ARTICLES OF INCORPORATION
CHAPTER I
NAME, ORGANIZATION, PURPOSE, HEADQUARTERS AND DURATION OF THE
COMPANY
Art. 1 - Companhia de Saneamento do Parana - SANEPAR, organized on
January 23, 1963, as a share-based, publicly held corporation, with diversified
economic interests, shall be governed by these articles of incorporation and by
applicable law in order to:
(a) perform studies and prepare projects and cost estimates for works
associated with new facilities and for the expansion of water and sanitary
sewage facilities;
(b) perform the works mentioned in the previous item;
(c) develop, either directly or through regional and local
subsidiaries, water and sanitary sewage services;
(d) cooperate with federal, state and local entities and/or private
entities in matters related to the objectives of the corporation, pursuant to
agreements, covenants and contracts;
(e) provide technical and/or administrative assistance with regard to
water and sewage services to municipalities and quasi-governmental entities
and/or to local companies in which the company owns no interest or has a
minority interest;
(f) own interests in other companies, in the capacity of shareholder or
quota holder, with a view toward expanding its area of activity;
(g) develop public services and private systems for removal and final
disposal of domestic and industrial solid waste and its byproducts;
(h) develop public services and private systems of urban drainage;
(i) provide advisory services, technical assistance and certification
in these areas of activity.
Art. 2 - The Company shall have its headquarters and administration at
Rua Engenheiros Reboucas No. 1376, in the city of Curitiba, capital of the State
of Parana, Brazil, and may set up offices, representations, and any other
establishments in the country, by authorization of the Executive Directorate.
Art. 3 - The duration of the Company shall be indefinite.
CHAPTER II
CONCERNING CAPITAL AND STOCK
Art. 4 - The capital stock, fully subscribed and paid-in, is BRR
831,707,029.68 (eight hundred thirty-one million, seven hundred and seven
thousand, twenty-nine reais and sixty-eight centavos) representing:
(a) 289,836,870 (two hundred eighty-nine million, eight hundred
thirty-six thousand, eight hundred seventy) registered common shares with no par
value;
(b) 124,245,312 (one hundred twenty-four million, two hundred
forty-five thousand, three hundred twelve) registered preferred shares with no
par value.
Sole paragraph - The right to vote shall be reserved exclusively for
common shares and each share shall have one vote in the decisions of the
Meetings of Shareholders.
Art. 5 - The Company's shares of capital stock shall be uncertified,
which does not alter in any way their inherent rights and restrictions. They
shall remain on deposit at an authorized institution in the name of their
titleholders, with no certificates being issued, according to the terms in Arts.
34 and 35 of Law No. 6,404 of December 15, 1976. The fee addressed in Art. 35:3
of the aforementioned law may be collected from the shareholders.
Art. 6 - Common shares confer the right to vote in the decisions of the
Company's Meetings of Shareholders and preferred shares confer no right to vote.
However, they do confer a priority in the reimbursement of capital, but no right
to a premium, pursuant to the provisions of Subparagraph I of Art. 17 of Law No.
6,404/76.
ss.1 - The nonvoting preferred shares may account for up to 2/3
(two-thirds) of the total shares issued by the Company.
ss.2 - The Company may increase the number of preferred shares, even
without maintaining the same proportion with future classes (ESPECIES) of stock,
and the Company may also increase the number of common shares without
maintaining the same proportion with the preferred shares.
Art. 7 - Common and preferred shares shall be treated equally in the
distribution of share dividends.
Art. 8 - Shareholders shall have a preferential right in the issuance
of shares, debentures or founders' shares convertible into shares, subscription
bonuses and any other securities, under the terms of applicable law and have 30
(thirty) calendar days after the respective announcement in which to exercise
the aforementioned right.
CHAPTER III
MEETING OF SHAREHOLDERS
Art. 9 - A Meeting of Shareholders shall normally be held within the
first 4 (four) months of the year for the purposes set forth by law, and special
meetings of shareholders whenever necessary, with the meeting notice, the call
to order, and the deliberations adhering to the applicable legal provisions.
ss.1 - Meetings of Shareholders require advance notice of 15 (fifteen)
business days.
ss.2 - In the event that the Company has on file an agreement between
its shareholders regarding the right to vote, the Meeting of Shareholders shall
observe the provisions of that agreement.
