REPORT ON THE BRAZILIAN CODE OF CORPORATE GOVERNANCE

PUBLICLY-HELD COMPANIES

TOTVS S.A.

Filed on July 30, 2021.

The documents mentioned herein are available on the Company's website (http://ri.totvs.com) and/or that of the CVM - Securities Commission (www.cvm.gov.br).

1. 1. As regards principle 1.1: "Each share must be entitled to one vote":

  1. please state whether the issuer abides by the following recommended practice: "The company's capital stock must be composed up only of common shares";
  2. in case such recommended practice has not been adopted, the reasons that led the issuer to adopt other shareholding structures shall be provided, in line with the guidelines of the Code.

Practice adopted.

2. As regards principle 1.2: "Shareholders' agreements shall not transfer to the signatory shareholders the decisions on matters within the competence of the board of directors, theexecutive board of officers, or the fiscal council (aka 'supervisory board')".:

  1. please state whether the shareholders' agreements filed at the issuer's principal place of business or of which the controlling shareholder is a party, regulating the exercise of voting rights or the transfer of shares issued by the issuer, abide by the following recommended practice: "shareholders' agreements shall not bind the exercise of voting rights of any manager or member of the supervisory and control bodies";
  2. in case such recommended practice is whether not adopted or is partially adopted, please provide, in line with the guidelines of the Code, the justification by the signatory shareholders of such agreements on the subject.

Practice adopted.

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3. As regards principle 1.3: "The Management must seek shareholder engagement, encourage attendance of shareholders' meetings and correct understanding of the matters to be resolved, as well as facilitate nomination and election of candidates to the board ofdirectors and fiscal council (aka supervisory board)":

  1. please state whether the issuer abides by the following practices:
    1. "The board of executive officers should use the meeting to communicate the conduct of the company's business, so the Management must publish a manual to facilitate and encourage participation in meetings";
    2. "Minutes must enable a full understanding of the discussions at the meeting, even if drawn up as a summary of events, and identify the votes cast by the shareholders";
  2. in case such recommended practices are whether not adopted or partially adopted, please provide the issuer's justification on the matter.

Practices adopted.

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4. As regards principle 1.4: "Defensive measures, if adopted by the company, should aim at preventing opportunistic acquisitions of significant shares of the company's capital stock at unfavorable moments in the market, preserving liquidity or maximizing the valueof shares, to the benefit of all shareholders":

  1. please state whether there are mechanisms to protect against stock dispersion provided for in the issuer's articles of incorporation:
    1. if the issuer observed the following recommended practice: "the board of directors shall perform a critical review of the advantages and disadvantages of the defense measure and its characteristics, and above all of the triggers and price parameters that explain them, if applicable";
    2. whether such mechanisms comply with the following recommended best practices:
      • "Clauses that prevent the removal of any provision from the bylaws, the so-called 'entrenchment provisions', shall not be used"
      • "if the Bylaws sets forth that a public offering of shares (OPA) is performed whenever a shareholder or group of shareholders reaches, whether directly or indirectly, a significant share in the voting capital, the rule of determining the price of the offer shall not impose premium increases substantially above the economic or market value of the shares";
  2. in case such recommended practices are whether not adopted or adopted in part, please provide the issuer's justification on the matter, in line with the guidelines of the Code;
  3. in case such practice was reported as having been adopted, please inform, in line with the guidelines of the Code:
    1. websites where the board of directors' critical review by the board of directors can be consulted as regards the advantages and disadvantages of said defense measure and its characteristics, and above all the triggers and price parameters thereof;
    2. the reasons why the issuer understands that premium increases above economic or market value are not substantial.

Practices not adopted.

The mechanism to protect against stock dispersion was added as a provision to the Company's Bylaws(article 43) on March 7, 2006, when the initial offering of shares for listing on B3's Novo Mercado was carried out, aimed at protecting the Company and its shareholders, seeking to avoid the concentration of the Company's shares in a small group of investors, and, consequently, to promote the dispersion of shares.

Such provisions have since been kept in the subsequent amendments to the Bylaws, and the most recent of which was approved at the general meeting held on April 20, 2021. This is a company with diffuse control, which is why the mechanism is justified. It is worth emphasizing that the percentage adopted as a trigger to activate such protection mechanism of stock

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dispersion in the Company's Bylaws exceeds the current share owned by the largest shareholder.

For these reasons, the Company's Management believes that the shareholders have repeatedly considered that the OPA price parameters are suitable to protect the Company, without generating undue embezzlement of the management.

5. Regarding principle 1.5: "Regardless of the legal form and the terms and conditions negotiated for the transaction that gives rise to the change of control, all shareholders of thecompany subject to the transaction must be treated fairly and equitably":

  1. please inform if the issuer observes the following recommended practice: "the company's bylaws must set forth that: (i) transactions involving the direct or indirect sale of share control must be accompanied of a public offering of shares (OPA) to be forwarded to all shareholders, at the same price and conditions got by the selling shareholder; (ii) Management members must express their opinion on the terms and conditions of corporate restructuring processes, capital stock increases and other transactions that give rise to change of control, and state whether they ensure a fair and equitable treatment to the company's shareholders";
  2. in case such recommended practices are whether not adopted or partially adopted, please provide the issuer's justification on the matter.

Practices adopted.

6. As regards principle 1.6: "The board of directors shall provide shareholders with advice on the public offerings addressed to them":

  1. please inform whether the issuer observes the following practice: "the bylaws must provide that the board of directors gives its opinion about any public offering (OPA) the purpose of which is of shares or securities convertible or exchangeable for shares issued by the company, which must contain, among other relevant information, the Management's opinion on any acceptance of such public offering (OPA) and on the company's economic value";
  2. in case such recommended practice is whether not adopted or adopted in part, please provide the issuer's justification on the matter, in line with the guidelines of the Code.

Practice adopted.

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7. As regards principle 1.7: "The company's profit distribution policy must respect the economic and financial characteristics of the business - cash generation and need forinvestments - and be known by all stakeholders, shareholders and investors":

  1. please inform whether the issuer observes the following practice: "the company shall prepare and disclose a profit distribution policy set forth by the board of directors. Among other aspects, such policy shall provide for the frequency of dividend payments and the benchmark to be used to determine the corresponding amount (percentages of adjusted net income and free cash flow, among others)";
  2. in case such recommended practice is whether not adopted or adopted in part, please provide the issuer's justification for the matter.

Practice not adopted.

The Company does not have a policy setting forth rules additional to those provided for by law and contained in its Bylaws.

Articles 36 to 41 of the Company's Bylawsset forth the minimum rules for the allocation of results, which are observed by the Board of Directors in the proposals submitted annually to the general meeting or in the approval of interim distributions throughout the years.

Historically, the Company approves interim distributions every six months, in addition to the annual shareholders' resolution. The policy adopted by the Company is, therefore, the one set forth in its Bylawsand consistently practiced by the Board of Directors. Further details, as well as the history of distribution of results by the Company, are provided for in sections 3.4 and 3.5 of the Reference Form.

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TOTVS SA published this content on 31 December 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 December 2021 00:46:03 UTC.