Board of Directors

 

DEFINITIONS

The definitions of words and phrases have their assigned meanings unless the situation demands otherwise:

• Auditor - the independent external auditor;
• Board - the Board of Directors of Pinheiro Cobaltum;
• CEO - the Chief Executive Officer of Pinheiro Cobaltum;
• CFO - the Chief Financial Officer of Pinheiro Cobaltum;
• Charter - the Charter of the Audit Committee of the Board of Directors;
• Committee - the Audit Committee of the Board of Directors;
• Company - Pinheiro Cobaltum, registered in Brazil, CENU Torre Norte, Av. das Nações Unidas, 12901 - Brooklin, São Paulo - SP, 04578-000, Brazil.
  

 

COMPOSITION

The Committee must consist of at least three members and most of them should be Independent Directors.

 

Qualifications

Every member of the Committee is required to also be a member of the Board. Additionally, they must possess the ability to comprehend basic financial statements such as the Company's balance sheet, income statement, and cash flow statement.

 

Appointment and Removal

The Board has the authority to appoint Committee members, who will serve until their successor is appointed and qualified or they resign or are removed from the position. The Board can remove any Committee member with or without cause through a majority vote.

 

Chair

The Board has the responsibility of designating the Chair of the Committee, however, in case the Chair is not present, the Committee members will choose an Independent Director to preside over the meeting.

 

Sub-Committees

When necessary, the Committee is allowed to create subcommittees comprising one or more members and give them the power to authorize audit and non-audit services beforehand. However, any decision made by the subcommittee regarding pre-approvals must be reported to the full Committee at its next planned gathering.

 

 

MEETINGS

 

Quorum and Consensus

For any business to be conducted, a majority of the members and Independent Directors must be present at each meeting. If a quorum is present, the Committee can exercise all of its powers and make decisions. The Committee has to control its own procedures. Each query raised during the Committee's meeting will be resolved by a majority of the votes cast. In case of an equal number of votes, the Board will make the final decision.

 

Meetings’ Agenda

The Committee must convene no less than four times per fiscal year, with the option to hold additional meetings if necessary. The Auditor will receive reasonable notice of all meetings and has the right to attend and provide input at any meeting related to the Company's annual financial statements. If the Committee deems it appropriate, the Auditor may also attend other meetings. If the Auditor requests it, the Chair must organize a meeting for the Committee to discuss any issues that the Auditor believes require the attention of the Committee, Board, or shareholders of the Company.

To encourage transparency, the Committee may hold private meetings with both management and the Auditor from time to time to discuss any relevant matters. Additionally, the Committee must have an annual meeting with the Auditor and management to scrutinize the Company's financial statements. The Committee has the authority to invite any director, manager, or other individual necessary for fulfilling its duties to attend its meetings. Conversely, the Committee may exclude any individual it deems necessary to exclude to carry out its responsibilities.

 

Corporate Secretary

The Corporate Secretary is in charge of making sure that the records of the Board's proceedings during a Board meeting, accurately represent the proper performance of those fiduciary duties.

 

RESPONSIBILITIES

 

General Duties

The Board's oversight responsibilities shall be supported by the Committee. In accordance with this mandate, the Committee's main duties and responsibilities are to act as an impartial and objective entity that monitors and evaluates:

• The accuracy and reliability of the Company's statements of earnings and other economic information;
• The statements' and information's adherence to applicable laws and regulations;
• The credentials and objectivity of the Company's Auditor;
• The effectiveness of the Company's internal accounting processes.

The Committee must report to the Board the outcomes of its meetings, any evaluations it has conducted, and any related suggestions for improvement.

The Committee has a set of recurring obligations that align with the purposes outlined. These duties are provided as a reference, but the Committee may also undertake extra responsibilities and implement additional policies and procedures as necessary based on evolving business, legislative, regulatory, or other circumstances. Additionally, the Committee will perform any other duties delegated to it by the Board that are related to the objectives of the Committee.

In carrying out its oversight responsibilities, the Committee has the authority to examine or look into any topic of interest or concern that it establishes. In order to perform these functions, the Committee will have complete access to the Company's internal accounting staff, managers, other employees, and auditor. The Committee shall have all of the authority of the Board when carrying out its stated mission but shall be accountable to the Board at all times.

 

External Advisors

In order to carry out its obligations, the Committee shall have the ability, at its own initiative, to hire and retain outside legal experts, financial advisory companies, and any other consultants it considers appropriate.

The Committee, as a committee of the Board, is entitled to receive suitable funding from the Company to pay for the compensation of its external advisors. The funding shall be determined by the Committee itself. However, it is important to note that the Committee is not obligated to follow the advice or recommendations of its outside advisors. The Committee retains the authority to exercise its own judgment in fulfilling its duties.

 

Authority and Responsibility

The Committee will be charged with multiple responsibilities and granted a series of rights and authority in order to carry out and fulfill these duties.

 

Independence of Auditor

The Committee is entitled to:

• Examine and converse with the Auditor regarding any revealed connections or services that could affect the impartiality and autonomy of the Auditor and, if required, procure a written declaration from the Auditor documenting all associations between them and the Company;
• Advise, or suggest that the Board undertake fitting measures to supervise the autonomy of the Auditor;
• Mandate that the Auditor submit their report directly to the Committee;
• Examine and authorize the Company's recruitment guidelines concerning associates, staff members, past associates and employees, as well as previous external auditors who worked independently for the Company.

 

Performance and Execution of the Auditor's Function

The Committee is entitled to:

• Take direct responsibility for the supervision of the Auditor's activity in order to prepare or release Audit Reports or other relevant activities;
• Evaluate the Auditor's performance on a regular basis and suggest that the Board select a new Auditor or that the current Auditor be re-elected by the Company's shareholders;
• Approve any non-audit services that the Auditor is allowed to carry out for the Company, as well as their costs and conditions.

 

Internal Financial Management and Operation

The Committee will provide guidelines for:

• The Company's handling of concerns regarding financial reporting, internal accounting management, or auditing issues;
• The protected, confidential reporting of concerns about accounting or auditing issues by Company personnel.

 

Risk Management

The Committee is entitled to:

• Request the Auditor and Management to determine important business, political, economic, and control risks and exposures, and to evaluate the efforts taken by Management to reduce such factors;
• Make sure the Board's and its committees' disclosure of the procedures they used to oversee how the Company manages its key business risks is accurate and comprehensive;
• Examine the management's risk analysis process and the actions taken to control these exposures and risks;
• Submit the risk register to the Board and provide a status report on it so that it may examine the Company's risk management.