Art. 10 - The Meeting of Shareholders, whether general or special,
shall be presided over by a shareholder elected from among those present, who
[in turn] shall appoint one or more secretaries, which can be convened:
a) by the chairman and vice chairman of the Board of Directors,
together;
b) by the Board of Directors, according to the terms of Article 17(f)
below; and
c) in the manner prescribed in the only paragraph of Art. 123 of Law
No. 6,404/76.
CHAPTER IV
ADMINISTRATION OF THE COMPANY
Art. 11 - Administration of the Company shall be exercised by a Board
of Directors and an Executive Directorate.
SECTION I
BOARD OF DIRECTORS
Art. 12 - The Board of Directors of the Company shall be comprised of 9
(nine) regular members and an equal number of alternates, one of whom shall be
chairman and another vice chairman, elected and removable at any time by the
Meeting of Shareholders, to serve a term of 3 (three) years. Members may be
reelected.
ss.1 - Alternate directors shall substitute for their respective
directors in their absences or disabilities, and in the event of a vacancy until
such time as a respective replacement is named.
ss.2 - The Board of Directors must include one employee of the Company
as a regular member and another employee as an alternate member, selected and
appointed by the other members, pursuant to applicable state law.
ss.3 - Overall compensation for the Board of Directors shall be
determined by the Meeting of Shareholders and individual compensation for each
member shall be established by the Board of Directors itself.
Art. 13 - In the event of a vacancy in a regular position on the Board
of Directors, that director shall be replaced by his or her alternate until the
next Meeting of Shareholders, which [meeting] is required to select a
replacement for the remainder of the term of office of the former director.
Art. 14 - Normally, the Board of Directors shall meet every 3 (three)
months and in special sessions when called by the Chairman or Vice Chairman, by
a third of the members, or at the request of the Executive Directorate, and
shall have a quorum of 4 (four) members present as a minimum for valid
deliberations, pursuant to the provisions of ss. 2 below.
ss.1 - Meetings of the Board of Directors shall be convened by written
notice sent at least 5 (five) days in advance. The notice must contain the
agenda of matters to be discussed. However, written notice may be waived if all
regular members or their respective alternates are present.
ss.2 - Decisions of the Board of Directors shall be by majority vote of
the members present, the Chairman having the authority to break a tie vote.
However, with regard to decisions concerning matters contained in lines "c,"
"d," "e," "h," "i," "j," "k," "l," "m," "o," "p" and "q" of Art. 17 of these
Articles of Incorporation, at least 7 (seven) votes in the affirmative are
required.
Art. 15 - It is incumbent on the Chairman of the Board of Directors to
grant leaves [of absence] to its members, and the other members to grant leave
to the Chairman.
Art. 16 - The Chairman and Vice Chairman shall be elected by their
peers at the first meeting of the Board of Directors held after the election of
its members, the Vice Chairman replacing the Chairman in the event of absence or
disability.
Art. 17 - It is incumbent on the Board of Directors to:
(a) set the general business goals of the Company;
(b) elect and remove the Company's Executive Officers in accordance
with these Articles of Incorporation;
(c) prior to their signing, decide on contracts between the Company and
any of its shareholders or companies that may be controlled by them, whether
individually or jointly.
(d) at the request of the Executive Directorate, decide on the disposal
of or mortgage on permanent assets of the Company and the giving of third-party
guarantees for an individual value greater that 0.5% (one-half percent) of the
equity of the Company;
(e) at the request of the Executive Directorate, decide on loans and
financing to be undertaken by the Company for a value greater than 2% (two
percent) of the equity of the Company;
(f) call the Meetings of Shareholders;
(g) oversee the performance of the Executive Directorate, including
examining at any time the books and papers of the Company, as well as requesting
information regarding signed contracts and those to be signed, or any other
facts or administrative acts deemed of interest;
(h) offer an opinion in advance regarding the administrative and
financial report of the Company's Executive Directorate;
(i) select the Company's independent auditors from among companies of
international reputation, authorized by the Brazilian Securities Commission to
audit publicly held companies and, if required, replace them;
(j) decide on the proposal for use of the profits for the year in
accordance with the provisions of these Articles of Incorporation;
(k) approve the fee and salary schedule as well as the Company's
compensation policy;
(l) at the request of the Executive Directorate, decide on voting
rights at Meetings of Shareholders by companies associated and controlled by the
Company, when they deal with matters contemplated in the Business Plan as
defined in Article 21 below;
(m) determine the six-month dividend distribution, as well as potential
payment of interest on own capital, pursuant to the provisions of Law No.
