Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Call notice to the annual and extraordinary general shareholders’
meetings, filed by Natura &Co Holding S.A. with the Brazilian Securities Commission on March 17, 2021.
According to the provisions
of Law No. 6.404, of December 15, 1976 (“Corporations Law”), and CVM Rule No. 481, of December 17, 2020 (“CVM
Rule No. 481”), the Company shall conduct its AEGM exclusively in a digital manner, through an electronic system to be
informed in due course, without the possibility of physical attendance. As known to its shareholders, Brazil and the world are
facing a delicate moment with the new coronavirus (COVID-19). The measures recommended by the authorities to prevent its spread
include the avoidance of gatherings, such as general meetings.
Shareholders holding registered
common shares without par value, issued by the Company, may participate in the General Meetings by themselves, by their legal representatives
or proxies, provided that said shares are kept in their name with the financial depository institution in charge of the Company’s
book-entry share service, namely, Itaú Corretora de Valores S.A. (CNPJ/ME No. 61.194.353/0001-64) (“Itaú“),
as provided for in article 126 of the Corporations Law. The shareholders that participate in the Fungible Custody of
Registered Shares of B3 S.A.
- Brasil, Bolsa, Balcão that wish to participate in the General Meetings shall present an updated statement of their equity
interest provided by the custodian institution.
If the shareholder opts for
the exercise of the remote voting right by means of the remote voting ballot (“Ballot”), made available by the
Company pursuant to the provisions of CVM Rule No. 481, he/she may send the Ballot by the following channels: (1) in case of shares
issued by the Company deposited with a financial depository institution responsible for the Company’s book-entry share services,
submit the voting instructions to Itaú, subject to the procedures established and documents demanded by Itaú, as
informed in the Meeting Attendance Manual; (2) in case they have shares issued by the Company deposited with custody institutions,
submit the voting instructions to the custody institutions, which will send the votes to the Depository Center of B3 S.A. - Brasil,
Bolsa, Balcão, subject to the established procedures and documents required by the respective custody institution, as informed
in the Meeting Attendance Manual; (3) directly to the Company, both in physical or digital means, according to instructions and
terms contained in the Handbook for Participation in General Meetings and in the Ballots, or also (4) by sending the Ballot in
digital format. For more information about the exercise of the remote voting right, we request the shareholders to verify the rules
provided for in CVM Rule No. 481, as well as the instructions and terms contained in the Handbook for Participation in General
Meetings and in the Ballots published by the Company.
If the Ballot is sent directly
to the Company, within three (3) days from receipt of the physical or digital copies of the Ballot and other required documents,
the Company will send an acknowledgment of receipt to the shareholder, preferably by means of the electronic address indicated
by the shareholder in the Ballot, regarding the receipt of the documents and their acceptance.
Notwithstanding the possibility
of sending the Ballot and other documents in physical form, in view of the delicate moment faced with the new coronavirus (COVID-19),
the Company requests the shareholders who wish to send the Ballot directly to the Company to, to the extent possible, adopt the
digital form, through the electronic address: ri@natura.net (subject: “Remote Voting
Ballot AEGM 2021”).
The shareholders may also participate
in the Meetings in a digital manner, by means of an electronic system to be informed in due course, pursuant to the Handbook for
Participation in General Meetings and the Management Proposal. Pursuant to article 21-C, paragraphs 2 and 3 of CVM Rule No. 481,
the shareholders will have the option of (i) simply attending the Meetings, whether or not they have sent the Ballot remotely;
or (ii) attending and voting at the Meetings, provided that, with respect to the shareholder that has already sent the Ballot,
if such a shareholder wishes to vote at the Meetings, all voting instructions received through the Ballot will be disregarded.
In order to participate in the
Meetings in a digital manner, the shareholders must request the prior registration through the following electronic address: ri@natura.net
(subject: “Participation AEGM 2021”), together with the digital submission, in the same electronic
address, of the necessary documentation,
as indicated below and in the Handbook for Participation in General Meetings, which establishes in greater detail the necessary
documents for prior registration, digital participation and how to receive the link to access the Meetings. The registration request
for digital participation in the Meetings must be received by the Company by April 14, 2021.
For registration purposes, the
Shareholders must send to the Company, no later than April 14, 2021, an updated proof of ownership of the Company's registered
common shares without par value, issued by Itaú and/or by a custodian institution, as well as the following documents: (i)
individual shareholders: an identification document with picture; (ii) legal entity shareholders: certified copies
of the last restatement of the bylaws or articles of association and documentation proving the representation (minutes of the election
of the officers and/or power of attorney) and identification document with a photograph of the legal representative(s); (iii) shareholders
that are investment funds: certified copies of the latest restated regulations of the fund, bylaws or articles of association
of its managers and documentation proving the representation (minutes of the election of the officers and/or power of attorney)
and identification document with a photograph of the legal representative(s).
The Company will not demand
certification of signature and/or consularization or apostille of the proxies granted by the shareholders to their respective representatives,
nor will it demand a sworn translation of the proxies and documents drawn up or translated into Portuguese or English, nor of the
documents attached with their respective translations into such languages.
The Handbook for Participation
in General Meetings and the Management Proposal, as well as the other documents provided by law and in the applicable regulation,
remain available to the shareholders at the Company's principal place of business located at Avenida Alexandre Colares, nº 1.188,
Sala A17, Bloco A, Parque Anhanguera, CEP 05106-000, in the City of São Paulo, State of São Paulo, on the Company's
Investor Relations website (https://ri.naturaeco.com), on the Securities Commission website
(www.gov.br/cvm) and on the website of B3 S.A. – Brasil, Bolsa, Balcão (www.b3.com.br),
containing all information required to better understand the matters above, pursuant to the provisions of paragraph 6, article
124, of article 133 and paragraph 3, article 135 of the Corporations Law and article 6 of CVM Rule No. 481.
Manual for Participation in the annual and extraordinary general
shareholders’ meetings, filed by Natura &Co Holding S.A. with the Brazilian Securities Commission on March 17, 2021.
1. Invitation
2. Procedures and Terms
3. Call Notice
4. Information on the Matters Subject to
Resolution
Natura &Co Holding S.A. (“Company”
or “Natura &Co”) invites its shareholders to attend the Annual and Extraordinary General Meetings (“AEGM"
or “Meetings”) to be held at 8:00 a.m., Brasília time, on April 16, 2021, in an exclusively digital manner,
with participation by means of an electronic system to be informed in due course, Brazil, in order to resolve upon the matters
contained in the call notice, according to item 3 of this Handbook for Participation in General Meetings (“Handbook”).
With the purpose of facilitating and encouraging
the participation in the General Meetings, the Company will make available, through the worldwide web, the information and documents
set out in Law No. 6.404, of December 15, 1976 (“Corporations Act”) and the Brazilian Securities and Exchange
Commission (“CVM”) Ruling No. 481, of December 17, 2009 (“CVM Rule No. 481”).
Please feel free to examine the Management
Proposal and other documents related to the AEGM on Natura &Co Investor Relations website (https://ri.naturaeco.com),
on the CVM website (www.gov.br/cvm), on the website of B3 S.A. – Brasil, Bolsa, Balcão
(www.b3.com.br) and in the Company’s principal place of business.
According to the provisions of the Corporations
Law and CVM Rule No. 481, and except as otherwise provided by law, the Company shall conduct its AEGM exclusively in a digital
manner, through an electronic system to be informed in due course, without the possibility of physical attendance. As known to
its shareholders, Brazil and the world are facing a delicate moment with the new coronavirus (COVID-19). The measures recommended
by the authorities to prevent its spread include the avoidance of gatherings, such as general meetings.
Participation of shareholders in the General
Meetings is of great importance.
For the Annual General Meeting to occur,
on first call, the attendance of shareholders representing at least one fourth (1/4) of the registered common shares without par
value issued by the Company is required, pursuant to article 125 of the Corporations Law. For the Extraordinary General Meeting
to occur, on first call, the attendance of shareholders holding at least two thirds (2/3) of the registered common shares without
par value issued by the Company is required, pursuant to the provisions of article 135 of the Corporations Act.
In case such quorum is not reached, the
Company will announce a new date for the General Meetings to be held. On second call, they can be instated with any given number
of attending shareholders.
The shareholders shall participate in an
exclusively digital manner, by means of an electronic system to be informed in due course, without the possibility of physical
attendance. The shareholders may also cast their votes by means of the voting right by means of the remote voting ballot (“Ballot”),
as provided for in CVM Rule No. 481.
The AEGM will be carried out in an exclusively
digital manner, by means of an electronic system to be informed in due course, without the possibility of physical attendance.
The Company shall begin the registration
of shareholders to attend the General Meetings soon after publication of the Call Notice. In case of doubt, please contact Natura
&Co Investor Relations Office either via email (ri@natura.net) or on telephone number
+55 (11) 4389-7881.
Pursuant to article 21-C, paragraphs 2
and 3 of CVM Rule No. 481, the shareholders will have the option of (i) simply attending the Meetings, whether or not they have
sent the Ballot remotely; or (ii) attending and voting at the Meetings, provided that, with respect to the shareholder that has
already sent the Ballot, if such a shareholder wishes to vote at the Meetings, all voting instructions received through the Ballot
will be disregarded.
In order to participate in the Meetings
in a digital manner, the shareholders must request the prior registration through the following electronic address: ri@natura.net
(subject: “Participation AEGM 2021”), together with the digital submission, in the same e-mail, of the necessary documentation,
as indicated below. The registration request for digital participation in the Meetings must be received by the Company by April
14, 2021. The necessary documentation is included below:
The Company will not demand certification
of signature and/or consularization or apostille of the proxies granted by the shareholders to their respective representatives,
nor will it demand a sworn translation of the proxies and documents drawn up or translated into Portuguese or English, nor of the
documents attached with the respective translations into such languages.
Shareholders that do not send the necessary
information by e-mail pursuant to this Manual until April 14, 2021 will not be allowed to participate in the AEGM in a digital
manner.
The Shareholder who cannot attend the Meetings
may be represented by a Proxy appointed less the one (1) year ago, as set out in paragraph 1 of article 126 of the Corporations
Law.
The proxies, pursuant to paragraph 1 of
article 126 of the Corporations Law, may only be granted to people who meet at least one of the following requisites:
For the shareholders who are legal entities,
according to the understanding of the CVM Board at a meeting held on November 4, 2014 (CVM Proceedings RJ2014/3578), the proxy
does not need to be:
The Company shall begin the registration
of shareholders represented by proxy soon after publication of the Call Notice.
In case of doubt, please contact Natura
&Co Investor Relations Office either via email (ri@natura.net) or on telephone number
+55 (11) 4389-7881.
In order to participate in the Meetings
in a digital manner, the Proxy must also request the prior registration through the following electronic address: ri@natura.net
(subject: “Participation AEGM 2021”), together with the digital submission, in the same e-mail, of the necessary documentation,
as indicated below. The registration request for digital participation in the Meetings must be received by the Company by April
14, 2021. The necessary documentation is included below:
Proxies representing more than one shareholder
must attached the representation documents for the registration of each shareholder to be represented at the AEGM, as provided
above.
Proxies that do not send the necessary
information by e-mail pursuant to this Manual until April 14, 2021 will not be allowed to participate in the AEGM in a digital
manner.
Shareholders or Proxies that register to
participate in a digital manner within the deadline will receive a confirmation e-mail.
The Company will disclose a notice in due
course with the information regarding the electronic system to be used, including information on receiving the access link, password
and instructions for accessing the electronic system of the AEGM. Access information will be individual and non-transferable and
may not be shared by the registered participant.
On the date of the AEGM, the shareholder
that registers its presence in a digital manner in the electronic system to be provided by the Company will be considered present
to the AEGM and a signatory of its minutes, pursuant to article 21-V, item III and its sole paragraph, of CVM Rule No. 481.
The Company will not be responsible for
any operational or connection problems that the shareholders may face and other situations outside the control of the Company,
such as connection instability or incompatibility of the electronic system with the participant’s equipment. The AEGM will
be recorded, pursuant to article 21-C, §1, item III of CVM Rule No. 481.
The shareholders may also cast their votes
in the General Meetings by means of the Ballot, as provided for in CVM Rule No. 481. The vote shall be formalized by means of the
Ballot, according to versions made available by the Company on its Investor Relations website (https://ri.naturaeco.com),
on the CVM website (https://www.gov.br/cvm) and on the website of B3 S.A. – Brasil,
Bolsa, Balcão (www.b3.com.br).
Please note that since an Annual General
Meeting and an Extraordinary General Meeting shall be held on the same day, the shareholders must deliver individual Ballots for
each General Meeting for which they wish to cast their vote.
In the Ballot, the following data must
be filled in: (i) full name or corporate name; and (ii) National Register of Legal Entities (CNPJ) or Individual Taxpayers’
Register (CPF) of the Ministry of Economy. Providing an e-mail address is advisable, but not mandatory.
Any shareholder who opts for exercising
their remote voting right through the Ballot may (i) fill out the Ballot and submit it directly to the Company, on hard copy or
by digital means; (ii) in case the shareholders have shares issued by the Company deposited with custody institutions, the shareholder
must submit the voting instructions to the custody institutions, which will send the votes to the Depository Center of B3 S.A.
- Brasil, Bolsa, Balcão, subject to the established procedures and documents required by the respective custody institution;
or (iii) in case the shareholders have shares issued by the Company deposited with a financial depository institution responsible
for the
Company’s book-entry share services,
namely, Itaú Corretora de Valores S.A. (CNPJ/ME No. 61.194.353/0001-64) (“Itaú”), the shareholder
must submit the voting instructions to Itaú, subject to the procedures established and documents demanded by Itaú.
Notwithstanding the possibility of sending
the Ballot and other documents in physical form, in view of the delicate moment faced with the new coronavirus (COVID-19), the
Company requests the shareholders who wish to send the Ballot directly to the Company to, to the extent possible, adopt the digital
form, through the electronic address: ri@natura.net (subject: “Remote Voting Ballot
AEGM 2021”).
For the Ballot to be considered valid and
for the votes therein to be counted as an integral part of the quorum of the AEGM (i) all fields must be properly filled; (ii)
all pages must be initialed by the shareholder (or their legal representative, as the case may be); and (iii) finally, the shareholder
(or its legal representative, as the case may be) must sign it.
The deadline for receipt of the Ballot
sent directly to the Company (in hard copies or digitally) or through service providers (as per article 21-B of CVM Rule No. 481)
is April 9, 2021 (including such date). The Ballots received after such date will be disregarded.
Any shareholder who opts for exercising
its remote voting right by sending the Ballot directly to the Company in digital format shall send the documents listed below exclusively
to the electronic address ri@natura.net (Subject: 2021 AEGM Remote Voting Ballot):
(i) a digitalized copy of the Ballot, duly
filled out, initialed and signed, with the signature being certified by a notary public; and
(ii) a digitalized certified copy of the
following documents: (a) individual shareholders: an identification document with a photograph; (b) legal entity shareholders:
certified copies of the last restatement of the bylaws or articles of association and documentation proving the representation
(minutes of the election of the officers and/or power of attorney) and identification document with a photograph of the legal representative(s);
and (c) shareholders that are investment funds: certified copies of the latest restated internal regulations of the fund, bylaws
or articles of association of its manager and documentation proving the representation (minutes of the election of the officers
and/or power of attorney) and identification document with a photograph of the legal representative(s).
The Company will not demand certification
of signature and/or consularization or apostille of the proxies granted by the shareholders to their respective representatives,
nor will it demand a sworn translation of the proxies and documents drawn up or translated into Portuguese or English, nor of the
documents attached with the respective translations into such languages.
The Ballot and the related documentation
shall only be deemed received by the Company and, therefore, taken into consideration for the quorums of the AEGM if the Company
receives the digitalized copy as per items (i) and (ii) above, up to seven (7) days before the date the AEGM is to be held, that
is, by April 9, 2021 (including such date). The Ballots and the related documentation received after such date will be disregarded.
Once the Ballot and other required documentation
have been received in digital format, the Company will inform the shareholder, by electronic mail, within three (3) days, of the
receipt of the Ballot, and if the Ballot and any supporting documents are sufficient for the Shareholder vote to be deemed valid
or if there is need of rectification or new submission of the Ballot or supporting documents, describing the procedures and terms
necessary for regularization of the remote voting.
The Shareholder may rectify
or resend the Ballot or the documents accompanying it, observing the deadline of April 9, 2021 (including such date). The Ballots
and/or their supporting documents received after such date will be disregarded.
Any shareholder who opts for exercising
their remote voting right by sending the Ballot directly to the Company shall send, on hard copy, the documents listed below to
the Company's principal place of business located at Avenida Alexandre Colares, nº 1188, sala A17, Bloco A, Parque Anhanguera,
in the City of São Paulo, State of São Paulo, CEP 05106-000, to the attention of “Tamires Quirino Parini
- Investor Relations Office - 2021 AEGM”:
(i) a hard copy of the Ballot, duly filled
out, initialed and signed, with the signature being certified by a notary public; and
The Company will not demand certification
of signature and/or consularization or apostille of the proxies granted by the shareholders to their respective representatives,
nor will it demand a sworn translation of the proxies and documents drawn up or translated into Portuguese or English, nor or the
documents attached with the respective translations into such languages.
The Ballot and the related documentation
shall only be deemed received by the Company and, therefore, taken into consideration for the quorums of the AEGM if the Company
receives the hard copy of such documents as per items (i) and (ii) above, up to seven (7) days before the date the AEGM is to be
held, that is, by April 9, 2021 (including such date). The Ballots and the related documentation received after such date will
be disregarded.
Once the Ballot and other required documentation
have been received in their hard copies, the Company will inform the shareholder, preferably through electronic mail, within three
(3) days, of the receipt of the Ballot, and if the Ballot and any supporting documents are sufficient for the Shareholder vote
to be deemed valid or if there is need of rectification or new submission of the Ballot or supporting documents, describing the
procedures and terms necessary for the regularization of the remote voting.
The Shareholder may rectify or resend the
Ballot or the documents accompanying it, observing the deadline of April 9, 2021 (including such date). The Ballots and/or their
supporting documents received after such date will be disregarded.
During the holding of the AEGM, as it occurs
in the meetings of the Company’s management and inspection bodies, the attending shareholders must pronounce themselves upon
the existence of any situation of conflict of interests in any matters under discussion or subject to resolution, in which their
independence that may be jeopardized. Any attending shareholder who has knowledge of a situation
of conflict in relation to another shareholder
and the matter subject to resolution shall also pronounce themselves.
Upon pronouncement of a conflict of interests,
the conflicted shareholder shall abstain from taking part in the resolution in relation to that matter. In case the conflicted
shareholder refuses to abstain from the resolutions, the chairman of the AEGM shall determine the annulment of the conflicted votes
rendered, even if after the conclave.
According to the provisions
of Law No. 6.404, of December 15, 1976 (“Corporations Law”), and CVM Rule No. 481, of December 17, 2020 (“CVM
Rule No. 481”), the Company shall conduct its AEGM exclusively in a digital manner, through an electronic system to be
informed in due course, without the possibility of physical attendance. As known to its shareholders, Brazil and the world are
facing a delicate moment with the new coronavirus (COVID-19). The measures recommended by the authorities to prevent its spread
include the avoidance of gatherings, such as general meetings.
Shareholders holding registered
common shares without par value, issued by the Company, may participate in the General Meetings by themselves, by their legal representatives
or proxies, provided that said shares are kept in their name with the financial depository institution in charge of the Company’s
book-entry share service, namely, Itaú Corretora de Valores S.A. (CNPJ/ME No. 61.194.353/0001-64) (“Itaú“),
as provided for in article 126 of the Corporations Law. The shareholders that participate in the Fungible Custody of Registered
Shares of B3 S.A. - Brasil, Bolsa, Balcão that wish to participate in the General Meetings shall present an updated statement
of their equity interest provided by the custodian institution.
If the shareholder opts for
the exercise of the remote voting right by means of the remote voting ballot (“Ballot”), made available by the
Company pursuant to the provisions of CVM Rule No. 481, he/she may send the Ballot by the following channels: (1) in case of shares
issued by the Company deposited with a financial depository institution responsible for the Company’s book-entry share services,
submit the voting instructions to Itaú, subject to the procedures established and documents demanded by Itaú, as
informed in the Meeting Attendance Manual; (2) in case they have shares issued by the Company deposited with custody institutions,
submit the voting instructions to the custody institutions, which will send the votes to the Depository Center of B3 S.A. - Brasil,
Bolsa, Balcão, subject to the established procedures and documents required by the respective custody institution, as informed
in the Meeting Attendance Manual; (3) directly to the Company, both in physical or digital means, according to instructions and
terms contained in the Handbook for Participation in General Meetings and in the Ballots, or also (4) by sending the Ballot in
digital format. For more information about the exercise of the remote voting right, we request the shareholders to verify the rules
provided for in CVM Rule No. 481, as well as the instructions and terms contained in the Handbook for Participation in General
Meetings and in the Ballots published by the Company.
If the Ballot is sent directly
to the Company, within three (3) days from receipt of the physical or digital copies of the Ballot and other required documents,
the Company will send an acknowledgment of receipt to the shareholder, preferably by means of the electronic address indicated
by the shareholder in the Ballot, regarding the receipt of the documents and their acceptance.
Notwithstanding the possibility
of sending the Ballot and other documents in physical form, in view of the delicate moment faced with the new coronavirus (COVID-19),
the Company requests the shareholders who wish to send the Ballot directly to the Company to, to the extent possible, adopt the
digital form, through the electronic address: ri@natura.net (subject: “Remote Voting
Ballot AEGM 2021”).
The shareholders may also participate
in the Meetings in a digital manner, by means of an electronic system to be informed in due course, pursuant to the Handbook for
Participation in General Meetings and the Management Proposal. Pursuant to article 21-C, paragraphs 2 and 3 of CVM Rule No. 481,
the shareholders will have the option of (i) simply attending the Meetings, whether or not they have sent the Ballot remotely;
or (ii) attending and voting at the Meetings, provided that, with respect to the shareholder that has already sent the Ballot,
if such a shareholder wishes to vote at the Meetings, all voting instructions received through the Ballot will be disregarded.
In order to participate in the
Meetings in a digital manner, the shareholders must request the prior registration through the following electronic address: ri@natura.net
(subject: “Participation AEGM 2021”), together with the digital submission, in the same electronic address, of the
necessary documentation, as indicated below and in the Handbook for Participation in General Meetings, which establishes in greater
detail the necessary documents for prior registration, digital participation and how to receive the link to access the Meetings.
The registration request for digital participation in the Meetings must be received by the Company by April 14, 2021.
For registration purposes, the
Shareholders must send to the Company, no later than April 14, 2021, an updated proof of ownership of the Company's registered
common shares without par value, issued by Itaú and/or by a custodian institution, as well as the following documents: (i)
individual shareholders: an identification document with picture; (ii) legal entity shareholders: certified copies
of the last restatement of the
bylaws or articles of association and documentation proving the representation (minutes of the election of the officers and/or
power of attorney) and identification document with a photograph of the legal representative(s); (iii) shareholders that are
investment funds: certified copies of the latest restated regulations of the fund, bylaws or articles of association of its
managers and documentation proving the representation (minutes of the election of the officers and/or power of attorney) and identification
document with a photograph of the legal representative(s).
The Company will not demand
certification of signature and/or consularization or apostille of the proxies granted by the shareholders to their respective representatives,
nor will it demand a sworn translation of the proxies and documents drawn up or translated into Portuguese or English, nor of the
documents attached with their respective translations into such languages.
The Handbook for Participation
in General Meetings and the Management Proposal, as well as the other documents provided by law and in the applicable regulation,
remain available to the shareholders at the Company's principal place of business located at Avenida Alexandre Colares, nº 1.188,
Sala A17, Bloco A, Parque Anhanguera, CEP 05106-000, in the City of São Paulo, State of São Paulo, on the Company's
Investor Relations website (https://ri.naturaeco.com), on the Securities Commission website
(www.gov.br/cvm) and on the website of B3 S.A. – Brasil, Bolsa, Balcão (www.b3.com.br),
containing all information required to better understand the matters above, pursuant to the provisions of paragraph 6, article
124, of article 133 and paragraph 3, article 135 of the Corporations Law and article 6 of CVM Rule No. 481.
To obtain information on the matters subject
to resolution in the General Meetings, we refer to the Management Proposal and other documents relating to the AEGM made available
by the Company on its Investor Relations website (https://ri.naturaeco.com), on the CVM
website (www.gov.br/cvm), on the website of B3 S.A. – Brasil, Bolsa, Balcão
(www.b3.com.br) and in the Company’s principal place of business.
Minutes of the Board of Directors’ Meeting Held on March
16, 2021, filed by Natura &Co Holding S.A. with the Brazilian Securities Commission on March 17, 2021.
sixty-five cents) (R$ 21,473,051.65), subscribed
by the managers and employees of the Company and of its directly or indirectly controlled companies, during the period from (and
including) September 30, 2020 to (and including) March 9, 2021, so that the Company's capital stock was changed from
twelve billion, five hundred and eighty-six million, nine hundred and seventy-eight thousand, four hundred and nine reais and eighty-three
centavos (R$12,586,978,409.83), divided into one billion, three hundred and seventy-five million, eighteen thousand, one hundred
and forty reais (1,375,018,140) registered common shares, with no par value, to twelve billion, six hundred and eight
million, four hundred and fifty-one thousand, four hundred and sixty-one reais and forty-eight centavos (R$ 12,608,451,461.48),
divided into one billion, three hundred and seventy-five, eight hundred and nineteen thousand, three hundred and four (1.375.819.304)
registered common shares, with no par value, as a result of the exercise of call options or options to subscribe common shares
issued by the Company, by the Company's managers and employees, as well as by the managers and employees of its directly or indirectly
controlled companies, who participate in the ILP Plans. The new shares shall be entitled, under equal conditions as the currently
existing common shares, to all rights granted to the latter, including dividends, interest on net equity and possible return on
capital that may be declared by the Company after their date of Issue;
Notice to Shareholders regarding a capital increase from the
exercise of options, filed by Natura &Co Holding S.A. with the Brazilian Securities Commission on March 17, 2021.
CNPJ/ME No. 32.785.497/0001-97
In view of the limit of the authorized
capital of the Company, as established on article 6 of the Company’s Bylaws, the issuance, without preemptive rights, of
801,164 shares, subscribed by the Company’s management and employees during the period of September 30, 2020 (inclusive)
to March 9, 2021 (inclusive), deriving from the exercise of options for the purchase or subscription of common shares issued by
the Company, by the Company’s management and employees, as well as by the management and employees of its subsidiaries, directly
or indirectly, who are participants of the LTI Plans (“LTI Capital Increase”), was approved. The new shares
shall be entitled to, in equal conditions of the shares currently issued, all its aspects and benefits, including dividends, interest
on net equity and eventual capital compensations that may be distributed by the Company as of its date of issuance.
In accordance with article 5 of Exhibit
30-XXXII of CVM Ruling No. 480, of December 7, 2009, detailed information about the LTI Capital Increase is presented in the Exhibit
to this Notice to Shareholders.
As a result of the LTI Capital Increase,
the share capital of the Company goes from R$ R$12,586,978,409.83, represented by 1,375,018,140 common shares, all registered,
book-entry and with no par value, to R$12.608.451.461,48, divided into 1.375.819.304 common shares, all registered, book-entry
and with no par value.
The Company’s shareholders approved
at an extraordinary general meeting held on December 13, 2019, the Stock Option Purchase or Subscription Program of the Company,
replacing the program originally approved at the extraordinary general meeting of Natura Cosméticos S.A. (“Natura
Cosméticos”) held on March 23, 2009; Stock Option Purchase or Subscription Program of the Company, replacing the
program originally approved at Natura Cosméticos’ extraordinary general meeting held on February 6, 2015 and as amended
at an extraordinary general meeting held on April 12, 2019; Restricted Stock Option Program of the Company, replacing the program
originally approved at Natura Cosméticos’ extraordinary general meeting held on February 6, 2015; Stock Option Purchase
or Subscription for Strategy Acceleration Program, replacing the program originally approved at Natura Cosméticos’
extraordinary general meeting of Natura Cosméticos held on July 27, 2015; Second Restricted Stock Option Program of the
Company, replacing the program originally approved at Natura Cosméticos’ extraordinary general meeting held on November
30, 2017 and as amended at an extraordinary general meeting held on April 12, 2019; Second Stock Option Purchase or Subscription
for Strategy Acceleration Program, replacing the program originally approved at Natura Cosméticos’ extraordinary general
meeting held on November 30, 2017; Coinvestment Program, replacing the program originally approved at Natura Cosméticos’
extraordinary general meeting held on April 12, 2019; Long-Term Incentive Program (“LTIP”), replacing the program
originally approved at Natura Cosméticos’ extraordinary general meeting held on April 12, 2019. The Board of Directors
approved on December 13, 2019, the Stock Option Purchase or Subscription Plan of Natura Cosméticos S.A. – Calendar
Year of 2013; the Stock Option Purchase or Subscription Plan of Natura Cosméticos S.A. – Calendar Year of 2014; the
Stock Option Purchase or Subscription Plan of Natura Cosméticos S.A. – Calendar Year of 2015; the Stock Option Purchase
or Subscription Plan of Natura Cosméticos S.A. – Calendar Year of 2016; the Stock Option Purchase or Subscription
Plan of Natura Cosméticos S.A. – Calendar Year of 2017; the Stock Option Purchase or Subscription Plan of Natura Cosméticos
S.A. – Calendar Year of 2018; the Stock Option Purchase or Subscription Plan of Natura Cosméticos S.A. – Calendar
Year of 2019; Restricted Stock Option Plan – Calendar Year of 2016; Restricted Stock Option Plan – Calendar Year of
2017; Restricted Stock Option Plan – Calendar Year of 2018; Restricted Stock Option Plan – Calendar Year of 2019; Stock
Option Purchase or Subscription for Strategy Acceleration Plan – Calendar Year of 2015; Stock Option Purchase or Subscription
for Strategy Acceleration Plan – Calendar Year of 2016; Stock Option Purchase or Subscription for Strategy Acceleration Plan
– Calendar Year of 2017; Restricted Stock Option Plan – Calendar Year of 2018; Restricted Stock Option Plan –
Calendar Year of 2019; Stock Option Purchase or Subscription for Strategy Acceleration Plan – Calendar Year of 2018; Stock
Option Purchase or Subscription for Strategy Acceleration Plan – Calendar Year of 2019; Long-Term Incentive Plan –
Calendar Year of 2019; on January 3, 2020, the Stock Option Avon; and on March 27, 2020, the approval of the terms and conditions
of the Coinvestment Plan 2020 – Gross Option; and Coinvestment Plan 2020 – Management (jointly “LTI Plans”).
As a result of the exercise of options
to purchase of shares, the Company’s share capital was increased by R$21,473,051.65 between September 30, 2020 (inclusive)
to March 9, 2021 (inclusive). Hence, the share capital of the Company goes from R$12,586,978,409.83 to R$12,608,451,461.48.
Within the scope of the LTI Plans, 801,164
new registered common shares were issued, without par value, which will be entitled to, in equal conditions with the shares currently
issued, all aspects and benefits, including dividends, interest on net equity and eventual compensations that may be distributed
by the Company. Hence, the total number of registered common shares, without par value, issued by the Company, will be 1,375,819,304
registered common shares, without par value, on March 9, 2021.
Within
the scope of the LTI Plans, the new common shares were issued at the following issuance prices:
The dilution percentage of the current
shareholders of the Company resulting from the capital increase was of 0.058232%, within the LTI Plans.
Management proposal for the annual and extraordinary general
shareholders’ meetings to be held on April 16, 2021, filed by Natura &Co Holding S.A. with the Brazilian Securities Commission
on March 17, 2021.
