Dividends Distribution

Distribuição de Dividendos

Dividends Policy

Law 6,404/76 requires the Company to hold the annual shareholders’ meeting until April 30 of each year, where the annual dividend may be declared. In addition, interim dividends can be declared by the Board of Directors “ad referendum” to the annual shareholders’ meeting.

Law 6,404/76 sets forth the shareholders’ right to receive, as mandatory dividend, in each fiscal year, the value of profits set forth in the Bylaws, or in the event of lack of any provision in this regard in the Bylaws, 50% of the adjusted net income for the year, increased by the reversal of the realized portion of the profits previously recorded in the unrealized profit reserve, if not absorbed by losses.

Adjusted net income mean the value corresponding to the net income for the year net of (i) the values allocated to legal and contingency reserves, increased by (ii) the reversal of the provision for contingencies. The payment of the dividend so calculated could be limited to the realized value of the net income, provided that the difference is recorded as unrealized profit reserve.

Dividends can be distributed out of the net income for the respective fiscal year, retained earnings and profit reserves. Furthermore, any net income not allocated to the profit reserves should be distributed as dividends. Pursuant to Law 6,404/76, the dividends should be paid to the person who, as of the dividend declaration date, is registered as the holder or owner of the shares within a period of 60 days after the declaration of the dividend, unless the shareholders establish another payment date which, in any event, should occur prior to the closing of the fiscal year in which the dividend was declared. The shareholder is granted a period of three years counted from the dividend payment date to demand any dividends relating to the shares thereof, after which period the Company should not be held liable for any such payment. The value of the declared dividend is not subject to inflation-adjustments or restatements corresponding to the period between the declaration date and the payment date. Consequently, in actual terms, the value of the dividends paid to the shareholders, as it is not restated, may be substantially reduced due to inflation.

The Bylaws set forth that, at least, 25% of the adjusted net income should be distributed as mandatory dividend. Law 6,404/76 allows the Company to suspend the mandatory distribution of dividends if the Board of Directors reports to the annual shareholders’ meeting that the distribution would be incompatible with the Company’s financial condition as of that date. The supervisory board, if one is in place, should approve any suspension of the mandatory distribution of dividends. Furthermore, the management should inform the reasons for any suspension of distribution to CVM. The Company should establish a special reserve by using the net income not distributed due to any suspension. If not absorbed by subsequent losses, the Company should distribute such net income as soon as the Company’s financial condition permits so.

Interest Attributed to Equity

Since January 1, 1996, Brazilian companies are authorized to pay limited interest to the holders of ownership interests and consider such payments as deductible for income tax calculation purposes and, since 1998, also for social contribution purposes. The rate used in the calculation of interest attributed to equity is limited to the TJLP variation during the respective period and is limited to the greater of: (i) 50% of the Company’s net income (net of the payment of interest or any deductions relating to CSLL and IRPJ) and (ii) 50% of the Company’s retained earnings and profit reserves. Pursuant to the Bylaws, the value distributed to the shareholders as interest attributed to equity, net of the income tax withheld at source, can be allocated as part of the mandatory dividend. Pursuant to the applicable legislation, the Company is required to pay to shareholders a value sufficient to ensure that the net value received by the shareholders as interest attributed to equity, net of the payment of the respective income tax withheld at source, increased by the value of the declared dividends, is at least equivalent to the value of the mandatory dividend.

Payment of Dividends or Interest Attributed to Equity

The table below shows the dividends or interest attributed to equity paid to the holders of the Company’s common and preferred shares:

Year Net Income
(R$ mi)
Net Income per Share (R$) Dividends
(R$ mi)
Dividends per Share (R$) Payout Dividend Yield
2004 150 2.27 53 0.80 35% 11.8%
2005 249 3.23 76 0,98 30% 11.8%
2006 460 5.99 142 1.85 31% 8.3%
2007 420 1.82 129 0.56 31% 2.5%
2008 290 1.26 88 0.38 30% 2.9%
2009 318 1.34 99 0.42 31% 2.1%
2010 623 1.90 240 0.73 39% 2.6%
2011 580 1.78 280 0.86 48% 4.0%
2012 683 2.10 341 1.05 50% 4.5%
2013 1.405 4.35 843 2.61 60% 8.8%
2014 876 2.71 434 1.34 50% 4.4%
2015 1.002 3.10 351 1.08 35% 3.8%
2016 916 2.83 326 1.01 36% 3.8%
2017 1.101 3.41 440 1.36 40% 3.7%
2018 1.311 4.05 1,455 4.50 111% 8.6%
2019 1.379 4.27 690 2.13 50% 3.4%

The preferred shares were converted into common shares at the ratio of 1:1 on October 27, 2004.

The common shares were split at the ratio of 1:3 in March 2008.

98,292,519 shares were issued in November 2009, due to the association with Itaú-Unibanco.

Also in 2009, 1,293,600 shares were repurchased and cancelled afterwards with no capital reduction.

In 2011, 2,972,600 shares were repurchased and cancelled afterwards in March 2012, with no capital reduction.

In 2012, 1,376,100 shares were repurchased and cancelled afterwards in March 2013, with no capital reduction.

In 2013 distributed dividends were impacted by the non-recurring effects of the COFINS tax lawsuit gain.

In 2018, extraordinary dividends were distributed with a value of R$ 500 million, aiming to increase the Company‘s capital efficiency.

In 2019, 378,700 common shares issued by the company were rebought to be held in treasury and subsequently sold or canceled without reduction of capital.