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Cemig

Cemig Generation and Transmission

Cemig Distribution

Internal Regulations of the Company's Board of Directors

Chapter I - Purpose
Chapter II - Composition of the Board
Chapter III - Investing of Powers
Chapter IV - Impediments, Leave, Vacancies and Replacements
Chapter V - Remuneration
Chapter VI - Attributions
Chapter VII - Meetings
Chapter VIII - The General Secretary
Chapter IX - Duties and Responsibilities
Chapter X - Assessment of Performance
Chapter XI - Committees, Their Atributions and Functioning
Chapter XII - The Boards of Directors and Committees of the Subsidiaries and Affiliated Companies
Chapter XIII - General Provisions

 

Updated September 25, 2014

Chapter I - Purpose

Clause 1. The purpose of these regulations is to set rules for the working of the Boards of Directors of Companhia Energética de Minas Gerais – Cemig, Cemig Distribuição S.A. – Cemig D, and Cemig Geração e Transmissão S.A. – Cemig GT and the Committees linked to them, and for their relationship with the other corporate bodies, defining their responsibilities and attributions, subject to the Bylaws of these companies and the Corporate Law, and good corporate governance practices.


Chapter II - Composition of the Board

Clause 2. The company’s Board of Directors shall be made up of 15 (fifteen) sitting members and an equal number of substitute members. One of the members shall be its Chairman and another its Vice-Chairman, all being subject to election and dismissal at any time by the General Meeting of Stockholders, for a period of office of (three) years, and able to be reelected.

§ 1. The structure and members of the Boards of Directors of the wholly-owned subsidiaries Cemig D and Cemig GT shall be identical to that of Cemig.


Chapter III - Investing of Powers

Clause 3. The Members of the Board shall take office upon signature of a term of investiture in the Book of Minutes of Meetings of the Board of Directors. Signature of the Term of Consent specified by the Regulations of Level I of the Novo Mercado of BM&FBovespa S.A. (the São Paulo Stock, Commodities and Futures Exchange) is a prior condition for investiture.

Clause 4. The Chairman and Vice-Chairman of the Board of Directors shall be chosen by their peers, at the first meeting of the Board of Directors that takes place after the election of its members.

Clause 5. The Members of the Board shall keep their personal information updated with the Cemig Corporate Executive Office; supply a copy of their Identity Card, Taxpayer Card (CPF), résumé and Statement of Assets; and also, make the statements required by the Bylaws and by the legislation and regulations in force, including, but not limited to, declaration of non-impediment, term of agreement to the Company’s policy for disclosure of material information and trading in the Company’s securities, and, as applicable, solemn undertaking and confidential statement of information referred to in the Code of Ethical Conduct of Government Workers and Senior Administration of the State of Minas Gerais.


Chapter IV - Impediments, Leave, Vacancies and Replacements

Clause 6. The substitute Members shall substitute the respective Members of the Board if the latter are absent or impeded from exercising their functions and, in the event of a vacancy, shall do so until a new member is elected.

§ 1 The Vice-Chairman of the Board of Directors shall take the place of the Chairman when the Chairman is absent or impeded from exercising his functions.

Clause 7. In the event of a vacancy in the Board of Directors, the first General Meeting of Stockholders shall elect a new member, for the period of office which was remaining to the previous member.

Clause 8. The Chairman of the Board of Directors has the competency to grant leave to the Board’s members, and the other Members of the Board have the competency to grant leave to the Chairman.


Chapter V - Remuneration

Clause 9. The global or individual amount of the remuneration of the Board of Directors shall be fixed by the General Meeting of Stockholders, in accordance with the legislation from time to time in force.

Clause 10. A sitting or substitute Board Member who is resident outside the municipality of Belo Horizonte shall receive cost assistance to reimburse expenses of travel and accommodation necessary for attendance at meetings or for the carrying out of his or her functions, and this shall be set by the Ordinary General Meeting of Stockholders.


Chapter VI - Attributions

Clause 11. The attributions of the Board of Directors are those specified in the Bylaws.