Table
of Contents
1.
|
Information on the matters
subject to resolution
|
p. 4
|
2.
|
Management Proposal
|
p. 6
|
3.
|
Exhibit I: Item 10 of the Company’s
Reference Form
|
p. 14
|
4.
|
Exhibit II: Items 12.5 to 12.10 of the
Company’s Reference Form
|
p. 69
|
5.
|
Exhibit III: Item 13 of the Company’s
Reference Form
|
p. 96
|
6.
|
Exhibit IV: Proposal for Amendment to
the Bylaws and Comparative Chart
|
p. 144
|
|
1.
|
Information
on the matters subject to resolution
|
All information
and documents set forth in CVM Rule No. 481/09 (“CVM Rule No. 481”) related to the matters subject to resolution
in the Annual and Extraordinary General Meetings of the Company, to be held at 8:00 a.m., Brasília time, on April 16, 2021,
in an exclusively digital manner, with participation by means of an electronic system to be informed in due course, (“AEGM”
or “Meetings”), as well as the further information and documents relevant for the exercise of voting rights
by the shareholders are available to the shareholders at the Company’s principal place of business and on the investor relations
website (https://ri.naturaeco.com), on the website of the Brazilian Securities and Exchange
Commission – CVM (“CVM”) (www gov.br/cvm) and of B3 S.A. –
Brasil, Bolsa, Balcão (“B3”) (www.b3.com.br).
Under the
Call Notice to be disclosed pursuant to Law No. 6,404/76 (“Corporations Act”), the Meetings shall have the
following agenda:
At
the Annual General Meeting:
(1)
review the managers’ accounts, examine, discuss and vote on the management report and the financial statements, together
with the independent auditors’ report, for the fiscal year ended on December 31, 2020;
(2)
examine, discuss and vote on the proposed allocation of the losses assessed in the fiscal year ended on December 31, 2020
to the Company accrued losses account; and
(3)
define the global compensation of the Company’s managers, to be paid by the date of the annual general meeting at which
the Company’s shareholders shall vote on the financial statements for the fiscal year ending on December 31, 2021.
At
the Extraordinary General Meeting:
(1)
resolve on the rectification and ratification of the global compensation of the Company’s managers relating to the period
from May 2020 to April 2021, fixed at the Company’s Annual General Meeting held on April 30, 2020;
(2)
resolve on the absorption of the losses assessed in the fiscal year ended on December 31, 2020 by the capital reserve account
related to the premium in the issue/sale of the Company’s shares;
(3)
resolve on the independence of Ms. Georgia Garinois-Melenikiotou, as candidate to the Company’s Board of Directors;
(4)
resolve on the election of Ms. Georgia Garinois-Melenikiotou to hold office as independent member of the Company’s Board
of Directors, for a term of office unified with the other members of the Board of Directors, which will end on the date of the
annual general meeting at which the Company’s shareholders shall vote on the financial statements for the fiscal year ending
on December 31, 2021;
(5)
resolve on the updating of article 5 of the Company’s Bylaws, so as to reflect the amount of the capital stock confirmed
at the Board of Directors’ Meeting held on March 16, 2021;
(6)
resolve on the amendment to paragraph 1, article 16 of the Company’s Bylaws to provide that a majority of the Board
of Directors be composed of external members, having at least one third of independent members;
(7)
resolve on the amendment to letter “j”, paragraph 4, article 18 of the Company’s Bylaws, to exclude the
obligation that at least one Co-Chairman of the Board of Directors be a member of the Organizational Development and Personnel
Committee;
(8)
resolve on the amendment to item (xxv) of article 20 of the Company’s Bylaws, to provide that the Board of Directors
shall issue a statement on conducting public offerings for the purchase of shares the subject matter of which are other securities
convertible into or exchangeable for shares issued by the Company, in addition to its shares;
(9)
resolve on the inclusion of the new item (xxviii) in article 20 of the Company’s Bylaws, to provide that the Board of
Directors shall issue a statement on the terms and conditions of corporate restructurings, capital increases and other transactions
giving rise to change of control and decide whether these transactions assure fair and equitable treatment to the company’s
shareholders;
(10)
resolve on the inclusion of the new item (xxix) in article 20 of the Company’s Bylaws, to provide that the Board of
Directors shall assess and annually disclose who are the independent directors of the Company, as well as inform and justify any
circumstances that may jeopardize their independence;
(11)
resolve on the inclusion of the new item (xxx) in article 20 of the Company’s Bylaws, to provide that the Board of Directors
shall resolve on the transactions with related parties it is empowered to resolve upon, as defined in the corresponding policy
of the Company;
(12)
resolve on the amendment to item (xxvi), article 20 and to letter “c”, paragraph 2, article 24 of the Company’s
Bylaws, to correct the wording and cross-reference; and
(13)
resolve on the restatement of the Company’s Bylaws, to reflect the amendments set forth in the items above.
The Management
Proposal for the matters in the agenda of the Meetings is described herein.
BOARD
OF DIRECTORS
In compliance
with the provisions of Ruling No. 480 of the Brazilian Securities and Exchange Commission (“CVM”) of December
7, 2009, as amended (“CVM Rule No. 480”), and of CVM Rule No. 481, and aiming at the Shareholders’ instruction
regarding the matters to be resolved in the Meetings, this document provides the Company’s management proposal about the
matters to be submitted to the resolution of the Shareholders in the Meetings, as well as the information relevant for the exercise
of the voting right by the Shareholders.
At
the Annual General Meeting:
(1)
Review the managers’ accounts, examine, discuss and vote on the management report and the financial statements, together
with the independent auditors’ report, for the fiscal year ended on December 31, 2020.
The annual
management report and the financial statements, together with the independent auditors’ report for the fiscal year ended
on December 31, 2020, were approved by the Board of Directors at a meeting held on March 3, 2021, and published in newspaper “Valor
Econômico” and in the Official Gazette of the State of São Paulo in its editions of March 5, 2021.
In addition
to the other applicable documents, pursuant to CVM Rule No. 481, the documents below are available for consultation on the Investor
Relations website (https://ri.naturaeco.com), on the CVM website (www.gov.br/cvm)
and on the B3 website (www.b3.com.br):
|
·
|
Managers’
comments about the Company’s financial status, pursuant to item 10 of the Reference
Form and under CVM Rule No. 481, which is also in Exhibit I to this Proposal;
|
|
·
|
Annual
Summarized Report of the Audit, Risk Management and Finance Committee;
|
|
·
|
Fiscal Council’s Opinion;
|
|
·
|
Independent
Auditors’ Report;
|
|
·
|
Officers’
Declaration on the Financial Statements; and
|
|
·
|
Officers’
Declaration on the Auditors’ Report.
|
The Management
proposes approval of the manager’s accounts, of the management report and of the financial statements, together with the
independent auditors’ report, for the fiscal year ended on December 31, 2020.
(2)
Examine, discuss and vote on the proposed allocation of the losses assessed in the fiscal year ended on December 31, 2020 to the
Company accrued losses account.
As indicated
in the financial statements of the Company and in the managers’ comments about the financial situation of the Company, pursuant
to item 10 of the Reference Form in Exhibit I to this proposal, the result assessed in year 2020 was a loss of six hundred
fifty million, one hundred ninety-six thousand reais, three hundred thirty-three reais and sixty-nine centavos (R$650,196,333,69).
Therefore,
the Management proposes that the losses assessed in the fiscal year be allocated to the accrued losses account, pursuant to the
provisions of article 189 of the Corporations Act, without prejudice to the proposed absorption of these losses by the Company’s
capital reserve at an Extraordinary General Meeting, as set forth below.
(3)
Define the global compensation of the Company’s managers, to be paid by the date of the annual general meeting at which
the Company’s shareholders shall vote on the financial statements for the fiscal year ending on December 31, 2021.
The Company’s
Management proposes to set the managers’ global compensation, to be paid by the date of the annual general meeting at which
the Company’s shareholders shall vote on the financial statements for the fiscal year ending on December 31, 2021, considering
the period from May 2021 to April 2022, in the total amount of up to one hundred and four million, five hundred and eighty-five
thousand, six hundred and fifteen (R$104,585,615.00), including fixed and equity-based compensation.
In accordance
with the understanding stated by the CVM’ Board at a meeting held on December 8, 2020 (CVM Proceeding No. 19957.007457/2018-109),
the social charges payable by employers are not comprised by the concept of “benefits of any nature” mentioned in
article 152 of the Corporations Act. Thus, such charges have not been considered for the purposes of the managers’ proposed
global compensation herein submitted.
For further
information on the amount corresponding to the management compensation, see item 13 of the Reference Form included in Exhibit
III.
The Company’s
Managers’ Compensation Policy was approved by the Board of Directors on July 17, 2019 and is available for consultation
on the Company’s investor relations website (https://ri.naturaeco.com) and on the
CVM website (https://www.gov.br/cvm).
(4)
Instatement of the Fiscal Council.
Although
not included in the agenda of the AEGM, the law allows shareholders who hold more than 2% of the Company’s capital to request
the instatement of a Fiscal Council. In this regard, by legal requirement, the Remote Voting Ballot contains the following simple
question:
“4.
Do you wish to request the instatement of the Fiscal Council, pursuant to article 161 of Law No. 6,404 of 1976?
[ ] Yes
[ ] No [ ] Abstain”
The Company
suggests that the shareholders vote “no” or “abstain” upon request for instatement of such body, as it
understands that the Audit, Risk Management and Finance Committee - the mission of which is to ensure the operationalization of
the internal and external audit procedures, of the mechanisms and controls related to the risk management and coherence of financial
policies with the strategic guidelines and the business risk profile - already properly performs the surveillance functions, thus
it being not necessary the instatement of the Fiscal Council, which would result in an increase to the costs with no clear benefits.
Up to the
moment, the Management informs that there has not been any request for inclusion of candidates to the Fiscal Council in the Remote
Voting Ballot, as allowed under the CVM Rule No. 481.
Thus, those
shareholders that opt for remote voting shall not be able to know the names, résumés and other relevant information
of any candidates that may be appointed afterwards, even at the General Meeting itself, nor shall they take part in the election,
if shareholders holding more than 2% of the total Company’s capital vote in favor of the request for instatement of the
Fiscal Council (considering the sum of the votes cast in person or remotely).
Thus, to
avoid the risk that shareholders who opt for the remote voting inadvertently contribute for the election of candidates (i) indicated
and appointed by shareholders holding an irrelevant percentage or a percentage that minimally represents the capital stock, and/or
(ii) whose names and résumés and other information relevant for an informed decision have not been disclosed upon
completion of the Remote Voting Ballot, without prejudice to the provisions of article 21-L of CVM Rule No. 481, the Management
suggests that the shareholders who opt for the remote voting vote “no” or “abstain” in the answer to the
simple question No. 4.
At
the Extraordinary General Meeting:
(1)
Resolve on the rectification and ratification of the global compensation of the Company’s managers relating to the period
from May 2020 to April 2021, fixed at the Company’s Annual General Meeting held on April 30, 2020.
At the Annual
General Meeting held on April 30, 2020 (“2020 AGM”), the shareholders approved, by majority of the votes cast,
the global compensation of the managers considering the period from May 2020 to April 2021, in the total amount of up to eighty-one
million, sixty-five thousand, seven hundred and forty-nine reais and sixty-two centavos (R$81,065,749.62).
The Company’s
management explained, on that occasion, by means of the Company’s Management Proposal relating to the 2020 AGM, that the
amount of eighty-one million, sixty-five thousand, seven hundred and forty-nine reais and sixty-two centavos (R$81,065,749.62)
considered that no variable compensation payment (bonus, profit sharing and charges) would be made to the members of the Company’s
statutory management, considering the failure to reach the targets of this compensation component due to the potential impacts
of the Covid-19.
2020 was
a time to care. The Company focused on ensuring its associates’ health and safety, as well as of its consultants and representatives
network and business partners. It prioritized essential products, including significant donations, and worked to reinforce its
capital structure in order to absorb the possible impacts caused by Covid-19 on the results. Even in view of such a challenging
scenario, the Company demonstrated resilience and reported an increase in net sales of 12.1% in R$ (-2.3% in constant currency)
in 2020, exceeding the CFT1 market. The strength of
the social selling model, iconic brands, advancement of digitalization and a worldwide omnichannel strategy resulted in an exceptional
performance over the last quarters. The Company ended the year with great confidence in its business model and its brands, result
of its efforts, resilience, and dedication of our network of associates and executives.
In view
of the above, the Management proposes to approve the rectification and ratification of the global compensation amount paid for
the Company’s managers considering the period from May 2020 to April 2021, defined at the Annual General Meeting held on
April 30, 2020, from the amount of eighty-one million, sixty-five thousand, seven hundred and forty-nine reais and sixty- two
centavos (R$81,065,749.62) to ninety-eight million, nine hundred and thirty-three thousand, nine hundred, seventy-seven reais
and forty-eight centavos (R$98,933,977.48), a difference equivalent to seventeen million, eight hundred and sixty-eight thousand,
two hundred and seventy-seven reais and eighty centavos (R$17,868,277.80) so that the total payment can be incorporated into the
compensation for the year as variable compensation (bonus, profit and charges).
For the
purposes of comparison with the global compensation approved at the 2020 AGM, the proposal for a new ratification submitted herein
includes the social charges payable by the employer, following the same criteria used in the global compensation approved
at the 2020 AGM.
For further
information on the proposed rectification and ratification of the management compensation presented, see item 13 of the Reference
Form included in Exhibit III.
____________________
1
English acronym for Cosmetics, Fragrances and Toiletries. Company’s estimate based on the income of comparable global companies
of 2020 vs. the previous year, of -8.3% (in reported current currency), as reported by the Companies or estimates published on
Bloomberg for those that have not yet disclosed their results.
(2)
Resolve on the absorption of the losses assessed in the fiscal year ended on December 31, 2020 by the capital reserve account
related to the premium in the issue/sale of the Company’s shares;
As indicated
in the financial statements of the Company and in the managers’ comments about the financial situation of the Company, pursuant
to item 10 of the Reference Form in Exhibit I to this proposal, the result assessed in year 2020 was an accumulated loss
in its financial statements for the fiscal year ended on December 31, 2020 in the amount of six hundred fifty million, one hundred
ninety-six thousand reais, three hundred thirty-three reais and ninety-six centavos (R$650,196,333.69). In addition, the Company
currently has, in its capital reserves, a share issue/sale premium account, in the amount of ten billion, nine hundred seventy-four
million, six hundred and sixty-four thousand reais, two hundred sixty-four reais and thirteen centavos (R$10,974,664,264.13),
as evidenced in the Statement of Changes in Net Equity.
The Corporations
Act allows that capital reserves be used to absorb losses.
The purpose
of the proposed absorption of losses by the share issue/sale premium account is to make the balance of accrued losses on December
31, 2020 to be zero, so that the profits generated as of January 1, 2021 be distributable to the shareholders.
In this
regard, the Company’s Management proposes the approval of said absorption of accrued losses by the Company’s share
issue/sale premium account.
(3)
Resolve on the independence of Ms. Georgia Garinois-Melenikiotou, candidate to the Company’s Board of Directors.
Pursuant
to the provisions of article 17 of the Novo Mercado Rules, the characterization of Ms. Georgia Garinois-Melenikiotou as candidate
to the Board of Directors as independent board members shall be resolved by the Company’s General Meeting.
For purposes
of article 17 of the Novo Mercado Rules, the Company’s Board of Directors issued a favorable statement for the qualification
of the candidate in accordance with the independence criteria set forth in the Novo Mercado Rules. In support to her candidacy,
the Board of Directors obtained from the candidate a statement that she meets the independence requirements established in the
Novo Mercado Rules, as well as that she is apt to assume the office, pursuant to article 147 of the Corporations Act.
Considering
the above, the Management recommends that the shareholders approve, within the scope of the Annual General Meeting, the qualification
of Ms. Georgia Garinois-Melenikiotou as candidate to independent member of the Board of Directors.
(4)
Resolve on the election of Ms. Georgia Garinois-Melenikiotou to hold office as independent member of the Company’s Board
of Directors, for a term of office unified with the other members of the Board of Directors, which will end on the date of the
annual general meeting at which the Company’s shareholders shall vote on the financial statements for the fiscal year ending
on December 31, 2021.
The Management
appoints Ms. Georgia Garinois-Melenikiotou as member of the Board of Directors, for a term of office unified with the other members
of the Board of Directors, which shall end on the date of the annual general meeting at which the Company’s shareholders
shall vote on the financial statements for the fiscal year ending on December 31, 2021.
For further
information on the candidate, see the document contained in Exhibit II to this Proposal.
(5)
Resolve on the amendment to article 5 of the Company’s Bylaws, so as to reflect the amount of the capital stock confirmed
at the Board of Directors’ Meeting held on March 16, 2021.
The Company’s
Management proposes the amendment to article 5 of the Company’s Bylaws, so as to reflect the amount of the capital stock
confirmed at the Board of Directors’ Meeting held on March 16, 2021, which was increased from twelve billion, five hundred
and eighty-six million, nine hundred and seventy-eight thousand, four hundred and nine reais and eighty-three centavos (R$12,586,978,409.83),
divided into one billion, three hundred and seventy-five million, eighteen thousand, one hundred and forty (1,375,018,140) registered
common shares, without par value, to twelve billion, six hundred and eight million, four hundred and fifty-one thousand,
four hundred and sixty-one reais and forty-eight centavos (R$12.608.451.461,48), divided into one billion, three hundred and seventy-five
million, eight hundred and nineteen thousand, three hundred and four (1.375.819.304) registered common shares, without par value,
as a result of the exercise, by the Company’s managers and employees, as well as by the managers and employees of the companies
directly or indirectly controlled by it, who participate in the current long-term incentive plans, as authorized by the wording
of article 6, paragraph 2, of the Company’s Bylaws, of call options or options to subscribe common shares issued by the
Company.
Therefore,
it proposes to amend article 5 of the Company’s Bylaws, which shall now become effective with the following new wording:
“Article
5 - The Company’s capital, fully subscribed and paid up, is twelve billion, six hundred and eight million, four hundred
and fifty-one thousand, four hundred and sixty- one reais and forty-eight centavos (R$ 12.608.451.461,48), divided into one billion,
three hundred and seventy-five million, eight hundred and nineteen thousand, three hundred and four (1.375.819.304) registered
common shares with no par value.”
In compliance
with the provisions of article 11 of CVM Rule No. 481, Exhibit IV to this Proposal contains a comparative chart, including
the current wording, the proposed wording and the justification for the amendments. In addition, for ease of reference and better
viewing and contextualization of all amendments proposed herein, Exhibit IV also contains the track changes and clean versions
of the Bylaws restating the proposed amendments.
(6)
Resolve on the amendment to paragraph 1, article 16 of the Company’s Bylaws to provide that a majority of the Board of Directors
be composed of external members, having at least one third of independent members.
The Brazilian
Code of Corporate Governance (“CBGC”), created under the coordination of the Brazilian Institute for Corporate
Governance, establishes a set of recommended practices for publicly-held companies, based on an “apply or explain”
model.
Under the
terms of CVM Rule No. 480/09, publicly-held companies must annually deliver a Report on the adoption of the practices recommended
by the CBGC. The recommended practice in its item 2.2.1(i) provides the following: “2.2.1 The bylaws shall set forth
that: (i) the board of directors shall be mostly composed of external members, with, at least, one third of independent members;
(...)”
In order
to comply with the recommended practice and improve its corporate governance practices, the Company’s Management proposes
to amend the Company’s Bylaws to adopt the principle indicated above.
Irrespective
of the amendment to the Bylaws proposed herein, the Company already meets the proposed rule, considering that, out of the twelve
(12) members who currently compose its Board of Directors, eight (8) are independent members, which corresponds to 67% of independent
members.
Similarly, a majority of the members of the Board of Directors of the Company are already deemed external members.
In compliance
with the provisions of article 11 of CVM Rule No. 481, Exhibit IV to this Proposal contains a comparative chart, including
the current wording, the proposed wording and the justification for the amendments. In addition, for ease of reference and better
viewing and contextualization of all amendments proposed herein, Exhibit IV also contains the track changes and clean versions
of the Bylaws restating the proposed amendments.
(7)
Resolve on the amendment to letter “j”, paragraph 4, article 18 of the Company’s Bylaws, to exclude the obligation
that at least one Co-Chairman of the Board of Directors be a member of the Organizational Development and Personnel Committee.
Pursuant
to the Bylaws, the Co-Chairmen of the Board of Directors will be elected by the majority vote of the other members of the Board
of Directors, and they have several specific attributions, which positions are currently occupied by representatives related to
the controlling shareholders of the Company.
The Organizational
Development and Personnel Committee of the Company is a non-statutory committee of the Company currently presided over by an independent
board member, and the majority of its members are independent board members.
The proposal
of the Company’s Management to exclude the obligation that one of the Co- Chairmen be part of the Organizational Development
and Personnel Committee will reinforce the independent character of the committee and the Company’s governance practices,
since such Committee will have an office chosen by a Board of Directors composed mostly of independent members.
In compliance
with the provisions of article 11 of CVM Rule No. 481, Exhibit IV to this Proposal contains a comparative chart, including
the current wording, the proposed wording and the justification for the amendments. In addition, for ease of reference and better
viewing and contextualization of all amendments proposed herein, Exhibit IV also contains the track changes and clean versions
of the Bylaws restating the proposed amendments.
(8)
Resolve on the amendment to item (xxv) of article 20 of the Company’s Bylaws, to provide that the Board of Directors shall
issue a statement on conducting public offerings for the purchase of shares the subject matter of which are other securities convertible
into or exchangeable for shares issued by the Company, in addition to its shares;
The practice
recommended in item 1.6.1 of CBGC sets forth the following: “1.6.1. The bylaws shall set forth that the board of directors
must give its opinion regarding any Public Offer of Shares, which object is the shares or securities convertible into or exchangeable
for shares issued by the company, which shall include, among other relevant information, the opinion of the management on the
potential acceptance of the Public Offer of Shares and on the company’s economic value.”
For the
purpose of improving its corporate governance practices and complying with principle 1.6.1 of the CBGC, the Management proposes
to amend item (xxv) of article 20, so that the Board of Directors assumes the obligation to issue a statement on conducting public
offerings for the acquisition of shares the subject matter of which are other securities convertible into or exchangeable for
shares issued by the Company, in addition to its shares, which is already contemplated in the current wording.
In compliance
with the provisions of article 11 of CVM Rule No. 481, Exhibit IV to this Proposal contains a comparative chart, including
the current wording, the proposed wording and
the justification
for the amendments. In addition, for ease of reference and better viewing and contextualization of all amendments proposed herein,
Exhibit IV also contains the track changes and clean versions of the Bylaws restating the proposed amendments.
(9)
Resolve on the inclusion of the new item (xxviii) in article 20 of the Company’s Bylaws, to provide that the Board of Directors
shall issue a statement on the terms and conditions of corporate restructurings, capital increases and other transactions giving
rise to change of control and decide whether these transactions assure fair and equitable treatment to the company’s shareholders.
The practice
recommended in item 1.5.1(ii) of CBGC sets forth the following: “1.5.1 The company’s bylaws shall set forth as
follows: (...) (ii) the managers shall issue a statement on the terms and conditions of corporate restructurings, capital increases
and other transactions giving rise to change of control, and decide whether these transactions assure fair and equitable treatment
to the company’s shareholders.”
Also seeking
to improve its corporate governance practices and complying with principle 1.5.1 of the CBGC, the Management proposes the inclusion
of the new item (xxviii) in article 20 of the Company’s Bylaws, to provide that the Board of Directors shall issue a statement
on the terms and conditions of corporate restructurings, capital increases and other transactions giving rise to change of control
and decide whether these transactions assure fair and equitable treatment to the Company’s shareholders.
In compliance
with the provisions of article 11 of CVM Rule No. 481, Exhibit IV to this Proposal contains a comparative chart, including
the current wording, the proposed wording and the justification for the amendments. In addition, for ease of reference and better
viewing and contextualization of all amendments proposed herein, Exhibit IV also contains the track changes and clean versions
of the Bylaws restating the proposed amendments.
(10)
Resolve on the inclusion of the new item (xxix) in article 20 of the Company’s Bylaws, to provide that the Board of Directors
shall assess and annually disclose who are the independent directors of the Company, as well as inform and justify any circumstances
that may jeopardize their independence.
The practice
recommended in item 2.2.1(ii) of CBGC sets forth the following: “2.2.1 The bylaws shall set forth that: (...) (ii) the
board of directors shall assess and annually disclose who the independent board members are, as well as indicate and justify any
circumstances that may compromise their independence. (...)”
Also seeking
to improve its corporate governance practices and complying with principle 2.2.1(ii) of the CBGC, the Management proposes the
inclusion of the new item (xxix) in article 20 of the Company’s Bylaws, to provide that the Board of Directors shall assess
and annually disclose who are the independent directors of the Company, as well as inform and justify any circumstances that may
jeopardize their independence.
In compliance
with the provisions of article 11 of CVM Rule No. 481, Exhibit IV to this Proposal contains a comparative chart, including
the current wording, the proposed wording and the justification for the amendments. In addition, for ease of reference and better
viewing and contextualization of all amendments proposed herein, Exhibit IV also contains the track changes and clean versions
of the Bylaws restating the proposed amendments.
(11)
Resolve on the inclusion of the new item (xxx) in article 20 of the Company’s Bylaws, to provide that the Board of Directors
shall resolve on the transactions with related parties it is empowered to resolve upon, as defined in the corresponding policy
of the Company.
The practice
recommended in item 5.3.1 of CBGC sets forth the following: “5.3.1 The bylaws shall set forth which transactions with
related parties shall be approved by the board of directors, with the exclusion of any members with potentially conflicting interests.
Also seeking
to improve its corporate governance practices and complying with principle 5.3.1 of the CBGC, the Management proposes the inclusion
of the new item (xxx) in article 20 of the Company’s Bylaws, to provide that the Board of Directors shall approve the transactions
with related parties it is empowered to resolve upon, as defined in the corresponding policy of the Company.
In compliance
with the provisions of article 11 of CVM Rule No. 481, Exhibit IV to this Proposal contains a comparative chart, including
the current wording, the proposed wording and the justification for the amendments. In addition, for ease of reference and better
viewing and contextualization of all amendments proposed herein, Exhibit IV also contains the track changes and clean versions
of the Bylaws restating the proposed amendments.
(12)
Resolve on the amendment to item (xxvi), article 20 and to letter “c”, paragraph 2, article 24 of the Company’s
Bylaws, to correct the wording and cross-reference.
The Company’s
Management proposes the amendment to item (xxvi) of article 20 of the Company’s Bylaws to correct an error in the cross-reference
to another article of the Bylaws.
It also
proposes the amendment to letter “c”, paragraph 2, article 24 of the Company’s Bylaws to correct the wording
of said item, to exclude the redundant text “to represent the Company in”.
The purpose
of these amendments is merely to correct errors in the wording of the Company’s Bylaws, and they do not represent a material
impact to the Company.
In compliance
with the provisions of article 11 of CVM Rule No. 481, Exhibit IV to this Proposal contains a comparative chart, including
the current wording, the proposed wording and the justification for the amendments. In addition, for ease of reference and better
viewing and contextualization of all amendments proposed herein, Exhibit IV also contains the track changes and clean versions
of the Bylaws restating the proposed amendments.
(13)
Resolve on the restatement of the Company’s Bylaws, to reflect the amendments set forth in the items above.
To the extent
that the amendments proposed in the items above are approved by the shareholders, the Board of Directors proposes, as a consequence,
the restatement of the Company’s Bylaws, pursuant to the provisions of Exhibit IV to this Proposal.
In compliance
with the provisions of article 11 of CVM Rule No. 481, Exhibit IV to this Proposal contains a comparative chart, including
the current wording, the proposed wording and the justification for the amendments. In addition, for ease of reference and better
viewing and contextualization of all amendments proposed herein, Exhibit IV also contains the track changes and clean versions
of the Bylaws restating the proposed amendments.
* * *
NATURA &CO HOLDING S.A.
MANAGEMENT
PROPOSAL FOR THE ANNUAL AND EXTRAORDINARY
GENERAL
MEETINGS
TO BE
HELD ON APRIL 16, 2021
EXHIBIT
I
Managers’
comments about the Company’s financial status, pursuant to item 10 of the Reference Form and under CVM Rule No. 481
10.1 -
General financial and equity conditions
The following
discussion of our consolidated financial condition and results of operations should be read in conjunction with our audited consolidated
financial statements as of and for the years ended December 31, 2020, 2019 and 2018 presented in accordance with accounting practices
adopted in Brazil, which comprise the rules of the Brazilian Securities and Exchange Commission (“CVM”) and the pronouncements
of the Accounting Pronouncements Committee (“CPC”) and in accordance with the International Financial Reporting Standards
(“IFRS”), as issued by the International Accounting Standards Board (“IASB”).
As described
in item 7.1 of this Reference Form, the Company was organized with the purpose of enabling the acquisition of Avon Products, Inc.
(“Avon”) through the combination of businesses, operations, and share bases of Natura Cosméticos S.A.
(“Natura Cosméticos”) and Avon (“Transaction”).
As a result
of the Transaction, for the purposes of this Section 10 of the Reference Form, “Natura &Co” only means (i) prior
to the conclusion of the Transaction, Natura Cosméticos and its subsidiaries on a consolidated basis, and (ii) after the
conclusion of the Transaction, Natura &Co Holding and its subsidiaries on a consolidated basis. The brands under management
of the Company include Natura Cosméticos, Avon and Natura &Co International S.a.r.l., recently constituted.
The Transaction
was announced on May 22, 2019, when Avon, Natura Cosméticos, the Company (“Natura & Co Holding”) and
the subsidiaries Nectarine Merger Sub I, Inc. and Nectarine Merger Sub II, Inc. entered into the Merger Agreement, as amended
on October 3, 2019 and November 5, 2019, whereby Avon and Natura Cosméticos would become direct wholly-owned subsidiaries
of Natura &Co Holding.
On November
13, 2019, the controlling shareholders of Natura Cosméticos contributed to Natura &Co Holding, in a capital increase,
shares corresponding to approximately 57.3% of the capital of Natura Cosméticos and, on December 17, 2019, the merger,
into Natura &Co Holding, of all shares held by non- controlling shareholders and not previously held by Natura &Co Holding.
Thus, Natura Cosméticos became a wholly-owned subsidiary of Natura &Co Holding, completing the corporate restructuring
carried out in preparation for the Transaction (“Corporate Restructuring”).
After all
the conditions for the conclusion of the Transaction were met, Nectarine Merger Sub II were merged with and into Avon, with Avon
surviving the merger. Subsequently, Nectarine Merger Sub I were merged with and into Natura &Co Holding S.A., with Natura
&Co Holding S.A. surviving the merger. Following the mergers, Avon became a wholly owned direct subsidiary of Natura &Co
Holding S.A., and the former Avon shareholders became shareholders of Natura &Co Holding S.A.
Prior to
the Corporate Restructuring, Natura &Co Holding had limited or inexistent assets, operations, and liabilities, and had no
material contingent commitment or liability.
The Corporate
Restructuring was recorded using the predecessor accounting method through which historical transactions of Natura Cosméticos
are considered Natura &Co Holding’s transactions.
Thus, the
consolidated financial statements analyzed and discussed in this form reflect:
|
·
|
the
historical operating results and Natura &Co’s financial standing before the
Corporate Restructuring;
|
|
·
|
the
consolidated results of Natura &Co Holding and Natura &Co after the Corporate
Restructuring;
|
|
·
|
Natura
&Co’s assets and liabilities at their historical cost; and
|
|
·
|
Natura
&Co Holding’s profit per share for all periods presented.
|
The Transaction
was consummated on January 3, 2020, and, as a result, Avon became a direct wholly- owned subsidiary of Natura &Co Holding.
Immediately
after the conclusion of the Transaction, the former shareholders of Natura Cosméticos held approximately 72.9% of Natura
&Co Holding and the former common shareholders of Avon held approximately 27.1% of Natura &Co Holding. As a result, Natura
&Co Holding is the acquirer for the purposes of financial reporting.
The number
of common shares issued by Natura &Co Holding, as a result of the Corporate Restructuring, is retrospectively reflected as
of January 1, 2017, for the purpose of calculation of the profit per share in all previous periods presented.
The consolidated
financial statements, the statements of income and cash flows and all other movements of assets and liabilities are, except when
mentioned, in Brazilian Reais, the functional currency and the presentation currency of the consolidated financial statements
of Natura & Co Holding and Natura & Co.
