BRASKEM S/A BOARD OF DIRECTORS INTERNAL OPERATING RULES

Transcription

1 BRASKEM S/A BOARD OF DIRECTORS INTERNAL OPERATING RULES Date: 06/22/05 Approved at Board meeting held 06/22/05 after incorporating feedback from Board members.

2 INTERNAL OPERATING RULES OF THE BRASKEM S/A BOARD OF DIRECTORS 1. PURPOSE 2. BASIC CONCEPTS 3. BOARD OF DIRECTORS (BOARD) 4. BOARD COMMITTEES 5. BASIC PROTOCOL FOR COMMUNICATION BETWEEN THE BOARD AND THE BRASKEM CEO (CEO /BAK) 6. OPERATING PROCEDURES FOR THE BOARD APPENDIX A RESPONSIBILITIES OF THE BOARD, THEIR NATURE AND TYPE OF PARTICIPATION APPENDIX B STANDARD RESOLUTION PROPOSAL TEMPLATE 2 INTERNAL OPERATING RULES OF THE BRASKEM S/A BOARD OF DIRECTORS

3 1. PURPOSE The purpose of the document is to establish and define the criteria and guidelines pertaining to the internal operations of the Board, which are used to guide its members in terms of: 1.1. the nature of their role in the execution of their responsibilities, in accordance with Article 26 of the Bylaws 1.2. the roles and responsibilities of the Board s supporting committees 1.3. the communication protocol to be used by the Board in its interactions with the CEO/BAK 1.4. the Board s support structure and the role and responsibilities of its members. The following abbreviations are used throughout this document: Braskem Board of Directors: Board Chairman of the Braskem Board of Directors : CH-BD/BAK Chief Executive Officer of Braskem: CEO/BAK Board Executive Secretary: BES Resolution Proposals: (RP) General Shareholders Meetings: (GSM) 3 INTERNAL OPERATING RULES OF THE BRASKEM S/A BOARD OF DIRECTORS

4 2. BASIC CONCEPTS 2.1. The General Shareholders Meeting (GSM) is the decision-making forum for shareholders and is responsible for electing members to the Board and for appointing the chairman of the Board (CH-BD/BAK) and the Board s vice chairman Decisions from previous meetings are recorded in existing shareholders agreements As the body that represents shareholders, the Board has the final say on business matters concerning Braskem, subject to restrictions imposed by the GSM. Its deliberations are focused on matters of policy and strategy and on planned delegation to Braskem s CEO (CEO/BAK). Planned delegation is implemented via the Business Plan and monitoring carried out through monthly Oversight Reports The CH-BD/BAK is the link between the decision-making body (the Board) and the executive level (CEO/BAK). The Board Executive Secretary (BES) assists the CH- BD/BAK in his or her interactions with other Board members and with the CEO/BAK The CEO/BAK is charged with implementing the Business Plan, which is monitored via monthly Oversight Reports. In his or her execution of the Business Plan, the CEO/BAK adheres to all policies established by the Board and ensures that the Company s values and principles are respected and that its Code of Conduct is followed The Board s work is supported by committees, which are assembled to address specific matters. Their basic function is to analyze information and to submit recommendations to the Board that are designed to improve the speed and quality of its decision-making The formal decisions adopted by the Board are based on Resolution Proposals (RPs) which are forwarded to the Board by way of the CH-BD/BAK. Once approved, the resolutions are recorded as decisions in the meeting minutes, after which implementation of the actions begins Matters considered by the Board fall into three categories: EXECUTION (E): executed by the Board only and explained to the company, or restricted to the Board itself. RESOLUTION APPROVAL (A): last word prior to execution/implementation, in accordance with RP protocol. INFORMATION (I): material whose purpose is to provide the Board information regarding oversight or the Company s performance in areas for which the Board does not require prior approval The BES also provides support services to Board committees. 4 INTERNAL OPERATING RULES OF THE BRASKEM S/A BOARD OF DIRECTORS

