PAN is ethical, responsible and transparent in the management of its business and seeks to improve its standard of corporate governance in line with the best market practices, in order to protect the rights of shareholders through fair, transparent and open treatment.

PAN’s shares are listed as Level 1 Corporate Governance on the BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros (“BM&F Bovespa” and “Level 1”, respectively). Level 1 is a listing segment for the trading of shares issued by companies that voluntarily commit to adopt a specific set of corporate governance practices and additional information disclosure beyond that which is already required by law.

Furthermore, in keeping with best corporate governance practices, the Bylaws of PAN provide for the right to include their preferred shares in a public offering of shares, with the same conditions and price paid per common share held by the controlling bloc (tag-along), in the event of sale of control, cancellation of its registration as a publicly held company and delisting from Level 1.


Because it is listed in Level 1, it adopts the following practices: (i) to prepare and release financial statements and quarterly earnings releases; (ii) to carry out, at least once a year, public meetings with analysts and any other interested parties to provide information regarding the financial state of the company, its projects and perspectives; (iii) to publish an annual calendar; (iv) no beneficial interests; (v) to require that the newly elected managers subscribe to the Statement of Consent from Senior Managers (as defined below), among others. PAN thus aims to promote transparency and access to information for its investors.

PAN’s Bylaws establish, in addition to the requirements of corporate governance under level 1, the adoption of the following corporate governance practices under the rules of level 2:

A – Right of shares to be included in a public offer, which minimum offering price shall correspond to the economic value derived at (i) discontinuity of the corporate governance practices under level 1; (ii) reorganization of the company’s statutes through which the company can no longer be admitted under level 1; (iii) closing of capital; and (iv) limitation or exclusion, except as a consequence of legal structures or rules issued by Bovespa, of articles of the bank Bylaws which seal with: (1) a public purchase offering as a consequence of the sale of controlling interests of the bank, (2) the participation of independent board members in PAN’s board as a twenty (20%) minimum of the totality of its members, (3) adherence to the Regulations of the Market Arbitration Chamber and the Adherence Agreement to Level 1 Differentiated Corporate Governance Practices, and (4) all other hypotheses under which a public purchase offering is to be undertaken as well as its terms and conditions;

B – Obligation to maintain at least five (5) members in the Board of Directors;

C – The mandatory election of independent members to the board representing at least twenty per cent (20%) of the total number of board members; and

D – Submission to the rules of arbitrage to solve eventual disputes involving the bank, its shareholders, executive officers and fiscal council members.

Furthermore, PAN’s Bylaws foresee the right of inclusion of its preferred shares in the public purchase offering under the same conditions and price paid for the ordinary shares of the controlling block (tag-along).

In order to improve the Company’s corporate governance standards, Banco PAN is guided by the “Code of Best Corporate Governance Practices”, published by the Brazilian Institute of Corporate Governance – IBCG, which establishes guidelines designed to (i) increase the institution’s worth; (ii) improve its performance; (iii) enhance its access to capital resources at lower costs; and (iv) contribute to its perpetuation. These basic principles inherent in this practice are transparency, accountability, equity and corporate responsibility. From the corporate governance rules recommended by the IBGC’s code, the bank has adopted the following:

A – Further to the attributes foreseen under the corporate law the general shareholders meeting can: I) discontinue the practices adopted under Bovespa’s level 1 of governance; II) cancel the registry of an open capital corporation at CVM, unless otherwise mandated by PAN’s by laws; III) choose, as foreseen in the Bylaws, between companies indicated by the board, a specialized company to give an appraisal of the Bank’s shares worth, in the case of canceling of registry at the CVM or discontinuance of the practices of Level 1 of governance; and IV) any matter submitted to it by the board of directors;

B – Hiring of independent auditors for the audit of the Bank’s financials and balance sheets. This company is not hired to provide other services for the Bank, thereby ensuring full independence;

C – Having a fiscal council installed;

D – Choice of a location to hold the shareholders’ meeting in order to allow for the participation of all shareholders or their representatives;