§ 1 The Board of Directors may, by specific resolutions, delegate to the Executive Board the power to authorize agreement of contracts for sales of electricity or for provision of distribution or transmission services, in accordance with the legislation.


Chapter VII - Meetings

Clause 12. The Board of Directors shall meet ordinarily once a month, to analyze the results of the Company and its wholly-owned subsidiaries, subsidiaries and affiliated companies, and to decide on other matters included on the agenda in accordance with its internal regulations. It shall also meet extraordinarily, on convocation by its Chairman, or its Vice-Chairman, or one-third of its members, or when requested by the Executive Board.

§ 1 Before the beginning of each business year, the Chairman of the Board shall propose the annual timetable of ordinary meetings.

Clause 13. The meetings of the Board of Directors shall be called by its Chairman or its Vice-Chairman, by written notice, either by fax, e-mail or letter, sent with 5 (five) days’ notice, containing the agenda and corresponding documentation supporting the matters to be dealt with. Meetings of the Board of Directors may be called on the basis of urgency by the Chairman without being subject to the above-mentioned period provided that all the other Members of the Board are unequivocally aware of the convocation.

Clause 14. The meetings shall be held at the Company’s head office, and may also, exceptionally, take place at a different location. On a basis of urgency, they may take place in virtual form, by conference call.

§ 1 In any of these situations, a Board Member shall be considered to be present if he or she states his position using the means of communication chosen, and his or her statements and vote shall be considered valid for all legal purposes and recorded in minutes.

Clause 15. The meetings of the Board of Directors shall be carried out with the presence of at least the majority of its members, and decisions shall always be taken by the majority of those present, the Chairman having the casting vote in the event of a tie.

§ 1 If the Sitting Member is present at the meeting, his or her Substitute Member shall not have the right to a vote, but may make statements on the subjects discussed.

§ 2 Matters submitted by the Executive Board for inclusion in the agenda as Executive Board Resolution Statements (CRDs) must be accompanied by reports, opinions, drafts of the documents to be signed, and, depending on the individual case, a statement that they comply with the company’s Long-Term Strategic Plan and are included in the budget, and also by all the documents referred to in the Proposal for Decision by the Board of Directors (PRCA), and the opinions of the Committees which have analyzed the matters.

§ 3 Any Board Member who wishes to request complementary explanations on matters to be discussed at a meeting should make such request in writing, from the Cemig Corporate Executive Office, and the Company must provide the said explanations or send complementary documents by the start of the meeting.

§ 4 The provision of the previous paragraph shall not encumber the right of any Board Member to request explanations and documents at the time of the meeting or any time afterward.

Clause 16: Matters included on the agenda for the meeting that have been submitted by the Executive Board may only be withdrawn from the agenda at the request of the CEO, or at the request of one-third of the members of the Board of Directors, after preliminary debate by the Members.

Clause 17. Sessions may be adjourned or closed, when the circumstances so require, at the request of any Board Member and with approval of the Board Members and the Chairman shall set a date, time and place for their continuation, a further convocation not being necessary.

Clause 18. As well as the Members of the Board of Directors, the General Manager of the Corporate Executive Office shall take part in the meetings, without the right to vote.

Clause 19. Members of the Executive Board, members of the Audit Board, employees and consultants may be invited to take part in the meetings, without the right to vote, remaining present during such time as the subject of their area of specialization is in debate.

Clause 20. Meetings of the Board of Directors shall be transcribed in the Book of Minutes of the Meetings of the Board of Directors, and shall be written and signed at the end of each meeting, when there is any difference of opinion between Board Members on any subject on the agenda. In other cases, the draft of the minutes of the meeting shall be sent to the Board Members within a maximum of five calendar days, for examination, and their reading and signature shall take place at the subsequent meeting of the Board.


Chapter VIII - The Secretary

Clause 21. The Board of Directors shall have a Secretary, who, obligatorily, shall be an employee of the Corporate Executive Office of Cemig or Cemig D or Cemig GT, for recording of the business and to give assistance to the Board Members.

