Dividends

In accordance with our Bylaws and the Brazilian Corporation Law, we regularly pay annual dividends for each fiscal year within sixty days after the declaration at the annual shareholders’ meeting.

To the extent amounts are available for distribution, we are required to distribute as dividends an aggregate amount (the “Mandatory Dividend”) equal to at least 25.0% of Adjusted Net Profit (as hereinafter defined). Dividends are allocated pursuant to the formula described in “Dividend Priority of Class A Shares and Class B Shares” below. Under the Brazilian Corporation Law, we are not permitted to suspend the Mandatory Dividend payable with respect to the Common Shares, to the Class A Shares and to the Class B Shares for any year. Brazilian law permits, however, a company to suspend the payment of all dividends if the Board of Directors, with the approval of the Fiscal Council, reports to the shareholders’ meeting that the distribution would be incompatible with the financial circumstances of the company.

In such a case, companies with publicly traded securities must submit a report to the CVM providing the reasons for the suspension of dividend payments. Notwithstanding the above, the Brazilian Corporation Law and our Bylaws provide that Class A Shares and Class B Shares shall acquire voting rights if we suspend the Mandatory Dividend payments for more than three consecutive years. We are not subject to any contractual limitations on our ability to pay dividends.

The table below shows more details about the history of the company’s dividends.

Fiscal Year
Corporate Action
Distribute
R$ 1.000
COMMON/
ELPVY
Preferred A
Preferred B
ELP/XCOP
Payment Date
1994
DIV
7,996
0.03308
0.03308
05/31/1995
1995
DIV
24,175
0.07896
0.13160
04/29/1996
1996
IOC
116,856
0.48346
0.48346
0.48346
06/23/1997
1997
IOC
150,000
0.52352
0.57588
0.57588
1st part
IOC
74,627
0.26046
0.28651
0.28651
12/10/1997
2nd part
IOC
75,372
0.26306
0.28937
0.28937
04/30/1998
1998
IOC
136,200
0.47555
0.52269
0.52269
05/20/1999
1999
IOC
110,000
0.38359
0.59208
0.42209
04/25/2000
2000
IOC
160,000
0.55841
0.59208
0.61437
1st part
IOC
70,000
0.24378
0.59208
0.26826
12/27/2000
2nd part
IOC
90,000
0.31463
——–
0.34611
04/27/2001
2001
IOC
170,000
0.59166
0.65455
0.64455
1st part
IOC
80,000
0.27851
0.30794
0.30794
10/30/2001
2nd part
IOC
90,000
0.31315
0.34661
0.34661
06/03/2002
2002
2003
IOC
42,584
0.14734
1.05973
0.16211
06/15/2004
2004
IOC
96,061
0.33396
1.27127
0.36743
06/24/2005
2005
IOC
122,995
0.42811
1.27167
0.47101
06/19/2006
2006
280,951
0.98001
1.41617
1.07821
1st part
DIV
157,951
0.55096
0.79739
0.60617
06/26/2007
2nd part
IOC
123,000
0.42905
0.61878
0.47204
06/26/2007
2007
267,750
0.93356
1.62979
1.02713
DIV
67,750
0.23622
0.41239
0.25990
05/16/2008
IOC
200,000
0.69734
1.21740
0.76723
05/16/2008
2008
261,834
0.91289
1.62979
1.00438
DIV
33,834
0.11796
0.21060
0.12979
05/29/2009
IOC
228,000
0.79493
1.41919
0.87459
05/29/2009
2009
249,459
0.86965
1.62979
0.95679
1st part
IOC
168,000
0.58625
0.64510
0.64510
12/07/2009
2nd part
IOC
62,000
0.21556
0.85756
0.23706
05/27/2009
DIV
19,459
0.06784
0.12713
0.07463
05/27/2009
2010
281,460
0.98027
2.52507
1.07854
1st part
IOC
85,000
0.29662
0.32638
0.32638
09/20/2010
2nd part
IOC
115,000
0.40037
1.15087
0.44049
05/23/2011
DIV
81,460
0.28328
1.04782
0.31167
05/23/2011
2011
421,091
1.46833
2.52507
1.61546
1st part
IOC1
225,814
0.78803
0.86706
0.86706
09/15/2011
2nd part
IOC
195,277
0.68030
1.65801
0.74840
05/29/2012
2012
268,554
0.93527
2.52507
1.02889
IOC1
138,072
0.47920
2.52507
0.52720
01/15/2013
DIV
130,482
0.45607
0.50169
05/23/2013
2013
560,537
1.95572
2.52507
2.15165
IOC1
180,000
0.62819
0.69111
0.69111
12/16/2013
DIV1
145,039
0.50617
0.55688
0.55688
12/16/2013
DIV
235,498
0.82136
1.27708
0.90366
05/13/2014
2014
622,523
2.17236
2.52507
2.39000
IOC1
30,000
0.10469
0.11519
0.11519
11/21/2014
DIV1
350,770
1.22416
1.34678
1.34678
11/21/2014
DIV
241,753
0.84351
1.06310
0.92803
06/22/2015
2015
326,795
1.13716
2.52507
1.25473
IOC
198,000
0.68748
2.10511
0.76022
06/15/2016
DIV
128,795
0.44968
0.41996
0.49451
06/15/2016
2016 506,213 1.76466 2.89050 1.94342
IOC 282,947 0.98539 2.89050 1.08410  06/30/2017
DIV 223,266 0.77927 0.85932 12/28/2017
2017 289.401 1.00801 2.89050 1.10883
IOC1 266,000 0.92624 2.89050 1.01887 08/14/2018
DIV 23.401 0.08177 0.08996 08/14/2018
2018 378,542 1.31950 2.89050 1.45151
IOC 280,000 0.97515 2.89050 1.07270 06/28/2019
DIV 98,542     0.34435 0.37881 06/28/2019
2019 643,000 2.24235 3.94657 2.46692
IOC 643,000 2.24235 3.94657 2.46692 to be defined
DIV