As explained
in item 7.2(a), before the announcement in January 2020 about the acquisition of Avon, starting in the first quarter of 2020,
and as a result of the acquisition of Avon, we started to manage and report our operations based on the following four operating
segments:
|
·
|
Natura
&Co Latam: all operations of Natura, Avon, The Body Shop and Aesop located in
Brazil and Latin America;
|
|
·
|
Avon
International: all Avon operations outside of Latin America;
|
|
·
|
The
Body Shop International: all operations of The Body Shop outside Latin America; and
|
|
·
|
Aesop
International: all Aesop operations outside of Latin America.
|
The discussion
and comparative analysis of the consolidated results for the years ended December 31, 2020 and 2019 are based on the new presentation
of segments. We emphasize that the consolidated information per segment for the year ended December 31, 2019 has been restated
to reflect the changes in the presentation of the segments, as mentioned above.
The discussion
and comparative analysis of the consolidated results for the years ended December 31, 2019 and 2018, are based on information
on segments as originally presented, reflecting, then, based on five operating segments: Natura Brasil, Natura Latam, The Body
Shop, Aesop and others, as disclosed in the individual and consolidated financial statements for the years ended December 31,
2019 and 2018. Therefore, segment information for years ended December 31, 2018 is not comparable with information from segments
for the year ended December 31, 2020.
The comparative
consolidated historical information presented herein for the income statements, comprehensive income, changes in shareholders’
equity, cash flows and value added for the comparative
year ended
December 31, 2019 and 2018, does not include information from subsidiary Avon Products Inc., since the Business Combination was
realized on January 3, 2020.
Additionally,
on January 1, 2019 the new standard that regulates the accounting treatment of Lease Transactions IFRS 16/CPC 06(R2), issued by
IASB and CPC, respectively, came into force. During the transition, Natura Cosméticos chose to implement the new standard
using the simplified modified retrospective approach. Consequently, the financial information of December 31, 2018 does not reflect
the adoption of IFRS 16/CPC 06(R2) and, for this reason, some financial information is not comparable with the periods before
the initial date of application of IFRS 16/CPC 06(R2).
The officers’
comments intend to provide to investors relevant information to facilitate the comparison of performance using our historical
financial statements for the fiscal years ended December 31, 2020, 2019, and 2018.
The terms
“HA” and “VA” in the columns of certain tables of this section 10 of the Reference Form mean “Horizontal
Analysis” and “Vertical Analysis”, respectively. The Horizontal Analysis compares indexes or items of a line
in our financial statements over a period of time. The Vertical Analysis represents the percentage or the item of a line in relation
to the net operating income for the indicated years, or in relation to the total assets on the applicable dates, except when indicated
otherwise.
All the information
presented in this Section 10 has been rounded to the nearest thousands, except when indicated otherwise.
|
a)
|
General financial and
equity conditions
|
Result
The Management
believe that the Company’s financial and equity conditions are sufficient to fulfill its short- and long-term obligations.
The Company’s cash generation, jointly with the available credit facilities in financial institutions, is sufficient to
fund its activities and cover its need for funds to carry out its business plan.
The Company
surpassed the global personal hygiene, perfumery and cosmetics market during the year. This achievement is mainly by the 107.2%
expansion of total digital sales in 2020 compared with 2019 which include sales by digital relationship (“social selling”)
and e-commerce, which were driven by the closing of the retail market during certain periods of the year.
The impact
of COVID-19, we demonstrate the omnichannel Group’s resilience, with growth in the digital channel and e-commerce. We also
made progress in Avon´s integrating and successfully raised R$ 2 billion in an increase in private capital, generating high
deleveraging, to accelerate the digital / technological transformation, through an estimated investment of R$ 400 million over
the next six months. Investments are in line with our capital expenses budget (capex), with a greater focus and priority on digital
acceleration to update Avon platforms, accelerate integration in Latin America and further boost our social and go-to- sales e-commerce
market.
In October,
the Company completed a US$ 1.0 billion (R$ 5.6 billion) public offering. This transaction has enabled investments to accelerate
growth in the following strategic priorities: integration and revitalization of Avon, digitization of the Group, geographic expansion
and sustainability commitments 2030 as well as prepayment of Avon securities in the original amount of US$ 900 million (R$ 5,194.6
million) due in 2022.
The Company
is closely monitoring the evolution of the COVID-19 pandemic worldwide, particularly the recent new lockdown or restriction measures
adopted in parts of Europe. The Crisis Committee created continuously analyzes the situation and acts to minimize impacts, ensure
continuity of operations, protect cash, improve liquidity, and promote the health and safety of all, as we advance into 2021.
We remain
extremely attentive to the health and safety of our employees, consultants and representatives and customers.
Additional
details on the results assessed by the Company of the period ended December 31, 2020 and 2019 (and other comparative periods)
are presented in item 10.1 (h) and 10.2 of this Reference Form.
Liquidity
Ratio
|
As
of December 31,
|
Indicator
|
2020
|
2019
|
2018
|
Net Liquidity (i)
|
1.2
|
1.3
|
1.4
|
General Liquidity
(ii)
|
0.8
|
0.7
|
0.6
|
|
(i)
|
Total
current assets divided by total current liabilities.
|
|
(ii)
|
Sum
of current assets and non-current assets divided by the sum of current liabilities and
non-current liabilities.
|
For the ended
December 31, 2020, current and general liquidity index were 1.2 and 0.8 for December 31, 2020 (1.3 and 0.7 on December 31, 2019),
respectively. The Company has R$ 5,821.7 million of cash and cash equivalents on December 31, 2020 and R$ 2,520.6 million in short-term
securities. The Company prepaid US$ 900 million (R$ 5,194.6 million) in November in Avon bonds maturing in 2022, and the cash
balance is in line with projections and well above our minimum limits. The cash flow generation in the second half helped to reverse
the negative cash flow in the first half of the year, despite Avon´s acquisition costs and COVID-19 impacts. Cash generation
at, mainly in the fourth quarter, was driven by strong operating results and improvement in working capital, mainly due to lower
inventory at Natura &Co Latam and the extension of the terms of the accounts payable at The Body Shop, mainly by the postponement
of rental payments.
In 2019,
the current liquidity index decreased, but the general liquidity index slightly increased. The current liquidity index went from
1.4 to 1.3, while the general liquidity index went from 0.6 to 0.7. In 2018, the current liquidity index went from 1.0 to 1.4,
while the general liquidity index stayed at 0.6. The main impacts were the increase in the indebtedness level by issuance of promissory
notes.
Net
Debt
|
As
of December 31,
|
|
2020
|
2019
|
2018
|
|
(Millions
of R$)
|
Borrowings, financing
and debentures (current liabilities)
|
3,805.6
|
3,354.4
|
1,113.1
|
Borrowings, financing
and debentures (non-current liabilities)
|
10,017.3
|
7,432.0
|
6,881.1
|
Lease (current liabilities)
|
1,059.7
|
542.1
|
68.8
|
Lease
(non-current liabilities)
|
2,798.8
|
1,975.5
|
377.5
|
Indebtedness
|
17,681.4
|
13,304.0
|
8,440.4
|
|
|
|
|
Derivative financial
instruments (current and non-current liabilities)
|
61.2
|
11.8
|
69.2
|
Lease (current liabilities)
|
(1,059.7)
|
(542.1)
|
(68.8)
|
Lease
(non-current liabilities)
|
(2,798.8)
|
(1,975.5)
|
(377.5)
|
Gross Debt
|
13,884.1
|
10,798.2
|
8,063.3
|
Cash
and cash equivalents and current and noncurrent short-term securities
|
(8,358.4)
|
(5,546.8)
|
(2,430.4)
|
Net Debt
|
5,525.7
|
5,251.4
|
5,632.9
|
The Company’s
goals, in managing its capital, are to protect its continuity, offer return to the shareholders and benefit the other stakeholders,
in addition to maintaining a reasonable capital structure to decrease such cost. The table below shows some finance information
on the Company’s activities, considering the stockholders’ equity and the equity of third parties:
|
As
of December 31
|
|
2020
|
2019
|
2018
|
|
(Million
of R$)
|
Shareholders’
equity
|
27,387.1
|
3,362.3
|
2,574.1
|
Current and noncurrent
borrowings, financing and debentures, including lease
|
17,681.4
|
13,303.9
|
8,440.4
|
Total source of capital.
|
45,045.7
|
16,666.2
|
11,014.5
|
Shareholders’
equity (i)
|
60.7%
|
20.2%
|
23.4%
|
Current and noncurrent
borrowings, financing and debentures, including lease (ii)
|
39.3%
|
79.8%
|
76.6%
|
|
(i)
|
Shareholders’
equity divided by the total source of capital.
|
|
(ii)
|
Current
and noncurrent borrowings, financing and debentures, including lease, divided by total
source of capital.
|
Shareholders’
Equity
As of December
31, 2020, our shareholders’ equity amounted to R$ 27,387.1 million, an increase of R$ 24,024.8 million compared to R$ 3,362.3
million as of December 31, 2019, primarily due to Avon´s
acquisition
of Avon and net income for the year that led to stock issues and operations of follow-on of shares during the 2020 financial year.
As of December
31, 2019, our shareholders’ equity amounted to R$ 3,362.3 million, an increase of R$ 788.2 million compared to R$ 2,574.1
million as of December 31, 2018, primarily due to (i) the net income for the year, (ii) the gain on the conversion of foreign
subsidiaries’ results of operations and cash flow hedges recognized in other comprehensive income, and the effect of stock
options and restricted stock unit plans. This increase was offset by the minimum mandatory dividend declared and interest on capital.
Current
and Noncurrent Borrowings, Financing and Debentures, Including Lease
As of December
31, 2020, current and noncurrent borrowings, financing and debentures, including lease, amounted to R$ 17,681.4 million, an increase
of R$ 4,377.5 million compared to R$ 13,303.9 million as of December 31, 2019, mainly due to the inclusion of Avon’s debts,
in addition to new borrowings and also the effects of exchange variation that were relevant in the year, due to the sharp exchange
rate devaluation due mainly to the impacts of COVID-19. These increases were partially offset by the amortization of debentures,
among other Company’s debts, during the 2020 financial year.
As of December
31, 2019, current and noncurrent borrowings, financing and debentures, including lease, amounted to R$ 13,303.9 million, an increase
of R$ 4,863.5 million compared to current and noncurrent borrowings, financing and debentures, including lease, from R$ 8,440.4
million as of December 31, 2018, primarily due to the adoption of IFRS 16/ CPC 06 (R2) and the issuance of promissory notes in
the amount of R$ 2,883.3 million related to the acquisition process of Avon.
Cash and
Cash Equivalents and Short-Term Securities
As of December
31, 2020, our cash and cash equivalents and short-term securities amounted to R$ 8,342.3 million, an increase of R$ 2,802.9 million
compared to R$ 5,539.4 million on December 31, 2019.
As of December
31, 2019, our cash and cash equivalents and short-term securities amounted to R$ 5,539.4 million, an increase of R$ 3,109.0 million
compared to R$ 2,430.4 million on December 31, 2018.
|
c)
|
capacity
to pay assumed financial commitments
|
In the fiscal
years ended December 31, 2020, 2019 and 2018, we fully complied with our financial commitments.
Additionally,
the Management understands that the relationship of the Company with first-tier financial institutions allows the access to additional
credit facilities when it becomes necessary.
The analysis
of the current liquidity and general liquidity ratios evidenced in item 10.1.a of this Reference Form demonstrates the Group’s
capacity to settle its short-term commitments.
Additionally,
up to the date of this Reference Form, the Group has honored the payments of all its commitments, as expected, and there is no
perspective of financial incapacity or non-managed liquidity risk.
|
d)
|
sources of financing
for working capital and for investments in non-current assets used by the Company
|
Our cash
needs have traditionally consisted in working capital, maintenance of our indebtedness, capital expenses related to investments
in operations, maintenance and expansion of facilities, as well as acquisitions. Our sources of liquidity consist in cash flows
from our operations (which may vary according to the fluctuations of our operating income, cost of sales, operating expenses and
financial results) and short- and long-term borrowings. We have been financing acquisitions through third-party borrowings and
structures involving stock exchange.
We believe
that our working capital is sufficient to meet our current needs for the next 12 months. If necessary, we may cover any possible
shortfall in our working capital needs or any additional needs arising from the impacts of the COVID-19 pandemic on business through
short- and long-term borrowings or debt offerings on the national and international capital markets. Our main sources of financing
for working capital, investments in non-current assets and any additional needs are: (i) cash generated from our operating activities
and (ii) borrowings and financing.
|
e)
|
sources of financing
for working capital and investment in non-current assets that it intends to use as a means of covering liquidity shortfalls
|
As presented
in note 6.2 to our individual and consolidated financial statements regarding liquidity risk management, The Body Shop had, on
December 31, 2020, a credit facility of up to seventy million pounds sterling (GBP 70 million), with guarantee provided by Natura
Cosméticos, which could be withdrawn in installments to meet short-term financing needs of The Body Shop International
Limited. This line of credit was fully cleared by the indirect subsidiary in the first quarter of 2020, to strengthen working
capital and liquidity, with payment of annual interest of Libor + 2% a year.
The Company
also used unsecured credit lines of about US$ 100 million for working capital purposes in the countries where it operates.
These lines
provide financial coverage to Natura, Aesop and Avon. Some of these lines were used in the first and second quarters of 2020 (about
US$ 60 million) to strengthen liquidity. However, a part has already been settled in the last quarter of 2020 (about US$ 14 million).
|
f)
|
indebtedness levels
and the characteristics of such debts
|
|
(i)
|
material loan and
financing agreements
|
As of December
31, 2020, current and noncurrent borrowings, financing, debentures and bond issuances, including lease, amounted to R$ 17,681.4
million, of which R$ 4,865.3 million was current and R$ 12,816.1 million was noncurrent. As of December 31, 2019, current and
noncurrent borrowings, financing, debentures and bond issuances, including lease, amounted to R$ 13,303.9 million, of which R$
3,896.4 million was current and R$ 9,407.5 million was noncurrent. As of December 31, 2018, current and noncurrent borrowings,
financing, debentures and bond issuances, including lease, amounted to R$ 8,440.4 million, of which R$ 1,181.9 million was current
and R$ 7,258.5 million was noncurrent.
The following
table shows the maturities of our non-current consolidated debts, including lease, as of, December 31, 2020:
As
of December 31, 2020
|
|
(R$ million)
|
|
Maturity of loans
and financing, including lease
|
|
2022
|
1,005.2
|
2023
|
6,715.8
|
2024
|
3,531.1
|
2025 onwards
|
1,564.0
|
Total
|
12,816.1
|
The summary
of the main banking borrowings and financing in the period ended in 2020, 2019 and 2018 is demonstrated as follows:
|
As
of December 31,
|
|
|
|
|
|
2020
|
2019
|
2018
|
Currency
|
Maturity
|
Interest
|
Security/
Guarantee
|
FINEP
(Financing Agency for Studies and Projects)
|
73.1
|
102.0
|
135.6
|
Real
|
Jun-23
|
Interest
of 3.5% per year for the installment maturing in June 2023.
|
Bank-issued
guarantee letter.
|
Debentures
|
4,042.5
|
4,251.2
|
4,680.7
|
Real
|
Aug-24
|
Interest
of 109% to 112% of the CDI and 1.4% + CDI, 1.75% + CDI, 1.00%+ CDI and 1.15% + CDI, maturing in March 2020, September 2020,
September 2021, September 2022 and August 2024.
|
None
|
Promissory
Notes
|
773.9
|
2,883.4
|
—
|
Real
|
April-2021
|
3.25%
+ CDI (i)
|
Natura
Cosméticos Ltda Secured disposed shares
|
BNDES
(vi)
|
7.8
|
35.4
|
73.4
|
Real
|
Up
to September 2021
|
TJLP
+ interest of 0.5% per year to 3.96% per year and fixed-rate contracts of 3.5% per year to 5% per year (PSI). (ii)
|
Bank-issued
guarantee letter
|
BNDES
– FINAME(vi)
|
0.0
|
0.2
|
0.7
|
Real
|
Up
to March 2021
|
Interest
of 4.5% per year + TJLP for contracts up to 2012, and for contracts executed as of 2013 fixed rate of 3% per year (PSI) (ii)
(d); Contracts from August 2014 to May 2016 at fixed rate of 6% per year to 10.5% per year
|
Fiduciary
sale, accommodation of Natura Cosméticos S.A. and promissory notes
|
Lease
|
3,858.5
|
2,517.6
|
446.2
|
Real
|
Aug-26
|
Interest
of 9% per year + IPCA (iii)
|
Fiduciary
sale of assets object of lease agreements.
|
Working
capital – International operation – Peru
|
—
|
—
|
21.0
|
Peruvian
sol
|
Jul-19
|
Interest
of 3.99% per year
|
Accommodation
of Natura Cosméticos S.A.
|
Working
capital – International operation – Mexico
|
14.5
|
31.8
|
10.0
|
Mexican
peso
|
February
2021 and October 2020
|
Interest
of 1.15% per year + TIIE (iv)
|
Accommodation
of Natura Cosméticos S.A.
|
Working
capital – International operation – Aesop Operation
|
—
|
100.4
|
59.9
|
Australian
dollar
|
Aug-26
|
US$
Libor + interest 0.92% per year
|
Bank-issued
guarantee letter
|
Working
capital – International operation – The Body Shop
|
500.8
|
—
|
—
|
GBP
|
Mar-21
|
GBP
Libor plus 2.0%
|
Accommodation
of Natura Cosméticos S.A.
|
Working
capital – International operation – Avon
|
145.5
|
—
|
—
|
Various
|
May-22
|
Libor
plus 7.7%
|
N/A
|
Notes
– Avon
|
4,033.7
|
—
|
—
|
U.S.
dollar
|
(a)
March 15, 2023;
(b)
March 15, 2043;
|
Annual
interest of (a) 7.00% and (b) 8.95%
|
(i)
No guarantee; (ii) No guarantee; (iii) Guarantee (iv) Guarantee
|
Total
in local currency
|
13,450.3
|
9,922.0
|
5,427.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
Currency
|
|
|
|
|
|
|
|
BNDES
(vi)
|
1.6
|
8.0
|
17.1
|
U.S.
dollar
|
Oct-20
|
Interest
of 1.8% per year to 2.3% per year + Brazilian Resolution No. 635 (v)
|
Accommodation
of Natura Cosméticos S.A. and bank-issued guarantee letter
|
Export
Credit Note (NCE)
|
—
|
81.2
|
—
|
U.S.
dollar
|
Oct-20
|
Libor
+ interest of 0.87% per year (a)
|
None
|
Law
No. 4,131/62
|
260.2
|
202.2
|
—
|
U.S.
dollar
|
May-22
|
Libor
+ interest of 1.1% per year (v)
|
Guarantee
of Natura Indústria.
|
Notes
|
3,969.2
|
3,090.5
|
2,995.8
|
U.S.
dollar
|
Feb-23
|
Interest
of 5.375% per year (v)
|
None
|
Total
in foreign currency
|
4,231.1
|
3,381.9
|
3,012.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Overall total
|
17,681.4
|
13,303.9
|
8,440.4
|
|
|
|
|
Current
|
4,865.3
|
3,896.4
|
1,181.9
|
|
|
|
|
Noncurrent
|
12,816.1
|
9,407.5
|
7,258.5
|
|
|
|
|
Debentures
|
|
|
|
|
|
|
|
Current
|
2,169.8
|
246.0
|
934.4
|
|
|
|
|
Noncurrent
|
1,872.7
|
4,005.2
|
3,746.3
|
|
|
|
|
____________________
|
(i)
|
CDI
rate – Interbank Loan Rate.
|
|
(ii)
|
PSI
– Investment Support Program.
|
|
(iii)
|
IPCA
– Broad Consumer Price Index.
|
|
(iv)
|
TIIE
– Mexican Interbank Equilibrium Interest Rate.
|
|
(v)
|
Loans
and financing for which swap contracts (CDI) were entered into. These loans and financing
operations are not being shown net of their derivatives.
|
|
(vi)
|
These
loans are subject to the general provisions applicable to BNDES agreements, including
provisions that restrict us from obtaining certain new indebtedness.
|
|
(ii)
|
other long-term relationships
with financial institutions
|
The Company
has long-term relationships with national and international financial institutions that, over the last years, enabled the growth
of its activities by means of loans and financing.
|
(iii)
|
debt subordination
levels
|
There is
no subordination among our debts. The gross debt is composed of the sum of loans and financing and debentures (current and non-current),
guaranteed by (i) fiduciary assignment; (ii) fiduciary alienation; and (iii) financial guarantees, such as endorsement and bail.
The degree of subordination between the Company’s debts is determined in accordance with the provisions of the legislation
in force, namely: (i) social and labor obligations; (ii) tax liabilities; (iii) leases; (iv) borrowings and financing; (v) chiropractic
credits; (vi) subordinated credits; and (vii) dividends and interest on equity.
(iv) any
restrictions on the Company, especially with regard to indebtedness limits and contracting of new debts, distribution of dividends,
disposal of assets, issuance of new securities, and disposal of ownership control, as well as whether the issuer has been complying
with these restrictions
Debentures
The covenants
are evaluated based on the subsidiary Natura Cosméticos balances in the years/periods as shown in the table below.
These clauses
establish financial indicators resulting from division of Net Debt for covenants purpose (which not considerate the effects of
leases and effects of derivative financial instruments of mark-to-market), less cash and cash equivalents and short-term securities
by EBITDA in the last 12 months, which must be equal to or lower than the number established:
12-month
Period Ended
|
Leverage
Ratio*
|
December 31, 2019
/ June 30, 2020
|
3.25
|
December 31, 2020
/ June 30, 2021
|
3.00
|
December 31, 2021
/ June 30, 2022
|
3.00
|
December 31, 2022
/ June 30, 2023
|
3.50
|
December 31, 2023
/ June 30, 2024
|
3.50
|
Natura
Debenture Covenants
The indentures
of the ninth issue of debentures provides for a leverage limit of 3.00x. The deeds of the tenth issuance of debentures require,
with regard to the financial covenant of leverage, limits of 3.00x until June 30, 2022 and 3.50x from the measurement of December
31, 2022 to maturity.
Covenants
Bonds Natura Cosmetics
The Company,
the function of issuing bonds abroad, also has limitations such as: (i) declaring or paying dividends or making any other distribution
on its equity interest; (ii) repurchase Natura shares; (iii) write off subordinated debt; or (iv) make minority investments, unless:
(i) no default event has occurred; (ii) Natura incurs at least US$ 1.00 of Debt without prejudice to the measurement of the Net
Debt/EBITDA (leverage) index; and (iii) the aggregate value of restricted payments made from the original date of issue of the
Notes does not exceed a percentage of Natura Cosméticos’ accumulated net income according to its leverage indicator,
among other obligations.
Avon Notes
Covenants
The indentures
governing Avon’s outstanding notes described above contain certain customary covenants, customary events of default, cross-default
provisions and change in control provisions. In July and September 2019, bondholder consents for the 5% Notes and the 6.95% Notes,
respectively, were obtained to amend the definition of “change of control” to permit the acquisition of Avon by Natura.
No repayment of notes was triggered by the Transaction with Natura &Co.
As of December
31, 2020, we were in compliance with the covenants of our financing agreements, including the financial covenants.
|
g)
|
limits
of the contracted funding and percentages already used
|
Refer to
item 10.1 (d) and (e).
|
h)
|
material
changes in each item of the financial statements
|
Income
Statements
The tables
in this item show a summary of the main consolidated financial information of the Company for the periods indicated therein, with
accompanying comments from the Officers of the Company regarding material changes occurred in such periods.
The following
table sets forth our individual and consolidated financial information for the fiscal years ended December 31, 2020, 2019 and
2018:
|
As
of December 31,
|
(Million
R$)
|
2020
|
A.V
|
A.H
|
2019
|
A.V
|
A.H
|
2018
|
NET REVENUE
|
36,922.0
|
100.0%
|
155.6%
|
14,444.7
|
100.0%
|
7.8%
|
13,397.4
|
Cost of products sold
|
(13,229.7)
|
(35.8%)
|
228.0%
|
(4,033.5)
|
(27.9%)
|
6.6%
|
(3,782.8)
|
GROSS PROFIT
|
23,692.3
|
64.2%
|
127.6%
|
10,411.2
|
72.1%
|
8.3%
|
9,614.6
|
|
|
|
|
|
|
|
|
OPERATING (EXPENSES)
INCOME
|
|
|
|
|
|
|
|
Selling, Marketing and
Logistics expenses
|
(15,702.8)
|
(42.5%)
|
145.5%
|
(6,395.6)
|
(44.3%)
|
9.7%
|
(5,828.7)
|
Administrative, R&D,
IT and Project Expenses
|
(5,956.0)
|
(16.1%)
|
147.6%
|
(2,405.6)
|
(16.7%)
|
6.9%
|
(2,251.3)
|
Impairment loss on trade
receivables
|
(727.7)
|
(2.0%)
|
247.3%
|
(209.5)
|
(1.5%)
|
(11.9%)
|
(237.9)
|
Other
operating income (expenses), net
|
(516.2)
|
(1.4%)
|
946.8%
|
(49.3)
|
(0.3%)
|
23.6%
|
(39.9)
|
OPERATING
PROFIT BEFORE THE FINANCIAL
RESULTS
|
789.6
|
2.1%
|
(41.6%)
|
1,351.2
|
9.4%
|
7.5%
|
1,256.7
|
|
|
|
|
|
|
|
|
Financial Income
|
4,738.4
|
12.8%
|
142.3%
|
1,955.8
|
13.5%
|
(4.9%)
|
2,056.4
|
Financial Expenses
|
(5,773.8)
|
(15.6%)
|
106.5%
|
(2,795.9)
|
(19.4%)
|
5.9%
|
(2,639.7)
|
Tax
on Natura &CO Holding formation
|
-
|
-
|
(100.0%)
|
(206.6)
|
(1.4%)
|
-
|
-
|
PROFIT
BEFORE INCOME TAX AND SOCIAL
CONTRIBUITION
|
(245.8)
|
(0.7%)
|
(180.7%)
|
304.5
|
2.1%
|
(54.8%)
|
673.4
|
|
|
|
|
|
|
|
|
Income tax and social
contribution
|
(274.7)
|
(0.7%)
|
84.3%
|
(149.1)
|
(1.0%)
|
19.3%
|
(125.0)
|
NET (LOSS) INCOME FOR
THE YEAR – CONTINUING OPERATIONS
|
(520.5)
|
(1.4%)
|
(434,9%)
|
155.4
|
1.1%
|
(71.7%)
|
548.5
|
NET
LOSS OF DISCONTINUED OPERATIONS (i)
|
(143.1)
|
(0.4%)
|
-
|
-
|
-
|
-
|
-
|
NET
PROFIT FOR THE YEAR
|
(663.6)
|
(1.8%)
|
(527.1%)
|
155.4
|
1.1%
|
(71.7%)
|
548.5
|
|
(i)
|
On December
17, 2015, Avon signed contracts that resulted in the separation of operations in the
United States, Canada and Puerto Rico from New Avon. These transactions were closed on
March 1, 2016. As of that date, contingent liabilities prior to this transaction and
related to operations in the United States, Canada, and Puerto Rico are treated as discontinued
operations.
|
Comparative
Analysis of the Consolidated Results –Periods ended December 31, 2020/2019
Net Revenue
|
As of December 31,
|
|
|
2020
|
2019
|
Variation
|
Operating segments
|
(R$
million)
|
|
Natura &Co LATAM
|
20,542.3
|
9,113.9
|
125.4%
|
Avon International
|
9,097.4
|
-
|
100.0%
|
The Body Shop International
|
5,332.9
|
4,028.7
|
32.4%
|
Aesop
International
|
1,949.3
|
1,302.2
|
49.7%
|
Net
revenue
|
36,922.0
|
14,444.7
|
155.6%
|
Our consolidated
net revenue increased by 155.6%, amounting to R$ 36,922.0 million for the period ended December 31, 2020 from R$ 14,444.7 million
for the period ended December 31, 2019, mainly due to the acquisition and consolidation of Avon in 2020 and the strong growth
in sales on the social selling and e- commerce of Natura & Co LATAM, The Body Shop International and Aesop International.
The following
is a discussion of our main segments:
|
·
|
Natura
&Co LATAM: Natura &Co LATAM’s net revenue increased by 125.4%, to R$
20,542.3 million for the period ended December 31, 2020 from R$ 9,113.9 million for the
period ended December 31, 2019, mainly due to the acquisition of Avon and the strong
growth of the Natura brand in Latin America, despite of impacts resulting from the restrictions
imposed by COVID-19.
|
|
·
|
Avon
International: Since the acquisitions of Avon on January 3, 2020 through December
31, 2020, Avon International contributed R$ 9,097.4 million of net revenue, representing
24.6% of our total consolidated net revenue.
|
|
·
|
The
Body Shop International: The Body Shop International’s net revenue increased
by 32.4%, to R$ 4,028.7 million for the period ended December 31, 2019 from R$ 5,332.9
million for the period ended December 31, 2020. The net revenue increased mainly as a
result of the increase in the average exchange rate from pound sterling to Brazilian
Real by 32.2%. In functional currency (pound sterling), The Body Shop International’s
revenue remained stable compared to 2019 (with a negative change of 1.3% in the period),
supported by the performance of e-commerce and direct selling channels, at Home, offsetting
the impacts of the Covid-19 pandemic.
|
|
·
|
Aesop
International: Aesop International’s net revenue increased 49.7%, from R$ 1,302.2
million for the year ended December 31, 2019, to R$ 1,949.3 million for the year ended
December 31, 2020. The net revenue increased mainly as a result of the increase in the
average exchange rate from Australian dollars to Brazilian Real by 31.5%. In functional
currency (Australian dollars), net revenue increased 13.9% due to the exponential increase
in online sales, offsetting the impact of temporary closure of physical stores during
part of 2020
|
and
the lower flow of tourists in the markets where the company operates, due to the restrictions of the pandemic of COVID- 19.
Cost of
Sales
The following
table shows the cost components of sales for the periods indicated:
|
As
of December 31,
|
|
|
2020
|
2019
|
Variation
|
Operating
segments
|
|
|
(R$
million)
|
Raw material for products
and packages (i) and resale products (ii)
|
11,222.8
|
3,457.5
|
224.6%
|
Personnel expenses
|
638.5
|
293.4
|
117.6%
|
Depreciation and amortization
|
215.4
|
57.4
|
274.9%
|
Other
costs (iii)
|
1,153.0
|
225.2
|
412.1%
|
Cost of sales
|
13,229.7
|
4,033.5
|
228.0%
|
|
(i)
|
Particularly plastic,
glass, graphics and fragrance bottles.
|
|
(ii)
|
Products manufactured
by third parties, including soaps, hair products and others.
|
|
(iii)
|
“Other costs”
include electricity, water, gas, computer services and others.
|
For the period
ended December 31, 2020, Natura &Co Holding’s cost of sales increased by 228.0% to R$ 13,229.7 million for ended December
31, 2020, from R$ 4,033.5 million for the year ended December 31, 2019. Cost of sales represented 35.8% of net revenue as compared
to 27.9% for December 2019. This increase is mainly due to the consolidation of Avon’s costs in the amount of R$ 8,298.9
million and Avon’s gross margin, which is lower when compared to the other companies consolidated by the Company.
With respect
to our main operating segments:
|
·
|
For
the year ended December 31, 2020, Natura &Co LATAM accounted for 60.9% of our total
cost of sales. Natura &Co LATAM’s cost of sales increased by 170.8% to R$ 8,062.8
million for the year ended December 31, 2020, representing 39.2% of the segment’s
net revenue, compared to R$ 2,977.3 million for the year ended December 31, 2019, which
represented 32.7% of net revenue. The increase in costs is mainly due to the acquisition
of Avon.
|
|
·
|
For
the period ended December 31, 2020, Avon International accounted for 28.9% of our total
cost of sales, amounting to R$ 3,822.0 million. In 2020, Avon International’s cost
of sales represented 42.0% of its own net revenue.
|
|
·
|
For
the period ended December 31, 2020, The Body Shop International accounted for 8.7% of
our total cost of sales. At The Body Shop International, cost of sales increased by 25.7%,
amounting to R$ 1,157.0 million for the period ended December 31, 2020 from R$ 933.6
million for the period ended December 31, 2019. In 2020, the cost of sales represented
21.7% of The Body Shop International’s net revenue, compared to 23.2% for the year
ended December 31, 2019. The improvement was mainly due to the reduction in discounts
on products sold.
|
|
·
|
For
the period ended December 31, 2020, Aesop International represented 1.4% of our total
cost of sales. At Aesop International, cost of sales increased by 54.2%, amounting to
R$ 188.0 million for the period ended December 31, 2020 from R$ 122.6 million for the
period ended
|
December
31, 2019. This was mainly impacted by the increase in our sales and represented 9.7% and 9.4% of net revenue for the year ended
December 31, 2020 and December 31, 2019, respectively, remaining stable.