9,249/95;
(n) direct any proposal to amend the Articles of Incorporation to a
Special Meeting of Shareholders;
(o) examine, as a higher authority, contracts with waivers or
exemptions from bidding;
(p) approve rate plans and schedules regarding the Company's services,
products and operations;
(q) determine items omitted from these Articles of Incorporation, based
on current law, retaining any other powers defined by law to higher collegiate
bodies for the Executive Directorate of the Company.
SECTION II
EXECUTIVE DIRECTORATE
Art. 18 - The Executive Directorate shall be comprised of 7 (seven)
Executives, who may be shareholders or not, selected by the Board of Directors,
designated Chief Executive Officer, New Business Officer, Superintendent
Officer, Financial Officer, Investor Relations Officer, Operations Officer, and
Administrative Officer.
ss.1 - The term of office shall be 3 (three) years, and reelection is
permitted. The officers shall remain in office until their duly elected
successors have taken office.
ss.2 - Overall compensation for the officers of the Executive
Directorate shall be determined by the Meeting of Shareholders and individual
compensation for each officer by the Board of Directors.
Art. 19 - In the event of a vacancy, resignation, leave of absence or
disability, even if temporary, by any of the members of the Executive
Directorate, the Board of Directors shall meet in special session within a
period of 15 (fifteen) days to select a replacement.
Sole paragraph - The Board of Directors is authorized at any time to
assign the respective replacement of one officer as the replacement for another
officer in the event of temporary disabilities, provided that such replacements
follow the same selection criteria provided for in Item 4.5.4 of the
Shareholders Agreement on file with the Company.
Art. 20 - Normally, the Executive Directorate shall meet at least once
a month, and, in special session whenever convened by the Chief Executive
Officer, Superintendent Officer or 2 (two) Officers, through notification at
least 2 (two) days in advance, which may be waived if all officers are present.
Except for the provisions of Art. 21:3 of these Articles of Incorporation, the
decisions of the Executive Directorate shall be adopted by majority vote of its
members.
Art. 21 - Day-to-day management of the Company is the responsibility of
the Executive Directorate in accordance with the Organization Plan, Business
Plan and the Annual Budget prepared and approved pursuant to these Articles of
Incorporation.
ss.1 - The Company's business plan shall contain plans and projections
for a period of 2 (two) fiscal years, which will be updated every six months and
will address the following in detail:
(a) the Company's activities and strategies including any plans for
construction or expansion of facilities;
(b) new investments and business opportunities, including with
companies controlled by and affiliated with the Company;
(c) amounts to be invested or otherwise contributed from the Company's
own funds or those of third parties.
(d) rates of return to be obtained or generated by the Company;
ss.2 - The Company's Annual Budget shall reflect the Business Plan and
must provide a detailed list of operating income and expenses, costs and
investments, cash flow, investments of the Company's own funds and those of
third parties, as well as any other data the Executive Directorate deems
necessary.
ss.3 - The Organization Plan, Business Plan, and the Annual Budget
shall be prepared by the Executive Officers for Operations, Finance, and
Administration. In the absence of a consensus among the respective officers
regarding the preparation of these documents, those same officers will determine
by majority vote the final version of the documents, which will be sent to the
Executive Directorate for its approval, as a collegiate body. Because of its
technical nature, such a decision cannot be appealed to the Board of Directors.
ss.4 - The Company's banking activities, endorsements and foreign
exchange acceptances, grants of powers of attorney, and performance of actions
necessary for the normal functioning of the Company shall be carried out [as
follows]:
(a) jointly by two members of the Directorate, one of whom shall be
either the Chief Executive Officer or Superintendent Officer, and the other the
Executive Officer of the respective area from which the matter arises; or
(b) by the Executive Officer and an officer duly authorized to perform
these acts.
ss.5 - The powers of attorney on behalf of the Company must be
authorized by two executive officers, one of whom must be the Chief Executive
Officer or Administrative Officer and the other the Superintendent Officer or
Financial Officer.