1 In advance

DIV – Dividend

IOC – Interest on Own Capital

Payment of Dividend

We are required to hold an annual shareholders’ meeting by April 30th of each year at which, among other things, an annual dividend may be declared by decision of the shareholders on the recommendation of the management, as approved by the Board of Directors. The payment of annual dividends is based on the financial statements prepared for the fiscal year ending December 31st. Under Brazilian law, we must pay dividends within sixty days following the date of the shareholders meeting that declared the dividends to shareholders of record on such shareholders’ meeting. A shareholders’ resolution may set forth another date of payment, which must occur prior to the end of the fiscal year in which such dividend was declared. We are not required to adjust the amount of paid-in capital for inflation for the period from the end of the last fiscal year to the date of declaration or to adjust the amount of the dividend for inflation for the period from the end of the relevant fiscal year to the payment date.

Consequently, the amount, in real terms, of dividends paid to holders of Class B Shares may be substantially reduced due to inflation. According to our Bylaws, our management may declare interim dividends to be paid from profits in our semi-annual financial statements approved by our shareholders. Any payment of interim dividends may be set off against the amount of mandatory distributions relating to the net profit earned in the year in which the interim dividends were paid.

Pursuant to Brazilian law, we may pay interest on equity in lieu of dividends as an alternative form of making distributions to shareholders. We may treat a payment of interest on equity as a deductible expense for tax purposes, provided that it does not exceed the lesser of:

  • the total amount resulting from (1) TJLP multiplied by (2) the total shareholders’ equity (determined in accordance with the Brazilian Corporation Law), less certain deductions prescribed by the Brazilian Corporation Law; and
  • the greater of (1) 50.0% of current net income (after the deduction of social contribution on profits (CSLL) and before taking such distributions and any deductions for corporate income tax) for the year in respect of which the payment is made or (2) 50.0% of retained earnings and profit reserves for the year prior to the year in respect of which the payment is made. Shareholders who are not residents of Brazil must register with the Central Bank in order for dividends, sales proceeds or other amounts with respect to their shares to be eligible to be remitted in foreign currency outside of Brazil. The Class B Shares underlying the ADSs are held in Brazil by the Custodian, as agent for the Depositary, which is the registered owner of our shares.

