Related Party Transactions (RPT) · (1a) Amec agrees that the Tractebel decision was a positive,...

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Related Party Transactions (RPT)

Amec respectfully submits this document to the OECD Latin American Corporate Governance

Roundtable’s Task Force on Related Party Transactions, through the rapporteur of the Brazilian

arm of the Task Force, the CVM. Our association is honored by the invitation to participate in

this project, and we are convinced that our experience and that of our members will bring a

valuable input to the debate.

Answers to the Questionnaire

A. Response to Earlier Questionnaire Amec believes that most of the responses to the earlier questionnaire do indeed reflect the

current reality of the Brazilian market. However, there are important items in which the reality

of market practices may not yet be as encouraging as the ‘letter of the law’. We list a few

items below:

(1a) Disclosure of RPTs are still far from adequate. Problems are centered on the conditions of such transactions, especially given that many firms opt for boilerplate language that is of little use to investors. Statements such as ‘all RPTs are done according to market parameters’ or ‘arm’s length basis’ may in fact hide significant problems. For example: if a company lends money to its controlling shareholder at the benchmark Selic rate, even though that shareholder’s credit rating would imply a cost of capital that are several percentage points higher, can it be considered arm’s length at all ? Amec’s understanding is that it cannot, but this is the regular procedure today.

(1a) There is little clarity on which transactions are done with wholy owned subsidiaries (which are less important from an investor’s perspective) as opposed to partly owned entities, or to entities that are ‘above’ the listed company on the shareholder structure.

(1a) Amec agrees that the Tractebel decision was a positive, landmark development. The problem is that it sits amid conflicting decisions from the CVM that have allowed similar transactions or RPTs to flourish. Please refer to our Annex for a list of cases that have raised concerns among Amec’s members.

(1a) Amec believes that the priority in terms of enforcement is a deeper sensitivity to the economics of a transaction, as opposed to its formalities. A number of dilutive or otherwise unfair RPTs have happened without hindrances simply because they ‘check the boxes’ in relation to procedures.



(1b) Greater board responsibility in RPTs is a major challenge in terms of enforcement. Currently, as the answers indicate, this responsibility is very general. And unfortunately there is little jurisprudence confirming such responsibility. Parecer 35 is a big step in that direction, even though Amec has serious concerns regarding its details and its implementation. On a recent transaction (Oi), comments from an independent board member criticizing a corporate restructuring among related parties were ignored by the full board, by the controlling shareholder and by CVM.

(1b) Enforcement via regulator and/or the Federal Prosecutors Office contain an important problem: failure to reimburse investors who have suffered losses due to unfair RPTs. Fees and penalties revert to the CVM (and thus to the Federal Government). Amec ignores a single case in which investors received compensation in such situations.

(1b) The list provided for market mechanisms and shareholder activism is very inclusive. The problem is that they are very rare. This is due to a combination of absenteeism from investors (which has to do with the regulatory and self regulatory framework in which they are inserted) an frustration regarding the effectiveness of such remedies. Judicial remedies (especially ex-ante) are very rare, given the lack of specialized courts and the fact that courts virtually ALWAYS confirm understanding from the CVM.

(1b) The need for shareholder approval mitigates only a very small percentage of potential

problems. Corporate law does provide for some protection, especially in restructuring, but

breaches remain. Incorporação de Ações, for example, is a loophole that has been used with

increasing frequency in such situations. Reverse mergers also allow for minorities to be

compelled to accept such transactions.

(1b) Voting impediments are clearly in Brazilian legislation, and the recent Tractebel decision was a positive precedent. However, CVM decisions are a whole have failed to impose voting impediments in many transactions were the economic reality of the transactions would have imposed them. The ‘solution’ of allowing conflicted shareholders to vote and later penalize them is almost completely innocuous, as it allows a de facto situation to be imposed – which later penalties are not able to revert.

(1b) Redemption rights do represent a legal defense for shareholders, albeit an imperfect one (redemption price can have little to no relation to economic reality). In addition, jurisprudence is leaning towards a restrictive interpretation of that right. In a recent transaction, for example (Oi), 40% of shareholders failed to exercise their redemption rights, even though the redemption price was app. 75% above the market price.

(2) Jurisprudence on the board’s duties to all shareholders is spotty. In the Aracruz/VCP merger, for example, the board and the independent committee issued no opinion on the relative value attributed to different classes of shareholders, yielding a significant transfer of value from preferred to common shareholders (especially controlling ones). Many cases in which no actual negotiation has occurred



on behalf of shareholders of listed entities – and there is no record of penalties for such cases.

