Duratex :: Investor Relations :: Corporate Governance

Corporate Governance

BOARD OF DIRECTORS’ CHARTER

INDEX

1. CHARTER OBJECT

2. BOARD OF DIRECTORS’ MISSION

3. ACTION SCOPE AND OBJECTIVES

4. COMPOSITION, MANDATE AND INVESTITURE

5. ATTRIBUTIONS OF THE BOARD OF DIRECTORS

6. BOARD MEMBERS’ OBLIGATIONS

7. CHAIRMAN OF THE BOARD OF DIRECTORS

8. BOARD OF DIRECTORS’ OPERATION RULES

9. BOARD OF DIRECTORS’ COMMITTEES

10. BOARD OF DIRECTORS’ BUDGET

11. EVALUATION OF THE BOARD OF DIRECTORS

12. AMENDMENTS TO THE CHARTER

CHARTER OBJECT
1.1. This Charter ("Charter") governs the operation of the Board of Directors ("Board") of Duratex SA ("Company"), the committees linked to it, and the relationship between the Board and other bodies of the Company, subject to the provisions of the Bylaws, Shareholders' Agreement and the legislation.

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BOARD OF DIRECTORS’ MISSION
2.1. The Board has, as its primary mission, to protect the interests of all Company’s shareholders, aiming at value creation in the short and long term, ensuring that decisions and execution of actions to pursuit these goals are always aligned with the vision, mission, and values of the Company.

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ACTION SCOPE AND OBJECTIVES
3.1.The Board’s action scope is:
1. to decide on strategic issues, ensuring the continuity of the Company, with a long-term and sustainability perspective, that incorporates economic, social, environmental and corporate governance considerations;
2. to protect and enhance the Company's assets and maximize return on investment;
3. to ensure that, the management structure is agile, composed of qualified professionals and unblemished reputation;
4. to ensure that the objectives and responsibilities of the Board are always clearly defined;
5. to formulate guidelines for the Company’s management and its subsidiaries, which will be reflected in the annual budget;
6. to monitor the effective implementation of defined strategies and guidelines;
7. to prevent and manage interests conflicts situations or differences of opinions, so that the Company's interest always prevails; and
8. to protect the Company’s culture and values.
  
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COMPOSITION, MANDATE AND INVESTITURE
4.1. According to the Bylaws, the Board shall consist of at least 5 (five) and a maximum of 10 (ten) Effective Directors and Substitute Directors. It is a responsibility of the General Assembly which proceed the election to establish the effective number of Directors, Effectives and Substitutes, who will compose the body during each mandate.

4.2. Mandate: The Directors shall be elected for a term of one (1) year, reelection is permitted

4.3. Investiture: The Directors shall take office within thirty (30) days following their election, upon signing of the investiture terms in the minutes book of the Board of Directors. The elected Director shall inform the Company the number of shares held by him/her, his spouse, by companies that he/she manages and also held their dependents, declared in the Income Tax, issued by the Company or its subsidiaries, as well as the controllers of the Company. In order to take office, the Director shall sign the (i) Consent Statement of Managers to the Listing Rules of the BM&FBOVESPA Novo Mercado; (ii) adhesion to the Securities Negotiation Policy, (iii) accession to the Disclosure of Relevant Act or Fact Policy of the Company and (iv) declaration of awareness of the Shareholders Agreement Terms.

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ATTRIBUTIONS OF THE BOARD OF DIRECTORS
5.1. Attributions