E – The Bank’s Social Statutes have to clearly define the way the shareholders’ meeting is to be convened, how the board members and the executive officers are to be elected and time of tenure and power and obligations of the board and of the executive directors;

F – Non-election of alternate board members;

G – Dispersion of shares with a view towards their liquidity at the Exchange;

H – Transparency in the public release of the bank’s annual report to shareholders;

I – Board members with experience in operational and financial matters, who have also been members of other Boards of Directors;

J – Free access to the Bank’s data and premises by the members of the board; and

K – Resolution of disputes that may arise between PAN, its shareholders, its executive officers and members of the fiscal council.

Regulation of the Brazilian Securities Markets

The Brazilian securities markets are regulated by the Brazilian Securities and Exchange Commission (CVM), which has the authority to supervise and issue general rules about disciplinary powers and the management of stock exchanges and financial institutions registered with the CVM, which are members of the Brazilian securities market, as well as by the National Monetary Council (CMN) and the Brazilian Central Bank (BACEN), which, among other things, have licensing authority for brokerage firms and regulates foreign investment and foreign exchange transactions.

The Brazilian securities markets are governed by the Securities Market Law (Law 6,385, of 1976, and amendments thereto), the Brazilian Corporate Law (Law 6,404, of 1976, and amendments thereto) and regulations issued by the CVM, the CMN and the BACEN. The laws and regulations provide for, among other things, disclosure requirements, restrictions on insider trading and price manipulation and protection of minority shareholders.

Under the Brazilian Corporate Law, a company is either publicly held and listed (companhia aberta) or privately held and unlisted (companhia fechada). All listed companies are registered with the CVM and are subject to reporting and regulatory requirements. To be listed on the BOVESPA, a company must apply for registration with the BOVESPA and the CVM and is subject to regulatory and disclosure requirements.

A company registered with the CVM may trade its securities either on the BM&FBovespa or in the Brazilian over-the-counter market. Companies need to request to be registered with the CVM in order to have their shares listed on the securities market. The shares of companies listed on the BM&FBovespa can also be traded in private transactions, in compliance with the applicable regulatory limitations.

The Brazilian over-the-counter market, whether or not organized, consists of trades between investors, through an institution that is a member of the national financial system.

The trading of securities on the BM&FBovespa may be suspended at the request of a company in anticipation of a material announcement. Trading may also be suspended on the initiative of the BM&FBovespa or the CVM due to, among other reasons, a belief that a company has provided inadequate information regarding a significant event or has provided inadequate responses to inquiries by the CVM or the BM&FBovespa.

Disclosure and Use of Information

CVM Instruction 358/2002 governs the disclosure and use of information related to material facts and acts of publicly held companies, including:

A – Establishing the concept of a material fact, which includes any decisions of the controlling shareholders, resolutions of the shareholders’ meeting or management bodies of publicly held companies, or any other act or fact of a political, administrative, technical, business, economic or financial nature that has occurred in or related to the company’s business, which may materially influence (i) the price of securities; (ii) investors’ decision to buy, sell or hold said securities; and (iii) investors’ decision to exercise any rights inherent in the condition of holders of securities issued by the Bank;

B – Providing specific examples of facts that are considered to be material, which include, among others, the execution of shareholders’ agreements providing for the transfer of control, the entry or withdrawal of shareholders that maintain any managing, financial, technological or administrative function with or contribution to the company, and any corporate restructuring undertaken among related companies;

C – Obliging the officer of investor relations, controlling shareholders, other executive officers, members of its board of directors, members of the audit committee and other advisory boards to disclose material facts;

D – Requiring simultaneous disclosure of material facts to all markets in which the corporation’s securities are admitted for trading;

E – Obliging the acquirer of a controlling stake in a corporation to publish material facts, including its intentions as to whether or not to de-list the corporation’s shares, within one year;

F – Establishing rules regarding disclosure requirements in the acquisition and disposal of a material stockholding stake; and

G – Restricting the use of insider information.