NYSE and Brazil Governance Practices

Significant Differences between our Corporate Governance practices and the Corporate Governance standards laid down by the NYSE

We are subject to the New York Stock Exchange (NYSE) listing rules. As a foreign private issuer, the rules applicable to us are different to those applied to US companies. Under NYSE rules, we are required to have an audit committee, pursuant to an applicable exemption available to foreign private issuers that meet certain requirements, as presented below, and provide prompt confirmation by the Chief Executive Officer (CEO) of any significant non-compliance with any Corporate Governance rules, as well as to provide a brief description, as shown below, of any material differences between our Corporate Governance practices and the NYSE Corporate Governance practices that are to be followed by US listed companies.

  NYSE CORPORATE GOVERNANCE RULES FOR US ISSUERS FIBRIA CORPORATE GOVERNANCE STRUCTURE FIBRIA COMPLIANCE
Majority of Independent Board Members

NYSE rules require that a majority of the Board of Directors should consist of independent members. Independence is defined by a number of criteria, including the lack of any significant relationship between the member and the listed company.

The majority on our Board of Directors does not consist of independent members.

Brazilian legislation does not impose a similar requirement. Under Brazilian law, our Board of Directors and our management do not need to test the independence of potential members prior to the election of the Board. However, both the Brazilian Corporate Law and the CVM (Securities & Exchange Commission of Brazil) have established rules that require Board members to meet certain qualification requirements and address matters of remuneration, responsibilities and obligations, as well as restrictions applicable to the Executive Officers and Board members of a company.

Executive Meetings

NYSE rules require Board members who do not perform management functions to hold regular meetings without the presence of Executive Officers.

Board members do not have express authorization to inspect the management , so they are not required to meet regularly without a management presence. As a result, our Board members do not usually attend executive meetings.

Brazilian legislation does not impose a similar requirement. Pursuant to the Brazilian Corporate Law, up to one-third of the members elected to the Board of Directors may hold administrative positions. In our case, none of the members holds an executive or advisory position.

Appointments / Corporate Governance Committee

NYSE rules require listed companies to have a Nominating / Corporate Governance Committee comprising only independent Board members and governed by an official statute that sets out the objectives and responsibilities of the committee, which include, among other things, the identification and selection of nominees for Board membership and development of a set of corporate governance principles applicable to the company.

We do not have a Nominating / Corporate Governance Committee. The Board members are chosen by our shareholders at an ordinary general meeting (AGM).

Under the applicable Brazilian legislation, we do not need to have a Nominating Committee or Corporate Governance Committee, and consequently, we have not yet set up one. Our Corporate Governance practices are adopted by all the Board members.

Remuneration Committee

NYSE rules require listed companies to have a Remuneration Committee comprising only independent Board members and governed by an official statute that sets out the objectives and responsibilities of the committee, which include, among other things, analysis of corporate goals relating to the remuneration of the Chief Executive Officer (CEO), evaluation of the CEO’s performance and approval of the remuneration level of the CEO, as well as recommending to the Board suitable levels of basic remuneration, remuneration incentives and share-based plans applicable to functions other than that of the CEO.

Our Remuneration Committee is not comprised entirely of independent Board members.

Under the prevailing Brazilian legislation, a Remuneration Committee is not required, although we have set up an advisory committee (not composed entirely of Board members) to assist in matters of this kind. Pursuant to the Brazilian Corporate Law, the total amount available for the remuneration of our Board members and Executive Officers and for the payment of profit sharing to our executive officers is determined by our shareholders at the ordinary general meeting (AGM). The Board of Directors is thus responsible for determining the remuneration and profit share of each individual Executive Officer, as well as for the remuneration of the Board and committee members. To thatend, the Board analyzes the performance of each Executive Officer in relation to each of the goals that needed to be met during the financial period.

Statutory Audit Committee

Under NYSE Rule 303A.06 and the requirements of Securities and Exchange Commission (SEC) Regulation 10A-3, listed US companies must have an Audit Committee consisting entirely of independent Board members who satisfy the demands of Regulation 10A-3. Moreover, the Audit Committee must be governed by an official statute that addresses the issues emphasized in NYSE Rule 303.A.06(c), include an internal auditing function and meet the requirements of the NYSE and Rule 10A-3.

We do not have an Audit Committee that meets the requirements of the NYSE and SEC.

There is no requirement for an Audit Committee under the Brazilian legislation and there are appeals against the legislation calling for the adapting of the rules relating to an independent audit committee, as permitted by NYSE Rule 303A.06 and SEC Regulation 10A-3. As a foreign private issuer, Fibria complies with both Rule 303A.06 and Regulation 10A-3. Our Audit Committee, equivalent to a US Audit Committee, was established at a meeting of our Board of Directors on December 18, 2009 and became a corporate statutory body by determination of an Extraordinary General Meeting (EGM) held on April 26, 2013. It meets all the requirements and assists our Board of Directors in matters involving our accounting, internal controls, financial reporting and compliance. Our Audit Committee advises the Board of Directors on the appointment of Independent Auditors and collaborates with and studies the remuneration of our independent auditors. Our Audit Committee also assesses the effectiveness of our internal financial controls and legal compliance.

Approval of Stock-Based Remuneration Plans by the Shareholders

NYSE rules require that the shareholders be given the opportunity to vote on all share-based remuneration plans and material changes thereto, with limited exceptions.

We meet the requirements of the NYSE.

Pursuant to the Brazilian Corporate Law, the shareholders must approve all stock option plans. Furthermore, any issuance of new shares that exceeds the authorized share capital is subject to shareholder approval. We do not have any share-based remuneration plan.

Corporate Governance Guidelines

NYSE rules require listed companies to adopt and disclose Corporate Governance guidelines.

We do not adopt any formal Corporate Governance guidelines other than those required by the applicable Brazilian legislation.

We believe that the Corporate Governance guidelines applicable to the company under the Brazilian Corporate Law comply with the guidelines set out by the NYSE.

Corporate Code of Conduct and Ethics 

NYSE rules require listed companies to adopt and disclose a Code of business Conduct and Ethics for the Board members, Executive Officers and employees and to promptly disclose any exemption from the code granted to Board members or Executive Officers.

Our Code of Conduct meets the requirements of the NYSE.

The applicable Brazilian legislation does not impose a similar requirement. Nevertheless, we have amended our Code of Conduct to comply with the requirements of the Sarbanes-Oxley Act and NYSE rules. We believe that our code, as amended, largely addresses the issues that need to be discussed in accordance with the NYSE rules.

Internal Auditing Function

NYSE rules require listed companies to maintain an Internal Auditing function, to provide the management and the Audit Committee with ongoing assessments of the company's risk management processes and internal control system.

We maintain the Internal Auditing function, thereby meeting the requirements of the NYSE.

The Brazilian legislation does not require companies to maintain an Internal Auditing function. Nevertheless, as an issuer at the NYSE, we do maintain an Internal Auditing function, which is under the supervision of the Statutory Audit Committee.

 

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