Gross
Profit
As a result
of the foregoing, consolidated gross profit increased by 127.6% to R$ 23,692.3 million for the period ended December 31, 2020
from R$ 10,411.2 million for the period ended December 31, 2019. Our consolidated gross margin, which we calculate as gross profit
divided by net revenue, expressed as a percentage, reached 64.2% for the period ended December 31, 2020, compared to 72.1% for
the period ended December 31, 2019. Our margin decreased primarily due to the integration of Avon into the results, which has
historically run lower gross margins than the predecessor company.
Operating
Expenses
Consolidated
operating expenses increased 152.8%, to R $ 22,902.7 million for the year ended December 31, 2020, representing 62.0% of consolidated
net revenue compared to R $ 9,060.0 million for the year ended December 31, 2019, representing 62.7% of net revenue primarily
due to the factors listed below.
Selling,
Marketing and Logistics Expenses
Consolidated
selling, marketing and logistics expenses increased by 145.5% to R$ 15,702.8 million for the year ended December 31, 2020, compared
to R$ 6,395.6 million for the year ended December 31, 2019. This increase is aligned with the growth pattern of revenue and it
is primarily due to (i) Avon consolidation since January 3, 2020, (ii) the effects of Purchase Price Allocation (“PPA”)
primarily in relation to amortization of intangible assets during 2020, (iii) measures to mitigate the impacts of COVID-19 - such
as: extension of payment terms for consultants, flexibility of credit conditions and increase in online sales commissions, marketing
expenses, sales force and other sales expenses, (iv) the increase in the effects of the exchange rate of the conversion of our
foreign operations due to the devaluation of the Real and expenses based on foreign currency and (v) logistics expenses driven
by online sales. As a percentage of net revenue, sales, marketing and logistics expenses represented 42.5% for the year ended
December 31, 2020, compared to 44.3% for the year ended December 31, 2019. This decrease is a result of continued investments
in improving operational efficiency, the reduction of discretionary expenses during the second and third quarters to mitigate
the impact of COVID-19 on the profitability and liquidity of the business, and the government benefits obtained by The Body and
Aesop specially in certain markets in the second and third quarters of 2020.
Administrative,
Research and Development, Technology and Other Project Expenses
Administrative,
research and development, technology and other project expenses increased by 147.6% to R$ 5,956.0 million for the period ended
December 31, 2020 from R$ 2,405.6 million for the period ended December 31, 2019. This increase of R$ 3,550.4 million was primarily
due to the acquisition of Avon in January 2020, including the effects of amortization of PPA, which were partially offset by measures
implemented to minimize the COVID-19 impacts. As a percentage of net revenue, administrative, research and development, technology
and other project expenses at 16.1% for the year ended December 31, 2020 compared to 16.7% for the year ended December 31, 2019.
Other
Operating Income (Expenses), Net
Other operating
expenses, net increased to R$ 516.2 million for the year ended December 31, 2020, from R$ 49.3 million for the year ended December
31, 2019. This change was primarily due to (i) acquisition costs related to the Avon´s acquisition, to R$ 303.9 million
for the year ended December 31, 2020 (R$ 141.3 million in December 31, 2019) and; (ii) expenses amounting to R$ 256.7 million
related to the implementation of a transformation plan for the ended December 31, 2020 (R$ 51.5 million for the year
ended December
31, 2019). The increase on expenses were partially offset by tax credits in the amount of R$ 105,2 million for 2020 (R$ 116,7
million for 2019)
Net Financial
Result
Net financial
expenses amounted to R$ 1,035.4 million for the year ended December 31, 2020, compared to R$ 840.1 million for the year ended
December 31, 2019, mainly due to the consolidation, from 2020, of interest expenses on Avon’s debts, partially offset by
lower interest rates in Brazil, and by gains related to the amortization of step up related to debts recorded as a result of the
PPA.
Income
Tax and Social Contribution Expenses
Income tax
and social contribution expenses increased to R$ 274.7 million for 2020, from R$ 149.1 million for 2019. The increase is mainly
related to the entity Natura Cosméticos S.A. and its sales performance in 2020, when compared to 2019, and the consolidation
of Avon’s results since January 3, 2020. The increase was partially offset by the recognition of deferred tax assets on
losses carried forward by Avon and the amortization of tax liabilities on set ups on assets and liabilities recognized as a result
of the PPA recorded by the Company.
Net Loss
For the reasons
described above, we had a net loss of R$ 663.7 million (1.8% of net revenue) for the year ended December 31, 2020, compared to
a net income of R$ 155.4 million (1.1% of net revenue) for the year ended December 31, 2019.
Comparative
Analysis of the Consolidated Results – Years 2019/2018
For the years
ended December 2019, 2018 and 2017, segment information is being presented based on five operating segments: Natura Brasil, Natura
Latam, The Body Shop, Aesop and others as disclosed in the individual and consolidated financial statement as of the years ended
December 31, 2019, and 2018:
Net Revenue
|
For
the Fiscal Year Ended
|
|
|
December
31,
|
|
|
2019
|
2018
|
Variation
|
Operating
segments
|
(R$ million)
|
Natura Brasil
|
6,260.8
|
6,022.2
|
4.0%
|
Natura LATAM
|
2,742.5
|
2,415.7
|
13.5%
|
The Body Shop
|
4,129.3
|
3,886.0
|
6.3%
|
Aesop
|
1,303.0
|
1,064.0
|
22.5%
|
Natura
Others
|
9.1
|
9.5
|
(4.2%)
|
Net revenue
|
14,444.7
|
13,397.4
|
7.80%
|
Our consolidated
net revenue increased by 7.8%, to R$ 14,444.7 million in 2019 from R$ 13,397.4 million in 2018, as a result of the accelerated
growth in Aesop, as well as the steady growth across the other brands.
The following
is a discussion on our main segments:
Sales
in the domestic market
Natura Brasil’s
net revenue increased by 4.0%, amounting to R$ 6,260.8 million in 2019 from R$ 6,022.2 million in 2018, primarily due to (i) sales
increases across all channels and categories; (ii) one of the strongest fourth quarter sales in recent years due to a successful
Christmas campaign; (iii) an increase of 3.2% in the number of independent beauty consultants, reaching 1.1 million in 2019, as
well as an increase in consultant productivity (which is measured as gross sales divided by the average number of consultants
for a given period, divided by the same metric for the comparable period); (iv) an increase in the average price per unit sold
to R$ 18.0 in 2019 compared to R$ 16.4 for 2018, which was partially offset by a decrease in units sold of 5.4% to 347.4 million
in 2019, compared to 367.4 million units sold in 2018.
In 2019,
Natura Brazil further consolidated its relationship selling model, enhancing the digital capabilities of its independent beauty
consultants. In 2019, over 900,000 independent beauty consultants in Brazil used the digital mobile platform, while 700,000 of
these consultants had virtual consultant stores in Rede Natura, further increasing sales and their ability to reach customers.
Natura Brazil also continued its omnichannel growth, with the launch of 22 owned retail stores in shopping malls, reaching 58
stores at the end of the 2019. In addition, 200 new “Aqui tem Natura” franchise stores opened in Brazil in 2019, bringing
the total number of stores to approximately 400 at the end of 2019, twice as many as there were as of December 31, 2018.
Sales
in foreign markets
|
·
|
Natura
LATAM: Natura LATAM’s net revenue increased by 13.5%, to R$ 2,742.5 million
in 2019 from R$ 2,415.7 million in 2018, primarily as a result of (i) a 19.0% increase
in units sold, to 167.9 million units in 2019 from 141.1 million units in 2018, led by
increases in Argentina, despite its challenging hyperinflationary environment, as well
as revenue growth in Colombia and Mexico; (ii) a 6.9% increase in the average number
of beauty consultants, from 623.8 thousand in 2018 to 666.6 thousand in 2019; and (iii)
significant growth in consultant productivity as a result of a large scale implementation
of our mobile platforms. The average price per unit sold decreased to R$ 16.3 in 2019
compared to R$ 17.1 in 2018.
|
Additionally,
in 2018, inflation in Argentina reached 100% accumulated over three years, which triggered our adoption of the following standards
starting from the third quarter of 2018: (i) IAS 29 – Financial Reporting in Hyperinflationary Economies, which requires
consolidation of the financial statements of a legal entity, the functional currency of which is that of a hyperinflationary economy,
in order to reflect the changes in the general pricing power of its currency and (ii) IAS 21 – The Effects of Changes in
Foreign Currency, whereby Argentina’s financial statements had to be converted from the Argentinean peso to the Brazilian
real at the exchange rate at the end of the reporting period.
The
impact of the adoption of both standards on net revenue was a decrease of R$ 4.5 million in 2019.
|
·
|
The
Body Shop: The Body Shop’s net revenue increased by 6.3%, to R$ 4,129.3 million
in 2019 from R$ 3,886.0 million in 2018. The net revenue increased primarily due to (i)
steady revenue growth in the UK and Australia, which reported strong sales from the retail
and at- home channels, and the impact of a 24.2% increase in the average exchange rate
from pounds sterling to reais. The increase in net revenue was offset by the impact of
the closure of 67 underperforming stores (owned or franchised), which resulted in a total
of 1,006 owned stores as of December 31, 2019 (compared to 1,037 as of December 31, 2018),
and 1,862 franchised stores as of December 31, 2019 (compared to 1,898 as of December
31, 2018), and the decline in sales in Hong Kong due to recent political events.
|
|
·
|
Aesop:
Aesop’s net revenue increased by 22.5%, to R$ 1,303.0 million in 2019 from R$ 1,064.0
million for 2018, driven primarily by strong growth in sales in the Americas and Asia
(particularly South Korea, Taiwan and Japan), and in digital sales. The net revenue was
also impacted by a 0.6% increase in the average exchange rates from Australian dollars
to reais. There were 247 signature stores as of December 31, 2019, a net increase of
20 stores from 227 stores as of December 31, 2018. The number of department stores increased
to 99 as of December 31, 2019 from 92 stores as of December 31, 2018.
|
Cost of
Sales
Cost of sales
increased by 6.6%, amounting to R$ 4,033.5 million in 2019 from R$ 3,782.8 million in 2018, and represented 27.9% and 28.2% of
net revenue for 2019 and 2018, respectively.
The following
table shows the cost components of sales for the periods indicated:
|
For the Fiscal Year Ended
December 31,
|
|
|
|
2019
|
|
2018
|
|
Variation
|
|
(R$
million)
|
Raw material for
products and packages(i) and resale products(ii)
|
3,457.5
|
|
3,223.4
|
|
7.3%
|
Personnel expenses
|
293.4
|
|
276.8
|
|
6.0%
|
Depreciation and
amortization
|
57.4
|
|
65.2
|
|
(12.0%)
|
Other costs(iii)
|
225.2
|
|
217.4
|
|
3.6%
|
Cost of sales
|
4,033.5
|
|
3,782.8
|
|
6.6%
|
|
(i)
|
Particularly
plastic, glass, graphics and fragrance bottles.
|
|
(ii)
|
Products
manufactured by third parties, including soaps, hair products and others.
|
|
(iii)
|
“Other
costs” include electricity, water, gas, computer services and others.
|
With respect
to our main operating segments:
|
·
|
In
2019, Natura Brasil accounted for 48.4% of our total cost of sales. Natura Brasil’s
cost of sales increased by 3.1%, amounting to R$ 1,953.9 million in 2019 from R$ 1,895.9
million in 2018. This increase is in line with our revenue growth in 2019. As a percentage
of net revenue, cost of sales remained stable at 31.2% in 2019, compared to 31.5% in
2018.
|
|
·
|
In
2019, Natura LATAM accounted for 24.3% of our total cost of sales. Natura LATAM’s
cost of sales increased by 19.0%, amounting to R$ 981.5 million in 2019 from R$ 824.8
million in 2018, representing 35.8% and 34.1% of net revenue for 2019 and 2018, respectively.
This increase was mainly due to an increase in units sold of 19.0% and the impact of
hyperinflation in Argentina in the amount of R$ 43.2 million in 2019.
|
|
·
|
In
2019, The Body Shop accounted for 24.0% of our total cost of sales, which is substantially
the cost of finished goods manufactured by third parties. At The Body Shop, cost of sales
increased by 2.8%, amounting to R$ 969.7 million in 2019 from R$ 943.5 million for 2018,
primarily due to an increase in the foreign exchange effect on the exchange rate of the
pound sterling to reais.
|
|
·
|
In
2019, Aesop represented 3.0% of our total cost of sales, which is substantially the cost
of finished goods manufactured by third parties. At Aesop, cost of sales increased by
6.0%, amounting to R$ 123.0 million in 2019 from R$ 116.1 million in 2018 and represented
9.4%
|
and
10.9% of the net revenue for 2019 and 2018, respectively. The increase in cost of sales is primarily due to an increase in unit
sales, from 10.3 million in 2018 to 10.8 million in 2019.
Gross
Profit
As a result
of the foregoing, the consolidated gross profit increased by 8.3%, amounting to R$ 10,411.2 million in 2019 from R$ 9,614.6 million
in 2018. Our consolidated gross margin, which we calculate as gross profit divided by net revenue, expressed as a percentage,
remained stable at 72.1% in 2019, and 71.8% in 2018. For Natura Brasil, Natura LATAM, The Body Shop and Aesop, the gross margin
for 2019 was 68.8% (68.5% for 2018), 64.2% (65.9% for 2018), 76.5% (75.7% for 2018) and 90.6% (89.1% for 2018), respectively.
Operating
Expenses
The consolidated
operating expenses increased by 8.4%, amounting to R$ 9,060.0 million for 2019, compared to R$ 8,357.8 million for 2018, primarily
due to the factors listed below.
Selling,
Marketing and Logistics Expenses
Consolidated
selling, marketing and logistics expenses increased by 9.7%, amounting to R$ 6,395.6 million for 2019, compared to R$ 5,828.7
million for 2018. As a percentage of net revenue, selling, marketing and logistics expenses amounted to 44.3% for 2019, compared
to 43.5% for 2018. This increase of R$ 566.9 million was primarily due to an increase in selling, marketing and logistics expenses
at Aesop as a result of the launch of 20 signature stores in 2019 and an increase in depreciation and amortization, amounting
to R$ 766.5 million in 2019 compared to R$ 230.0 million in 2018, as a result of the adoption of a new lease accounting standard
(IFRS 16) and the opening of new stores during the year.
Administrative,
Research and Development, Technology and Other Project Expenses
Administrative,
research and development, technology and other project expenses increased by 6.9%, amounting to R$ 2,405.6 million in 2019 from
R$ 2,251.3 million for 2018. As a percentage of net revenue, administrative, research and development, technology and other project
expenses remained stable at 16.7% in 2019 compared to 16.8% in 2018. This increase of R$ 154.3 million was primarily due to an
increase of R$ 186.7 million in personnel expenses related to grant of new stock plans and pension plan cost reversals during
2018.
Other
Operating Income (Expenses), Net
Other net
operating expenses increased to R$ 49.3 million in 2019, compared to R$ 39.9 million in 2018. This change was primarily due to
expenses arising from the acquisition of Avon, which amounted to R$ 141.3 million in 2019. These effects were partially offset
by (i) recognition of a credit referring to the reversal of provision constituted by the Company as a result of discussions on
the illegality of changes in state laws for the charges of ICMS-ST; (ii) the recognition of R$ 43.0 million from recovered tax
credits related to changes in the tax position taken on PIS/COFINS in 2019; and (iii) the reversal of provisions regarding the
substitution of the ICMS tax, amounting to an income of R$ 21.4 million in 2019.
Net Financial
Result
Net financial
expenses amounted to R$ 840.1 million in 2019, compared to R$ 583.3 million in 2018, primarily due to (i) debt structuring expenses
for the acquisition of Avon, which amounted to R$ 115.8 million in 2019; and (ii) additional expenses related to interest on lease
transactions of R$ 134.6 million arising mainly as a result of the adoption of IFRS 16.
Taxes
on Natura &Co Holding Formation
Taxes on
Natura &Co Holding formation refer to the income tax of R$ 206.6 million paid in relation to the contribution of Natura Cosméticos
shares by controlling shareholders to Natura &Co Holding as part of the corporate restructuring that took place in order to
effect the acquisition of Avon.
Income
Tax and Social Contribution Expenses
Income tax
and social contribution expenses increased to R$ 149.1 million in 2019 from R$ 125.0 million in 2018, primarily due to a higher
effective tax rate of 29.2% in 2019 compared to 18.6% in 2018.
Net Income
For the reasons
described above, the net income decreased to R$ 155.5 million (1.1% of net revenue) in 2019, compared to R$ 548.4 million (4.1%
of net revenue) in 2018.
Balance
Sheet
|
As of December 31,
|
|
|
|
|
(Millions
R$)
|
|
|
Current Assets
|
2020
|
A.V
|
A.H
|
2019
|
Cash and cash equivalents
|
5,821.7
|
9.6%
|
29.0%
|
4,513.6
|
Short-term securities
|
2,520.6
|
4.1%
|
145.7%
|
1,025.8
|
Trade receivables
|
3,597.5
|
5.9%
|
113.4%
|
1,685.8
|
Inventories
|
4,544.3
|
7.5%
|
217.6%
|
1,430.6
|
Recoverable taxes
|
1,071.3
|
1.8%
|
170.8%
|
395.6
|
Income tax and social
contribution
|
242.1
|
0.4%
|
113.3%
|
113.5
|
Derivative financial
instruments
|
139.9
|
0.2%
|
100.0%
|
-
|
Other current assets
|
616.1
|
1.0%
|
132.3%
|
265.2
|
Non-current
assets held for sale
|
181.3
|
0.3%
|
100.0%
|
-
|
Total Current
Assets
|
18,734.8
|
30.8%
|
98.7%
|
9,430.1
|
|
|
|
|
|
Non-current Assets
|
|
|
|
|
Recoverable taxes
|
932.2
|
1.5%
|
127.8%
|
409.2
|
Income tax and social
contribution
|
478.5
|
0.8%
|
43.0%
|
334.7
|
Deferred income tax
and social contribution
|
1,339.7
|
2.2%
|
257.8%
|
374.4
|
Judicial deposits
|
566.2
|
0.9%
|
67.9%
|
337.3
|
Derivative financial
instruments
|
1,768.1
|
2.9%
|
139.8%
|
737.4
|
Short-term securities
|
16.1
|
0.0%
|
117.6%
|
7.4
|
Other
non-current assets
|
1,527.7
|
2.5%
|
1722.2%
|
83.8
|
Total long-term
assets
|
6,628.5
|
10.9%
|
190.2%
|
2,284.2
|
Property, plant and
equipment
|
5,235.1
|
8.6%
|
195.1%
|
1,773.9
|
Intangible assets
|
26,917.1
|
44.2%
|
427.2%
|
5,076.5
|
Right of use
|
3,402.0
|
5.6%
|
29.9%
|
2,619.9
|
|
|
|
|
|
Total Non-Current
Assets
|
42,182.8
|
69.2%
|
258.9%
|
11,754.5
|
|
|
|
|
|
Total
Assets
|
60,917.6
|
100.0%
|
187.6%
|
21,184.6
|
|
Período
encerrado em 31 de dezembro de
|
|
(Milhões
R$)
|
Current
Liabilities
|
2020
|
A.H
|
A.V
|
2019
|
Borrowings, financing
and debentures
|
3,805.6
|
6.2%
|
13.5%
|
3,354.4
|
Lease
|
1,059.7
|
1.7%
|
95.5%
|
542.1
|
Trade payables and
reverse factoring
|
6,774.2
|
11.1%
|
270.2%
|
1,829.8
|
Payroll, profit sharing
and social charges
|
1,340.7
|
2.2%
|
139.2%
|
560.4
|
Tax liabilities
|
785.4
|
1.3%
|
144.7%
|
320.9
|
Income tax and social
contribution
|
441.3
|
0.7%
|
13.7%
|
388.2
|
Dividends and interest
on shareholders’ equity payable
|
-
|
0.0%
|
(100.0%)
|
95.9
|
Derivative financial
instruments
|
61.2
|
0.1%
|
418.7%
|
11.8
|
Provision for tax,
civil and labor risks
|
58.8
|
0.1%
|
215.0%
|
18.7
|
Other current liabilities
|
1,832.8
|
3.0%
|
362.4%
|
396.4
|
Total current
liabilities
|
16,159.6
|
26.5%
|
114.9%
|
7,518.4
|
|
|
|
|
|
Non-current
|
|
|
|
|
Borrowings, financing
and debentures
|
10,017.3
|
16.4%
|
34.8%
|
7,432.0
|
Lease
|
2,798.8
|
4.6%
|
41.7%
|
1,975.5
|
Payroll, profit sharing
and social charges
|
43.8
|
0.1%
|
-
|
-
|
Tax liabilities
|
109.5
|
0.2%
|
(10.7%)
|
122.6
|
Deferred income tax
and social contribution
|
1,288.0
|
2.1%
|
185.9%
|
450.6
|
Provision for tax,
civil and labor risks
|
2,000.4
|
3.3%
|
893.2%
|
201.4
|
Other non-current
liabilities
|
1,113.1
|
1.8%
|
814.7%
|
121.7
|
Total non-current
liabilities
|
17,370.9
|
28.5%
|
68.6%
|
10,303.7
|
|
|
|
|
|
Total Liabilities
|
33,530.5
|
55.0%
|
88.1%
|
17,822.2
|
|
|
|
|
|
Shareholders’
Equity
|
12,378.0
|
20.3%
|
733.3%
|
1,485.4
|
Capital stock
|
(11.7)
|
0.0%
|
100.0%
|
-
|
Treasury shares
|
11,052.1
|
18.1%
|
812.7%
|
1,210.9
|
Capital reserves
|
120.2
|
0.2%
|
(180.6%)
|
(149.0)
|
Legal profit reserve
|
(759.9)
|
(1.2%)
|
100.0%
|
-
|
Retained losses
|
4,585.6
|
7.5%
|
462.7%
|
815.0
|
Equity appraisal
Adjustment
|
27,364.3
|
44.9%
|
713.9%
|
3,362.3
|
|
|
|
|
|
Non-controlling
interest in shareholders’ equity of subsidiaries
|
|
|
|
|
Equity of subsidiaries
|
22.8
|
100.0
|
-
|
-
|
Total shareholders’
equity
|
27,387.1
|
714.5%
|
45.0%
|
3,362.3
|
Total
liabilities and shareholders’ equity
|
60,917.6
|
100.0%
|
187.6%
|
21,184.6
|
Comparison
between December 31, 2020 and December 2019
Current
Assets
As of December
31, 2020, our current assets represented 30.8% compared to 44.5% on December 31, 2019. Our current assets increased by 98.7%,
amounting to R$ 18,734.8 million as of December 31, 2020 from R$ 9,430.1 million as of December 31, 2019, mainly as a result of
the acquisition of Avon, completed in January 2020. Further information is provided below.
Cash and
Cash Equivalents and Short-Term Securities
Cash and
cash equivalents and short-term securities increased by 50.6%, amounting to R$ 8,342.2 million as of December 31, 2020 from R$
5,539.4 million as of December 31, 2019. This increase is primarily due to the acquisition of Avon and transactions carried out
in the capital market that raised funds in the amount of R$ 7.6 billion. Cash and cash equivalents and short-term securities represented
13.8% of total assets as of December 31, 2020, in comparison with 26.1% as of December 31, 2019.
Trade
receivables
Trade receivables
increased by 113.4%, amounting to R$ 3,597.5 million as of December 31, 2020 from R$ 1,685.8 million as of December 31, 2019 primarily
due to the acquisition of Avon. The trade receivables represented 5.9% of assets as of December 31, 2020, in comparison with 8.0%
as of December 31, 2019.
Inventories
Inventories
increased by 217.6%, to R$ 4,544.3 million as of December 31, 2020 from R$ 1,430.6 million as of December 31, 2019 primarily due
to the acquisition of Avon and represented 7.5% and 6.8% of total assets as of December 31, 2020 and December 31, 2019, respectively.
Non-current
assets
As of December
31, 2020, our non-current assets represented 69.4% compared to 55.5% as of December 31, 2019. Our non-current assets increased
by 257.6% to R$ 42,033.6 million as of December 31, 2020 from R$ 11,754.5 million as of December 31, 2019, mainly as a result
of the assets recognized in the PPA due to Avon´s acquisition, which was completed in January 2020. Further information
is provided below.
Property,
plant and equipment and Intangible Assets
Our property,
plant and equipment and intangible assets amounted to R$ 32,152.2 million as of December 31, 2020, an increase of 369.3% compared
to the balance amount as of December 31, 2019, which was R$ 6,850.4 million. This increase is mainly due to:
|
(i)
|
R$
2,912.4 million recorded on property, plant and equipment related to the acquisition
of Avon’s control;
|
|
(ii)
|
Recognition
of goodwill in the amount of R$ 11,511.0 million in relation to the acquisition of Avon.
Goodwill is attributable to strong market position and geographic regions and will result
in a more diversified and balanced global portfolio, as well as expected future profitability
and operational synergies such as supply, manufacturing, distribution and efficiency
of the administrative structure and revenue growth; and
|
|
(iii)
|
R$
5,227.5 million regarding exchange variation on property, plant and equipment and intangible
assets related to our international operations.
|
As of December
31, 2020 the fixed and intangible asset accounts represented 52.8% of our assets in comparison with 32.3% as of December 31, 2019.
Right
of use
As of December
31, 2020, the Company had a net balance of R$ 3,402.0 million in the item of right of use, which represented 5.6% of our assets,
in comparison with 12.4% as of December 31, 2019.
Deferred
income tax and social contribution
Deferred
income tax and social contribution increased by 257.8%, to R$1,339.7 million for 2020, from R$374,4 for 2019 driven primarily
by the recognition of Avon’s deferred tax assets, as consequence of its acquisition.
Current
Liabilities
In the period
ended December 31, 2020, the current liabilities increased to R$ 16,159.7 million, 114.9% higher than the period ended December
31, 2019, when they amounted to R$ 7,518.5 million. In the first half of 2020 it represented 26.6% of total liabilities and shareholders’
equity, compared to 35.5% in the same period in the previous year.
Borrowings,
financing and debentures
As of December
31, 2020, the balance of borrowings, financing and debentures account was R$ 3,805.6 million, 13.5% lower than December 31, 2019,
mainly due to the consolidation of Avon’s debts in 2020, the effect of converting debts into foreign currency, offset by
the amortization of debentures and other debts during 2020. The borrowings, financing and debentures account represented 6.2%
of our total liabilities and equity as of December 31, 2020, compared to 15.8% as of December 31, 2019.
Lease
As of December
31, 2020, the Company accumulated obligations related to lease agreements over the short term in the total amount of R$ 1,059.7
million (R$ 542.1 on December 31, 2019). As of December 31, 2020, it represented 1.7% of total liabilities and shareholders’
equity of the Company (2.6% on December 31, 2019).
Trade
payables and reverse factoring
As of December
31, 2020, the balance of trade payables and reverse factoring was R$ 6,774.2 million, representing an increase of 270.2% in relation
to December 31, 2019. The trade payables and reverse factoring account represented 11.1% of our total liabilities and shareholders’
equity as of December 31, 2020, in comparison with 8.6% as of December 31, 2019.
Non-Current
Liabilities
As of December
31, 2020, non-current liabilities amounted to R$ 17,370.9 million, 68.6% higher than December 31, 2019. This change is mainly
explained by the following:
Non-Current
Borrowings, financing and debentures
As of December
31, 2020, non-current borrowings, financing and debentures was R$ 10,017.3 million, representing an increase of 34.8% in relation
to December 31, 2019. The variation of R$ 2,585.3 is mainly
due to the
consolidation of Avon’s debts in 2020. The non-current borrowings, financing and debentures account represented 16.4% of
our total liabilities and equity for December 31, 2020, compared to 35.1% for December 31, 2019.
Non-Current
Lease
On December
31, 2020, the Company accumulated obligations related to non-current lease agreements over the long term in the total amount of
R$ 2,798.8 million compared to R$ 1,975.5 million on December 31, 2019. The increase was mainly due to the new agreements and
the acquisition of Avon’s control.
Total
shareholders’ equity
The equity
changed from R$ 3,362.3 million on December 31, 2019 to R$ 27,387.1 million on December 31, 2020. The increase was mainly due:
(i) to the completion of the acquisition of Avon, which resulted in the issuance of Natura &Co shares for the total subscription
price of R$ 13,274.9 million. Of this total, the amount of R$ 3,397.8 million was allocated to the capital stock account and the
remaining, R$ 9,877.1 was recognized as capital reserve; and (ii) the follow-on of Natura & Co’s actions in 2020.
Comparison
between December 31, 2019 and 2018
Below, we
comment on the main variations in the items of the balance sheet. The comments, in accordance with CVM direction, must be restricted
to the items that have presented significant changes in the examined periods.
|
Período
encerrado em 31 de dezembro de
|
|
(Milhões
R$)
|
(em
milhões de R$)
|
2019
|
A.H
|
A.V
|
2018
|
Current Assets
|
|
Cash and cash equivalents
|
4,513.6
|
21.3%
|
271.5%
|
1,215.0
|
Short-term securities
|
1,025.8
|
4.8%
|
(15.6%)
|
1,215.4
|
Trade receivables
|
1,685.8
|
8.0%
|
(0.3%)
|
1,691.6
|
Inventories
|
1,430.5
|
6.8%
|
4.8%
|
1,364.7
|
Recoverable taxes
|
395.6
|
1.9%
|
4.3%
|
379.3
|
Income tax and social
contribution
|
113.5
|
0.5%
|
(65.3%)
|
326.8
|
Derivative financial
instruments
|
-
|
0.0%
|
0.0%
|
-
|
Other
current assets
|
265.2
|
1.3%
|
0.8%
|
263.0
|
Total dos Ativos
Circulantes
|
9,430.0
|
44.5%
|
46.1%
|
6,455.8
|
Non-current Assets
|
|
|
|
|
Recoverable taxes
|
409.2
|
1.9%
|
11.0%
|
368.6
|
Income tax and social
contribution
|
334.7
|
1.6%
|
-
|
-
|
Deferred income tax
and social contribution
|
374.4
|
1.8%
|
(6.0%)
|
398.4
|
Judicial deposits
|
337.3
|
1.6%
|
1.1%
|
333.6
|
Derivative financial
instruments
|
737.4
|
3.5%
|
26.2%
|
584.3
|
Short-term securities
|
7.4
|
0.0%
|
-
|
-
|
Other non-current
assets
|
83.8
|
0.4%
|
62.4%
|
51.6
|
Total long-term assets
|
2,284.2
|
10.8%
|
31.5%
|
1,736.5
|
Property, plant and
equipment
|
1,773.9
|
8.4%
|
(20.7%)
|
2,236.7
|
Intangible assets
|
5,076.5
|
24.0%
|
2.5%
|
4,950.5
|
Right
of use
|
2,619.9
|
12.4%
|
-
|
-
|
Total
Non-Current Assets
|
11,754.5
|
55.5%
|
31.7%
|
8,923.8
|
Total
Assets
|
21,184.5
|
100.0%
|
37.7%
|
15,379.5
|
(em
milhões de R$)
|
2019
|
A.H
|
A.V
|
2018
|
Current liabilities
|
|
|
|
|
Borrowings, financing
and debentures
|
3,354.3
|
15.8%
|
201.4%
|
1,113.1
|
Lease
|
542.1
|
2.6%
|
687.9%
|
68.8
|
Trade payables and
reverse factoring
|
1,829.8
|
8.6%
|
5.4%
|
1,736.7
|
Payroll, profit sharing
and social security charges
|
560.4
|
2.6%
|
(2.4%)
|
574.4
|
Tax liabilities
|
320.9
|
1.5%
|
3.5%
|
310.1
|
Income tax and social
contribution
|
388.2
|
1.8%
|
112.1%
|
183.0
|
Dividends and interest
on shareholders’ equity payable
|
95.9
|
0.5%
|
(37.3%)
|
153.0
|
Derivative financial
instruments
|
11.8
|
0.1%
|
(82.9%)
|
69.2
|
Provisions for tax,
civil and labor risks
|
18.7
|
0.1%
|
(8.3%)
|
20.4
|
Other
current liabilities
|
396.4
|
1.9%
|
17.2%
|
338.2
|
Total current
liabilities
|
7,518.5
|
35.5%
|
64.6%
|
4,566.9
|
Non-Current
|
|
|
|
|
Borrowings, financing
and debentures
|
7,432.0
|
35.1%
|
8.0%
|
6,881.0
|
Lease
|
1,975.5
|
9.3%
|
423.3%
|
377.5
|
Tax liabilities
|
122.5
|
0.6%
|
(25.8%)
|
165.3
|
Deferred income tax
and social contribution
|
450.6
|
2.1%
|
4.4%
|
431.5
|
Provisions for tax,
civil and labor risks
|
201.4
|
1.0%
|
(16.6%)
|
241.4
|
Other
non-current liabilities
|
121.7
|
0.6%
|
(14.2%)
|
141.8
|
Total non-current
liabilities
|
10,303.7
|
48.6%
|
25.1%
|
8,238.6
|
Shareholders’
equity
|
|
|
|
|
Capital Stock
|
1,485.4
|
7.0%
|
247.8%
|
427.1
|
Treasury shares
|
-
|
0.0%
|
(100.0%)
|
(19,408.0)
|
Capital reserves
|
1,303.0
|
6.2%
|
295.7%
|
329.3
|
Retained earnings
(losses)
|
(149.0)
|
(0.7%)
|
(110.4%)
|
1,437.0
|
Discount on capital
transaction
|
(92.1)
|
(0.4%)
|
0.0%
|
(92.1)
|
Equity
valuation adjustments
|
815.0
|
3.8%
|
65.6%
|
492.2
|
Total
shareholders’ equity
|
3,362.3
|
15.9%
|
30.6%
|
2,574.1
|
Total
liabilities and shareholders’ equity
|
21,184.5
|
100.0%
|
37.7%
|
15,379.5
|
Balance
Sheet
Current Assets
In 2019,
the current assets amounted to R$ 9,430.1 million, 46.1% higher than 2018, when they amounted to R$ 6,455.8 million. Such scenario
was a result mainly of the increase in the net cash flow generated by the operating activities, partially due to the profile of
more prolonged debts.