(2) The establishment of detailed procedures to protect minorities in related party restructuring seems to be creating an ‘appearance of protection’ that is not related to real protection. Many transactions have used the CVM opinion to spend a lot of money on procedures, but much less on actions the have economic substance (with notable exceptions such as CCR – see Annex). Final responsibility is being pushed from directors to advisers and appraisals, thus making it harder to enforce it.

(2) The definition of conflict of interests is very weak, and threatens the protection established by law. In some cases, the CVM has decided that an entity selling something to the company is not in a position of conflict. This has thankfully been reversed on the Tractebel decision, but it is still an open question.

(2) Current disclosure rules regarding beneficial ownership fail to include derivatives and other indirect forms of ownership. This brings up many problems, including that of empty voting. Amec understands that the CVM has the legal power to demand full disclosure of a related party’s true economic exposure to a company, including derivatives.

(4) Amec believes that the ex post emphasis of the CVM on the enforcement of RPT abuse does not lead to appropriate remedies. Even in the cases in which officers are fined, the amounts paid never revert to injured shareholders – and the decision often comes long after the transaction is completed.

B. Available Data

As mentioned in the earlier questionnaire, CVM’s Formulário de Referência contains data on

RPTs for all listed companies in Brazil. However, also as mentioned above, these data are

seldom conclusive, especially in regards to the conditions of the RPTs and lack transparency so

that outside investors can observe the truly relevant transactions that might benefit related

parties. In other words, pricing of goods and services transacted between related parties, as

compared to their alternatives in the market (for the actual situation, not in relation to a

market standard like the Selic rate) is a piece of information that is missing in the current

structure.

A large step forward was made when the CVM mandated extended disclosure of management

compensation. As management and controlling shareholders many times overlap, this

comprises a class of self dealing in itself.

C. Analysis and Studies

The CVM regularly publishes consolidated data on its enforcement activities. A database of its

decisions is also available, but search capabilities are not well developed, as the CVM itself has

mentioned in the answers to the earlier questionnaire.



The IBGC publishes case studies on a regular basis, and fosters academic research on corporate

governance through its CG Prize.

Amec does not publish similar studies, but has a database of cases which was tapped to

prepare the Annex to this document.

D. Impact of Related Party Transactions Yes, Amec members consider RPT abuse as a significant source of value destruction to minority

shareholders and to the market in general. Many companies trade at ‘discounts’ due to the

perceived risk of RPT abuse. We are unaware of quantitative studies that gauge this value

destruction.

Amec does see the impact of RPT abuse as two-pronged: firstly one can identify value

destruction on the RPT contracts themselves (ie, lending to a related party at below-market

rate, adjusted for credit risk). Secondly, there is a ‘perception discount’, through which

markets discount both future transactions and the risk of current transactions that are not

properly disclosed.

E. Categories of Related-Party Transactions The list can be very large, and classified in two broad classes: ongoing transactions and one-off

situations. Our members have highlighted the following:

Ongoing Transactions

o Loans to or from related parties o Loan guarantees o Management Compensation o Management Fees o Competing market opportunities o Use of corporate assets o Use of assets owned by controlling shareholders o Marketing or service contracts (including commissions) o Capex / Opex Allocation o ‘Social goals’ at State Owned Enterprises

One-Off Situations o Mergers between related parties o Incorporation, reverse takeovers



F. Treatment of Different Categories of Transactions The only categories of RPT currently receiving different treatment are (1) corporate

restructuring; and (2) management compensation

Corporate restructuring is now regulated by Parecer 35, with all the positive and negative

aspects that have been pointed out by both the CVM and market participants. Despite

significant efforts to introduce more accountability in such processes, the general sensation is

still that the measures taken so far are most procedural, and have done little to avoid RPT

abuses.

Monitoring of management compensation, as mentioned, received a substantial boost with

the new disclosure requirements by the CVM. That, in addition to legal rules determining

shareholder vote for management compensation have the potential to reduce abuse in this

category of transactions significantly. Notably, a number of companies that lack a controlling

shareholders have seen management compensation plans rejected by shareholders.