Art. 22 - In accordance with the provisions of the previous articles,
the powers of the Executive Directorate are as follows:
I - Chief Executive Officer:
(a) call and preside over meetings of the Executive Directorate;
(b) propose matters to the Board of Directors;
(c) coordinate internal auditing activities;
(d) oversee executive programs and final evaluation of the results;
(e) develop and coordinate the activities of the Company's legal
service;
(f) develop and coordinate corporate communications policy;
(g) represent the Company before the concession authority and related
companies;
(h) represent the Company before counterpart companies in the
sanitation industry for the establishment of joint policies;
(i) represent the Company at trial, whether as plaintiff or defendant;
(j) present the Company's annual business report to the Board of
Directors and the Regular Meeting of Shareholders;
II - Superintendent Officer:
(a) in conjunction with the Operations Officer, plan the expansion of
the Company's sanitation services and coordinate and prepare the Company's
Sanitation Master Plan, as well as oversee the application of established goals,
making sure they are continually updated;
(b) develop organizational systems and methods;
(c) propose goals, decision-making, and standardizing instruments that
define the planning policies of the Company's sanitation system;
(d) study and encourage the introduction of new technologies and
services in the Company;
(e) plan and coordinate the acquisition of equipment, materials, and
labor for the expansion plans, jointly with the Operations Officer;
(f) develop market studies;
(g) plan and coordinate activities for marketing of services;
(h) replace the Chief Executive Officer when absent;
(i) coordinate with the Operations Officer for the contracting of a
basic sanitation services company, with a view toward acquiring new technologies
for the Company.
III - Chief Financial Officer:
(a) plan, coordinate, and direct economic and financial activities;
(b) study and propose directives and rules for the implementation of
economic and financial policies;
(c) promote adherence to the Company's budget in accordance with
established plans and programs;
(d) supervise collection of operating revenues and collection of
non-operating revenues;
(e) foster collection of funds outside the Company when necessary;
(f) administer use of financial resources;
(g) ensure that financial commitments fulfill legal, administrative,
budgetary, and contractual formalities, interacting with other departments of
the Company and with other involved parties;
(h) oversee the accounting procedures for operations undertaken by the
Company;
(i) in conjunction with the Investor Relations Officer, administer the
Company's shareholders' policy;
(j) undertake studies, in conjunction with the Chief Administrative
Officer, and propose alternatives for the financial and economic balance of the
pension plans sponsored by the Company;
(k) prepare, in conjunction with the Chief Operations Officer and the
Chief Administrative Officer, the Company's Annual Budget and Business Plan;
IV - Investor Relations Officer:
(a) plan, coordinate, and direct the relationship and communications
between shareholders, the Brazilian Stock Exchange and the Brazilian Securities
Commission (CVM);
(b) study and propose directives and rules for Market Relations;
(c) further the appreciation in value of the Company's stock in the
financial markets through ongoing dissemination of information regarding the
Company's operations to the financial markets;
V - Chief Operating Officer:
(a) plan, coordinate, and oversee activities relating to operations,
maintenance, projects, and the installation and modernization of the sanitation
system;
(b) oversee the Company's departmental standards in their areas of
activity;
(c) schedule, coordinate, and direct activities regarding project
execution and investment budget;
(d) propose technical specifications for equipment, materials, and
labor for expansion plans;
(e) prepare and manage contracts, promote the installation and/or
acceptance of projects regarding the plant necessary for rendering sanitation
services;
(f) direct and oversee the preparation and implementation of
operational standards, methods, and routines, in accordance with established
goals;
(g) propose partnership agreements with other sanitation companies to
the Executive Directorate;
(h) perform market analyses with a view toward improving the quality of
existing services;
(i) oversee activities associated with the expansion program;
(j) operate and maintain the sanitation service, marketing the services
and their benefits, administering billing for services rendered, carrying out
development planning for services, and executing their implementation;
(k) plan and coordinate, in conjunction with the Superintendent
Officer, the acquisition of equipment, materials, and labor for the expansion
plans;
(l) in conjunction with the Superintendent Officer, implement the
Company's Master Sanitation Plan;
(m) acquire up-to-date materials in line with the needs of the Company,
as applicable;
(n) direct the receipt, storage, and distribution of materials, and
supervise the inventory;
(o) prepare, in conjunction with the Chief Financial and Administrative
Officers, the Company's Organization Plan, Annual Budget, and Business Plan.