Cash and
Cash Equivalents and Short-term Securities
In 2019,
the total balance of cash and cash equivalents and short-term investments was R$ 5,539.4 million, 127.9% higher than 2018. As
previously commented, there has been solid cash generation, favored by the level of operating activity of the Group and fundraising
through capital market. Cash and cash equivalents and short-term investments, together, represent 26.1% of the total assets in
2019, in comparison with 15.8% in 2018.
Trade
receivables
In 2019,
the trade receivables amounted to R$ 1,685.8 million, 0.3% less than 2018, when the total was R$ 1,691.6. The trade receivables
represented 8.0% of our assets in 2019, in comparison with 11.0% in 2018. This is explained mainly by the improvement in the turnover
liquidity in Natura Brazil and Latam, given the lower levels of accounts receivable.
Inventories
In 2019,
the balance of the inventories account was R$ 1,430.6 million, 4.8% higher than in 2018, which was R$ 1,364.7 million due to an
increase in the sales in international operations. The inventories account represented 6.8% of our assets in 2019, in comparison
with 8.9% in 2018.
Non-current
assets
In 2019,
the non-current assets amounted to R$ 11,754.5 million, 31.7% higher than in 2018. Such increase occurred mainly as a function
of the direct recognition of right to use in lease agreements in the total amount of R$ 2,619.9 million in 2019. For further details
on the implementation of the new accounting standard, please see item 10.4 of this Reference Form.
Property,
plant and equipment and Intangible assets
Property,
plant and equipment and intangible assets decreased, amounting to R$ 6,850.4 million in 2019, a reduction of 4.7% compared to
2018, which amounted to R$ 7,187.2 million. Such variation results from the transfer of R$ 631.6 million for right of use (previously
recognized as property, plant and equipment). The property, plant and equipment and intangible assets account represented 32.3%
of our assets in 2019, in comparison with 46.7% in 2018.
Right
of use
On December
31, 2019, the Company had a balance of R$ 2,619.9 million as right of use as result of the application of a new lease standard
in 2019. Further details on the registration of this balance were documented in item 10.4 of this Reference Form.
Recoverable
taxes
In 2019,
the recoverable taxes balance amounted to R$ 409.2 million, 11.0% higher than the balance recorded in the item in 2018 (R$ 368.6
million). The recoverable taxes account represented 1.9% of our assets in 2019, in comparison with 2.4% in 2018. The variation
is mainly due to the recognition of the credits regarding exclusion of ICMS on the tax base of PIS and COFINS, as a result of
final and unappealable decision during the year of 2019.
Deferred
income tax and social contribution
In 2019,
the balance of the deferred income tax and social contribution account was R$ 374.4 million, 6.0% lower than the balance of the
account in 2018. Such variation is due mainly to the reduction of the balance of tax losses and negative bases accumulated in
2019 and other temporary differences, which are
presented,
on a comparative basis, in note 11 to the Consolidated Financial Statements on December 31, 2019. The deferred income tax and
social contribution account represented 1.8% of our assets in 2019, in comparison with 2.6% in 2018.
Current
Liabilities
In 2019,
the current liabilities increased to R$ 7,518.6 million in 2019, 64.6% higher than 2018, (R$ 4,567.0 million). Such increase resulted
mainly from the fundraising by means of promissory notes to reinforce the cash and payment of costs incurred upon organization
of the operation that involves the acquisition of Avon.
Borrowings,
financing and debentures
In 2019,
the balance of loans, financing and debentures account was R$ 3,354.4 million, 201.4% higher than in 2018, as a result of the
raising of promissory notes as commented above. The loans, financing and debentures account represented 15.8% of our total liabilities
and total equity in 2019, in comparison with 7.2% in 2018.
Lease
On December
31, 2019, the Company accumulated obligations related to lease agreements over the short term in the total amount of R$ 542.1
million. Further details on the registration of this balance were documented in item 10.4 of this Reference Form.
Trade
payables and reverse factoring
In 2019,
the balance of trade payable and reverse factoring account balance was R$ 1,829.8 million, representing an increase of 5.4% in
relation to 2018. The trade payable and reverse factoring account represented 8.6% of our total liabilities and shareholders’
equity in 2019, in comparison with 11.3% in 2018.
Non-Current
Liabilities
In 2019,
the non-current liabilities amounted to R$ 10,303.8 million, 25.1% higher than in 2018. Such variation was mainly due to the increase
of loans, financing and debentures in the year.
Borrowings,
financing and debentures
In 2019,
the loans, financing and debentures amounted to R$ 7,432.0 million, representing an increase of 8.0% in relation to 2018. The
loans, financing and debentures account represented 35.1% of our total liabilities and shareholders’ equity in 2019 (44.7%
in 2018).
Lease
On December
31, 2019, the Company accumulated obligations related to lease agreements over the long term in the total amount of R$ 1,975.5
million compared to R$ 377.5 million in 2018, as a result of the application of a new lease standard in 2019. Further details
on the registration of this balance were documented in item 10.4 of this Reference Form.
Total
shareholders’ equity
Total shareholders’
equity changed from R$ 2,574.1 million in 2018 to R$ 3,362.3 million in 2019, materially due to the increase of 247.8% on the
stockholders’ equity, which was R$ 427.1 million in 2018 and became R$ 1,485.4 million in 2019.
Other
property accounts
The property
accounts not discussed above did not have significant variations in the comparison between the 2019 and 2018 balances and/or were
not representative in contrast with the total assets/liabilities.
Cash
flow comparison between 2020, 2019, and 2018
The table below shows
our cash flows
consolidated for the periods indicated:
|
Fiscal
year ended December 31
|
Variation
|
|
2020
|
2019
|
2018
|
2020/2019
|
2019/2018
|
(R$ million)
|
Net
cash provided by operating activities
|
1,285.6
|
1,300.4
|
844.3
|
(1.1%)
|
54.0%
|
Net
cash (used in) provided by investment activities
|
679.1
|
(314.4)
|
389.1
|
(316.0%)
|
(180.8%)
|
Net
cash (used in) provided by financing activities
|
(777.6)
|
2,312.4
|
(1,751.4)
|
(133.6%)
|
(232.0%)
|
Net
increase (reduction) in cash and cash equivalents
|
1,308.1
|
3,298.5
|
(478.1)
|
(60.3%)
|
(789.9%)
|
Cash
and cash equivalents at the beginning of the year
|
4,513.6
|
1,215.0
|
1,693.1
|
(271.5%)
|
(28.2%)
|
Cash
and cash equivalents at the end of the year
|
5,821.7
|
4,513.6
|
1,215.0
|
(29.0%)
|
(271.5%)
|
For the period
ended December 31, 2020, consolidated cash and cash equivalents amounted to R$ 5,821.7 million compared to R$ 4,513.6 million
for the period ended December 31, 2019.
Net cash
flow provided by (used in) operating activities
Net cash
provided by operating activities amounted to R$ 1,285.6 million in the period ended December 31, 2020 compared to net cash provided
by operating activities of R$ 1,300.4 million in the period ended December 31, 2019. This variation is due to (i) increase in
net income excluding items without cash effect, mainly due to amortization and depreciation of PPA effects recorded as a result
of the Avon´s acquisition, increase in interest and exchange variation on borrowings and financing; ii) increase in payments
related to tax, civil and labor proceedings, rental interest and interest on borrowings, financing and debentures.
Net cash
provided by (used in) investment activities
Net cash
provided by investment activities amounted to R$ 679.1 million in the period ended December 31, 2020, compared to cash provided
by investment activities of R$ 314.4 million in the period ended December 31, 2019. This variation was mainly due to (i) cash
acquired from Avon in the amount of R$ 2,661.8 million and (ii) increase in securities redemptions to R$ 9,008.9 million in the
year ended December 31, 2020
compared
to R$ 7,345.4 million in 2019, offset by an increase in investments in short-term securities to R$ 10,371.5 million in the year
ended December 31, 2020, compared to R$ 7,161.5 million in 2019.
Net cash
provided by (used in) financing activities
Net cash
provided by financing activities amounted to R$ 777.6 million in the year ended December 31, 2020, compared to cash used in financing
activities of R$ 2,312.4 million in the year ended December 31, 2019. This variation was primally due to: (i) increase in the
amortization of loans, financing and debentures to R$ 8,483.9 million in the year ended December 31, 2020, compared to R$ 2,643.5
million in the year ended on December 31 2019, due to the settlement and maturity of Avon’s Notes, debentures and promissory
notes during 2020; (ii) decrease in funding for new borrowings, financing, leases and debentures to R$ 1,354.7 million in the
year ended December 31, 2020, from R$ 5,346.1 million in the year ended December 31, 2019; offset by (iii) the capital increase
of R$ 7,436.6 million in the year ended December 31, 2020 resulting from the net proceeds from the follow-on of Natura & Co
common shares.
For the fiscal
year ended December 31, 2019, consolidated cash and cash equivalents amounted to R$ 4,513.6 million, compared to R$ 1,215.0 million
for the fiscal year ended December 31, 2018.
Net cash
flow provided by operating activities
Net cash
provided by operating activities amounted to R$ 1,300.4 million in 2019, compared to net cash provided by operating activities
of R$ 844.3 million in 2018. This change was primarily due to higher net income for the period after adjustments for noncash items,
mainly due to an increase in depreciation and amortization of R$ 527.5 million as a result of the implementation of IFRS 16/ CPC
06 (R2). While this new accounting standard positively impacted net cash flow provided by operating activities, it negatively
impacted net cash provided by (used in) financing activities, as described further below.
Net cash
(used in) provided by investment activities
Net cash
used in investment activities amounted to R$ 314.4 million in 2019, compared to cash provided by investment activities of R$ 389.1
million in 2018. This change was primarily due to a decrease of R$ 7,345.4 million in net redemptions of securities in 2019 from
R$ 9,187.7 million in 2018, and an increase in the acquisition of property, plant and equipment, and intangible assets, amounting
to R$ 586.4 million in 2019 from R$ 485.0 million in 2018, offset by a decrease of R$ 7,161.5 million in investments in securities,
compared to R$ 8,483.7 million in 2018.
Net cash
provided by (used in) financing activities
Net cash
provided by financing activities amounted to R$ 2,312.4 million in 2019, compared to cash of R$ 1,751.4 million used in financing
activities in 2018. This change was primarily due to (i) a decrease in amortization of loans, financing, and debentures, amounting
to R$ 2,643.6 million in 2019 from R$ 6,552.2 million in 2018, due to the settlement of commercial promissory notes in 2018; (ii)
a capital contribution of R$ 206.6 million in 2019 by the controlling shareholders of Natura Cosméticos related to the
corporate restructuring; (iii) a net increase in new loans, financing, lease and debentures, which amounted to R$ 5,346.1 million
in 2019 from R$ 5,015.3 million in 2018, due to the issuance of a new promissory note in December 2019; (iv) recognition of R$
451.7 million related to lease payments as a result of the adoption of IFRS 16/ CPC 06 (R2) on January 1, 2019, which became mandatory
its presentation as financial activities; and (v) the receipt of R$ 52.7 million from the exercise of call options.
10.2 -
Operating and financial result
|
a)
|
the results of the Company’s
operations, especially:
|
|
(i)
|
description of any significant
revenue elements
|
Gross
Sales Revenue
The Company
operates in an integrated way in the industry of cosmetics, fragrances and toiletries (CF&T), developing, manufacturing, distributing
and selling products. Present in more than 157 countries worldwide. The Company also holds a 100% equity interest in (i) Emeis
Holdings Pty Ltd,, an Australian manufacturer of premium cosmetics and beauty products which operates under the “Aesop”
brand in Australia, Asia, Europe, North America and Brazil; and (ii) The Body Shop International Limited, a company domiciled,
registered and incorporated under the laws of England, the activities of which are the development, distribution and sale of cosmetics
and beauty products and operates under the brand “The Body Shop” in Africa, Asia, North America, South America, Europe
and Oceania, with sales through its own stores, e- commerce and franchised stores; and (iii) Avon, manufacturer of perfumes, makeup,
creams, lotions, hair products, skin and daily care, among other items. Avon’s operations outside the United States are
conducted primarily through subsidiaries in 70 countries. In Brazil, Avon has been operating throughout the territory since 1958
and currently, the country represents its largest operation and has its largest sales force.
In the period
ended December 31, 2020, 30.1% of our net revenue derived from Brazil. Our extensive portfolio of essential products and secured
supply ensured the continuity of our manufacturing, distribution and sales in a year that was marked by strict lockdowns due to
Covid-19 in the Latam region, notably Hispanic Latam (Central America, Argentina, Peru, Colombia and Ecuador). The strength of
our digital social selling model was proven by the performance of Natura brand, particularly in Brazil, while the digital transformation
in the region continues to advance. Avon integration in Latam is on track, with progress on procurement, cross-manufacturing opportunities,
including all Avon Latam plants manufacturing products for Natura, and transfer of good field management practices to improve
engagement and loyalty of Company’s representatives. In Brazil, the loyalty index of Natura representatives reached a record
level in the fourth quarter, and the satisfaction rate of Avon representatives in Brazil and Mexico was the highest in recent
years, despite the challenging scenario in a context of pandemic development..
In 2019,
43.8% of our net revenue derived from our segment in Brazil and came from the sale of our products to our consultants. Our revenue
comes almost entirely from our operations and the number of consultants and their productivity are the main drivers of the growth
in our gross operating revenue. The income in foreign currency comes from the sale of products in the countries where we operate
with brands Natura, Aesop and The Body Shop, in addition to exports to our distributor in Bolivia and the Duty Free.
The table
below shows the share of sales from Natura operations in Brazil and sales through our subsidiaries for the period ended December
31, 2020, 2019 and 2018:
|
As
of December 31,
|
|
2020
|
2019
|
2018
|
Asia
|
7.9%
|
5.4%
|
5.0%
|
North
America
|
13.9%
|
12.1%
|
6.9%
|
México
|
8.7%
|
5.3%
|
4.6%
|
Others
|
5.2%
|
6.8%
|
2.3%
|
South
America
|
44.6%
|
57.7%
|
63.7%
|
Brazil
|
30.1%
|
43.8%
|
45.4%
|
Argentina
|
5.4%
|
5.5%
|
5.3%
|
Others
|
9.1%
|
8.5%
|
13.0%
|
Europe,
Middle East and Africa (EMEA)
|
31.4%
|
20.1%
|
19.9%
|
United King
|
11.2%
|
14.6%
|
14.0%
|
Others
|
20.2%
|
5.5%
|
5.8%
|
Oceania
|
2.2%
|
4.6%
|
4.6%
|
Consolidated
|
100.0%
|
100.0%
|
100.0%
|
|
(ii)
|
factors with a material
impact on operating results
|
Macroeconomic
environment
Our operating
results are largely dependent upon the levels of demand for our products in the countries we operate in. The demand for our products
in these countries is affected by the performance of their respective economies in terms of the gross domestic product (GDP),
as well as by the predominant levels of employment, inflation, and interest rates. Our results are specifically affected by the
economic environment in Brazil and the economic environment of the United Kingdom.
In addition,
the extension of COVID-19 outbreak could have a significant effect on demand in 2021. The Company constantly monitors and evaluates
the evolution of the Covid-19 pandemic in the markets in which it operates, especially with regard to the restrictive measures
adopted by these jurisdictions.
Brazil
The Brazilian
economic environment is historically characterized by significant variations in the economic growth, inflation, interest, and
foreign exchange rates. A significant portion of our operations is located in Brazil. Thus, our revenue and profitability are
affected by political and economic developments in Brazil due to the effect these factors have on credit availability, available
income, employment rates, and average wages in Brazil. Our operations and the sector in general may be affected by changes in
the economic conditions.
Brazil is
the largest Latin American economy, considering the GDP. The table below shows the actual GDP, inflation, and interest rate data
in Brazil and the dollar/real exchange rate on the dates and periods indicated.
|
As
of and for the Fiscal Year Ended
|
|
December
31,
|
|
2020
|
2019
|
2018
|
Real growth (contraction)
in gross domestic product (i)
|
(4.1%)
|
1.1%
|
1.3%
|
Inflation (IGP-M)
|
23.1%
|
7.3%
|
7.5%
|
Inflation (IPCA)
(ii)
|
4.5%
|
4.3%
|
3.7%
|
Long-term interest
rate - TJLP (average) (iv)
|
4.4%
|
5.6%
|
7.0%
|
CDI interest rate
(iii)
|
2.7%
|
6.0%
|
6.4%
|
Exchange rate at
the end of the period per US$ 1,00
|
5,197
|
4,031
|
3,875
|
Average exchange
rate per US$ 1,00
|
5,157
|
3,946
|
3,656
|
Appreciation (depreciation)
of the real against the U,S, dollar (v)
|
(22.4%)
|
(4.0%)
|
(17.1%)
|
Unemployment rate
|
13.9%
|
11.9%
|
12.3%
|
Sources:
IBGE, Brazilian Central Bank, B3, and FGV.
|
(i)
|
GDP growth is presented
for the years ended December 31, 2020, 2019 and 2018. GDP is presented in comparison to the corresponding previous period.
|
|
(ii)
|
IPCA is a consumer price
index calculated by IBGE.
|
|
(iii)
|
CDI refers to the average
interbank deposit rates in Brazil, accumulated during the corresponding period.
|
|
(iv)
|
The Brazilian long-term
interest rate (taxa de juros de longo prazo) (“TJLP”) is the rate applicable to long-term loans by BNDES, at the end
of the period.
|
|
(v)
|
Comparing the PTAX exchange
rate at the end of the last day of the period with the day immediately prior to the first day of the concerned period. The PTAX
is the exchange rate calculated at the end of each day by the Brazilian Central Bank. It is the average rate of all businesses
conducted in U,S, dollars on the determined date in the interbank exchange market.
|
General economic
stability in Brazil, following the onset of the global financial crisis in 2009, allowed the Brazilian Central Bank to continue
its policy of reducing interest rates. Due to inflation and other general macroeconomic concerns, the Brazilian Central Bank began
increasing interest rates, through the SELIC, a benchmark interest rate, reaching 10% at the end of December 31, 2013, 11.75%
at the end of December 31, 2014 and 14.25% at the end of December 31, 2015. Following changes in economic and political scenarios,
the Brazilian Central Bank started to reduce interest rates since then, where the SELIC reached 13.75% as of December 31, 2016,
7.0% as of December 31, 2017 and 6.50% as of December 31, 2018 and 4.50% as of December 31, 2019 and 2.00% as of December 31,
2020.
In addition,
various ongoing investigations into allegations of money laundering and corruption being conducted by the Office of the Brazilian
Federal Prosecutor, including the largest of such investigations known as “Lava Jato,” have negatively impacted the
Brazilian economy and the political environment.
The recent
economic instability in Brazil, as well as to the deterioration of the political environment and the extent of the Covid-19 pandemic;
has contributed to a fall in market confidence in the Brazilian economy. Unfavorable macroeconomic conditions in Brazil are expected
to continue throughout 2021. GDP fell in 2020 and is projected to grow by 3.29% for 2021.
We are not
able to fully estimate the impact of global and Brazilian political and macroeconomic developments on our business. Recent economic
and political instability has led to a negative perception of the Brazilian economy and increased volatility in the Brazilian
securities markets, which may also adversely affect us and our securities. Any continued economic instability and political uncertainty
may materially and adversely affect our business and the trading prices of any of our securities. Furthermore, uncertainty over
whether the Brazilian government will implement reforms and political uncertainty resulting from the presidential elections and
the transition to a new government may have an adverse effect on our business, results of operations and financial condition.
Any deterioration
in Brazil’s rate of economic growth, changes in interest rates, the unemployment rate or price levels generally may limit
the credit availability, income and purchasing power of our customers, thereby adversely affecting demand for our products.
Inflation
While minor
variations in the rate of inflation can be passed on to our customers with no impact on the demand for our products and services,
we believe that a significant increase in the rate of inflation may adversely affect demand for our products in that it may (i)
adversely affect consumer confidence; and (ii) adversely affect consumers’ purchasing power.
In addition,
a significant part of our costs and expenses are incurred in reais and adjusted when our suppliers or service providers
increase their prices. In Brazil, our service providers in general use the IPCA index to adjust their prices, while our suppliers
use the National Consumer Price Index (Índice Nacional De Preços Ao Consumidor), or INPC, disclosed by IBGE
or by FGV, or the IGP-M, or the variation in the price of certain commodities, in order to adjust their prices according to the
inflation. For operations in the United Kingdom, we have experienced low inflation, driven largely by falling oil prices and the
strength of the pound sterling keeping down the costs of imports. However, the sharp fall in the value of the pound sterling since
the vote to leave the EU means that imports have become more expensive, and inflation has risen.
Our gross
revenue is also indirectly affected by inflation, since in general we transfer part of our cost increases to our consumers through
price increases.
Foreign
Exchange
We operate
globally, with manufacturing and distribution facilities in various countries around the world. The increase or decrease in value
of the Brazilian real against the U,S, dollar, the euro and the pound sterling affected and will continue to affect the
results of our operations, particularly with regard to: (i) the changes in raw material costs and imported goods or those linked
to U,S, dollars; (ii) our loans in foreign currency; (iii) Natura’s costs of products sold in reais to our companies
operating in Argentina, Chile, Peru, Mexico and Colombia; (iv) our operations in Australia, Asia, Europe and the United States
through Aesop; (v) our operations through The Body Shop brand, primarily related and limited to the conversion of financial information
to real; and (vi) our operations around the world through Avon for which we had net underlying foreign currency
exchange rate exposures regarding the Argentinian peso, the Brazilian real, the pound sterling, the Chilean peso, the Colombian
peso, the euro, the Mexican peso, the Peruvian new sol, the Philippine peso, the Polish zloty, the Romanian leu, the Russian ruble,
the South African rand, the Turkish lira and the Ukrainian hryvnia. Certain of our receivables and financial obligations assumed
are denominated in foreign currencies.
Natura &Co
Holding currently manages its foreign exchange risk exposure by individual business units.
The Company
and its subsidiaries are exposed to the exchange risk resulting from financial instruments in currencies other than their functional
currencies, as well as operating cash flows in foreign currencies. To reduce this exposure, policies were implemented to protect
foreign exchange risk, which establish exposure levels linked to these risks.
The treasury
procedures defined by the current policies include monthly evaluation routines of the consolidated foreign exchange exposure of
the Company and its subsidiaries, on which the decisions taken by the Management are based.
The Company’s
foreign exchange protection policy considers the amounts in foreign currency of the balances to be received and payable from commitments
already assumed and recorded in the financial statements, as well as future cash flows, with an average term of six months, not
yet recorded in the balance sheet.
According
to the Foreign Exchange Protection Policy, derivatives contracted by the Company or its subsidiaries shall eliminate foreign exchange
risk of financial instruments in currencies other than their functional currencies and limit losses due to exchange variation
of future cash flows.
To protect
foreign exchange exposures in relation to foreign currency, the Company and its subsidiaries contract transactions with derivative
financial instruments of the “swap” type and Currency Term called “Non-Deliverable Forward - NDF” (“forward”).
In addition,
the policy of the subsidiary Natura Cosmetics is to protect its exposure resulting from loans denominated in a currency other
than the functional currency of the corresponding entity. To protect this exposure, the subsidiary Natura Cosméticos has
signed derivative contracts (swaps) that protect the principal value of debts and their respective interest flows.
The Body
Shop
Due to its
international sales and cost of sales denominated in different currencies, The Body Shop International is exposed to fluctuations
of main currencies versus the pound sterling. In order to mitigate currency risk, The Body Shop International adopts a
conservative approach of hedge, before the year-end, a significant portion of annual foreign exchange exposures for the following
year, through forward purchases or sales contracts. Foreign exchange exposure is identified for the following year on the basis
of the operating budgets of each subsidiary, however a material proportion of our foreign exchange exposure is connected to The
Body Shop International. These requirements are then reviewed regularly throughout the year in progress. The Body Shop International
Limited is the financial company of The Body Shop International and provides working capital intercompany financing to all its
subsidiaries in their local currencies. The Body Shop International hedges the foreign exchange risk arising from using foreign
exchange swaps dealt with external financial counterparties.
Avon
Avon has
a financial risk management program to reduce the potential negative effects from changes in foreign exchange and may reduce its
exposure to fluctuations in fair value or cash flows associated with changes in foreign exchange rates by creating offsetting
positions, including through the use of derivative financial instruments. Avon may use foreign currency rate-sensitive instruments
to hedge a portion of our existing and expected transactions, and it expects that any loss in value for the hedge instruments
generally would be offset by changes in the value of the underlying transaction. Avon do not enter into derivative financial instruments
for business or speculative purposes.
Interest
rate
Interest
rate risk stems from financial investments and short- and long-term loans and financing. Financial instruments issued at variable
rates expose the Company and its subsidiaries to the risk of cash flows associated with the interest rate. Financial instruments
issued at prefixed rates expose the Company and its subsidiaries to fair value risk associated with the interest rate.
The risk
of cash flows associated with the Company’s interest rate stems from financial investments and short- and long-term loans
and financing issued at post-fixed rates. The Company’s Management mostly maintains the indexers of its exposures to active
and passive interest rates linked to post-fixed rates. Financial investments are corrected by the CDI and loans and financing
are corrected by the Long-Term Interest Rate - TJLP, CDI and prefixed rates, according to contracts signed with financial institutions
and through securities negotiations with investors of this market.
Other factors
In addition,
our results of operations have been influenced and will continue to be influenced by the following key factors:
|
·
|
acquisitions,
partnerships and corporate restructurings;
|
|
·
|
hedge
transactions (as discussed under “Management’s Discussion and Analysis of
Financial Condition and Results of Operations of Natura &Co – Quantitative
and Qualitative Disclosures About Market Risk”);
|
|
·
|
trade
barriers in North America, Europe and other markets;
|
|
·
|
the
growth rate of GDP in the countries where we operate, which can impact the demand for
our services and, consequently, our distributed volumes and sales;
|
|
·
|
the
tax policies adopted by the governments of the countries in which we operate;
|
|
·
|
cross-border
commercial regulations; and
|
|
·
|
developments
with respect to the COVID-19 pandemic in Brazil and globally (see “Risk Factors
– Risks Related to Our Business and Industries in Which We Operate – Our
businesses, operations and results may be adversely impacted by COVID-19” and “Business
– History and Development of the Company – Recent Events”).
|
|
b)
|
variations in revenues
on account of changes in prices, exchange rates, inflation, changes in volumes, and launch of new products and services
|
The Management
commented on this information in item 10.2.a.
|
c)
|
impact of inflation,
variation in the main inputs and product prices, foreign exchange and interest rate on our operating and financial results
|
The Management
commented on this information in item 10.2.a.
10.3 –
Past and expected events with material effects on the financial statements
|
a)
|
launch or disposal of
an operating segment
|
There has
been no launch or divestiture of an operating segment during the period ended December 31, 2020 and during the fiscal years ended
December 31, 2019 and December 31, 2018.
During the
first quarter of 2020, and as a result of the acquisition of Avon, we began to manage our operations based on the following four
operating segments:
|
·
|
Natura
&Co Latam: all operations of Natura, Avon, The Body Shop and Aesop located in
Brazil and Latin America;
|
|
·
|
Avon
International: all Avon operations outside of Latin America;
|
|
·
|
The
Body Shop International: all operations of The Body Shop outside of Latin America;
and
|
|
·
|
Aesop
International: all Aesop operations outside of Latin America.
|
|
b)
|
formation, acquisition,
or disposal of equity interest
|
The Company
was incorporated on January 21, 2019 to hold equity in other companies. The Company was acquired as a part of a corporate restructuring
process initiated by Natura Cosméticos with the purpose of purchasing Avon through a merger between Avon and the Company,
resulting in a combination of businesses and stock.
On November
13, 2019, the controlling shareholders of Natura Cosméticos contributed to Natura &Co Holding shares corresponding
to about 57.3% of Natura Cosméticos’ capital stock, on December 17, 2019, all shares of Natura Cosméticos
held by the controlling shareholders and not previously held by Natura &Co Holding were merged into the Company. Thus, Natura
Cosméticos became a wholly-owned subsidiary of Natura &Co Holding, completing the corporate restructuring carried out
in preparation for the Transaction.
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(i)
|
corporate restructuring
to acquire Avon’s control
|
On May 22,
2019, an agreement was signed by Avon, Natura Cosméticos, the Company, and other shell companies incorporated in Delaware
with the sole purpose of acting as vehicles for the all-share merger transaction, which resulted in the combination of businesses,
operations, and stock of Natura and Avon, through the Company.
Thus, in
December 2019, Natura Cosméticos became a wholly-owned subsidiary of the Company, through the capital increase of the Company
by means of the contribution of Natura Cosméticos’ shares held by its then-controllers to the capital stock of the
Company and of the merger of free float shares issued by Natura Cosméticos into the Company.
On January
3, 2020, after the conditions precedent for the business combination of Natura and Avon were met, other shell companies, which,
at that time, held Avon, were merged into the Company, and both Natura Cosméticos and Avon became wholly-owned subsidiaries
of the Company.
After the
conclusion of the acquisition of Avon, the exchange ratio of 0.6 common shares issued by the Company or 0.3 American Depositary
Receipts of the Company (each “ADR” representing 2 common shares of the Company), at the discretion of each shareholder,
replacing each one (1) common share issued by Avon held by then Avon shareholders immediately before the business combination
between Natura and Avon.
|
c)
|
unusual events or transactions
|
Relevant
unusual events and transactions were reported in sections “3.3. Events after the last financial statements referring to
the end of the fiscal year” and “3.9 – Other relevant information” of this Reference Form.
10.4
- Material changes in the accounting practices – Caveats and highlights in auditor’s opinion
|
a)
|
material changes in
accounting practices
|
New
Standards, Interpretations and Amendments Adopted in 2020
Amendments
to IFRS 3 / CPC 15 (R1): Definition of a Business
The amendment
to IFRS 3 clarifies that to be considered a business, an integrated set of activities and assets must include, at a minimum, an
input and a substantive process that together significantly contribute to the ability to create output. Furthermore, it clarified
that a business can exist without including all of the inputs and processes needed to create outputs. These amendments had no
impact on the consolidated financial statements of the Company but may impact future periods should the Company enter into any
business combinations.