G. Groups There are rules regarding the definition of groups, but they are proving to be far from

adequate in a number of cases. Petrobrás, for example, a state-owned company, accepted

votes from pension funds sponsored by itself and other government owned entities as if they

were not part of the same group. This leads to a number of abuses that extrapolate the issue

of RPTs. Amec suggests that this issue be further debated among members of the Corporate

Governance Roundtable.

H. Detection The CVM can act when requested by an investor, or simply based on news that it receives.

Investors themselves are the actors with the broadest reach, given their interactions with

invested companies. Board members, as well as members of the Conselho Fiscal can also act

on the detection of RPT abuse, and report them directly to the regulators. However, this has

been done on very few occasions.

I. Enforcement Options

The CVM has already provided quantitative data on enforcement actions related to RPTs. Their

sheer number shows that they are a fraction of the situations that investors perceive as

questionable. Courts are rarely used, given their cost, lack of expertise and slowness. For

companies in the Novo Mercado, the Arbitrage Chamber is also available, but very rarely used.

Amec members believe that failure to focus on the economic substance of transactions as

opposed to formalities is one of the greatest challenges to effective enforcement. In addition,

the time lapse between detection and punishment reduce the effectiveness of penalties, even

when they are applied.



Amec believes that greater focus on board duties regarding RPT evaluation, detection and

monitoring is a promising strategy for better enforcement.

J. Remedies/Penalties Amec resents the fact that penalties do not revert to shareholders or to the company. In many

cases, the maximum punishment is not relevant in relation to the abuse that was allegedly

perpetrated.

Also, the CVM has been very active in plea agreements with offenders. While this may

expedite the solution of a case, and eventually stop harmful transactions, they never result in

compensating shareholders for the losses – nor in admission of guilt.

A deeper understanding of the ‘diffuse interests’ represented by the financial markets would

be important to determine a bigger involvement of the Federal Prosecutor’s Office in RPT

enforcement. This has the potential to lead to more effective penalties.

K. Fora/Enforcement Agents

The CVM is by far the most active enforcement agent. The Arbitration Chamber is clearly

underused by investors, possibly due to the inexistence of jurisprudence issued by this body. It

is important that BMF Bovespa works on improving disclosure of procedures taken to the

Chamber.

See item J above for additional comments.

L. Corporate Structure

Corporate pyramids are a major incentive to abusive RPTs. A number of companies that were

privatized in Brazil in the late 1990s resorted to such transactions, given that controlling

shareholders in many cases had less than 1% of economic interest , but still controlled the

company (by means of both pyramids and non-voting shares). Some of these structures are

still present in the market today.

State owned companies are also very much subjected to questionable RPTs. In this case the

motivation stems from political use of the entities.

Listed entities that are part of broader economic groups are also potential targets for

problematic RPTs. See the case of Confab, explained in the Annex.

The Novo Mercado structure, which follows the one-share, one-vote principle reduces the

incentives for abusive RPTs. However, we have witnessed cases of companies that were in this

segment, and were still able to build pyramidal structures. Not coincidentally, one such

companies is pursuing a very expensive acquisition, that some members see as following the

interests of the controlling shareholder, but not necessarily those of the company.



M. Possible Recommendations

Many of the possible recommendations were already mentioned over the course of this document. We summarize them here:

Greater emphasis on economic substance of transactions, rather than procedures or formalities.

Greater involvement of the Federal Prosecutor’s Office on financial market issues, and on RPTs in particular.

Greater accountability of board members in RPT oversight.

Annex – Selected cases involving RPTs

Yellow / Red Flag

Unfortunately, recent advances in voluntary practices and regulation have not stopped a large

number of companies from undertaking questionable RPTs. The list below is an extremely

summarized narrative of events involving certain companies, that have been brought to

Amec’s attention by its members. The list is not a presumption of malpractice or illegal actions,

but rather potential problem areas for some of the issues discussed in the main body of this

document.

Investur and Brasil Agro listed their shares in the hype of the emerging markets mania of

2005/2007. They included management or consulting fees payable to their controlling

shareholder and/or key employees that had no relation with profitability and surpassed

market practices. Both companies removed this provision when they ran into financial

problems and required capital injection from private equity/strategic investors.

Media reports suggested that the controlling shareholder of Cosan was to receive a

compensation to the tune of USD 25 million per year and a non-executive Chairman of the

Board. The arrangement raised fears that it might represent a de facto control premium in the



corporate restructuring the led to the creation of Raizen, in partnership with Royal/Dutch

Shell.