5 3. BOARD OF DIRECTORS 3.1. ROLE OF THE BOARD In accordance with the Braskem Bylaws, the essential aspects of the Board s role are: a) To ensure that Braskem adopts a system of corporate governance consistent with best market practices b) To determine the Company s general business direction c) To approve the Business Plan of the CEO/BAK d) To approve matters set forth in the Bylaws as well as policies proposed by the CEO/BAK e) To submit relevant matters to the GSM, in accordance with the Bylaws f) To monitor the Business Plan of the CEO/BAK via the monthly Oversight Reports The Board acts in an active and independent manner, engaging in quality and efficient decision-making to advance the best interests of Braskem by generating added value for shareholders The Board is accountable to the Company s shareholders, its other constituents and to society at large for the tangible and intangible assets it uses to lead the Company POWERS OF THE BOARD Participation of the Board The Board s responsibilities, its various types of participation and the degree to which it is involved in each (as set forth in Article 26 of the Bylaws) are reproduced in Appendix A. 5 INTERNAL OPERATING RULES OF THE BRASKEM S/A BOARD OF DIRECTORS

6 4. BOARD COMMITTEES 4.1. COMPOSITION AND NATURE Committees will be convoked by the Board, which will define: a) the expected results b) c) committee membership designation of the coordinating member Committees can be permanent or "ad hoc" in nature a) Permanent Committees Permanent committees deal with matters whose character and purpose remain unchanged over time. Members of permanent committees serve one-year terms. Permanent committees shall have no fewer than three and no more than four members. b) "Ad hoc" Committees Ad hoc committees are convened to deal with relevant temporary issues. They function for a limited period and are dissolved when they produce their expected outcomes or when the deadline set at the time of their formation is reached. The number of members is defined on a case-by-case basis The nature of the work done by committees is always to provide analysis of issues in order to complement the Board s decision-making duties. Committees themselves do not make decisions Each committee will be directed by a coordinating member. Committee membership is restricted to members and alternates. Invited guests, including other Company executives, whose responsibilities, involvement or knowledge justify their inclusion, may participate in committee meetings when asked to do so by the coordinating member Committee should be populated in such a way that their members and/or alternates provide the best contributions possible In certain situations, the coordinating members of committees may propose the hiring of outside persons to help the committee to complete its tasks. Those hiring processes must conform to Braskem s internal practices. 6 INTERNAL OPERATING RULES OF THE BRASKEM S/A BOARD OF DIRECTORS

7 4.2. PERMANENT COMMITTEES: Finance and Investments a) The committee s purview includes relevant issues, such as those pertaining to the economic-financial macro-equation, as well as matters relating to fiscal, structural and capital planning; capital costs; and hedge operations, among others. Periodicity: meets quarterly, on a regular basis Personnel and Corporate Issues a) Regarding personnel matters, the committee s purview includes processes relevant to the identification, training, development and succession of executives for or in strategic positions, as well as fixed and variable compensation. b) Regarding corporate aspects, the committee s purview includes policies, the Code of Conduct and corresponding practices, as well as aspects relative to the Company s corporate culture. Periodicity: meets quarterly, on a regular basis Strategy and Communication a) Regarding strategy, the committee s purview includes the periodic evaluation and confirmation/redefinition of the business direction being pursued to achieve defined objectives. b) Regarding Communication, the committee s purview includes the periodic evaluation of the Company s projected/perceived market image, resulting in recommendations to maintain or to terminate programs. c) This committee s scope also includes the defining of guidelines and protocols for the Planning, Oversight and Evaluation cycle 7 INTERNAL OPERATING RULES OF THE BRASKEM S/A BOARD OF DIRECTORS

8 5. BASIC PROTOCOL FOR COMMUNICATION 5.1. Matters subject to Board Approval (Class A) are submitted by the CEO/BAK for approval in accordance with guidelines pertaining to: The annual Planning, Oversight and Evaluation cycle The RP protocol 5.2. The basic instruments utilized for written communications are: The CEO/BAK s Business Plan Oversight Reports of the CEO/BAK s Business Plan RPs Memos on other relevant matters that the CEO/BAK believes should be brought to the Board s attention (Class I) Notwithstanding prior approval of the issues subject to consideration by the Board, announcements regarding material facts should be communicated to the Board no later than when they are made available to the media. 8 INTERNAL OPERATING RULES OF THE BRASKEM S/A BOARD OF DIRECTORS