Amendments
to IFRS 7, IFRS 9 and IAS 39 (CPC 40(R1), CPC 48 and CPC 38, respectively): Interest Rate Benchmark Reform (Level 1)
The amendments
to IFRS 9 and IAS 39 Financial Instruments: Recognition and Measurement provide a number of reliefs, which apply to all hedging
relationships that are directly affected by interest rate benchmark reform. A hedging relationship is affected if the reform gives
rise to uncertainties about the timing and or amount of benchmark-based cash flows of the hedged item or the hedging instrument.
These amendments had no impact on the consolidated financial statements of the Company as it does not have any interest rate hedge
relationships.
Amendments
to IAS 1 and IAS 8 (CPC 26(R1) e CPC 23, respectively): Definition of Material
The amendments
provide a new definition of material that states “information is material if omitting, misstating or obscuring it could
reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis
of those financial statements, which provide financial information about a specific reporting entity.” The amendments clarify
that materiality will depend on the nature or magnitude of information, either individually or in combination with other information,
in the context of the financial statements. A misstatement of information is material if it could reasonably be expected to influence
decisions made by the primary users. These amendments had no impact on the consolidated financial statements of, nor is there
expected to be any future impact to the Company.
Conceptual
Framework for Financial Reporting issued on March 29, 2018 (CPC 00(R2))
The Conceptual
Framework is not a standard, and none of the concepts contained therein override the concepts or requirements in any standard.
The purpose of the Conceptual Framework is to assist the IASB in developing standards, to help preparers develop consistent accounting
policies where there is no applicable standard in place and to assist all parties to understand and interpret the standards. The
revised Conceptual Framework includes some new concepts, provides updated definitions and recognition criteria for assets and
liabilities and clarifies some important concepts. These amendments had no impact on the consolidated financial statements of
the Company.
Amendments
to IFRS 16 (CPC 06(R2)): Covid-19-Related Rent Concessions
On May 28,
2020, the IASB issued Covid-19-Related Rent Concessions -amendment to IFRS 16 – Leases (CPC 06(R2)). The amendments provide
relief to lessees from applying IFRS 16/ CPC 06 (R2) guidance on lease modification accounting for rent concessions arising as
a direct consequence of the Covid-19 pandemic. As a practical expedient, a lessee may elect not to assess whether a Covid-19 related
rent concession from a lessor is a lease modification. A lessee that makes this election accounts for any change in lease payments
resulting from the Covid-19 related rent concession the same way it would account for the change under IFRS 16/ CPC 06 (R2), if
the change were not a lease modification.
The amendment
applies to annual reporting periods beginning on or after June 1st, 2020. This change brought a positive financial impact of R$
58.7 million in the statement of income of the Company and its subsidiaries.
New
Standards, Interpretations and Amendments Adopted in 2019
CPC 06(R2)
/ IFRS 16 – Lease
The Company
applied CPC 06 (R2) / IFRS 16, the new accounting standard on Lease, to replace CPC 06 (R1) / IAS 17 – Lease.
This standard introduces a single-lessee accounting model and requires a lessee to recognize assets and liabilities for all
lease with a term of more than12 months, unless the underlying asset is of a low value. A lessee is required to recognize a right-of-use
asset that represents its right to use the underlying asset and lease liabilities representing its obligation to make lease payments.
This standard substantially carries forward the lessor accounting requirements of CPC 06(R1) / IAS 17, while requiring enhanced
disclosures by lessors.
We adopted
CPC 06(R1)/IFRS 16 from its effective date on January 1, 2019. For lease agreements meeting the CPC 06(R1)/IFRS 16 recognition
criteria, we recognized rights-of-use assets and lease liabilities of R$ 1,949.7 million on January 1, 2019, using the modified
retrospective transition method. For further information, see note 3.29 of our audited consolidated financial statements of December
31, 2019.
ICPC 22/IFRIC
23 – Uncertainty over Income Tax Treatment
ICPC 22/IFRIC
23 which clarifies how the recognition and measurement requirements of CPC 32 - Taxes on Profit (IAS 12 - Income Taxes) are applied
when there is uncertainty over income tax treatments. In this situation, we recognize and measure our current or deferred tax
assets or liabilities by applying CPC 32 / IAS 12 based on our taxable profit or loss, the tax bases of assets and liabilities,
unused tax losses and credits and tax rates. This interpretation became effective for annual periods beginning on January 1, 2019
and did not have a significant impact on our financial statements.
New
Standards, Interpretations and Amendments Adopted in 2018
CPC 47
/ IFRS 15 – Revenue from Contracts with Customers
CPC 47 /
IFRS 15 was issued in May 2014 and amended in April 2016. CPC 47 / IFRS 15 affects any entity entering into contracts with customers,
unless those contracts fall within the scope of certain different standards such as insurance contracts, financial instruments
or lease agreements. CPC 47 / IFRS 15 supersedes the revenue recognition requirements under IAS 18, Revenue, IFRIC 13, Customer
Loyalty Programs, and the majority of other industry-specific guidance. The standard contains a single model that applies to contracts
with customers and two approaches to recognizing revenue: at a point in time or over time. The standard provides a contract-based
five-step analysis of transactions to determine whether, how much and when revenue is recognized. New estimates and thresholds
under the standard have been introduced, which may affect the amount or timing of revenue recognized.
We adopted
CPC 47 / IFRS 15 as of January 1, 2018 using a cumulative effect method. This adoption resulted in a recognition of deferred revenue
related to our loyalty program (points campaign) and performance recognition of programs and events, as well as a reclassification
of penalties and additional charges for late payments from operating expenses to net revenue, which were considered variable.
These events exerted positive effects on our net revenue, negative effects on our operating expenses and positive effects on our
financial results in the amount of R$ 171.4 million, R$ 177.8 million and R$ 6.5 million, respectively, in the fiscal year ended
December 31, 2018.
CPC 48
/ IFRS 9 - Financial Instruments
CPC 48 /
IFRS 9 relating to the classification and measurement of financial instruments. CPC 48 / IFRS 9 uses a single approach to determine
whether a financial asset is measured by the amortized cost or by the fair value, and this approach replaces the previous requirements
of CPC 38 - Financial Instruments: IAS 39 - Financial Instruments - Recognition and Measurement. The approach of CPC 48
/ IFRS 9 is based on how an entity manages its financial assets (that is, the business model), and the contractual characteristics
of the cash flow of these financial assets. CPC 48 / IFRS 9 also amends the impairment criteria by introducing a new expected
credit losses model for calculating impairment on financial assets commitments to extend credit. Further, CPC 48 / IFRS 9 includes
new hedge accounting requirements that align the hedge accounting more closely with the risk management.
These new
requirements do not fundamentally alter the types of hedge relationships or the requirement of measuring and recognizing the ineffectiveness,
but allow more hedge strategies to be used to manage risks to qualify for the hedge accounting and for more judgment of the managers
in the assessment of the effectiveness of these hedge relationships. Extended disclosures related to the risk management activity
for those that choose to apply the new hedge accounting requirements will also be required under the new standard.
We adopted
CPC 48 / IFRS 9 with the date of the initial application being on January 1, 2018. The adoption of expected credit loss requirements
of CPC 48 / IFRS 9 has not had a material impact on our consolidated financial statements.
The adoption
of the classification and measurement of the financial instruments requirements of CPC 48/IFRS 9 has had an impact on the classification
of cash and cash equivalents as fair value through the result and Certificate of Bank Deposits as amortized cost.
It should
be noted that the individual and consolidated financial information as of and for the fiscal year ended December 31, 2017 does
not reflect the adoption of CPC 47 / IFRS 15 - Revenue from Contracts with Customers and of CPC 48 / IFRS 9 - Financial Instruments
beginning on January 1, 2018.
CPC 42
/ IAS 29 - Financial Reporting in Hyperinflationary Economies
Additionally,
starting from July 2018, Argentina has been considered a hyperinflationary economy, as per CPC 42 - Financial Reporting in Hyperinflationary
Economies (IAS 29 - Financial Reporting in Hyperinflationary Economies). The non-monetary assets and liabilities, the shareholders’
equity items and the income statement of subsidiary Natura Cosméticos S,A, Argentina (“Natura Argentina”),
the functional currency of which is the Argentinian Peso, are being adjusted so that their values are in the monetary unit of
measurement on the final date of the period, which considers the effects measured by the Consumer Price Index (“IPC”)
of Argentina as from January 1, 2017, and the Internal Index of Wholesale Prices (“IPIM”) of Argentina until December
31, 2016. Consequently, as required by CPC 42/IAS 29, the results of transactions of subsidiary Natura Argentina must be reported
as if they were highly inflationary as from January 1, 2018 (beginning of the fiscal year, when the hyperinflation was identified).
In the year
ended December 31, 2020, the application of CPC 42 (IAS 29) resulted in: (ii) a negative impact on the financial result of R$
20.6 million (R$ 13.9 million on December 31, 2019 ); and (iiii) a negative impact on net income for the year of R$ 106.2 million
(R$ 68.9 million on December 31, 2019).
The conversion
of the income statement using the exchange rate at the end of the year, instead of the average exchange rate for the year, resulted
in a positive impact on other comprehensive income for the year ended December 31, 2020 in the amount of R$ 32.1 million (R$ 17.7
million on December 31, 2019).
In the year
ended December 31, 2019, the application of CPC 42 / IAS 29 resulted in:
(ii) a
negative impact on financial income (expenses) of R$ 13.9 million (R$ 25.1 million on December 31, 2018); and (iiii) a negative
impact of R$ 68.9 million (R$ 64.3 million on December 31, 2018) on net revenue for the fiscal year.
The conversion
of the income statement using the exchange rate at the end of the year, instead of the average monthly exchange rate, resulted
in a positive impact on other comprehensive income for the fiscal year ended December 31, 2019 of R$ 17.7 million (R$ 19.1 on
December 31, 2018).
For further
information, see note 3.2.1 of our individual and consolidated financial statements for the year ended December 31, 2019.
New
Accounting Standards Issued but Not Yet Effective
Changes
to IAS 1 (CPC 26 (R1)): Classification of liabilities as current or non-current
In January
2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 (related to CPC 26 (R1)), in order to specify the requirements
for classifying the liability as current or non-current. The amendments clarify: (i) what a right to postpone liquidation means;
(ii) that the right to postpone must exist on the base date of the report; (iii) that this classification is not affected by the
likelihood that an entity will exercise its
right to
postpone; (iv) that only if a derivative embedded in a convertible liability is itself an equity instrument would the terms of
a liability not affect its classification.
The changes
are applicable for years beginning on or after January 1, 2023 and should be applied retrospectively. Currently, the Company and
its subsidiaries are evaluating the impact that the changes will have.
Reference
to the Conceptual Framework (CPC 00 (R2)), changes to IFRS 3 (CPC 15 (R1))
In May 2020,
the IASB issued amendments to IFRS 3 (related to CPC 15 (R1)), “Business Combination - Reference to the Conceptual Structure”.
The amendments are intended to replace a reference to the Conceptual Framework for the Preparation and Presentation of Financial
Statements, issued in 1989, with a reference to the Conceptual Framework for Financial Reporting issued in March 2018, without
significantly changing its requirements.
The Board
also added an exception to the IFRS 3 recognition principle to avoid the risk of potential “day 2” gains or losses
arising from contingent liabilities and liabilities that would be within the scope of IAS 37 (CPC 25) or IFRIC 21 - Taxes ( ICPC
19), if incurred separately.
At the same
time, the Board decided to clarify the existing guidelines in IFRS 3 (CPC 15 (R1)) for contingent assets that would not be affected
by replacing the reference to the Framework for the Preparation and Presentation of Financial Statements.
The amendments
are applicable for annual periods beginning on or after January 1, 2022 and, although they have no current impact on the Company
and its subsidiaries, they may be applicable to new business combinations in the future.
IFRS 9
(CPC 48), Financial Instruments - Fees in the “10 percent” test for derecognition of financial liabilities
As part of
its 2018-2020 annual improvements to IFRS, the IASB issued an amendment to IFRS 9 (CPC 48). The amendment clarifies the rates
that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different
from the terms of the original financial liability. These fees include only those paid or received between the borrower and the
lender, including fees paid or received by the borrower or the lender on behalf of the other. An entity applies the change to
financial liabilities that are modified or exchanged at, or after, the beginning of the annual reporting period in which the entity
first applies the change.
The change
is applicable for annual reporting periods beginning on or after January 1, 2022. The Company will apply the changes to financial
liabilities that are modified or exchanged at the beginning or after the beginning of the annual reporting period in which it
first applies the alteration. The changes are not expected to have an impact on the Company and its subsidiaries but may be applicable
to changes and / or derecognition of liabilities in the future.
Amendments
to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (CPC48, CPC 38, CPC 40 (R1), CPC 11 and CPC 06 (R2), respectively), Reform of the
reference interest rate (Level 2)
In 2020,
the IASB completed the second phase of the review process for IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (CPC 48, CPC 38, CPC
40 (R1), CPC 11 and CPC 06 (R2), respectively), in response to the reform of the interest rate reference index (started in phase
1, as disclosed in note 3.30.2. The changes address the possible effects that may arise from changes in contractual cash flows
or hedge relationships resulting from the replacement of the interest rate benchmark by the entity, as well as additional disclosure
requirements related to the effect of the reform of the interest rate benchmark on the entity’s financial instruments and
risk management strategy, including the nature and extent of the risks to which the entity is exposed and how the entity manages
those risks and the entity’s progress in completing the transition to alternative benchmark rates.
Considering
the extinction of LIBOR over the next few years, the Company and its subsidiaries are evaluating their contracts with clauses
that envisage the discontinuation of the interest rate. Most debt contracts linked to LIBOR have some clause to replace this rate
with a reference index or equivalent interest rate and, for contracts that do not have a specific clause, a renegotiation will
be carried out between the parties. Derivative contracts linked to LIBOR provide for a negotiation between the parties to define
a new rate or an equivalent rate will be provided by the calculation agent.
It is important
to emphasize that the clauses for changing the indexes of the debt contracts of the Company and its subsidiaries indexed to LIBOR,
establish that any replacement of the indexation rate in the contracts can only be evaluated in 2 (two) circumstances (i) after
communication an official government entity with formalization of the extinction and exchange of the contract’s effective
rate, and this communication must define the exact date on which LIBOR will be extinguished and / or (ii) syndicated operations
begin to be executed with a rate indexed to Secured Overnight Financing Rate (“SOFR”). Therefore, the negotiation
of debt contracts and their related derivatives will start after these events.
The Company
mapped all of its contracts subject to LIBOR reform that have not yet been subject to the transition to an alternative reference
rate and as of December 31, 2020, the Company had R$ 761,074, related to loan and financing contracts and, until the moment, awaits
the official event of the extinction of LIBOR to start the negotiation of its contracts with the counterparties.
The Company
understands that it will not be necessary to change the risk management strategy due to the change in the indexes of financial
contracts linked to LIBOR. The Company believes that it is reasonable to assume that the negotiation of the indexes of its contracts,
when the official trigger allows, will move towards the replacement of LIBOR by SOFR, as the available information indicates that
SOFR will be the new interest rate adopted by the capital market. Based on the information available to date, the Company does
not expect to have significant impacts on its debts and derivatives linked to LIBOR.
|
b)
|
significant effects
of changes in accounting practices
|
The impacts
on the financial statements are described in item 10.4.b above.
|
c)
|
caveats and highlights
contained in the auditor’s report
|
The independent
auditors issued a report with no caveats or highlights in the financial statements of December 31, 2020, 2019, and 2018.
10.5 -
Critical accounting policies
The preparation
of individual and consolidated financial statements requires certain judgments from management and the use of assumptions and
estimates based on experience and other factors considered relevant, which affect the values of assets and liabilities and that
may present divergent results from actual results.
The areas
that require higher level of judgment and have greater complexity, as well as the areas in which assumptions and estimates are
significant for the financial statements, are disclosed below:
Income
tax, social contribution and other taxes
Deferred
tax assets are recognized for unused tax losses to the extent that it is probable that future taxable profits will be available
against which the losses can be used. Significant management judgment is required to determine the amount of deferred tax assets
that can be recognized, based on the probable term and level of future taxable profits, together with future tax planning strategies.
The Company
has R$ 13,636.5 (R$ 880.5 in 2019) of reportable tax losses. These losses refer to subsidiaries that have a history of losses,
do not expire and cannot be used to offset taxable income in other subsidiaries. The subsidiaries have no taxable temporary differences
or tax planning opportunities available that can partially support the recognition of these losses as deferred tax assets. Based
on this, the Company determined that it cannot recognize deferred tax assets on tax losses to be offset.
Provision
for tax, civil and labor risks
The Company
and its subsidiaries are parties to several legal and administrative proceedings. Provisions are recorded for tax, civil and labor
risks referring to lawsuits that represent probable losses, except for those related to the business combination, and estimated
with a certain degree of security. The assessment of the likelihood of loss includes the assessment of the available evidence,
the hierarchy of laws, the available jurisprudence, the most recent court decisions and their relevance in the legal system, as
well as the assessment of legal counsel.
Post-employment
health care plan
The cost
of the post-employment health care plan is determined through actuarial assessments. An actuarial valuation involves several assumptions
that may differ from actual developments in the future. These are based on a series of financial and demographic assumptions,
such as discount rate, medical inflation and percentage of adherence to the plan. Due to the complexities involved in the assessment
and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are
reviewed at each balance sheet date.
Stock
option plan, restricted stock option program and strategy acceleration program
Estimating
the fair value for share-based payment transactions requires determining the most appropriate valuation model, which depends on
the terms and conditions of the grant. This estimate also requires determining the most appropriate data for the valuation model,
including the expected life of the stock option or rights on the valuation, volatility and dividend yield and making assumptions
about them.
The stock
option plan, the restricted stock plan and the strategy acceleration program are measured at fair value on the grant date and
the expense is recognized in the income statement during the acquisition period and in “Additional paid-in capital”
in the net worth. On the balance sheet dates, Management reviews the estimates regarding the number of restricted stock options
and, when applicable, recognizes the effect of this review on the result for the year against shareholders’ equity.
Impairment
of non-financial assets
Impairment
loss exists when the carrying amount of an asset or CGU exceeds its recoverable amount, which is the higher of fair value less
costs to sell and value in use. The calculation of fair value less costs to sell is based on information available on sales transactions
for similar assets or market prices less additional costs to dispose of the asset.
The value
in use is calculated based on the discounted cash flow model. Cash flows are derived from a budget prepared for the next three
to five years, according to the operating segment, and their projections take into account market expectations for operations,
investment estimates and working capital, in addition to other economic factors. The value in use is sensitive to the discount
rate used in the discounted cash flow method, as well as to the growth and perpetuity rate used for extrapolation purposes.
Provision
for expected losses on trade receivable from customers
The provision
for expected losses on trade receivable from customers is estimated based on the risk of loss in an “aging list” model.
The characteristics of the Company’s accounts receivable are (i) immaterial financial component; (ii) non-complex receivables
portfolio; and (iii) low credit risk.
For accounts
receivable, the Company applies the simplified approach in calculating expected credit losses (“ECL”) based on expected
credit losses at each reporting date. The provision is determined based on (i) the historical experience of credit losses of each
of the subsidiaries, observed in each group of the accounts receivable aging list, and (ii) adjustments for specific prospective
factors for defaulters and the economic environment. An estimated range is used based on the weighted average of losses over the
past 12 months. The calculation also considers the length of time of the relationship of the independent beauty consultant and
a division between renegotiated and non-renegotiated overdue trade receivable.
Provision
for inventory losses
The provision
for inventory losses is estimated using a methodology to contemplate discontinued products, products with slow turnover, products
expired and nearing expiration and products that do not meet quality standards.
Leases
- Incremental rate on lessee’s loan
The Company
cannot immediately determine the interest rate implicit in the lease, therefore, it uses its incremental rate on loan (IBR) to
measure the lease liabilities. IBR is the interest rate that the Company would have to pay to take out a loan, in a similar period
and with a similar guarantee, the resources necessary to obtain an asset of a value similar to the right-of-use asset in a similar
economic environment. IBR, therefore, reflects what the Company “would have to pay”, which requires an estimate when
there are no observable rates available (such as for subsidiaries that do not enter into financing transactions) or when they
need to be adjusted to reflect the terms and conditions lease (for example, when leases are not in the subsidiary’s functional
currency).
The Company
estimates IBR using observable data (such as market interest rates) when available and is required to make certain specific estimates
of its own.
Measurement
at fair value of financial instruments
When the
fair value of financial assets and liabilities recorded in the balance sheet cannot be measured based on prices quoted in active
markets, the fair value is measured based on valuation techniques, including the discounted cash flow model. The inputs considered
in these models are obtained from observable markets, when possible. In situations where these inputs cannot be obtained from
observable markets, a degree of judgment is necessary to establish the respective fair values. Associated judgments include assessment
of liquidity risk, credit risk and volatility. Changes in the assumptions related to these factors could affect the fair value
of financial instruments.
Business
combination
As disclosed
in note 3.4, business combinations are accounted for using the acquisition method, which involves the valuation of assets acquired
and liabilities assumed at the respective fair values. This assessment involves the use of estimates and assumptions that include
significant judgments by the Company, including those applied in the measurement of brand assets, sales representatives and developed
technology, as well as lease liabilities (adjustments to reflect favorable lease conditions in relation to market terms) and measurement
and recognition of contingent liabilities.
10.6 -
Relevant items not evidenced in the financial statements
A) the
off-balance-sheet assets and liabilities directly or indirectly owned by the Company, such as: (i) operating lease transactions,
assets and liabilities; (ii) written-off receivables portfolios over which the entity holds risks and responsibilities, including
the respective liabilities; (iii) agreements for future purchase and sale of products or services; (iv) unfinished construction
contracts; and (v) future financing receipt agreements
Contracts
related to supply of inputs
Subsidiary
Indústria e Comércio de Cosméticos Natura Ltda has commitments arising from electric power supply agreements
for its manufacturing activities, as described below:
|
·
|
Agreements
that started in 2019 and effective up to 2022, with the value of Megawatts/h between
R$ 155 and R$ 305.
|
|
·
|
Agreements
that started in 2020 and effective up to 2022, with the value of Megawatts/h between
R$ 204 and R$ 238.
|
The figures
are shown based on electric power consumption estimates in accordance with the contractual period, the prices of which are based
on volumes, also estimated, resulting from the subsidiary’s continuous operations.
The total
minimum supply payments, measured at nominal value, as per the contracts, are:
(R$
million)
|
2020(*)
|
2019
|
2018
|
Up to one year
|
1,413.9
|
17.9
|
1.3
|
Between
one and five years
|
886.0
|
13.2
|
4.9
|
Total
|
2,299.9
|
31.1
|
6.2
|
|
b)
|
other items not evidenced
in the financial statements
|
There are
no other relevant items which are not evidenced in our financial statements.
10.7 -
Comments on items not evidenced in the financial statements
|
a)
|
how such items affect
or are likely to affect the income, expenses, operating results, financial expenses or other items on the issuer’s financial
statements
|
Except for
the items reported in item 10.6.a above, the Company expects no other material impacts on its financial statements.
|
b)
|
kind and purpose of
the transaction
|
The kind
of off-balance commitments is described in item 10.6.a above.
|
c)
|
kind and amount of obligations
undertaken and rights generated in favor of issuer as a result of the transaction
|
The kind
of off-balance commitments is described in item 10.6.a above.
10.8 -
Business Plan
a) investments,
including: (i) quantitative and qualitative description of current and expected investments; (ii) sources of funding of the investments;
and (iii) material divestments in progress and planned divestments
Investments
The Company’s
operating activities regularly require capital investments, especially regarding the development of its infrastructure and the
purchase of supplies, such as software, machines, tools, vehicles, and industrial models.
The table
below shows the additions to the property, plant and equipment and intangible assets in the periods indicated:
|
As
of December 31,
|
|
2020
|
2019
|
2018
|
|
(Millions
R$)
|
Software
|
82.7
|
83.1
|
190.0
|
Machinery and accessories
|
20.1
|
9.6
|
11.2
|
Vehicles
|
14.6
|
12.5
|
25.2
|
Buildings and facilities
|
46.7
|
49.2
|
38.0
|
Templates (i)
|
1.2
|
1.5
|
0.1
|
Information technology
equipment
|
27.3
|
22.0
|
24.5
|
Furniture and fixtures
|
32.5
|
40.1
|
34.9
|
Projects in progress
|
440.2
|
204.1
|
157.8
|
Other investments
|
125.4
|
145.8
|
10.2
|
Total purchases
of property, plant and equipment and intangible assets
|
790.7
|
567.9
|
491.9
|
|
(i)
|
Refers to steel tooling or templates
specially manufactured by Natura &Co’s suppliers, used in the production of
bottles and plastic packaging for its products. We hold the property of such tooling.
|
In the fiscal
year ended December 31, 2020, acquisitions of property, plant and equipment and intangible assets amounted to R$ 790.7 million
compared to R$ 567.9 million in the period ended December 31, 2019, representing an increase of 39.2%. Our capital expenditure
program is currently focused on IT infrastructure, digital and social selling technology as well as product innovation, projects
aimed at increasing operational efficiency and productivity.
In the fiscal
year ended December 31, 2019, acquisitions of property, plant and equipment and intangible assets amounted to R$ 567.9 million
compared to R$ 491.9 million in the fiscal year ended December 31, 2018, representing an increase of 15.5%. This increase was
primarily related to investments in several areas, including a new distribution center in Mexico, investments in digital technology
and investments in research and development facilities, the opening of new stores and initiatives to increase operating efficiency
and productivity.
Actual
vs, Budgeted
The table
below shows the budgeted amounts for CAPEX against the realized amounts in the periods indicated:
CAPEX
(R$ million)
|
2020
|
2019
|
2018
|
Budgeted
|
854.0
|
637.0
|
585.7
|
Realized
|
790.7
|
567.9
|
491.9
|
Currently,
Natura Cosméticos investment program is focused on opening and renovating existing stores, digital technology, product
innovation, and projects that intend to improve the efficiency and operating productivity of Natura Cosméticos.
2021
Budget
The capital
budget estimated for the Company for the year 2021 is R$ 1,935.5 million, which will cover the investments necessary for the consolidation
of the Company’s growth plan. This amount includes the capital budget of subsidiary Natura Cosméticos, approved at
the Annual General Meeting of this subsidiary.
b) the
acquisition of plants, equipment, patents, and other assets that may have a material impact on the issuer’s production capacity
(if already disclosed)
Not applicable
c) new
products and services, indicating: (i) description of research in progress and already disclosed; (ii) total expenditures incurred
by the issuer in research activities to develop new products or services; (iii) projects in progress and already disclosed; (iv)
total expenditures incurred by the issuer in the development of new products or services.
The Company
has a plan for launching of new products aligned with the market trends. In 2018, the Company has invested R$ 102.4 million, in
2019, R$ 109.3 million and in 2020 R$ 508.8 million in researches for development of new products. Such investments have been
consistent throughout the last years.
10.9 -
Other factors with material influence
There are
no other factors with material influence not disclosed in the other sections of item 10.
NATURA &CO HOLDING S.A.
MANAGEMENT
PROPOSAL FOR THE ANNUAL AND EXTRAORDINARY
GENERAL MEETINGS
TO BE HELD ON APRIL 16, 2021
EXHIBIT
II
Items
12.5 to 12.10 of the Company’s Reference Form
12.5/6 - Composition and Professional
Experience of the Management and Fiscal Council
Name
|
Date
of birth
|
Management
body
|
Date
Elected
|
Term
of office
|
Number
of consecutive Terms of Office
|
Tax
ID (CPF)
|
Profession
|
Elective
office held
|
Date
of investiture
|
Elected
by the controlling shareholder
|
Percentage of participation in
the meetings
|
Other positions and functions held/performed at the issuer
|
Description of another position/duty
|
|
|
Joselena Peressinoto Romero
|
05/18/1967
|
Belongs to the Board of Officers only
|
04/30/2020
|
3 years
|
0
|
120.693.958-39
|
Engineer
|
19 - Other Officers
|
04/30/2020
|
Yes
|
100.00%
|
-
|
|
Chief Global Operations and Purchasing
Officer
|
|
|
|
João Paulo Brotto Gonçalves Ferreira
|
12/09/1967
|
Belongs to the Board of Officers only
|
04/30/2020
|
3 years
|
0
|
050.269.878-00
|
Engineer
|
19 - Other Officers
|
04/30/2020
|
Yes
|
100.00%
|
Member of the Group’s Operational
Committee
|
|
Executive Officer for Latin America
|
|
|
|
Itamar Gaino Filho
|
10/18/1976
|
Belongs to the Board of Officers only
|
04/30/2020
|
3 years
|
0
|
272.341.378-07
|
Lawyer
|
19 - Other Officers
|
04/30/2020
|
Yes
|
100.00%
|
Member of the Group’s Operational
Committee
|
|
Chief Legal & Compliance Officer
|
|
|
|
José Antonio de Almeida Filippo
|
10/27/1960
|
Belongs to the Board of Officers only
|
04/30/2020
|
3 years
|
0
|
750.801.417-00
|
Engineer
|
19 - Other Officers
|
04/30/2020
|
Yes
|
100.00%
|
Member of the Group’s Operational
Committee
|
|
Chief Financial Officer
|
|
|
|
Moacir Salzstein
|
12/31/1958
|
Belongs to the Board of Officers only
|
04/30/2020
|
3 years
|
0
|
036.269.088-01
|
Engineer
|
19 - Other Officers
|
04/30/2020
|
Yes
|
100.00%
|
N/A
|
|
Corporate Governance Officer
|
|
|
|
Viviane Behar de Castro
|
12/12/1965
|
Belongs to the Board of Officers only
|
04/30/2020
|
3 years
|
0
|
075.375.618-85
N/A
|
Manager
|
12 - Investor Relations Officer
|
04/30/2020
|
Yes
|
100.00%
|
Gilberto Mifano
|
11/11/1949
|
Belongs to the Board of Directors only
|
04/30/2020
|
2 years
|
2
|
566.164.738-72
|
Manager
|
27 - Independent Board of Directors (Permanent)
|
04/30/2020
|
Yes
|
100.00%
|
Member of the Audit, Risk Management
and Finance Committee
|
|
|
|
|
|
Fábio Colletti Barbosa
|
10/03/1954
|
Belongs to the Board of Directors only
|
04/30/2020
|
2 years
|
2
|
771.733.258-20
Member
of the Audit, Risk Management and Finance Committee and of the Organizational Development and Personnel Committee.
|
Manager
|
27 - Independent Board of Directors (Permanent)
|
04/30/2020
|
Yes
|
100.00%
|
12.5/6 - Composition and Professional
Experience of the Management and Fiscal Council
Name
|
Date
of birth
|
Management
body
|
Date
Elected
|
Term
of office
|
Number
of consecutive Terms of Office
|
Tax
ID (CPF)
|
Profession
|
Elective
office held
|
Date
of investiture
|
Elected
by the controlling shareholder
|
Percentage of participation in
the meetings
|
Other positions and functions held/performed at the issuer
|
Description of another position/duty
|
|
|
Committee Member.
|
|
|
|
|
|
Jessica DiLulio Herrin
|
11/29/1972
|
Belongs to the Board of Directors only
|
04/30/2020
|
2 years
|
2
|
000.000.000-00
|
Economist
|
27 - Independent Board of Directors (Permanent)
|
04/30/2020
|
Yes
|
96.15%
|
N/A
|
|
|
|
|
|
Ian Martin Bickley
|
10/02/1963
|
Belongs to the Board of Directors only
|
04/30/2020
|
2 years
|
2
|
000.000.000-00
|
Economist
|
27 - Independent Board of Directors (Permanent)
|
04/30/2020
|
Yes
|
96.15%
|
Member of the Strategic Committee
|
|
|
|
|
|
Antônio Luiz da Cunha Seabra
|
03/23/1942
|
Belongs to the Board of Directors only
|
04/30/2020
|
2 years
|
2
|
332.927.288-00
|
Economist
|
29 - Other Directors
|
04/30/2020
|
Yes
|
100.00%
|
Member of the Corporate Governance
Committee
|
|
Co-chairman of the Board of Directors
|
|
|
|
Pedro Luiz Barreiros Passos
|
06/29/1951
|
Belongs to the Board of Directors only
|
04/30/2020
|
2 years
|
2
|
672.924.618-91
|
Engineer
|
29 - Other Directors
|
04/30/2020
|
Yes
|
100.00%
|
Member of the Corporate Governance
Committee
|
|
Co-chairman of the Board of Directors
|
|
|
|
Nancy Killefer
|
11/16/1953
|
Belongs to the Board of Directors only
|
04/30/2020
|
2 years
|
2
|
000.000.000-00
|
Businesswoman
|
27 - Independent Board of Directors (Permanent)
|
04/30/2020
|
Yes
|
96%
|
Member of the Organizational Development
and Personnel Committee.