VI - Chief Administrative Officer:
(a) coordinate and develop organizational studies, providing advice on
solving administrative problems throughout the company;
(b) administer the Company's transportation services, seeking to meet
the transportation needs of personnel, equipment, and general cargo;
(c) plan, coordinate, and direct administrative support for the
administration, maintenance, and preservation of the Company's properties;
(d) plan, coordinate, and carry out activities associated with
personnel administration;
(e) promote and stimulate the development, training, and improvement of
human resources;
(f) administer activities related to medical, dental, and social
assistance for employees and their dependents, as well as attend to obligations
inherent to worker safety;
(g) undertake studies, in conjunction with the Chief Financial Officer,
and propose alternatives regarding the financial and economic balance of the
pension plans sponsored by the Company;
(h) prepare, in conjunction with the Chief Financial and Operations
Officers, the Company's Organization Plan, Annual Budget, and Business Plan.
VII - New Business Officer:
(a) search for and develop new business;
(b) coordinate, direct, and manage studies on strategic projects and
partnerships with enterprises not directly related to the principal purpose of
the Company;
(c) oversee the concession agreements.
Sole paragraph - In the absence of both the Chief Executive Officer and
the Superintendent Officer, each of these shall designate, from among the other
officers, whom shall be their replacements in such times, pursuant to the
provisions of the sole paragraph of Art. 19.
CHAPTER V
STATUTORY AUDIT COMMITTEE
Art. 23 - The Company shall have a Statutory Audit Committee comprised
of 3 (three) to 5 (five) regular members and an equal number of alternates, who
may or may not be shareholders, elected annually by the General Meeting of
Shareholders. They may be reelected.
Art. 24 - The Statutory Audit Committee is an ongoing function and
meets at the request of any of its regular members and has the authority,
powers, duties, and responsibilities established by law.
Art. 25 - Members of the Statutory Audit Committee shall receive
compensation fixed by the General Meeting of Shareholders that elects them,
pursuant to the legal minimum.
CHAPTER VI
FISCAL YEAR AND DIVIDENDS POLICY
Art. 26 - The fiscal year shall coincide with the calendar year,
closing on December 31 of each year, when the financial statements shall be
prepared, in accordance with applicable law.
Art. 27 - Accumulated losses and the provision for income tax shall be
deducted from the income for the year before any distribution of profits.
Sole paragraph - Dividends for the year shall only be distributed after
the legal reserve has been deducted, which is based on 5% (five percent) of
profits up to the maximum provided for by law.
Art. 28 - Shareholders have the right to receive in each fiscal year,
as an obligatory dividend, 25% (twenty-five percent) of the adjusted net income,
pursuant to the provisions of Art. 202 and its paragraphs of Law No. 6,404/76.
Sole paragraph - At the discretion of the Board of Directors, interest
on own capital may be applied, pursuant to line "m" of Art. 17 of these Articles
of Incorporation, which shall be obligatorily paid at the time of the obligatory
dividends distribution.
Art. 29 - Dividends shall be paid within a maximum period of sixty days
following the date on which the Meeting of Shareholders that authorized the
dividend met, or in accordance with the decision of the Meeting of Shareholders.
The Directorate, respecting this time period, shall determine the date, place,
and procedures for payment.
Sole paragraph - Dividends unclaimed for a period of 3 (three) years
following the date on which they became available to the shareholder shall
revert to the benefit of the Company.
CHAPTER VII
GENERAL PROVISIONS
Art. 30 - In the event of termination of concessions in effect, whether
by expiration of the contractual period, cancellation, rescission or any other
type of termination, the respective Concession Authorities shall indemnify the
Company in advance, in proportion to the investments made, and assume the
installments falling due from the financing associated with the work on the
returned systems.