To establish the Company’s and its subsidiaries general business direction by defining its mission, objectives and guidelines, and by approving multi-annual plans and annual result programs, investments and indebtedness, following their deployments, according to the Bylaws;
To decide on the acquisition, by the Company, of shares of its own issue, to be held in treasury and / or subsequent cancellation or sale, and to determine its resale or cancellation;
To approve the issuance of debentures, unsecured;
To decide on the approval of any transaction which has not been previously approved in the Company’s annual or multi-annual budget involving the purchase, sale, investments, divestitures, transfer or encumbrance of any asset of the Company which value exceeds, individually or in combined, for the same type of operation, 3% (three percent) of equity in the latest audited balance sheet of the Company;
To fix the members of the Board and CEO remuneration, according to the global annual remuneration approved by the General Assembly, as well as to define the remuneration policy and benefits for Directors and employees of the Company and its subsidiaries;
To define and change the Company's indebtedness policy;
To approve the contracts between the Company and (a) any controlling shareholder of the Company (or their spouses), (b) the managers (or their spouses) of the Company or its subsidiaries, or (c) the subsidiaries or under common control (i) of any of the controlling shareholders (or their spouses) or (ii) of the managers (or their spouses) of the Company or its subsidiaries;
To decide on the provision of guarantee, surety or other personal or real guarantees on behalf of the Company;
To approve the establishment and closure of committees and / or working groups of the Company, seeking to assist the Board, defining its composition, charter, remuneration and work scope;
To establish the conditions for any public offering in the capital market and the issuance of any credit instrument for public capture of resources, also deciding on their conditions of issuing and redemption;
To approve any material change in accounting practices of the Company, except for changes required by applicable laws or regulations;
To decide on sale, transfer, license or encumbrance of any form, trademark, patent or industrial design under detention or use of the Company, directly or indirectly, as provided in the Bylaws;
To define and modify policies for securities trading and disclosure of relevant information of the Company;
To approve the Risk Management Policy and monitor its implementation;
To approve the Company's Code of Conduct ;
To approve the Charters of the Board Council and its Committees;
To convene the General Assembly in cases according to the law and when it deems appropriate, and to do so, authorize the publication of the convening notice, according to the Bylaws’ rules;
To evaluate the performance of the Company, of the Board itself and its Committees, of the Directorship and, individually, the CEO;
To elect and dismiss the CEO, and under his/her proposal, approve the selection or dismissal of the other Executive Directors;
To appoint and remove independent auditors on the recommendation of the Audit and Risk Management Committee;
To review and approve the Company’s quarterly and annual financial statements, authorize its disclosure to the market and, when appropriate, its publication;
To decide on the allocation of the fiscal year net income, which will be submitted at the General Assembly;
to approve proposal to create and / or change the plan for granting stock options, subjecting it to the Shareholders approval at the General Assembly;
to approve proposed grant of options to purchase shares to beneficiaries identified by the responsible committee;
to approve the hiring of specialized professionals in order to assist and advise the activities of its Committees, and
in the first meeting to be held after the General Assembly which elect the Directors, the Board shall choose from among its members, its Chairman and two (2) Vice Presidents.

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6. BOARD MEMBERS’ OBLIGATIONS
6.1. It is the duty of the Director, in addition to observing the legal duties of the office:

To perform proactive, permanent and qualified monitoring of the Company's business, focusing in particular on long-term strategy, in relevant investments in acquisitions and divestitures and evaluating the performance of the Directorship;
To attend Board meetings previously prepared, with the examination of the documents made available, and participate actively and diligently;
To observe the strictest secrecy, and demand the same confidential treatment of professionals who will provide advice on any information regarding the Company, whether and until it is officially disclosure to the market, using it only for the exercise of their functions as Directors, under penalty of being responsible for the act contributes to its improper disclosure;
To refrain from interfere, either alone or jointly with third parties in any business with the Company and its subsidiaries, its controlling shareholders, and between the company and subsidiaries or affiliates of the managers and controlling shareholders, as well as other firms that, with any of these people, incorporate the same group, except upon the prior specific approval of the Board;
To declare, prior to any discussion and / or deliberation on the subject that, for whatever reason, has particular interest or conflict with the Company as to certain matters referred to it by refraining him/herself from its appreciation and vote , and
To guide their conduct by high ethical standards, observing and encouraging good corporate governance practices at the company.

6.2. At the first meeting that following the act of his/her election, the elected Board shall inform to the Board members:
(i) main activities developed outside the Company;
(ii) participation on Boards of other companies, subject to the limit provided in Section 6.2.1 below, and
(iii) business relationship with directly or indirectly controlled companies, (i) by the Company or (ii) the Controlling Group of the Company, including service providers to these companies.
Such information shall be provided annually and whenever there is a new event that must be informed.

6.2.1. The Directors may only attend a maximum of four (4) boards of companies that do not belong to the same economic conglomerate. For the purposes of this limit, it will not be counted the exercise of this function on charities, clubs or associations. That limit can be exceeded with the express approval of the Board.

6.3. If the Board member or business controlled or managed by him/her, hire operation with the Company or the controlled companies, directly or indirectly, (i) by the Company or (ii) the Company’s Controlling Group Controller, the following rules must be observed:
(i) the operation must be made at market values;
(ii) when it is not everyday operation or service, should be prepared a report, issued by a first line company, demonstrating that the operation or provision of service was made on market terms;
(iii) the operation must be informed to the Board; and,
(iv) the operations must be conducted through the normal hierarchical channels in the Company.