|
|
|
|
|
|
Wyllie Don Cornwell
|
01/17/1948
|
Belongs to the Board of Directors only
|
04/30/2020
|
2 years
|
2
|
000.000.000-00
|
Businessman
|
27 - Independent Board of Directors (Permanent)
|
04/30/2020
|
Yes
|
100%
|
N/A
|
|
|
|
|
|
12.5/6 - Composition and Professional
Experience of the Management and Fiscal Council
Name
|
Date
of birth
|
Management
body
|
Date
Elected
|
Term
of office
|
Number
of consecutive Terms of Office
|
Tax
ID (CPF)
|
Profession
|
Elective
office held
|
Date
of investiture
|
Elected
by the controlling shareholder
|
Percentage of participation in
the meetings
|
Other positions and functions held/performed at the issuer
|
Description of another position/duty
|
|
|
Andrew George McMaster Jr.
|
11/04/1952
|
Belongs to the Board of Directors only
|
04/30/2020
|
2 years
|
2
|
000.000.000-00
|
Businessman
|
27 - Independent Board of Directors (Permanent)
|
04/30/2020
|
Yes
|
100.00%
|
Member of the Audit, Risk Management
and Finance Committee
|
|
|
|
|
|
Guilherme Peirão Leal
|
02/22/1950
|
Belongs to the Board of Directors only
|
04/30/2020
|
2 years
|
2
|
383.599.108-63
|
Manager
|
29 - Other Directors
|
04/30/2020
|
Yes
|
100.00%
|
Member of the Corporate Governance
Committee
|
|
Co-chairman of the Board of Directors
|
|
|
|
Carla Schmitzberger
|
06/21/1962
|
Belongs to the Board of Directors only
|
04/30/2020
|
2 years
|
2
|
667.280.967-87
|
Engineer
|
27 - Independent Board of Directors (Permanent)
|
04/30/2020
|
Yes
|
100.00%
|
Member of the Strategic Committee
and of the Organizational Development and Personnel Committee
|
|
|
|
|
|
Roberto de Oliveira Marques
|
07/13/1965
|
Belongs to the Board of Directors only
|
04/30/2020
|
2 years
|
2
|
090.072.488-98
|
Manager
|
20 - Executive Chairman of the Board of Directors
|
04/30/2020
|
Yes
|
100.00%
|
Member of the Corporate Governance
Committee, Strategic Committee, Organizational Development and Personnel Committee, Operational Committee of the Group and
Audit, Risk Management and Finance Committee and Chief Officer of the Group
|
|
|
|
|
|
Georgia Garinois-Melenikiotou
|
07/06/1959
|
Belongs to the Board of Directors
only
|
04/16/2021
|
2 years counted as of 04/30/2020,
unified with the other members
|
0
|
000.000.000-00
|
|
27 - Independent Board
of Directors (Permanent)
|
04/16/2021
|
Yes
|
0.00%
|
Helmut Bossert
|
04/25/1948
|
Fiscal Council
|
04/30/2020
|
Until the next Annual Shareholders’ Meeting
|
0
|
480.672.378-91
|
Economist
|
45 - Fiscal Council (Permanent) Elected by the Minority Common Shareholders
|
04/30/2020
|
No
|
100.00%
|
N/A
|
|
|
|
|
|
Eduardo Rogatto Luque
|
07/06/1969
|
Fiscal Council
|
04/30/2020
|
Until the next Annual Shareholders’ Meeting
|
0
|
142.773.658-84
|
Accountant
|
43 - Fiscal Council (Permanent) Elected by the Controlling Shareholder
|
04/30/2020
|
Yes
|
100.00%
|
N/A
|
|
|
|
|
|
Carlos Elder Maciel de Aquino
|
04/09/1961
|
Fiscal Council
|
04/30/2020
|
Until the next Annual Shareholders’ Meeting
|
0
|
12.5/6 - Composition and Professional
Experience of the Management and Fiscal Council
Name
|
Date of birth
|
Management body
|
Date Elected
|
Term of office
|
Number of consecutive Terms of Office
|
Tax ID (CPF)
|
Profession
|
Elective office held
|
Date of investiture
|
Elected by the controlling shareholder
|
Percentage of participation in the meetings
|
Other positions and functions held/performed at the issuer
|
Description of another position/duty
|
226.993.094-00
N/A
|
Accountant
|
43 - Fiscal Council (Permanent) Elected by the Controlling Shareholder
|
04/30/2020
|
Yes
|
100.00%
|
Professional experience / Independence Criteria
|
Joselena Peressinoto Romero - 120.693.958-39
Joselena Peressinoto Romero is a food engineer
and has participated in executive programs at Pennsylvania State University, Harvard Business School and INSEAD. Her career at
Natura Cosméticos started in 2010 when she was a Global Supply Chain Planning Officer. She currently holds the position
of Global Operating and Purchasing Officer and is a member of the Operating Committee of Natura &Co Holding S.A. Prior to that,
she held various local and regional leadership positions at Unilever. Her last office was vice-president of supply chain for Latin
America for Home Care Business. She has not been subject, over the past five (5) years, to any criminal conviction; no conviction
in an administrative proceeding by the Securities Commission (CVM) and to no final and unappealable judgment, in the judicial or
administrative spheres, which suspended or disqualified her for the performance of any professional or business activity. She does
not fit the definition of politically exposed person, on the terms of CVM Rule No. 301, of 1999.
|
João Paulo Brotto Gonçalves
Ferreira - 050.269.878-00
João Paulo Brotto Gonçalves
Ferreira holds a degree in Electrical Engineering from the University of São Paulo (USP) and an executive MBA from the University
of Michigan, in the United States. João Paulo is an Executive Officer for Latin America and a member of the Group’s
Operational Committee. Since 2016, he has also held the office of Chief-Executive Officer of Natura Cosméticos, wherein
he was admitted in 2009 as vice-president of operations and logistics. Afterwards, he became vice-president of chains, responsible
for the Commercial Area and for Channel Development. Other roles at Natura included leading the International Operations and the
Sustainability Area. Prior to Natura, he worked at Unilever for 20 years, where he held the office of vice-president of supply
chain. João Paulo is a member of the Board of Instituto Natura and, since 2021, is also an independent member of the Board
of Directors of Infracommerce, a business digitalization solutions company. He has not been subject, over the past five (5) years,
to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM) and to any final
and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for the performance of
any professional or business activity. He does not fit the definition of politically exposed person, under the terms of CVM Rule
No. 301, of 1999.
|
Itamar Gaino Filho - 272.341.378-07
Itamar Gaino Filho holds a degree and a
master’s degree in Law from the Pontifical Catholic University of São Paulo (PUC-SP) and has a major from CEU Law
School, with experience in the legal, tax and compliance areas in large multinational companies. Prior to Natura&Co, he worked
as senior legal counsel for PepsiCo and in other leadership positions at General Motors, Monsanto and Femsa. Currently he holds
the office of Chief Legal and Compliance Officer at Natura &Co Group, is a member of the Group’s Operational Committee
and of the Board of Directors of subsidiaries Natura Cosméticos S.A., The Body Shop International Ltd., Avon Product Inc.
and Emeis Holdings (Aesop).He has not been subject, over the past five (5) years, to any criminal conviction; adverse judgment
in an administrative proceeding by the Securities Commission (CVM) and to any final and unappealable judgment, in the judicial
or administrative spheres, which suspended or disqualified him for the performance of any professional or business activity. He
does not fit the definition of politically exposed person, under the terms of CVM Rule No. 301, of 1999.
|
José Antonio de Almeida Filippo
- 750.801.417-00
José Antonio de Almeida Filippo
holds a bachelor’s degree in Civil Engineering from the Federal University of Rio de Janeiro. He also participated in the
Management Development Program at Harvard University. Filippo joined Natura in May 2018 as Chief Financial and Investor Relations
Officer. Previously, he was Embraer’s chief financial officer. He currently holds the office of Chief Financial Officer and
is a member of the Operational Committee of Natura &Co Holding S.A. Prior to working for Embraer, Filippo was the chief financial
officer of Companhia Brasileira de Distribuição (part of the Pão de Açúcar Group), and he also
held the office of vice-president of finance and investor relations at CPFL Energia S.A.
He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity. He does not fit the definition of politically exposed person, under the
terms of CVM Rule No. 301, of 1999.
|
Moacir Salzstein - 036.269.088-01
|
Moacir Salzstein holds a Chemical Engineering
degree from the Polytechnic School of the University of São Paulo and a post-graduate degree in Business Administration
and an MBA from FGV-SP. He serves as a Corporate Governance Officer for Natura &Co Holding S.A, having previously served as
strategic planning officer for Natura Cosméticos. He previously worked for companies such as Monitor Group, Ultrapar Group,
Dow / Union Carbide, Itaú, Jaakko Poyry and Promon Engenharia.
He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity. He does not fit the definition of politically exposed person, on the
terms of CVM Rule No. 301, of 1999.
|
Viviane Behar de Castro - 075.375.618-85
Viviane Behar de Castro is an Investor
Relations Officer at Natura &Co. Holding. Before joining Natura in 2018, she served as investor relations officer at Fleury
S.A. and as Investor Relations and Sustainability Officer at Redecard S.A, where she remained for eight years. Ms. Castro was previously
a managing partner of VB Projetos, working with debt restructuring. She brings more than 10 years of investment and corporate banking
experience, and held senior positions at Bank of America and Citibank. Ms. Castro holds a bachelor’s degree in Business Administration
from Foundation Armando Álvares Penteado (FAAP) and participated in the Executive Program at The Wharton School at the University
of Pennsylvania. She has not been subject, over the past five (5) years, to any criminal conviction; adverse judgment in an administrative
proceeding by the Securities Commission (CVM) and to any final and unappealable judgment, in the judicial or administrative spheres,
which suspended or disqualified her for the performance of any professional or business activity. She does not fit the definition
of politically exposed person, on the terms of CVM Rule No. 301, of 1999.
|
Gilberto Mifano - 566.164.738-72
Gilberto Mifano holds a degree in Business
Administration from the Business Administration College of the Getúlio Vargas Foundation of São Paulo (FGV-SP), 1972.
He is currently an independent member of the board of directors of Cielo S/A - since 2009, of TOTVS S/A - since 2017, of Pacaembu
Construtora S/A - since 2018 and an advisory director for Pragma Patrimônio Ltda - since 2009. From 1994 to 2008 he was CEO
at BOVESPA - Bolsa de Valores of São Paulo and CBLC - Companhia Brasileira de Liquidação e Custódia
and later, in 2008 and 2009, he was Chairman of The Board of Directors of BM&FBOVESPA – Bolsa de Valores Mercadorias
e Futuros S/A. He was also independent director for SEB Educacional S/A, Isolux Infrastructure S/A, Baterias Moura S/A, mbar
S/A and member of the Committee for Sustainability of Banco Santander Brasil S/A. On an international level, for approximately
8 years, he was member and vice-president of the executive committees of WFE – World Federation of Exchanges and FIAB –
Federación Latino Americana de Bolsas. Before 1994, he was an executive and officer in financial institutions in Brazil.
At Natura, Gilberto Mifano worked as advisor of the Audit, Risk Management and Finance Committee from 2009 to 2016 and started
his activities at the Board of Directors of Natura Cosméticos in 2017. He is currently an independent member of the Board
of Directors of Natura &Co Holding S.A. and Chairman of the Audit, Risk Management and Finance Committee.
Currently, Gilberto Mifano holds the following
positions in other companies or organizations from the third sector: (i) member of the Fiscal Council of the Arapyau Institute;
(ii) member of the Decision-Making Council of RAPS - Political Action Network for Sustainability (Institute); (iii) member of the
Fiscal Council of CIEB - Innovation Center for Education (Institute); In the past, he was (iv) tax director of the Natura Institute
and (v) chairman of the Board of Directors of IBGC – Brazilian Institute of Corporate Governance and (vi) member of the Fiscal
Council of Amigos da Poli (Institute). Out of the companies mentioned above, companies (i), (ii), (iv) and (vi) are controlled
by a shareholder in the issuer that holds direct or indirect interest equal to or greater than 5% of the same class or type of
issuer’s security.
He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity. Considered an independent member based on the independence criterion
defined by the Novo Mercado Rules of B3 S.A. – Brasil, Bolsa, Balcão. He does not fit the definition of politically
exposed person, on the terms of CVM Rule No. 301, of 1999.
|
Fábio Colletti Barbosa - 771.733.258-20
Fábio Colletti Barbosa is a member
of the board of directors of Itaú-Unibanco, Gávea Investimentos, CBMM (Brazilian Company of Metalworking and Mining)
and Hering. Fábio Barbosa started his activities in the Board of Directors of Natura Cosméticos in 2017 and is currently
an independent member of the Board of Directors of Natura &Co Holding S.A., of the Audit, Risk Management and Finance Committee
and of the Organizational Development and Personnel Committee. Fábio was president of Bank ABN Amro Real since 1996 and,
in 2008, following the acquisition of Bank Real by Santander, he became president of Santander Brazil. From 2007 to 2011, he was
also president of Febraban. Between 2011 and early 2015, he was president of Abril Mídia. Currently, Fábio is also
a board member of the Osesp Foundation; Chairman of the board of Empreender Endeavor Institute; Chief Officer of the board of Fundação
Itaú; member of the Board of the Public Leadership Center (CLP) and the UN Foundation, to support the UN. In 2011, he was
recognized a Personality of the Year, by the Brazil-United States Chamber of Commerce, in New York. In 2012, he received the prize
Campeões da Terra, granted by PNUMA (United Nations Environmental Program), due to his business vision. And in 2017, he
was recognized by the Worldfund for Education for bringing the topic of value to the forefront of the discussion. Fábio
holds a degree in Business Administration from the Getúlio Vargas Foundation of São Paulo and holds an MBA from the
Institute for Management Development (IMD), in Lausanne, in Switzerland.
Currently, Fábio holds the following
positions in other companies or organizations from the third sector: (i) Member of The Board of Directors of Fundação
OSESP (Foundation); (ii) Member of the Board of Directors of UN Foundation (Foundation); (iii) Chairman of The Board of Directors
of Instituto Empreender Endeavor (Institute); (iv) Member of the Investment Committee of Gávea Investments (Financial institution);
(v) Member of the Board of Directors of Itaú Unibanco Holding S.A. (Financial institution); (vi) Member of the Board of
Directors of the Brazilian Metalworking and Mining Company – CBMM (Mining); (vii) Member of the Board of Directors of Cia.
Hering (Clothing); (viii) member of the Board of Directors of the Public Leadership Center – CLP (Institute); and (ix) Chief
Officer of the Board of Directors of Fundação Itaú (Foundation). Out of the companies mentioned above, none
of them is a part of the issuer’s economic group or is controlled by a shareholder in the issuer that holds direct or indirect
interest equal to or greater than 5% of the same class or type of issuer’s security. He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity. Considered an independent member based on the independence criterion
defined by the Novo Mercado Rules of B3 S.A. – Brasil, Bolsa, Balcão. He does not fit the definition of politically
exposed person, on the terms of CVM Rule No. 301, of 1999.
|
Jessica DiLulio Herrin - 000.000.000-00
|
American Passport No. 557088851
Jessica DiLullo Herrin holds a degree in
Economics from the Stanford University. She is the CEO and founder of the brands Stella & Dot, Keep Collective and Ever Skin
and is also co-founder of the WeddingChannel.com, one of the main wedding websites in the world, where she also worked as Vice-President
of product management. Moreover, she worked at Dell Inc. as EBusiness Senior Manager and at Neilsen NetRatings as Senior Product
Marketing Manager. In 2016, she wrote her first book “Find Your Extraordinary: Dream Bigger, Live Happier, and Achieve Success
on Your Own Terms”. Jessica has already won various prizes and has been recognized for her enterprising achievements at Oprah,
Inc. Magazine (Stella & Dot was recognized as one of the private companies with fast growth between 2010 and 2011), Fortune,
New York Times, Wall Street Journal, InStyle, Glamour magazine, among others. Jessica Herrin started her activities at the Board
of Directors of Natura Cosméticos in 2018 and is currently an independent member of the Board of Directors of Natura &
Co. Holding S.A.
Jessica currently holds the following positions
in other companies or organizations from the third sector: Fashion and beauty CEO of brands Stella & Dot. The aforementioned
companies are not part of the issuer’s economic group or controlled by a shareholder in the issuer that holds direct or indirect
interest equal to or greater than 5% of the same class or type of issuer’s security.
She has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified her for
the performance of any professional or business activity. Considered an independent member based on the independence criterion
defined by the Novo Mercado Rules of B3 S.A. – Brasil, Bolsa, Balcão. She does not fit the definition of politically
exposed person, on the terms of CVM Rule No. 301, of 1999.
|
Ian Martin Bickley - 000.000.000-00
British
Passport No. 538953627
Mr. Bickley was Executive Officer at Tapestry,
Inc. (“Tapestry”), a company listed at NYSE encompassing modern luxury lifestyle and accessories brands, including
Coach, Kate Spade and Stuart Weitzman, until December 2018. Mr. Bickley held different executive offices at Tapestry (former Coach,
Inc.) between 1993 and 2018. From July 2017 to December 2018, Mr. Bickley was the President of Global Business and Strategic Alliances
Development for Tapestry. Previously, he held the office of President at the Coach International Group from August 2013 to July
2017, President at the Coach International from February 2006 to August 2013, President and CEO of Coach Japan from August 2001
to February 2006, Vice-President at Coach Japan from 1997 to 2001 and held other senior offices since he joined the company in
1993. Mr. Bickley became a member of the Board of Directors of Crocs, Inc, (CROX/NASDAQ) in 2015 and was a member of the Compensation
Committee from 2015 to 2019. Currently, he works at the Audit Committee (since 2019) and at the China Acceleration Committee as
Chairman (since 2019). Mr. Bickley joined the Board of Directors of Natura Cosméticos in 2019 and is currently an independent
member of the Board of Directors and member of the Strategic Committee of Natura & Co Holding S.A. The aforementioned companies
are not part of the issuer’s economic group or controlled by a shareholder in the issuer that holds direct or indirect interest
equal to or greater than 5% of the same class or type of issuer’s security.
He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity. Considered an independent member based on the independence criterion
defined by the Novo Mercado Rules of B3 S.A. – Brasil, Bolsa, Balcão. He does not fit the definition of politically
exposed person, on the terms of CVM Rule No. 301, of 1999.
|
Antônio Luiz da Cunha Seabra - 332.927.288-00
Antônio Luiz da Cunha Seabra founded
Natura Cosméticos in 1969 and started his activities at the Company’s Board of Directors in 1998. Since then he has
dedicated himself to the construction and development of said company. He started with a small store at Rua Oscar Freire wherein
he provided customized consultancy services. Five years later, he expanded the reach of his message and products by adopting the
sales method through relations with consultants as Natura’s business model. With a degree in Economics, Luiz Seabra developed
new products, languages and messages for the beauty industry. He participated actively in the transformation of the organization
in one of the largest cosmetics companies in the world, strongly committed with ethics and sustainability. He is currently co-chairman
of the Board of Directors of Natura &Co Holding and director of Instituto Natura.
Currently, Antonio Luiz holds the following
positions in other companies or organizations from the voluntary sector: (i) Executive Officer at Orexis Participações
Ltda. (Ownership Interests); (ii) Chief Executive Officer at VivaVida Instituto de Ações Solidárias (Institute);
(iii) Chief Executive Officer at Lisis Participações S.A (Holding Company); (iv) Executive Officer at Homagus Adm.
E Participações Ltda. (Administration); (v) Manager at Janos Com. Adm. e Participações Ltda. (Holding
Company); (vi) Managing Officer at Axioma Adm. e Participações Ltda. (Administration); (vii) Chief-Executive Officer
at Heuris Adm. e Consultoria Ltda (Administration); (viii) Chief Executive Officer at Lisis Gestão de Participações
S.A.. Out of the companies mentioned above, all of them are part of the issuer’s economic group or controlled by the issuer’s
shareholder that holds direct or indirect interest equal to or greater than 5% of the same class or type of the issuer’s
security.
He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity. He does not fit the definition of politically exposed person, on the
terms of CVM Rule No. 301, of 1999.
|
Pedro Luiz Barreiros Passos - 672.924.618-91
|
Pedro Luiz Barreiros Passos is co-founder
of Natura Cosméticos and started his activities at the Board of Directors of the Company in 1998. He is currently co-chairman
of the Board of Directors and member of the Corporate Governance Committee of Natura &Co Holding S.A. and board member of Instituto
Natura. Pedro holds a Bachelor’s degree in Production Engineering from the Polytechnic School of the University of São
Paulo - USP, with a major in Business Administration from Getúlio Vargas Foundation - FGV. Pedro works in different entities
and organizations, as listed below:
(i) Member of the Board of Directors of
IEDI (Institute); (ii) Member of the Board of Directors of Fundação de Amparo à Pesquisa do Estado de São
Paulo - FAPESP (Foundation for Support to Research of the State of São Paulo) (Public Foundation); (iii) Member of the Board
of Directors of Endeavor (Institute); (iv) Member of the Board of Directors of Dom Cabral Foundation (Education); (v) Chairman
of the Board of Directors of SOS Mata Atlântica (Institute); (vi) Member of the Board of Directors of Instituto Semeia (Institute);
(vii) Member of the Board of Directors of AC Camargo since 2018 (Private Foundation); (viii) Member of the Board of Empresa Brasileira
de Pesquisa e Inovação Industrial – EMBRAPII (Private Foundation).
Out of the companies mentioned above, only
(i) and (ii) are part of the issuer’s economic group or controlled by the issuer’s shareholder that holds direct or
indirect interest equal to or greater than 5% of the same class or type of the issuer’s security. He has not been subject,
over the past five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission
(CVM) and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him
for the performance of any professional or business activity. He does not fit the definition of politically exposed person, on
the terms of CVM Rule No. 301, of 1999.
|
Nancy Killefer - 000.000.000-00
American
Passport 515398235
Nancy Killefer was a senior partner at
McKinsey & Company, an international management advisory company, until her retirement in August 2013. Ms. Killefer started
at McKinsey in 1979 and held a series of leadership offices, including member of the company’s governance board. Nancy also
led the recruitment sector and presided over several assessment and compensation committees. From 2000 to 2007, she managed McKinsey
office in Washington, D.C. From 1997 to 2000, Nancy was Deputy Secretary of the Management, Financial Officer and Operational Officer
of the US Treasury Department. In 2000, she returned to McKinsey to create and lead the Public Sector department. She was also
a member of the Oversight Board of the U.S. Internal Revenue Service, from 2000 to 2005, and chairperson of the same body from
2002 to 2004. In addition, she was chairwoman and member of the board of CSRA until 2018, a member of the board of Taubman &
Company until 2020 and member of The Advisory Board until 2017. Ms. Killefer was a member of the board of Avon Products, Inc. since
2013, and was Chairwoman of the Committee of Appointment and Corporate Governance and member of the Compensation Committee. In
2020, she was appointed by Natura &Co to occupy the position of independent member of the Group’s Board of Directors.
Ms. Killefer currently holds the following offices in other companies or organizations of the voluntary sector: (ii) Independent
Member of the Board of Directors and Member of the Compensation and Management Development Committee of Cardinal Health, Inc.;
and (ii) Independent Member of the Board of Directors and Chairwoman of the Privacy Committee and Member of the Audit Committee
of Facebook, Inc. The aforementioned companies are not part of the issuer’s economic group or controlled by a shareholder
in the issuer that holds direct or indirect interest equal to or greater than 5% of the same class or type of issuer’s security.
She has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified her for
the performance of any professional or business activity. Considered an independent member based on the independence criterion
defined by the Novo Mercado Rules of B3 S.A. – Brasil, Bolsa, Balcão. She does not fit the definition of politically
exposed person, on the terms of CVM Rule No. 301, of 1999.
|
Wyllie Don Cornwell - 000.000.000-00
American
Passport No. 565384549
Mr. Cornwell was Chairman of the Board
and Chief Executive Officer at Granite Broadcasting Corporation from 1988 until his retirement in August 2009, and worked as Vice-Chairman
of the Board until December 2009. Previously, Mr. Cornwell worked as Chief Operating Officer of the Corporate Finance Committee
of Goldman, Sachs & Co., from 1980 to 1988, and as Vice-President of the Investment Banking Division, from 1976 to 1988. Mr.
Cornwell was an Independent Officer, Chairman of the Audit Committee, Chairman of the Regulation and Compliance Committee and a
member of the Compensation, Corporate Governance and Science, Sustainability and Technology Committees of Pfizer, Inc. Mr. Cornwell
retired from the board of Pfizer in 2020 and was appointed by Pfizer to act as (i) a member of the Board of Viatris, Inc., a new
health company created from the consolidation of Upjohn, a company that is part of Pfizer business, and Mylan. Currently, Mr. Cornwell
also works as (ii) trustee of Big Brothers Big Sisters of New York and Vice-Chairman and (iii) member of the board of Blue Meridian
Partners Inc., a non-profit organization. Mr. Cornwell is (iv) an Independent Officer, Chairman of Compensation and Management
Resources and Member of the Appointment and Corporate Governance Committees of the American International Group, Inc. Mr. Cornwell
was appointed Lead Director of the Board of Directors of Avon in March 2016 and has worked as a member of the Board of Avon since
2002, was Chairman of the Finance Committee, member of the Audit Committee and of the Appointment and Corporate Governance Committee.
Mr. Cornwell was elected as member of the Board of Directors of Natura & Co Holding in 2020.
Currently, he holds the following positions
in other companies or organizations from the voluntary sector: (i) Member of the Board of Directors of Blue Meridian Partners,
Inc.; (ii) Independent Member of the Board of Directors, Chairman of Compensation and Management Funds, and Member of the Appointment
and Corporate Governance Committees of American International Group, Inc.; (iii) member of the Board of Viatris, Inc.; and (iv)
Trustee of Big Brother Big Sisters of New York City. The aforementioned companies are not part of the issuer’s economic group
or controlled by a shareholder in the issuer that holds direct or indirect interest equal to or greater than 5% of the same class
or type of issuer’s security.
He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity. Considered an independent member based on the independence criterion
defined by the Novo Mercado Rules of B3 S.A. – Brasil, Bolsa, Balcão. He does not fit the definition of politically
exposed person, on the terms of CVM Rule No. 301, of 1999.
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Andrew George McMaster Jr. - 000.000.000-00
|
American Passport No. 518145244
Andrew was deputy executive officer and
vice-chairman of the board of directors of Deloitte & Touche LLP from 2010, and vice-president of Deloitte LLP from 2003 to
his retirement in May 2015. He started his activities at Deloitte in 1976 and held several leadership positions both in the national
and international scopes, including as National Managing Member of Deloitte, working in programs directed to CEO clients, as well
as leader of Global Litigation and Forensic Advisory practice of Deloitte in the USA. Andrew has been an officer of Avon Products,
Inc. since 2018, and chairman of the Audit Committee and of the Financial Committee. In 2020, he was appointed by Natura &Co.
Holding S.A. to occupy the position of independent member of the Group’s Board of Directors.
Andrew currently holds the following positions
in other companies or organizations from the voluntary sector: (i) Member of the Board of Directors, Member of the Compensation
Committee and Chairman of the Audit Committee of Black & Veatch Holding Company, (ii) member of the Board of Directors, Member
of Risk Committee and Chairman of the Audit Committee of UBS Americas Holding LLC in the United States, an intermediary holding
company of the United States for UBS Group in Switzerland and (iii) Member of the Board of Trustees, Vice-chairman of the Chairmen
Recruitment Committee, Member of the Executive Committee, of the Financial Management and Governance Committee, as well as Vice-Chairman
of the Investment Committee of Hobart and William Smith Colleges. The aforementioned companies are not part of the issuer’s
economic group or controlled by a shareholder in the issuer that holds direct or indirect interest equal to or greater than 5%
of the same class or type of issuer’s security.
He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity. He does not fit the definition of politically exposed person, on the
terms of CVM Rule No. 301, of 1999.
|
Guilherme Peirão Leal - 383.599.108-63
Guilherme Peirão Leal holds a degree
in Business Administration from the University of São Paulo (USP) and is a former student of the Advanced Administration
Program of FDC/INSEAD. He is a co-founder of Natura Cosméticos and started his activities in the Company’s Board of
Directors in 1998. He is currently co-chairman of the Board of Directors of Natura &Co Holding and director of Instituto Natura.
In the past 25 years, he participated in the creation and promotion of various companies and social organizations, such as the
Abrinq Foundation for the Rights of Children and Adolescents, the Ethos Institute of Enterprises and Social Responsibility and
the Akatu Institute for Conscious Consumption. He also participated in institutions such as Ashoka – Social Entrepreneurship.
After 2000, he was closely involved in various environmental institutions, such as the Brazilian Fund for Biodiversity (Funbio)
and WWF Brasil. In 2007, he was one of the founders of Movimento Nossa São Paulo, which seeks to engage various sectors
of the local society aiming at a better, fairer and more sustainable city. Since 2008, he has been focused on structuring his legacy
through the Arapyaú Institute, an organization focused on sustainable development and education. In the national elections
of 2010, Guilherme Leal joined former Senator Marina Silva, then from the Green Party, as candidate for Vice- Presidency. Together,
they received approximately 20 million votes. In 2012, he helped to fund the Political Action Network for Sustainability - RAPS,
a non-partisan institution focused on identifying, supporting, developing and congregating political leaders committed to ethical
values and to the construction of an inclusive and sustainable development. In the same year, he joined the B-Team, a group formed
by international leaders, the purpose of which is to engage corporations and leaders from all over the word with a new vision of
business success, by incorporating social and environmental objectives into profit.
Guilherme currently holds the following
positions in other companies or organizations from the third sector: (i) Chief Executive Officer at Maraé Investimentos
Ltda. (Manager); (ii) Manager of Janos Administração e Participações Ltda. (Holding Company); (iii)
President of Utopia Participações S.A. (Holding Company); (iv) Executive Officer at Dédalus Administração
e Participações Ltda. (Management); (v) Executive Officer at SG Debret Participações Ltda. (Management);
(vi) Executive Officer at Modusvivendi Participações Ltda. (Ownership Interest); (vii) Chairman of the Board of Directors
of the Political Action Network for Sustainability - RAPS (Institute); (viii) Member of the Leadership Group of The BTeam (Association);
(ix) Member of the Board of Directors of the Arapyau Institute of Education and Sustainable Development (Institute); (x) Member
of the Board of Directors of Biofílica Investimentos Ambientais S/A (Investments), (xi) Member of the Board of Directors
of Instituto Natura (OSCIP), and (xii) Member of the Advisory Board of Sempre FEA (Association). Out of the companies mentioned
above, companies (i) to (vi) are part of the issuer’s economic group or are controlled by a shareholder that holds direct
or indirect interest equal to or greater than 5% of the same class or type of security.
He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity.
He does not fit the definition of politically
exposed person, on the terms of CVM Rule No. 301, of 1999.
|
Carla Schmitzberger - 667.280.967-87
Carla Schmitzberger has a degree in Chemical
Engineering from the University of Cornell (Ithaca, NY, USA - 1984). She attended an extension course in Strategic People Management
at the FDC/INSEAD (2001). Carla was Vice-President of the Sandals Division of Alpargatas S.A., head of global business of Havaianas
and Statutory Officer of the company throughout her 13-year tenure therein, ended in December 2019. She previously worked at Citibank
for 8 years, having held various positions: Vice-President of Marketing and Products (Credicard S.A.), Vice-President of Marketing
(Citibank Consumer) and Head of Citibank Credit Cards Brazil. At Citibank, she was also responsible for Marketing and Decision
Management for Latin America for one year. Previously, she worked in the consumer goods area for 11 years at Procter & Gamble
in various countries (Germany, Canada and Brazil) in various product categories (Detergents, Hygiene and Cleaning Products, Cosmetics
and Diapers) and at Johnson & Johnson in Brazil for more than two and a half years. She started her activities at the Board
of Directors of Natura Cosméticos in 2016 and is currently an independent member of the Board of Directors of Natura &Co.