Bus manufacturer Marcopolo has been repeatedly criticized by minority shareholders and

even independent board members for the excessive compensation to controlling shareholders.

The company uses the legal authorization to pay up to 10% of profits to management to

channel these funds almost exclusively to members of the control group. As the company grew

in size, so did the compensation of these individuals. Investors complain that the practice is a

covert way to resuscitate the Partes Beneficiarias, or founders’ shares, a legal instrument that

was very prevalent in the past, but is forbidden under the Novo Mercado rules – to which

Marcopolo adheres as a Level II company.

JSL, a logistics company, removed a subsidiary involved in reselling used trucks from its

corporate structure prior to its IPO. A couple of years later, JSL decided to buy back the

operation from its controlling shareholders – arguing that the structure required too much

RPTs, that were criticized by the market. Initially, the company said it would follow CVM

recommendations, but that the controlling shareholder would vote in the GSM that would

approve the deal. Following investor uproar, JSL reverted that decision, and announced that

the controlling shareholder would follow the vote of minorities, thus granting them a final say

on valuation and on the transaction.

JSL is also criticized for renting a significant number of properties from its controlling

shareholder.

Lojas Marisa posts a similar problem. The apparel retailer rents a significant number of its

stores from its controlling shareholder, with limited transparency.

LPS, a real estate broker, became a public company without its main asset. The company’s

trade name “Lopes” was owned by the controlling shareholders. Later, the company agreed to

buy the brand for BRL xxx million.

TAM, an airline, did the same transaction, paying controlling shareholders BRL million for its

brand.

Gerdau’s controlling shareholders tried to perform the same transaction, but following

investor uproar, decided to give the brand for free to the company.

OSX, a shipyard owned by the EBX group, listed its shares in Brazil when the company was

nothing but a stream of contracts with its sister company OGX. The company was structured as

a subsidiary of EBX, though , not of publicly listed OGX – even though its several billion BRL in

market capitalization were fully dependent on the contracts with OGX. Market participants

saw the transaction as a transfer of value from OGX shareholders to its controlling shareholder

EBX.



The EBX Group, in term, is renowned for its endless RPTs within the group. Subsidiaries buy

each other, market assets to market in substantially private transactions. There is substantial

debate in the market to which extent these transactions either generate value and synergy, or

simply provide a Ponzi scheme to induce the market to a given perspective of value.

Brasil Ecodiesel became involved in a large controversy among its controlling shareholders, as

one of them tried to sell an asset to the company, and the other differed.

Fosfertil had a similar disagreement between controlling shareholders Bunge and Mosaic. The

matter was resolved when Vale acquired the whole company.

Confab was also criticized for making a sizeable investment to buy a small stake in the control

group of Usiminas. The asset was not originally strategic for Confab, but was part of the

strategy of its controlling shareholder Ternium. Minorities complained, and the company

ended up negotiating its exit from the market and buyout of minorities.

Aracruz merged with controlling shareholder VCP under highly controversial circumstances, as

the company posted significant losses in derivatives transactions. Markets had the perception

that minority shareholders ended up paying the bill for the commitment of VCP to buy out the

remaining controlling shareholders at a price fixed prior to the derivatives losses. The company

used the process suggested by the CVM on Parecer 35, but nevertheless questions related to

the distribution of value in the transaction remained unanswered.

Telemar/Oi is a repeat offender in terms of attempting to undertake corporate restructuring

that benefit the controlling shareholder. In the latest attempt, the appraisal report produced

by the ‘independent’ committee was questioned by an independent board member, who

argued that no real negotiation has taken place between the board and the controlling

shareholder, as stated in CVM regulations. All complaints by minorities were dismissed by

CVM.

Santos Brasil is currently involved in a similar situation, as the Klien family tries to sell

Multiterminais to the company. Co-controller Opportunity diverged, and the matter is under

arbitration. Minorities can only watch as controllers fight.

In a more distant past, Rhodia Ster diluted minority investors significantly with a similar

transaction – ie, acquiring a large asset from the controlling shareholder. The matter was

heavily criticized and complained about at the CVM, but to Amec’s knowledge no remedy was

been found.

Embratel and Net, respectively a long-distance operator and a cable company performed a

significant asset swap, in which minority shareholders had no transparency or any way to

scrutinize the transaction. More recently, the controlling shareholder has proposed to delist

Net.