Sole paragraph - All property not directly connected with the rendering
of public services that had been under concession shall remain the property of
the Company.
Art. 31 - Dissolution and liquidation of the Company shall be carried
out in accordance with the resolutions of the Meeting of Shareholders, pursuant
to the law in effect.
Art. 32 - Notwithstanding the provisions of paragraph 2, of Article 4,
of these Articles of Incorporation, the Company is authorized to increase its
capital stock up to an additional BRR 900,000,000.00 (nine hundred million
reais), exclusively by issuing preferred, nonvoting shares. Such increase may be
carried out without amending the Articles of Incorporation by resolution of the
Board of Directors, and may only be implemented through public subscription in
Brazil and the simultaneous issuance of American Depositary Receipts (ADR)
abroad; the subscription shall take place before June 30, 2002 or on a
subsequent date, if so decided by the General Meeting of Shareholders.
Sole paragraph - As long as the authorization provided for in the main
body of this article is in effect, the Board of Directors may not perform any
act or take any action involving the issuance of new shares for purposes other
than those provided for herein.
Art. 33 - Pursuant to Article 172 of Law No. 6,404/76, the preferential
right guaranteed to shareholders under Article 8 of these Articles of
Incorporation shall not be applied to capital increases carried out under the
authorization provided for in the previous article.
Art. 34 -The competent authority for approval of capital increases
pursuant to the specific authorizations in paragraph 2 of Article 4 and in
Article 32, both a part of these Articles of Incorporation, as well as for
setting the conditions governing the issues and their respective subscriptions,
shall be the Board of Directors, by a resolution passed by the affirmative vote
of at least 7 (seven) directors. It shall further be incumbent upon the Board of
Directors to make its opinion known, prior to soliciting the respective
registries in conjunction with the competent agencies, with regard to the
above-mentioned American Depositary Receipts (ADR) program and, prior to their
execution, with regard to the contracts with financial institutions and/or
custodians, domestic or foreign, whose purpose it is to implement this program.
Art. 35 - The specific authorization granted under Article 32 shall
cease to be valid in the event that, as of the date provided for herein, the
public subscription contemplated in said article has not taken place, and the
General Meeting of Shareholders has taken no action to postpone the term for
carrying out said act.
I CERTIFY THAT THIS DOCUMENT, COMPRISING 12 (TWELVE) PAGES, IS A
FAITHFUL TRANSCRIPTION OF THE ARTICLES OF INCORPORATION OF COMPANHIA DE
SANEAMENTO DO PARANA - SANEPAR, CURRENTLY IN EFFECT, AS APPROVED BY THE 72ND
SPECIAL SHAREHOLDERS' MEETING, HELD ON SEPTEMBER 18, 1998, INCORPORATING THE
AMENDMENTS APPROVED BY THE 73RD SPECIAL SHAREHOLDERS' MEETING, HELD ON OCTOBER
27, 1998, BY THE 74TH SPECIAL SHAREHOLDERS' MEETING, HELD ON APRIL 28, 1999, BY
THE 75TH SPECIAL SHAREHOLDERS' MEETING, HELD ON OCTOBER 8, 1999, BY THE 76TH
SPECIAL SHAREHOLDERS' MEETING, HELD ON FEBRUARY 21, 2000, BY THE 78TH SPECIAL
SHAREHOLDERS' MEETING, HELD ON FEBRUARY 21, 2001, BY THE 80TH SPECIAL
SHAREHOLDERS' MEETING, HELD ON JUNE 4, 2001, BY THE 82ND SPECIAL SHAREHOLDERS'
MEETING, HELD ON DECEMBER 18, 2001 AND THE 84TH SPECIAL SHAREHOLDERS' MEETING
HELD TODAY.
CURITIBA, MARCH 22, 2002.
/s/JOSE LUIZ COSTA TABORDA RAUEN
--------------------------------
JOSE LUIZ COSTA TABORDA RAUEN
SECRETARY OF THE GENERAL MEETING OF SHAREHOLDERS
GENERAL COUNSEL FOR THE COMPANY