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CHAIRMAN OF THE BOARD OF DIRECTORSO
7.1. The Chairman of the Board has the following attributions, in addition to Legal and those of the Company’s Bylaws:
1. To ensure the efficiency and good performance of the Board;
2. To ensure the effectiveness of the monitoring and evaluation system, by the Board, the Company, the Board itself, the Directorship and, individually, the CEO;
3. To organize and coordinate, in collaboration with the Secretary of the Board, the meetings agenda after consultation with other Directors and the CEO. By unanimous vote, of Board members, the Chairman may include in the meetings agenda relevant matters for discussion, which were not on the original agenda.
4. To ensure that the Directors receive timely and complete information about items of the meetings agenda;
5. To propose, after consultation with the Committees, the Board's annual budget, including the hiring of outside professionals;
6. To preside the meetings of the Board and the General Assemblies;
7. To propose to the Board the annual meetings calendar; and
8. To arrange, in conjunction with the CEO, an integration and training program, when the election of new Board members, which allows contact with activities and information about the Company and its subsidiaries.
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BOARD OF DIRECTORS’ OPERATION RULES
8.1. The Board will have, at least six (06) regular meetings per year, and one (01) meeting of up to three (3) days, as the annual calendar set by its Chairman.

8.2. The Chairman shall convene extraordinary meetings, even when reasonably requested by any Director or the Chief Executive Officer.

8.2.1. The meetings attended by all Board members shall be considered regular even without prior notification.

8.3. Location: the Board meetings are preferably held in the Company's headquarters.

8.3.1.For emergency reasons, the meetings may be held by conference call, video conferencing, email, or by any other means of communication.

8.4. Presence of others: The Chairman may invite, previously informing the Chief Executive Officer, any person of the Company or its subsidiaries, or their outside consultants, to provide clarification on matters within its competence or expertise.

8.5. The Directors may request, previously informing the Chief Executive Officer, information and clarifications to the Executive Directors of the Company.

8.6. To enable a deep evaluation of the issues, the agenda should be built so that about 50% of the meeting planed duration time be used in the Directors’ presentations and discussions and approval of corporate matters, with the remaining 50% being reserved for discussions.

8.7. The Board will seek, whenever possible, to achieve consensus decisions. Each Director shall be entitled to one (1) vote and decisions shall be deemed approved by a majority vote of those present.

8.8. At Board meetings, the votes will be accepted through delegation in favor of another Director, early written vote and vote by fax, electronic mail or other means of communication, being computed as present the members who vote through these means.

8.9. Secretary of the Board: the Board shall appoint a Secretary who shall have the following functions:

To prepare and send to the Chairman the meetings agenda;
To arrange for the convening for the Board meetings, giving information to the Directors, and potential participants, about the location, date, time and agenda;
To submit, within 5 working days before each meeting, supporting information to the matters that will be decided, so that each Director can learn about these issues and be adequately prepared for a successful cooperation in the debates, and
To be a secretary at the Board meetings, assisting the Chairman in organizing meetings, preparing the minutes with the resolutions adopted, which will be distributed to all Board members after each meeting, as soon as written.

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BOARD OF DIRECTORS’ COMMITTEES
9.1. In order to ensure the best possible contribution from the Board members, on the various matters of their competence, the Board may establish committees or working groups with defined objectives. The Committees created directly by the Board shall:
1. Adopt charters approved by the Board;
2. Be composed exclusively of effective or substitute members of the Board;
3. study the issues of their responsibility and submit proposals to the Board. The material needed to be reviewed by the Board, should be available along with the voting recommendation, any Director may request additional information if necessary.
  
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BOARD OF DIRECTORS’ BUDGET
10.1 The Board will have, as part of the Company’s annual budget, its own budget to face its administrative expenses necessary to carry on its works and of its Committees, according to the Company established policies.

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EVALUATION OF THE BOARD OF DIRECTORS
11.1 Annually, the Board will conduct a formal self-evaluation, as well as check the its Committee evaluations.

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AMENDMENTS TO THE CHARTER
12.1 This charter can be revised whenever the majority of its members decide it is appropriate.

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Atualized in July, 2010