Redecard and Cielo – credit card acquiring companies – are two additional examples of

companies born as a result of RPTs. Transactions with controlling shareholders abound, and so

does conflict. That stems from negotiations of commercial terms to the business of advancing

money to credit card customers – a transaction usually dominated by the banks that control

these companies, but increasingly also performed by the acquirers themselves. The conflicts

became so prevalent that Itaú has proposed to delist Redecard, explicitly mentioning the

difficulties of managing these conflicts of interest. The transaction has sparked the usual

complaints related to valuation, but notably to the alleged ‘threat’ to Redecard of harsher RPTs

in case the tender did not go through.

Coteminas has been criticized for the use of its corporate aircraft by its controlling

shareholder, then a Senator, running for the Vice President position under Lula’s ticket. A

corporate restructuring under way is raising the issue of whether the agreement of a major

minority shareholder equates to a ‘clean bill of health’ to a transaction involving RPTs

(Coteminas is proposing to buy an asset from the controlling shareholder, as one of several

steps to migrate to the Novo Mercado).

The same issue was raised by Amec when UOL tried to delist, counting on the votes of a

shareholder who was a member of the shareholders agreement.

Pão de Açucar (CBD) got negative publicity when a corporate helicopter crashed off the coast

of São Paulo. On board were the son of the controlling shareholder and his girlfriend (who died

in the accident), headed to a holiday getaway on the coast.

Banco Pine, despite its small size, held several aircrafts, which were later transferred to the

controlling shareholder.

Klabin was known by market participants for mixing private and public agendas. Family

members taxes the company with significant costs. The stock rose substantially when the

company hired a respected CEO, who the market viewed as being able to curb these abuses.

Similarly, Grupo Ipiranga ended up being sold in a transaction in which one of the main

‘synergy gains’ was the elimination of the ‘family office’ that ran within the entity, and that

some analysts calculated to cost app. BRL 50 million per year.

LAEP and Agrenco, foreign entities that are listed in Brazil and have substantially all its

operations in the country have entered into financing agreements with a related party, that

allows it to dilute minorities considerably at a discount. Markets speculate that the

shareholder sells shares in the market, and then exercise in the money warrants issued by the

company. The transaction would no be allowed for a Brazilian entity, but foreign incorporation

allows for such abuse.



The Petrobrás Situation

Petrobrás upset the market considerably in 2009 when it announced a major equity issue,

through which the proceeds would be used to buy acreage from its controlling shareholder –

the government. The transaction was criticized in many dimensions, and probably deserves a

case study on its own. Some market participants calculate the losses to Petrobrás shareholders

in the range of BRL 100 billion.

Perhaps the most flagrant abuse in this case was that the transaction was structured in a way

as to avoid scrutiny from minority shareholders. Brazilian legislation requires that any share

issuance in kind, i.e., not in legal tender, be approved by minorities. Petrobrás structured a

two-phase transaction that accomplished substantially the same, but bypassed the GSM.

Besides, so-called independent board members gave their blessing to the deal. However, the

market criticizes the independence of these members, as they were high profile entrepreneurs

who had fiduciary duties to their own organizations (steel maker Gerdau and bank Santander).

Any action by these board members against government intentions in Petrobrás could very

likely lead to losses for their organizations, which – as many companies in Brazil – have

significant dealings with Petrobrás and the government. It is important to note that these

board members, albeit nominally ‘independent’, were invited to their position by the President

of Brazil and the Finance Minister, and were elected substantially by the vote of pension funds

of state owned companies (including Petrobrás itself), and supported by automatic “FOR”

votes from less diligent foreign investors.

In 2012 a campaign to elect truly independent members to Petrobrás’s board was aborted by

the votes of these related parties, and is currently under review at CVM.

Petrobrás is also immersed in a number of RPTs given its special role in the Brazilian economy.

The price of gasoline, for example, is defined by the government, and notably frozen for long

periods, in spite of fluctuations in costs and demand.

That is a problem that plagues most listed state-owned companies. Brazilian legislation allows

managers to diverge from profit maximization strategy in order to achieve unspecified social

goals. When the government regulates prices, conditions, buys or sells from the company, this

leads to significant RPTs that may or may not have economic grounds.

Celesc is cited for a different type of RPT – which might more precisely be termed capture. The

state owned company repeatedly benefits its unions and employees, which are very vocal in

GSMs. In one instance, the company issued a ‘voluntary dismissal program’ under which

employees were paid 24 months of salary to quit their jobs. A few months later, the company

had to hire new employees, and admitted back many of the members who left in that

program.