9 6. OPERATIONAL PROCEDURES FOR THE BOARD 6.1. DECISION-MAKING 6.2. MEETINGS 6.3. AGENDAS 6.4. MINUTES 6.5. BUSINESS PLAN 6.6. OVERSIGHT REPORTS 6.7. BOARD EXECUTIVE SECRETARY (BES) 6.1. DECISION-MAKING RPs are formal communications forwarded to the board, via the CH-BD/BAK, in which information regarding matters to be considered and voted on by the Board are presented in a clear manner. Once approved, in their original form or with the amendments and changes made by the Board, the RPs are recorded as decisions, and implementation of the proposed actions begins RPs are to be forwarded by the CEO/BAK to the CH-BD/BAK through the BES RPs must be forwarded to the BES at least 10 (ten) days prior to the date of the meeting in which they will be considered The BES will process the RPs on the date of their receipt, order them sequentially and distribute them, in principle, as a group to the board members prior to the board meeting The CEO/BAK must make the Board aware, via communication with the CH-BD/BAK, of any potential exceptions to the implementation of the RPs. 9 INTERNAL OPERATING RULES OF THE BRASKEM S/A BOARD OF DIRECTORS

10 The RPs will have a standard format consisting of: a) The sequential number, followed by the year b) A heading that refers to: i) The nature of the matter: - Administrators - Divestment - Financial - Investments - Legal - Corporate - Planning / Organization / Personnel ii) Name of the company where it applies, if required iii) Resolution Summary c) Body, in which the following are presented: i) the facts and rationale that justify the RP ii) the nature of the resolution and proposed decision iii) designation by the CEO/BAK of the persons charged with implementing the decision and providing additional support, if necessary. d) Date and initials of the resolution proponent(s) Once the RPs are approved by the Board, they will be dated and initialed by the CH-BD/BAK and recorded in the meeting minutes. The BES will then return a copy to the person(s) who submitted the proposal Appendix B contains the standard template for RPs. 10 INTERNAL OPERATING RULES OF THE BRASKEM S/A BOARD OF DIRECTORS

11 6.2. MEETINGS In principle, Board meetings are held in February, May, June, August, October, November and December of each year, preferably in São Paulo. They are attended by the CEO/BAK. The following may participate in board meetings as guests: the BES; a member of the Legal unit, who will act as the secretary of the meeting; members of the CEO/BAK s team, when the nature of the matters under consideration justifies their presence, in accordance with the judgment of the CEO/BAK and with the prior approval of the CH-BD/BAK At the end of each year, the CH-BD/BAK will coordinate the elaboration of a meeting schedule for the coming year. The CH-BD/BAK will forward the proposed schedule to the rest of the Board, and it will be considered during the final meeting of the previous year at the latest Other meetings, in addition to the regularly scheduled Board meetings, may be called throughout the year, depending on the issues that need to be considered AGENDAS The agendas for Board meetings will be set in advance through coordination between the CH-BD/BAK and the CEO/BAK. In addition to the specific matters to be considered, the outline for these agendas should include: approval of the RPs submitted during the period consideration of the most recent oversight report follow-up on pending items material facts new business The agendas should be sent by the CH-BD/BAK, with the assistance of the BES, to the members of the Board and other meeting participants at least 10 (ten) days prior to the date of the meeting The documents to be considered at Board meetings must be forwarded to the Board members 7 (seven) days before the meeting, excepting the Business Plan and the Oversight Report, which have their own specific deadlines (see 6.5 and 11 INTERNAL OPERATING RULES OF THE BRASKEM S/A BOARD OF DIRECTORS