§ 1 The subjects to be considered in a Meeting of the Board of Directors, in accordance with the competencies established in Clause 11 of these Regulations, must be placed on the agenda through the Chairman of the Board, by means of the Corporate Executive Office, at least than 15 (fifteen) days prior to the date of the meeting.

Clause 22. The General Secretary has these attributions:

  • to accompany the business of meetings, advising the Chairman of the Board of Directors on the progress of activities;
  • to provide the complete logistics for the meetings;
  • to submit the relevant materials in good time;
  • formally to record and register the meetings;
  • to write the minutes and the acts of regulations necessary for dissemination of Statements of Decisions by the Board of Directors (CRCAs), and to keep these documents and their respective Proposals for Decision by the Board of Directors (PRCAs) under his or her guard and possession;
  • to file, internally, all the minutes of the meetings of the Board of Directors, and all the documentation upon which the meetings are based;
  • to file the minutes and summary minutes of the meetings of the Board of Directors at the Commercial Board of the State of Minas Gerais, with subsequent publication in accordance with the legislation from time to time in force.


Chapter IX - Duties and Responsibilities

Clause 23. The Members of the Board of Directors have the following duties in the exercise of their positions. As well as what is specified by the Bylaws and the applicable law they must:

  • exercise their functions in the exclusive interest of the Company, subject to satisfaction of the requirements of the public good and its social function;
  • serve the Company, and its subsidiaries, affiliated companies and wholly-owned subsidiaries, with diligence and loyalty, and maintain secrecy about their business;
  • maintain secrecy about information not yet disclosed to the market that has been obtained by reason of their position;
  • d) state, when signing the term of investiture, the number of shares, warrants, share purchase options and debentures in shares, issued by Cemig and its subsidiaries, affiliated companies and wholly-owned subsidiaries that they hold;
  • reserve and maintain time available in their schedules so as to comply with the convocations of meetings of the Board of Directors, based on the timetable previously published.

Clause 24. Members of the Board must attend meetings previously prepared, having examined the documents made available, and participate actively and diligently in the meetings.

Clause 25. If they have a private interest or an interest conflicting with that of the company in relation to any specific matter submitted to their consideration, Board Members must make statement of it, prior to any consideration or decision, and abstain from participation in debate and voting on it.

Clause 26. Board Members may not:

  • carry out acts of liberality at the Company’s expense;
  • take loans or funds from the Company, or use assets belonging to the company to their own advantage or for their own use;
  • receive any type of advantage by reason of exercise of their position;
  • use, to their own benefit or that of another person, with or without loss being caused to the Company or its subsidiaries, affiliates or wholly-owned subsidiaries, commercial opportunities of which they become aware by reason of the exercise of their position;
  • be omiss in the exercise or protection of rights of the Company or its subsidiaries, affiliated companies or wholly-owned subsidiaries;
  • acquire, for resale at a profit, an asset or right that they know to be necessary to the Company or that the Company intends to acquire;
  • make use of confidential information to obtain an advantage for themselves or any other party, by purchase or sale of securities;
  • intervene or take part in any operations or transactions that have an interest conflicting with that of the Company or any subsidiary, affiliate or wholly-owned subsidiary, and, in such cases, they must state the causes of their impediment in minutes; nor
  • directly or indirectly participate in trading of securities issued by the Company or referenced to it: (1) before disclosure to the market of a material event or fact taking place in the Company; (2) within 15 (fifteen) days prior to disclosure of the Company’s Quarterly Information (ITR) or annual information (DPF or IAN); or (3) in the event of any intention existing to carry out an absorption, partial or total split, merger, transformation or corporate reorganization.

Clause 27. The Members of the Board of Directors shall be liable, in accordance with applicable law, for damage resulting from omission to comply with their duties, or from acts carried out with negligence or malicious intent or in violation of the law or the Bylaws.