Nossa Caixa, a state-owned bank listed its shares on the Novo Mercado. A few months later,

the company paid a substantial amount to its controlling shareholder as a price for the

continued right to be the state’s house bank, servicing its payroll and its employees. Market

participants had the impression that this right was already owned by the bank when it listed its

shares.

Transactions that Benefit Minorities

Our members have indicated that RPTs are not necessarily ‘good’ if they benefit minority

shareholders to the detriment of controlling shareholders. This practice opens the door to

further conflicts, and may at some point justify things like control premium or compensation

that lack in transparency.

Electric motors manufacturer Weg, for example, used to get bank guarantees from its

controlling shareholders without compensation. This is very prevalent among mid sized

companies in Brazil. Following interactions with minority shareholders, the company started

paying for such guarantees.

Redecard and Cielo are also mentioned as recipients of implicit subsidies from their controlling

shareholders, allowing them to post ROEs north of 50% p.a. The subsidy takes the form of

below-market compensation for client acquisition.

Commercial relations between Petrobrás and its affiliate Braskem are also questioned by the

market. The former sells naphtha, an important input for the latter, under a pricing scheme

that is widely perceived as favorable to Braskem. The fact that Braskem has other co-

controllers (Odebrecht) only exacerbates speculation.

This type of problem plagued the entire petrochemical industry until the consolidation wave

of the 2000s. The industry was created under a “three party ownership structure” that

included the government, a Brazilian player and a foreign player. This resulted in a weak,

fractioned industry, that took many years to untangle.

Good examples

Amec believe that it is as important to call attention to transactions that raise yellow flags to

investors as it is to highlight the positive examples that are being led either by voluntary

corporate actions or in response to regulation.

CCR has raised the bar on best practices related to RPTs. The very existence of the company

implied a nexus of RPTs, as the company operates toll roads, and its founding shareholders are

contractors. Through time, CCR has managed to build a reputation in terms of managing these



transactions, through a system of checks and balances that included strategic shareholders

(without RPT opportunities), independent board members and qualified majority rules that in

practices submitted significant RPT to those independent board members. CCR currently posts

a market capitalization of BRL 26 billion, and total shareholder return of 130% over the last 5

years (as compared to 32% for the Ibovespa Index).

More recently, CCR gave further examples of good practice when the company agreed to

purchase airport operations owned by some of their shareholders. The whole process was led

by an independent committee, who was able to hire their own counsel and advisors. The

transaction was then approved in a shareholder meeting in Jan-16-2012, with record turnout

by minority shareholders, in which selling shareholders abstained from voting.

Another positive development was posted by Tractebel. As the company agreed to buy certain

significant assets (power plants) from its controlling shareholder, the CVM issued an opinion

whereby the controlling shareholder would not be allowed to vote on the matter. Tractebel

then built a real negotiating procedure between the company and its board.

In a reflection of such decision, Mahle reverted an initial decision to buy subsidiaries from its

controlling shareholder, voluntarily submitting the matter to a GSM, in which the controlling

shareholder abstained from voting.

This document provides answers from the Associação de Investidores no Mercado de Capitais – Amec to the

questionnaire received from the OECD and CVM. It does not have a scientific character. Rather, they only reproduce

information received from our members, and has the sole purpose of broadcasting the general feeling of investors

regarding the matter.

AMEC further emphasizes that the answers were produced after a consultation period involving a small number of

our members, and may or may not reflect the perception of other market agents not involved in the project.

Therefore, AMEC cannot be held liable for the use of this document by third parties that are not the original

recipients of our answers – namely the OECD and the CVM – especially regarding adequacy and precision, as it does

not represent a formal statement from the association, nor is based on scientific work.

The document has a section that describes public events involving certain companies that were brought to AMEC’s

attention. They are examples of important cases in our capital markets. We highlight that the inclusion of such cases

is not an allegation of wrongdoing. They represent real subsidies to illustrate the realities of the Brazilian capital

markets.

Finally, AMEC believes that it is important to call investor’s attention to the positive cases involving related party

transactions, based on best practices of corporate governance, and to acts by the CVM that have protected

companies and investors from losses.

Related Party Transactions (RPT) · (1a) Amec agrees that the Tractebel decision was a positive,...

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