12 6.6) MINUTES The BES is responsible for drafting the minutes of the board meetings, with the assistance of the member of the Legal unit who acts as the meeting secretary The minutes are drafted and approved by the Board members immediately after the conclusion of the meeting CEO/BAK s Business Plan The Business Plan proposed by the CEO/BAK must be submitted annually for consideration and approval by the Board The proposed Business Plan must be sent to the Board members at least 10 (ten) days prior to the meeting at which it will be considered Business Plan Oversight Reports CEO/BAK must submit his or her Business Plan Oversight Reports, whose purpose is to monitor the Business Plan, directly to the Board members prior to the 15th business day of each month, regardless of whether a meeting has been scheduled for their consideration Each year, the CEO/BAK will set up a schedule for distribution of the monthly oversight reports during the coming year and will present that schedule at the previous year s final Board meeting. 12 INTERNAL OPERATING RULES OF THE BRASKEM S/A BOARD OF DIRECTORS

13 6.7. BOARD EXECUTIVE SECRETARY (BES) The BES is responsible for assisting and supporting the Board and its committees by: a) drafting and managing the annual meeting schedule b) organizing Board meetings in terms of logistics, transport, meals, lodging, etc. c) defining standards, reviewing and distributing documents to be considered at Board meetings, verifying their delivery to the intended recipients. d) drafting agendas, minutes and associated documents related to Board meetings, interacting with the CEO/BAK and with the Board members on behalf of the CH-BD/BAK. e) Making clarifications with regard to the content of RPs and other documents, when necessary f) assisting the Board members, when requested, with matters that concern the Board g) monitoring and supporting the implementation of actions resulting from decisions on resolutions, particularly those for which the CH-BD/BAK is responsible h) maintaining the sequential order and controlling and storage of RPs and other forms referred to in this document i) assisting the CH-BD/BAK with the distribution and collection of documents to and from Board members j) proposing and drafting documents and supporting the implementation of measures designed to improve the Board s functionality The BES thus serves as the person who facilitates communication between Board members and the CEO/BAK, efficiently coordinating and following up on the information they need to successfully carry out their duties. 13 INTERNAL OPERATING RULES OF THE BRASKEM S/A BOARD OF DIRECTORS

14 RESPONIBILITIES OF THE BOARD, THEIR NATURE AND TYPE OF PARTICIPATION (APPENDIX A) This appendix reproduces Articles 25 and 26 of the Bylaws of Braskem S/A, which set forth the Board s responsibilities. These are grouped by category, and reference is made in each case to their location in the Bylaws: 1. General Policies 2. Business Direction 3. Corporate Issues 4. Insurance and Guarantees 5. Financial Issues 6. Compensation Issues 7. Investments and Expenses 8. Other Matters 9. Specific Responsibilities of the Board This appendix also identifies the type of participation the Board has with regard to each of these responsibilities, in accordance with the Basic Concepts outline in these Rules: Type A: Matters subject to Board approval (items 1-8 in the previous paragraph) Type E: Matters the Board executes directly, all of which concern responsibilities classified as Other Matters (item 9). 14 INTERNAL OPERATING RULES OF THE BRASKEM S/A BOARD OF DIRECTORS

15 1) POLICIES Setting the general business policy of the Company LOCATION IN BYLAWS ESTATUT Art. 26, d 2) BUSINESS DIRECTION Determining the general direction of the Company s business; LOCATION IN BYLAWS Art. 26, a Deciding the Company s Business Plan, which must include its shortmedium- and long-term business and strategic objectives as well as annual and multi-year budgets, and monitoring implementation of the same; Art. 26, c 15 INTERNAL OPERATING RULES OF THE BRASKEM S/A BOARD OF DIRECTORS

16 3) CORPORATE ISSUES LOCATION IN BYLAWS Deciding on the constitution of and participation in other companies; Deliberating, within the limits of the Authorized Capital, on the issue of shares and subscription warrants, as well as of promissory notes for public distribution( commercial paper ); Authorizing the Company to purchase its own shares to be held in treasury or cancelled, as well as the divestment of the same, in accordance with the terms of the law and rules published by the Brazilian Securities and Exchange Commission; Approving the issue of simple debentures that are not convertible into shares and unsecured by tangible assets; Approving the granting to its officers, employees, service providers or subsidiaries by the Company of stock options within the Authorized Capital and according to the stock option plan authorized by the GSM; Art. 26, m Art. 26, s Art. 26, t Art. 26, u Art. 26, v 4) INSURANCE AND GUARANTEES Deciding on the concession of guarantees for any value to any third parties that are not fully-owned subsidiaries; LOCATION IN BYLAWS Art. 26, r 16 INTERNAL OPERATING RULES OF THE BRASKEM S/A BOARD OF DIRECTORS