Payments of cash dividends and distributions, if any, will be made in Brazilian currency to the Custodian on behalf of the Depositary, which will then convert such proceeds into U.S. dollars and will cause such U.S. dollars to be delivered to the Depositary for distribution to holders of ADRs. In the event that the Custodian is unable to convert immediately the Brazilian currency received as dividends into U.S. dollars, the amount of U.S. dollars payable to holders of ADRs may be adversely affected by devaluations of the Brazilian currency that occur before such dividends are converted and remitted.

Calculation of Adjusted

Dividends with respect to a fiscal year are payable from (1) retained earnings from prior periods and (2) after-tax income for such period (reduced by losses carried forward from prior fiscal years) following the addition or subtraction of amounts allocated to legal and other reserves (as described below) (“Adjusted Net Profit”).

In accordance with Brazilian Corporation Law, we must maintain a legal reserve, to which we must allocate a minimum 5.0% of our net profits for each fiscal year until such reserve reaches an amount equal to 20.0% of our capital stock (calculated in accordance with the Brazilian Corporation Law).

However, we are not required to make any allocations to our legal reserve in a fiscal year in which the legal reserve, when added to our other established capital reserves, exceeds 30.0% of our total capital. At December 31, 2006, our legal reserve was R$ 268.3 million, or approximately 7% of our capital stock at that date.

In addition to deducting amounts for the legal reserve, under the Brazilian Corporation Law net profit may also be adjusted by deducting amounts allocated to two other reserves. One is a contingency reserve against future losses. The other is an unrealized profits reserve for specified categories of earnings that are currently required to be recognized, but that will be realized in subsequent periods. On the other hand, net profits may also be adjusted by reversing any amounts in any contingency reserve accounts that have been deposited in previous years and any amounts included in the unrealized profits reserve that have been realized in the relevant fiscal year and have not been used to offset losses. These reserves may only be established if they are proposed by the Board of Directors or management at a shareholders’ meeting and a resolution creating such reserves is adopted at that shareholders’ meeting.

The amounts available for distribution are determined on the basis of the Statutory Financial Statements prepared using the method required by the Brazilian Corporation Law, which differ from financial statements, such as the Consolidated Financial Statements included herein.

Dividend Prioritary

A Shares and Class B Shares

According to our Bylaws, Class A Shares and Class B Shares are entitled to receive annual, noncumulative minimum dividends, which dividend per share shall be at least 10.0% higher than the dividends per share paid to the Common Shares. Class A Shares have a dividend priority over the Class B Shares, and Class B Shares have a dividend priority over the Common Shares. To the extent funds are available therefore, dividends are to be paid in the following order:

  • first, the holders of Class A Shares have the right to receive a minimum dividend equal to 10.0% of the total share capital represented by the Class A Shares outstanding as at the end of the fiscal year in respect of which the dividends have been declared;
  • second, to the extent there are additional amounts to be distributed after all amounts allocated to the Class A Shares have been paid, the holders of Class B Shares have the right to receive a minimum dividend per share equal to (1) the Mandatory Dividend divided by (2) the total number represented by Class B Shares outstanding as at the end of the fiscal year in respect of which the dividends have been declared; and ·
  • third, to the extent that there are additional amounts to be distributed after all amounts allocated to the Class A Shares and the Class B Shares have been paid, the holders of Common Shares have the right to receive an amount per share equal to (1) the Mandatory Dividend divided by (2) the total number of Common Shares outstanding as at the end of the fiscal year in respect of which dividends have been declared, provided that the Class A Shares and Class B Shares receive dividends per share at least 10.0% higher than the dividends per share paid to the Common Shares.

To the extent that there are additional amounts to be distributed after all amounts described in the preceding items have been paid and in the form therein described, any such additional amount will be divided equally among all our shareholders.

General Shareholders Meeting

The General Shareholders Meeting is the forum in which shareholders have the power to decide on all matters related to the Company’s purpose and to take measures deemed appropriate for its defense and development.

Held in the first quarter of each year, the Annual General Meeting has some specific responsibilities set out in Article No. 132 of Federal Law 6,404 / 76, the Brazilian Corporate Law.

In addition to the Annual Meeting, shareholders can meet possibly where they deem necessary, at any time, at Extraordinary General Meetings.

Of all General Meetings are record in the book, which, upon proper registration in the the Board of Trade of the State of Paraná are published as required by Federal Law 6,404 / 76, the Brazilian Corporate Law.

Last update: May 18, 2020