Governance Practices

Comparison of Copel’s corporate governance practices with the New York Stock Exchange corporate governance requirements applicable to U.S. companies.

Section
New York Stock Exchange Corporate Governance Rules for U.S. Domestic Issuers
Copel’s Approach
Director Independence
303A.01 A company listed on the New York Stock Exchange (a “listed company”) must have a majority of independent directors on its Board of Directors. “Controlled companies” are not required to comply with this requirement. Copel fits the definition of a “controlled company” since the majority of its voting shares are held by the State of Paraná. As such, Copel would not be required to comply with the majority of independent directors requirement. However, Brazilian Law
13,303/2016 requires that at least 25% of our board members be independent members and according to Copel’s bylaws, meeting the requirements of B3’s State-Owned Enterprises Governance Program, we are required to have a minimum of 30% of independent directors on Board of Directors.
303A.03 The non-management directors of a listed company must meet at regularly scheduled executive sessions without management. Copel’s non-managing directors regularly hold executive sessions without management, which are usually scheduled to occur at the end of board meetings. Our Chief Executive Officer is also a
member of our board of directors.Pursuant to the internal regulations of our board of directors, in the event a conflict of interest or particular interest of any board member is identified in relation to a matter to be decided to be decided by the board, such board member must recuse himself from the meeting, which will continue without his presence.
Nominating/Corporate Governance Committee
303A.04 A listed company must have a Nominating/
Corporate Governance Committee composed entirely of independent directors, with a written charter that covers certain minimum specified duties. “Controlled companies” are not required to
comply with this requirement.
As a controlled company, Copel would not be required to comply with the nominating/ corporate governance committee requirements. However, Brazilian Law 13,303 / 2016 requires Copel to keep a permanent statutory committee, advisory to the shareholders, and responsible for monitoring the nomination and evaluation processes applicable to our management, members of our board of directors, Supervisory Board and board committees. This committee is composed of members nominated by the shareholders.
Compensation Committee
303A.05 A listed company must have a compensation
committee composed entirely of independent
directors, with a written charter that covers certain
minimum specified duties. “Controlled companies”
are not required to comply with this requirement.
Copel fits the definition of “controlled company”, as the majority of its voting shares are held by the State of Paraná. As a controlled company, Copel would not be required to comply with the compensation committee requirements if it were a U.S. domestic issuer.
Audit Committee
303A.06 303A.07

 

A listed company must have an audit committee with a minimum of three (3) independent directors who satisfy the independence requirements of
Rule 10A-3 under the Securities Exchange Act, with a written charter that covers certain minimum specified duties.
COPEL has a statutory Audit Committee composed of five board members (of whom three must satisfy the requirements set forth in Rule 10A-3 under the Securities Exchange Act and one must have professional experience in corporate accounting), each of whom serves a term of two years, and may be re-elected up to three consecutive times. One of the positions in our Audit Committee is currently
vacant. Pursuant to the Audit Committee internal rules, the Audit Committee members are appointed by, and may be replaced by, the Board of Directors. All of the members of the Audit Committee are members of our Board of Directors.The Audit Committee is an advisory committee responsible for assisting our Board of Directors and giving its opinion on matters related to our financial and accounting management, risks, internal controls and audit, including, but not limited to, the quality, transparency and integrity of our financial statements, effectiveness of our internal controls with respect to the preparation of financial reports,
as well as the activities, independence and quality of the work of our external and internal auditors.
Equity Compensation Plans
303A.08 Shareholders must be given the opportunity to vote on all equity compensation plans and material revisions thereto, with limited exemptions set forth in the NYSE rules. Under Brazilian Corporate Law, shareholder pre-approval is required for the adoption of any equity compensation plans and material revisions thereto.
Corporate Governance Guidelines
303A.09 A listed company must adopt and disclose corporate
governance guidelines that cover certain minimum
specified subjects.
Although the corporate governance practices adopted by Copel do not comply with all the terms specified in the rules of the NYSE, they fulfill the requirements established for companies listed on level 1 of corporate governance of B3 (Brasil, Bolsa, Balcão). The Company also adopts the Code of Better Corporate Governance Practices of the
Brazilian Institute for Corporate Governance (”IBGC”) and was granted with a certification under the State-Owned 186 Enterprise Governance Program of B3 (Brasil, Bolsa, Balcão) with the maximum score, being the only company in Brazil to obtain this result.
Code of Ethics for Directors, Officers and Employees
303A.10 A listed company must adopt and disclose a code of
business conduct and ethics for its directors, officers
and employees, and must promptly disclose any waivers of the code for directors or executive
officers.
Copel has adopted a code of ethics that applies to all members of the board of directors, the Supervisory Board, the executive board and employees.
Certification Requirements
303A.12 A CEO of a listed company must promptly notify the NYSE in writing after any executive officer of the listed company becomes aware of any material non-compliance with any applicable provisions of Section 303A and certify he or she is not aware of any violation by the listed company of NYSE corporate governance listing standards, qualifying the certification to the extent necessary. Each listed
company must submit an executed Written
Affirmation annually to the NYSE. In addition, each
listed company must submit an interim Written
Affirmation as and when required by the interim
Written Affirmation form specified by the NYSE.
Copel’s CEO will promptly notify the NYSE in writing after any executive officer of Copel becomes aware of any material non-compliance with any applicable provisions of the NYSE corporate governance rules and will also certify if he is not
aware of any violation by the listed company of NYSE corporate governance listing standards.Copel submits every year an Annual Written Affirmation to the NYSE and will submit an interim Written Affirmation when required.
Last update: May 8, 2020