17 5- FINANCIAL ISSUES Setting annual operating limits on the Directors, in accordance with the terms of Article 37, within which the same Directors may contract loans or funding without the prior authorization of the Board of Directors, whether in Brazil or elsewhere; Issuing an opinion on the management report and financial statements at the end of each financial year, as well as on the proposal for the distribution of net income, and decide as to movement in the reserve accounts; Appointing and dismissing the Company s independent auditors based on recommendations of accomplished auditors furnished by the Fiscal Committee; LOCATION IN BYLAWS Art. 26, q Art. 26,e Art. 26, i 6) COMPENSATION ISSUES LOCATION IN BYLAWS Approving the criteria for the employee results sharing program; Approving the individual amounts for the Company s managers based on the annual global compensation allocation, based in a proposal drafted and presented by the Personnel and Corporate Issues Committee; Art. 26, g Art INTERNAL OPERATING RULES OF THE BRASKEM S/A BOARD OF DIRECTORS

18 7) INVESTMENTS AND EXPENSES Deciding on new investments; Approving the acquisition of goods and the contracting of services of any kind for amounts exceeding R$100,000, (one hundred million reais), in accordance with the Company s Business Plans; Deciding on any contract between the Company and the registered holders of its voting shares, companies controlled by the same, or individuals owning voting shares or quotas in corporate entities that are registered holders of the Company s voting shares, for amounts exceeding R$5,000, (five million reais) per operation; Deciding on the rental, divestment, encumbrance and liens on the Company s property, plant and equipment, where the value of the relevant operation exceeds R$30,000,000,00 (thirty million reais); LOCATION IN BYLAWS Art. 26, b Art. 26, n Art. 26,p Art. 26, 0 8) OTHER MATTERS Deliberating on the limits of its responsibilities when these are not specifically addressed within the Bylaws. LOCATIO N IN Art.26, x 18 INTERNAL OPERATING RULES OF THE BRASKEM S/A BOARD OF DIRECTORS

19 9) SPECIFIC RESPONSIBILITIES OF THE BOARD Submitting to the GSM proposals regarding mergers, spinoffs, incorporations or the dissolution of the Company, as well as modifications to the bylaws, including increases in the Authorized Capital; Approving the Internal Operating Rules for the Board of Directors, which will rule on such subjects as the appointment of a Secretary and specialized committees to aid the Board in its decision-making process; Appointing and dismissing the Directors of the Company and establishing the attributions and compensation of the same, pursuant to the terms of the Bylaws and the global budget established by the GSM; LOCATION IN BYLAWS Art.26, I Art.26, f Art.26, h Monitoring management, examining at any time, the books and papers of the Company, requesting information on contracts signed or due to be signed, and on any other acts; Art.26, 1 Calling the Annual and Extraordinary GSM(s); Art.26, k 19 INTERNAL OPERATING RULES OF THE BRASKEM S/A BOARD OF DIRECTORS

20 STANDARD RESOLUTION PROPOSAL TEMPLATE (APPENDIX B) 20

21 (sequential Nº) (year) PD. - / RESOLUTION PROPOSAL (nature) (name of Company) (resolution summary) MATTER : - _ WHEREAS: Facts and rationale that justify the RP and the item in the Bylaws or Internal Operating Rules that defines the Board s jurisdiction. BE IT RESOLVED: Nature of the resolution and the decision proposed to the Board, which may be approved as proposed or amended BY: Name(s) of the person(s) responsible for carrying out the decisions and for providing support, if necessary.. date. initials of proponent(s) 21 INTERNAL OPERATING RULES OF THE BRASKEM S/A BOARD OF DIRECTORS