Clause 28. The Members of the Board of Directors must immediately advise the General Manager of the Corporate Executive Office of any changes in their holdings of shares in the Company, in accordance with the conditions and in the manner specified by the Securities Commission (CVM), especially as determined by Normative Instruction 358/2002, as amended, and also in accordance with the conditions specified in the Company’s Information Disclosure Policy.


Chapter X - Assessment of Performance

Clause 29. Annually, the Board of Directors shall make an assessment of its performance, aiming to improve its functions, and the methodology adopted must be previously approved by the Members of the Board and be part of the general process of assessment of internal procedures and controls.


Chapter XI - Committees, Their Atributions and Functioning

Clause 30. The committees do not have an executive function or power of decision, but their purpose is to ensure objectivity, consistency and quality in the decision process, providing an in-depth analysis of the matters within their specialization and issuing suggestions for decisions or actions, and opinions, to the Board.

§ 1 The Committees shall comprise between 5 (five) and 7 (seven) members, appointed by the Board of Directors from among the Sitting and Substitute Members. In committees made up of seven members, four members shall be appointed by the Board Members elected by the majority stockholder and three by a simple majority of the Board Members elected by the other stockholders of Cemig. In committees made up of five members, three members shall be appointed by the Board Members elected by the majority stockholder and two by a simple majority of the Board Members elected by the other stockholders of Cemig.

§ 2 The Company shall have the following Committees, with the attributions set out below:

  • a) Board of Directors Support Committee – to assess and recommend, prior to the meetings of the Board of Directors, any corrections to the contents of the agenda of meetings, allocation of priorities for subjects on the agenda, examination of the documentation necessary for understanding by the Members of the Board, the quantity, quality, and content of the material, the need for presentations or explanations, detailing of the subjects, compliance with the Bylaws, and any other measures necessary to enable meetings to be objective.
  • Corporate Governance and Sustainability Committee – to propose to the Board of Directors the structure and constitution of Committees, the conduction of the periodic assessment of the Board of Directors, the Committees, the Chairman and the Secretary of the Board, actions to improve the dynamics of functioning of the Board of Directors, criteria for assessment and development of corporate governance and sustainability, the rules for dealing with conflicts of interest of stockholders, between themselves and with the Company, review of the responsibilities of the Committees, reassessment of their structure and profile, and the needs of new members, issuing opinions to the Board of Directors.
  • Human Resources Committee – interacting with the office of the Chief Corporate Management Officer, to examine and give opinion on subjects relating to human resources, issuing opinions to the Board of Directors.
  • Strategy Committee – interacting with the offices of the Chief Officer for Finance, Investor Relations and Control of Holdings and the Chief New Business Development Officer: to examine and give opinion upon the directives for formulation, by the Executive Board, of the Long-term Strategic Plan, accompaniment of the Strategic Planning and the Annual Budget, the criteria for assessment of the results of the Company, and anticipation of strategic trends in the sector and in the market, to optimize the Company’s positioning in its competitive environment, issuing opinions to the Board of Directors.
  • Finance, Audit and Risks Committee – interacting with the office of the Chief Officer for Finance, Investor Relations and Control of Holdings:
    • to examine and give opinions on economic and financial subjects, such as loans/refinancings, management of debt, analysis of financial risks, cash flow, corporate results, covenants and the Balanced Scorecard, execution of the budget, and policy on dividends and issuance of shares or debentures;
    • to accompany and monitor the Company’s management of risks, continually identifying, assessing, and monitoring risks and, to propose strategies for management and mitigation of risks;
    • to monitor the performance of the controls (SOX);
    • to monitor the changes in the Company’s liabilities;
    • to monitor the application of the integrated risk analysis model in the Company’s projects;
    • to propose criteria for identification of risks inherent to the activity of the Board Members, and to propose preventive actions – in every case issuing opinions to the Board of Directors; and
    • to promote interaction between the Audit Board and the Board of Directors, in relation to subjects of internal and external auditing.
  • Committee for New Business Development and Corporate Control of Subsidiaries and Affiliates – Interacting with the offices of the Chief New Business Development Officer and the Chief Officer for Finance, Investor Relations and Control of Holdings:
    • to examine and give opinion on the carrying out of studies for potential acquisitions and/or participation in new business projects;
    • to assess and propose assumptions for investment (IRR, payback, cost of capital and any other indicators of risk/return that may be necessary);
    • to assess the positive and negative points of each potential business undertaking through preliminary analyses presented by the Office of the Chief Officer for New Business Development; to give opinion on continuation of the studies for each option for acquisition and/or interest analyzed;
    • to give opinion on potential acquisitions and/or participations in new business projects that have been previously analyzed by the office of the Chief Officer for New Business Development; to analyze the positive and negative points of each potential business through detailed studies carried out by the office of the Chief New Business Development Officer;
    • to identify potential problems and approaches to be followed in the negotiation and acquisition of businesses; to give an opinion on acquisition and/or participation in each option previously analyzed; to give an opinion on material subjects relating to the Company’s wholly-owned subsidiaries, subsidiaries and affiliated companies;
    • to give an opinion on potential disposals of stockholding interests coordinated by the office of the Chief Officer for Finance, Investor Relations and Control of Holdings, after hearing the opinions of the other Chief Officers’ Departments;
    • to analyze the economic and financial feasibility of each potential disposal through detailed studies carried out by the office of the Chief New Business Development Officer’s Department; to identify potential problems and approaches to be followed in the negotiation and disposal of businesses;
    • to give opinion on the disposal and/or disinvestment in each option previously analyzed; and
    • to issue opinions on all these matters to the Board of Directors.

§ 3 Each Committee shall:

  • have autonomy in the performance of its attributions, while aware of its interdependence with the other Committees and subordination to the Board of Directors;
  • seek consensus understanding between the participants in relation to the true significance of each one of its attributions and of its raison d’être;
  • be clear in its understanding of the meaning and significance of the Committees and their relations with the Board of Directors;
  • act in the defense of the Company, seeking at all times its sustainable development;
  • seek the best sources and references in the matters of its specialization;
  • inform the Board of Directors of the results of its activities;
  • adopt creativity, as a basic element and challenge, creativeness, becoming aware that innovation is a collective event and arises from competency in combining differences of style, knowledge and abilities;
  • be conscious that the success of the Board of Directors depends on the quality of its dynamics as a team, on the information on which it bases its decisions and on focus upon substantive or essential questions;
  • operate permanently as support to the Board of Directors.

§ 4 Recommendations and orientations resulting from the activities of the Committees are not binding on the members of the Board of Directors.

§ 5 The Committees, with the exception of the Board of Directors Support Committee, must obligatorily consider, and issue an opinion on, the specific subjects set out in their attributions.

§ 6 The Committees must consider and give opinion on subjects of their area of interest, even if they are not specifically mentioned in these Internal Regulations, provided that their consideration and opinion has been expressly requested by, at least, two thirds of the members of the Board of Directors. If the quotient of two thirds of the members of the Border Directors is not a whole number, for the purposes of interpretation of this paragraph the whole number immediately below that number shall be used.


Chapter XII - The Boards of Directors and Committees of the Subsidiaries and Affiliated Companies

Clause 31. Positions on the Boards of Directors of the subsidiary and affiliate companies of Cemig or of Cemig GT, appointment of which is in the power of those Companies, must be approved by the Executive Board or by the Board of Directors, as provided for in the Bylaws.

§ 1 Positions on the Board of Directors’ Support Committees of the subsidiary and affiliate companies of Cemig or of Cemig GT, appointment of which is in the power of those Companies, shall be filled in the same proportions used in the appointment of the members of the Committees of those Companies, as specified in Clause 30 above, if this does not violate the provisions of stockholders’ agreements that have been entered into.


Chapter XIII - General Provisions

Clause 32. These internal regulations come into effect on the date of their approval by the Board of Directors, which may change them at any time, upon a vote in favor given by the majority of its members present at any meeting that decides on the subject. They shall be filed at the head office of the company.

 

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