Holding S.A., member of the Organizational Development and Personnel Committee and of the Strategic Committee.
Carla is currently an independent member
of the Board of Directors of Lojas Marisa S.A. (Retail) and of Arco Platform Limited (Ed Tech). The aforementioned companies are
not part of the issuer’s economic group or controlled by a shareholder in the issuer that holds direct or indirect interest
equal to or greater than 5% of the same class or type of issuer’s security.
She has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified her for
the performance of any professional or business activity. Considered an independent member based on the independence criterion
defined by the Novo Mercado Rules of B3 S.A. – Brasil, Bolsa, Balcão. She does not fit the definition of politically
exposed person, on the terms of CVM Rule No. 301, of 1999.
|
Roberto de Oliveira Marques - 090.072.488-98
Brazilian Passport No. YC375214
|
Roberto Marques holds a degree in Business
Administration from Getúlio Vargas Foundation of São Paulo (FGV-SP) and a post-graduate degree at the Kellogg School
of Management at Northwestern University and at The Wharton School at the University of Pennsylvania. Roberto started his activities
at Natura in 2016 as a member of the Board of Directors. Currently, he is the Board of Directors’ Executive Chairman and
Chief Officer of Natura & Co. Group. Before that, he worked as EVP/President for North America at Mondeléz International,
and, for more than 25 years, Roberto worked at Johnson & Johnson as President of the Group for North America and held several
other global senior executive positions in the segment of Beauty, Baby, Personal Care, Medical Devices and free sale, working and
residing in countries such as Brazil, Colombia, the United Kingdom and the United States. Previously, Roberto was a member of the
board of Consumer Health Care Products Association (CHPA), of Enactus, of Grocery Manufacturers Association (GMA) and member of
the Brazil-USA Business Committee of the US Chamber of Commerce.
He is currently member of the Advisory
Committee of USTA Foundation and, at Natura & Co, he works together with the main international players, leading the group’s
work in the support to the UN Sustainable Development Goals (SDG’s). He is member of the Board and sole representative of
Latin America for the United Nations Global Compact (UNGC), the world’s largest sustainability initiative. .
Out of the companies mentioned above, none
of them is a part of the issuer’s economic group or is controlled by a shareholder in the issuer that holds direct or indirect
interest equal to or greater than 5% of the same class or type of issuer’s security.
He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity. He does not fit the definition of politically exposed person, on the
terms of CVM Rule No. 301, of 1999.
|
Georgia Garinois-Melenikiotou – 000.000.000-00
Greek Passport No. AP2166738
Georgia Garinois-Melenikiotou is the former
vice-chief officer of corporate marketing of Estée Lauder Companies (ELC), responsible for the marketing excellence resources
for the entire portfolio of the more than 30 brands of ELC, globally. She reported to the CEO and was a member of the ELC leadership
team. Over the 11 years she worked at ELC, she led the company during its “digital first” transformation.
Before joining Estée Lauder, Ms.
Garinois-Melenikiotou worked for 27 years at Johnson & Johnson, where she held leadership offices in seven countries, including
Global President of Beauty EMEA, J&J France President and Global Strategy and New Growth President. She was one of the developers
of the Global Business Unit J&J Beauty and led the creation of the consumption company J&J in France.
Ms. Garinois-Melenikiotou is Independent
External Officer at Inspire Medical (NYSE: INSP), Pulmonx (NYSE: LUNG) and Almirall SA (BME: ALM). Ms. Garinois-Melenikiotou is
from Greece and has a Master’s degree in Mechanical Engineering from the National Polytechnic of Athens, and an MBA from
MIT Sloan. She studied at MIT Sloan as a Fulbright scholarship holder and is currently a board member.
She has not been subject, over the past
five (5) years, to any criminal conviction; no conviction in an administrative proceeding by the Securities Commission (CVM) and
to no final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified her for the performance
of any professional or business activity. He does not fit the definition of politically exposed person, on the terms of CVM Rule
No. 301, of 1999.
|
Helmut Bossert - 480.672.378-91
Helmut Bossert is a member of the Fiscal
Council of Natura &Co Holding S.A and has a vast experience in the Brazilian capital market, especially in shares, issuance
of Eurobonds and debentures and in transactions with financial institutions in Brazil and abroad. He was also actively involved
in IPOs, listings in the “Novo Mercado” segment of B3, and in the NYSE (including with level III ADRs). Mr. Bossert
joined Corp-Group Conexões de Valor in 2015 as an Investors Relations, Corporate Governance, IPO-PMO Capital Market, ESG
Communications Consultant. Before Corp-Group, he worked as an investor relations officer at Natura Cosméticos and took part
in Natura’s IPO in 2004. He also significantly contributed to the implementation of the corporate actions for Natura’s
governance structure. He was also the Capital Market and Investors Relations Officer at SABESP and led its IPO in the “Novo
Mercado” at Bovespa, with a level III ADR program at NYSE. He also worked at Unibanco, where he occupied different positions,
such as Investment Analyst, Corporate Officer, Portfolio and Institutional Sales Manager. Mr. Bossert holds a BA in Economics from
the Pontifical Catholic University and in Capital Markets from the University of São Paulo.
He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity. Considered an independent member based on the independence criterion
defined by the Novo Mercado Rules of B3 S.A. – Brasil, Bolsa, Balcão. He does not fit the definition of politically
exposed person, on the terms of CVM Rule No. 301, of 1999.
|
Eduardo Rogatto Luque - 142.773.658-84
Eduardo Rogatto Luque is a member and current
Chairman of the Fiscal Council of Natura &Co Holding S.A. He has nearly 32 years of experience in auditing and assisting clients
with complex and unique accounting needs, especially those involving the US GAAP and IFRS, in Brazil and abroad. Eduardo has accumulated
27 years of experience at PwC (1989 - 2016), including 13 years as a partner (2004 - 2016). During his career at PwC, he was seconded
to the USA for three years, was in charge of the Engineering and Construction Industry and of Japan Desk in Brazil, and was also
a member of the Audit Global Quality Review Program in Brazil and Ecuador. Mr. Eduardo has a vast experience with large complex
and multinational companies (Ambev, Kroton, Bayer, GP Investimentos, Tempo Participações, Alcoa, DuPont, Qualicorp,
Sonae Sierra, Helbor, Gafisa, etc.) and with Initial Public Offering processes (IPOs) and filings with the SEC. Eduardo joined
as a partner in Irko Group in august 2016. He is Chairman of the Board of Qualicorp S.A., permanent member of the Fiscal Councils
of Itaúsa S.A. and of Zerrenner Foundation (Ambev Foundation), as well as deputy member of the Fiscal Council of Ambev S.A.
He is a member of the Executive Committee of companies of Irko Group (Irko Serviços Contábeis, Irko Hirashima Auditores
Independentes, Adamas Enterprise). He is also the Vice- President of the Brazilian Association of Administrative Service Providers
(ABRAPSA). Mr. Eduardo holds a degree in Accounting from PUC São Paulo, holds the title of Certified Public Accountant (CPA)
in the USA, an MBA in Controllership from USP São Paulo, and participated in APG’s Senior Leadership Program in Amana-Key
- São Paulo.
|
He has not been subject, over the past five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM) and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for the performance of any professional or business activity. He does not fit the definition of politically exposed person, on the terms of CVM Rule No. 301, of 1999.
|
Carlos Elder Maciel de Aquino - 226.993.094-00
Carlos Elder Maciel de Aquino is a member
and current Vice-Chairman of the Fiscal Council of Natura &Co Holding S.A. Mr. Elder holds a bachelor’s degree in Accounting
from the Federal University of Pernambuco (UFPE) and a master’s degree in Accounting and Actuarial Sciences from the Pontifical
Catholic University of São Paulo (PUC-SP). He holds an MBA in Finance from IBMEC-SP and an MBA in Finance and Controllership
from the University of São Paulo (USP-SP), as well as a specialization in Economic Engineering from the Catholic University
of Pernambuco (UNICAP-PE). He has worked as an officer at Unibanco, Itaú Unibanco and KPMG Brasil, Diagnóstico da
América S.A., among others. Mr. Elder has been a professor at the Institute for Accounting, Actuarial and Financial Research
(FIPECAFI) since 1995. He is the author and co-author of articles published in national and international books and magazines on
finance, accounting, governance, regulatory and audit aspects. He also has experience with executive positions in the financial,
audit, healthcare and private pension plan segments and the third sector, in addition to working as a member of the board of directors
and audit, risk management, internal control, money laundering prevention committees and fiscal council. He is currently a member
of the board of directors and coordinator of the Audit Committee of Locaweb S.A, chairman of the audit committee of Banco Pine
S.A and of the Federal Economists Foundation (FUNCEF). He is also a coordinating-member of the audit committee and of the risk
management committee of International Meal Company Alimentos S.A., coordinating-member of the audit committee of CRM Participações
S.A., member of the audit committee of São Paulo Turismo S.A and member of the fiscal council of Folha Participações
S.A.
He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity. He does not fit the definition of politically exposed person, on the
terms of CVM Rule No. 301, of 1999.
|
Type of Conviction
|
Description of Conviction
|
Joselena Peressinoto Romero - 120.693.958-39
N/A
João Paulo Brotto Gonçalves
Ferreira - 050.269.878-00 N/A
|
|
Itamar Gaino Filho - 272.341.378-07 N/A
|
|
José Antonio de Almeida Filippo - 750.801.417-00 N/A
|
|
Moacir Salzstein - 036.269.088-01
|
|
N/A
|
|
Viviane Behar de Castro - 075.375.618-85
N/A
Gilberto Mifano - 566.164.738-72
|
|
N/A
|
|
Fábio Colletti Barbosa - 771.733.258-20
N/A
Jessica DiLulio Herrin - 000.000.000-00
N/A
|
|
Ian Martin Bickley - 000.000.000-00 N/A
|
|
Antônio Luiz da Cunha Seabra - 332.927.288-00 N/A
|
|
Pedro Luiz Barreiros Passos - 672.924.618-91 N/A
|
|
Nancy Killefer - 000.000.000-00 N/A
|
|
Wyllie Don Cornwell - 000.000.000-00
|
|
N/A
|
|
Andrew George McMaster Jr. - 000.000.000-00
N/A
Guilherme Peirão Leal - 383.599.108-63
N/A
|
|
Carla Schmitzberger - 667.280.967-87
|
|
N/A
|
|
Roberto de Oliveira Marques - 090.072.488-98
N/A
Georgia Garinois-Melenikiotou – 000.000.000-00
|
|
N/A
|
|
Helmut Bossert - 480.672.378-91 N/A
Eduardo Rogatto Luque - 142.773.658-84
N/A
|
|
Carlos Elder Maciel de Aquino - 226.993.094-00 N/A
|
|
12.7/8 - Composition of the Committees
Name
|
Type
of committee
|
Type
of Audit
|
Position
held
|
Date
of birth
|
Date
of investiture
|
Term
of office
|
Tax
ID (CPF)
|
Description
of other committees
|
Profession
|
Description
of other positions held
|
Date
of election
|
Number
of consecutive Terms of Office
|
Percentage of participation in
the meetings
|
Other positions and
functions held/performed at the issuer
|
Gilberto Mifano
|
Audit Committee Statutory
Audit Committee not subject to CVM Rule
|
Chairman of the Committee
|
11/11/1949 01/30/2020
|
10 years
|
|
|
|
No. 308/99
|
|
|
|
|
566.164.738-72
|
|
Manager
|
|
01/30/2020
|
0
|
100.00%
|
Independent Board Member
|
|
|
|
|
|
|
Roberto de Oliveira Marques
|
Audit Committee
|
Statutory Audit Committee not subject to CVM Rule No. 308/99
|
Committee Member (Permanent)
|
07/13/1965 01/30/2020
|
10 years
|
|
090.072.488-98
|
|
Manager
|
|
01/30/2020
|
0
|
100.00%
|
Chief Executive of the
Group and Executive Chairman of the Board of Directors
|
Fábio Colletti Barbosa
|
Audit Committee
|
Statutory Audit Committee not subject to CVM Rule No. 308/99
|
Committee Member (Permanent)
|
10/03/1954
|
01/30/2020
|
10 years
|
771.733.258-20
|
|
Manager
|
|
01/30/2020
|
0
|
90.90%
|
Independent Board Member
|
|
|
|
|
|
|
Andrew George McMaster Jr.
|
Audit Committee
|
Statutory Audit Committee not subject to CVM Rule No. 308/99
|
Committee Member (Permanent)
|
11/04/1952
|
01/30/2020
|
10 years
|
000.000.000-00
|
|
Businessman
|
|
01/30/2020
|
0
|
100.00%
|
Independent Board Member
|
|
|
|
|
|
|
Luiz Carlos Passetti
|
Audit Committee
|
Statutory Audit Committee not subject to CVM Rule No. 308/99
|
Committee Member (Permanent)
|
10/07/1958
|
03/30/2020
|
10 years
|
001.625.898-32
|
|
Accountant
|
|
03/30/2020
|
0
|
100.00%
|
NA
|
|
|
|
|
|
|
Fábio Colletti Barbosa
|
Organizational Development and Personnel Committee
|
|
Chairman of the Committee
|
10/03/1954
|
01/30/2020
|
2 years
|
771.733.258-20
|
|
Manager
|
|
01/30/2020
|
0
|
85.71%
|
Independent Board Member
|
|
|
|
|
|
|
Roberto de Oliveira Marques
|
Organizational Development and Personnel Committee
|
|
Committee Member (Permanent)
|
07/13/1965
|
01/30/2020
|
2 years
|
090.072.488-98
|
|
Manager
|
|
01/30/2020
|
0
|
0.00%
|
12.7/8 - Composition of the Committees
Name
|
Type
of committee
|
Type
of Audit
|
Position
held
|
Date
of birth
|
Date
of investiture
|
Term
of office
|
Tax
ID (CPF)
|
Description
of other committees
|
Profession
|
Description
of other positions held
|
Date
of election
|
Number
of consecutive Terms of Office
|
Percentage of participation in
the meetings
|
Other positions and
functions held/performed at the issuer
|
Chief Executive of the
Group and Executive Chairman of the Board of Directors
|
01/30/2020
|
0
|
100%
|
|
Carla Schmitzberger
|
Organizational Development and Personnel Committee
|
|
Committee Member (Permanent)
|
06/21/1962
|
01/30/2020
|
2 years
|
667.280.967-87
|
|
Engineer
|
|
01/30/2020
|
0
|
100.00%
|
Independent Board Member
|
|
|
|
|
|
|
Nancy Killefer
|
Organizational Development and Personnel Committee
|
|
Committee Member (Permanent)
|
11/16/1953
|
01/30/2020
|
2 years
|
000.000.000-00
|
|
Businesswoman
|
|
01/30/2020
|
0
|
100.00%
|
Independent Board Member
|
|
|
|
|
|
|
Roberto de Oliveira Marques
|
Other Committees
|
|
Chairman of the Committee
|
07/13/1965
|
01/30/2020
|
2 years
|
090.072.488-98
|
Strategic Committee
|
Manager
|
|
01/30/2020
|
0
|
100.00%
|
Chief Executive of the
Group and Executive Chairman of the Board of Directors
|
|
|
|
|
Carla Schmitzberger
|
Other Committees
|
|
Others
|
06/21/1962
|
01/30/2020
|
2 years
|
667.280.967-87
|
Strategic Committee
|
Engineer
|
Committee Member
|
01/30/2020
|
0
|
100.00%
|
Independent Board Member
|
|
|
|
|
|
|
Ian Martin Bickley
|
Other Committees
|
|
Committee Member (Permanent)
|
10/02/1963
|
01/30/2020
|
2 years
|
000.000.000-00
|
Strategic Committee
|
Economist
|
|
01/30/2020
|
0
|
100.00%
|
Independent Board Member
|
|
|
|
|
|
|
Guilherme Peirão Leal
|
Other Committees
|
|
Chairman of the Committee
|
02/22/1950
|
01/30/2020
|
2 years
|
383.599.108-63
|
Corporate Governance Committee
|
Manager
|
|
01/30/2020
|
0
|
100.00%
|
Co-Chairman of the Board
|
|
|
|
|
|
|
Pedro Luiz Barreiros Passos
|
Other Committees
|
|
Committee Member (Permanent)
|
06/29/1951
|
01/30/2020
|
2 years
|
672.924.618-91
|
Corporate Governance Committee
|
Engineer
|
|
01/30/2020
|
0
|
100.00%
|
Co-Chairman of the Board
|
|
|
|
|
|
|
Antônio Luiz da Cunha Seabra
|
Other Committees
|
|
Committee Member (Permanent)
|
03/23/1942
|
01/30/2020
|
2 years
|
332.927.288-00
|
Corporate Governance Committee
|
Economist
|
|
01/30/2020
|
0
|
100.00%
|
Co-Chairman of the Board
|
|
|
|
|
|
|
Roberto de Oliveira Marques
|
Other Committees
|
|
Committee Member (Permanent)
|
07/13/1965
|
01/30/2020
|
2 years
|
12.7/8 - Composition of the Committees
Name
|
Type
of committee
|
Type
of Audit
|
Position
held
|
Date
of birth
|
Date
of investiture
|
Term
of office
|
Tax
ID (CPF)
|
Description
of other committees
|
Profession
|
Description
of other positions held
|
Date
of election
|
Number
of consecutive Terms of Office
|
Percentage of participation in
the meetings
|
Other positions and
functions held/performed at the issuer
|
090.072.488-98
|
Corporate Governance Committee
|
Manager
|
|
01/30/2020
|
0
|
100.00%
|
Group’s Chief
Officer and Executive Chairman of the Board of Directors
|
Roberto de Oliveira Marques
|
Other Committees
|
|
Chairman of the Committee
|
07/13/1965
|
01/30/2020
|
2 years
|
090.072.488-98
|
Group’s Operational Committee
|
Manager
|
|
01/30/2020
|
0
|
100.00%
|
Group’s Chief
Officer and Executive Chairman of the Board of Directors
|
João Paulo Brotto Gonçalves Ferreira
|
Other Committees
|
|
Committee Member (Permanent)
|
12/09/1967
|
01/30/2020
|
2 years
|
050.269.878-00
|
Group’s Operational Committee
|
Engineer
|
|
01/30/2020
|
0
|
100.00%
|
Executive Officer for Latin America
|
|
|
|
|
|
|
David Philip Boynton
|
Other Committees
|
|
Committee Member (Permanent)
|
03/30/1963
|
01/30/2020
|
2 years
|
000.000.000-00
|
Group’s Operational Committee
|
Food Scientist
|
|
01/30/2020
|
0
|
100.00%
|
The Body Shop Chief Executive Officer
|
|
|
|
|
|
|
Michael O’Keeffe
|
Other Committees
|
|
Committee Member (Permanent)
|
03/15/1970
|
01/30/2020
|
2 years
|
000.000.000-00
|
Group’s Operational Committee
|
Engineer
|
|
01/30/2020
|
0
|
100.00%
|
Aesop Chief Executive Officer
|
|
|
|
|
|
|
Robert Claus Chatwin
|
Other Committees
|
|
Committee Member (Permanent)
|
05/16/1970
|
01/30/2020
|
2 years
|
570.897.013-87
|
Group’s Operational Committee
|
Economist
|
|
01/30/2020
|
0
|
100.00%
|
Transformation Officer
|
|
|
|
|
|
|
Paula Leeson Fallowfield
|
Other Committees
|
|
Committee Member (Permanent)
|
08/22/1967
|
01/30/2020
|
2 years
|
000.000.000-00
|
Group’s Operational Committee
|
Political Scientist
|
|
01/30/2020
|
0
|
100.00%
|
Human Resources Officer
|
|
|
|
|
|
|
Joselena Peressinoto Romero
|
Other Committees
|
|
Committee Member (Permanent)
|
05/18/1967
|
01/30/2020
|
2 years
|
120.693.958-39
|
Group’s Operational Committee
|
Engineer
|
|
01/30/2020
|
0
|
100.00%
|
Chief Global Operations and Purchasing
Officer
|
|
|
|
|
|
|
Itamar Gaino Filho
|
Other Committees
|
|
Committee Member (Permanent)
|
10/18/1976
|
01/30/2020
|
2 years
|
272.341.378-07
|
Group’s Operational Committee
|
Lawyer
|
|
01/30/2020
|
0
|
100.00%
|
Chief Legal & Compliance Officer
|
|
|
|
|
|
|
12.7/8 - Composition of the Committees
Name
|
Type
of committee
|
Type
of Audit
|
Position
held
|
Date
of birth
|
Date
of investiture
|
Term
of office
|
Tax
ID (CPF)
|
Description
of other committees
|
Profession
|
Description
of other positions held
|
Date
of election
|
Number
of consecutive Terms of Office
|
Percentage of participation in
the meetings
|
Other positions and
functions held/performed at the issuer
|
José Antonio de Almeida Filippo
|
Other Committees
|
|
Committee Member (Permanent)
|
10/27/1960
|
01/30/2020
|
2 years
|
750.801.417-00
|
Group’s Operational Committee
|
Engineer
|
|
01/30/2020
|
0
|
100.00%
|
Chief Financial Officer
|
|
|
|
|
|
|
Silvia Freire Dente da Silva Dias Lagnado
|
Other Committees
|
|
Committee Member (Permanent)
|
08/25/1963
|
01/30/2020
|
2 years
|
086.908.868-85
|
Group’s Operational Committee
|
Engineer
|
|
01/30/2020
|
0
|
100.00%
|
Vice-President of Sustainable Growth
|
|
|
|
|
|
|
Kay Nemoto
|
Other Committees
|
|
Committee Member (Permanent)
|
12/07/1971
|
01/30/2020
|
2 years
|
000.000.000-00
|
Group’s Operational Committee
|
Executive
|
|
01/30/2020
|
0
|
100.00%
|
Chief of Staff
|
|
|
|
|
|
|
Angela Cretu
|
Other Committees
|
|
Committee Member (Permanent)
|
09/10/1974
|
01/30/2020
|
2 years
|
000.000.000-00
|
Group’s Operational Committee
|
Executive
|
|
01/30/2020
|
0
|
100.00%
|
Chief Executive Officer of Avon International
|
|
|
|
|
|
Professional experience / Independence Criteria
|
Gilberto Mifano - 566.164.738-72
Gilberto Mifano holds a degree in Business
Administration from the Business Administration College of the Getúlio Vargas Foundation of São Paulo (FGV-SP), 1972.
He is currently an independent member of the board of directors of Cielo S/A - since 2009, of TOTVS S/A - since 2017, of Pacaembu
Construtora S/A - since 2018 and an advisory director for Pragma Patrimônio Ltda - since 2009. From 1994 to 2008 he was CEO
at BOVESPA - Bolsa de Valores of São Paulo and CBLC - Companhia Brasileira de Liquidação e Custódia
and later, in 2008 and 2009, he was Chairman of The Board of Directors of BM&FBOVESPA – Bolsa de Valores Mercadorias
e Futuros S/A. He was also independent director for SEB Educacional S/A, Isolux Infrastructure S/A, Baterias Moura S/A, mbar
S/A and member of the Committee for Sustainability of Banco Santander Brasil S/A. On an international level, for approximately
8 years, he was member and vice-president of the executive committees of WFE – World Federation of Exchanges and FIAB –
Federación Latino Americana de Bolsas. Before 1994, he was an executive and officer in financial institutions in Brazil.
At Natura, Gilberto Mifano worked as advisor of the Audit, Risk Management and Finance Committee from 2009 to 2016 and started
his activities at the Board of Directors of Natura Cosméticos in 2017. He is currently an independent member of the Board
of Directors of Natura &Co Holding S.A. and Chairman of the Audit, Risk Management and Finance Committee.
Currently, Gilberto Mifano holds the following
positions in other companies or organizations from the third sector: (i) member of the Fiscal Council of the Arapyau Institute;
(ii) member of the Decision-Making Council of RAPS - Political Action Network for Sustainability (Institute); (iii) member of the
Fiscal Council of CIEB - Innovation Center for Education (Institute); In the past, he was (iv) tax director of the Natura Institute
and (v) chairman of the Board of Directors of IBGC – Brazilian Institute of Corporate Governance and (vi) member of the Fiscal
Council of Amigos da Poli (Institute). Out of the companies mentioned above, companies (i), (ii), (iv) and (vi) are controlled
by a shareholder in the issuer that holds direct or indirect interest equal to or greater than 5% of the same class or type of
issuer’s security.
He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity. He does not fit the definition of politically exposed person, on the
terms of CVM Rule No. 301, of 1999.
|
Roberto de Oliveira Marques - 090.072.488-98
Roberto Marques holds a degree in Business
Administration from Getúlio Vargas Foundation of São Paulo (FGV-SP) and a post-graduate degree at the Kellogg School
of Management at Northwestern University and at The Wharton School at the University of Pennsylvania. Roberto started his activities
at Natura in 2016 as a member of the Board of Directors. Currently, he is the Board of Directors’ Executive Chairman and
Chief Officer of Natura & Co. Group. Before that, he worked as EVP/President for North America at Mondeléz International,
and, for more than 25 years, Roberto worked at Johnson & Johnson as President of the Group for North America and held several
other global senior executive
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positions in the segment of Beauty, Baby,
Personal Care, Medical Devices and free sale, working and residing in countries such as Brazil, Colombia, the United Kingdom and
the United States. Previously, Roberto was a member of the board of Consumer Health Care Products Association (CHPA), of Enactus,
of Grocery Manufacturers Association (GMA) and member of the Brazil-USA Business Committee of the US Chamber of Commerce.
He is currently member of the Advisory
Committee of USTA Foundation and, at Natura & Co, he works together with the main international players, leading the group’s
work in the support to the UN Sustainable Development Goals (SDG’s). He is member of the Board and sole representative of
Latin America for the United Nations Global Compact (UNGC), the world’s largest sustainability initiative.
Out of the companies mentioned above, none
of them is a part of the issuer’s economic group or is controlled by a shareholder in the issuer that holds direct or indirect
interest equal to or greater than 5% of the same class or type of issuer’s security.
He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity. He does not fit the definition of politically exposed person, on the
terms of CVM Rule No. 301, of 1999.
|
Fábio Colletti Barbosa - 771.733.258-20
Fábio Colletti Barbosa is a member
of the board of directors of Itaú-Unibanco, Gávea Investimentos, CBMM (Brazilian Company of Metalworking and Mining)
and Hering. Fábio Barbosa started his activities in the Board of Directors of Natura Cosméticos in 2017 and is currently
an independent member of the Board of Directors of Natura &Co Holding S.A., of the Audit, Risk Management and Finance Committee
and of the Organizational Development and Personnel Committee. Fábio was president of Bank ABN Amro Real since 1996 and,
in 2008, following the acquisition of Bank Real by Santander, he became president of Santander Brazil. From 2007 to 2011, he was
also president of Febraban. Between 2011 and early 2015, he was president of Abril Mídia. Currently, Fábio is also
a board member of the Osesp Foundation; Chairman of the board of Empreender Endeavor Institute; Chief Officer of the board of Fundação
Itaú; member of the Board of the Public Leadership Center (CLP) and the UN Foundation, to support the UN. In 2011, he was
recognized a Personality of the Year, by the Brazil-United States Chamber of Commerce, in New York. In 2012, he received the prize
Campeões da Terra, granted by PNUMA (United Nations Environmental Program), due to his business vision. And in 2017, he
was recognized by the Worldfund for Education for bringing the topic of value to the forefront of the discussion. Fábio
holds a degree in Business Administration from the Getúlio Vargas Foundation of São Paulo and holds an MBA from the
Institute for Management Development (IMD), in Lausanne, in Switzerland.
Currently, Fábio holds the following
positions in other companies or organizations from the third sector: (i) Member of The Board of Directors of Fundação
OSESP (Foundation); (ii) Member of the Board of Directors of UN Foundation (Foundation); (iii) Chairman of The Board of Directors
of Instituto Empreender Endeavor (Institute); (iv) Member of the Investment Committee of Gávea Investments (Financial institution);
(v) Member of the Board of Directors of Itaú Unibanco Holding S.A. (Financial institution); (vi) Member of the Board of
Directors of the Brazilian Metalworking and Mining Company – CBMM (Mining); (vii) Member of the Board of Directors of Cia.
Hering (Clothing); (viii) member of the Board of Directors of the Public Leadership Center – CLP (Institute); and (ix) Chief
Officer of the Board of Directors of Fundação Itaú (Foundation). Out of the companies mentioned above, none
of them is a part of the issuer’s economic group or is controlled by a shareholder in the issuer that holds direct or indirect
interest equal to or greater than 5% of the same class or type of issuer’s security. He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity. He does not fit the definition of politically exposed person, on the
terms of CVM Rule No. 301, of 1999.
|
Andrew George McMaster Jr. - 000.000.000-00
American Passport No. 518145244
Andrew G. McMaster Jr.
Andrew was deputy executive officer and
vice-chairman of the board of directors of Deloitte & Touche LLP from 2010, and vice-president of Deloitte LLP from 2003 to
his retirement in May 2015. He started his activities at Deloitte in 1976 and held several leadership positions both in the national
and international scopes, including as National Managing Member of Deloitte, working in programs directed to CEO clients, as well
as leader of Global Litigation and Forensic Advisory practice of Deloitte in the USA. Andrew has been an officer of Avon Products,
Inc. since 2018, and chairman of the Audit Committee and of the Financial Committee. In 2020, he was appointed by Natura &Co.
Holding S.A. to occupy the position of independent member of the Group’s Board of Directors.
Andrew currently holds the following positions
in other companies or organizations from the voluntary sector: (i) Member of the Board of Directors, Member of the Compensation
Committee and Chairman of the Audit Committee of Black & Veatch Holding Company, (ii) member of the Board of Directors, Member
of Risk Committee and Chairman of the Audit Committee of UBS Americas Holding LLC in the United States, an intermediary holding
company of the United States for UBS Group in Switzerland and (iii) Member of the Board of Trustees, Vice-chairman of the Chairmen
Recruitment Committee, Member of the Executive Committee, of the Financial Management and Governance Committee, as well as Vice-Chairman
of the Investment Committee of Hobart and William Smith Colleges. The aforementioned companies are not part of the issuer’s
economic group or controlled by a shareholder in the issuer that holds direct or indirect interest equal to or greater than 5%
of the same class or type of issuer’s security.
He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity. He does not fit the definition of politically exposed person, on the
terms of CVM Rule No. 301, of 1999.
|
Luiz Carlos Passetti - 001.625.898-32
Luiz Carlos Passetti is an accountant graduated
from the Economic Sciences College of São Paulo, with courses at the Getúlio Vargas Foundation and Harvard. He has
over 35 years of experience in audit and consultancy at EY, being a partner for the last 25 years. Throughout his career, he has
dedicated himself to large Brazilian and international companies listed both at the CVM and at SEC. He was the chairman of the
Governance Board of EY South America and a member of the Board of EY Americas and Global. Passetti is also a member of the Audit,
Finance and Risk Committee of Marilan S.A. and of the Audit and Risk Committee of the IBGC - Brazilian Institute of Corporate Governance.
He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity. He does not fit the definition of politically exposed person, on the
terms of CVM Rule No. 301, of 1999.
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Carla Schmitzberger - 667.280.967-87
Carla Schmitzberger has a degree in Chemical
Engineering from the University of Cornell (Ithaca, NY, USA - 1984). She attended an extension course in Strategic People Management
at the FDC/INSEAD (2001). Carla was Vice-President of the Sandals Division of Alpargatas S.A., head of global business of Havaianas
and Statutory Officer of the company throughout her 13-year tenure therein, ended in December 2019. She previously worked at Citibank
for 8 years, having held various positions: Vice-President of Marketing and Products (Credicard S.A.), Vice-President of Marketing
(Citibank Consumer) and Head of Citibank Credit Cards Brazil. At Citibank, she was also responsible for Marketing and Decision
Management for Latin America for one year. Previously, she worked in the consumer goods area for 11 years at Procter & Gamble
in various countries (Germany, Canada and Brazil) in various product categories (Detergents,
|
Hygiene and Cleaning Products, Cosmetics
and Diapers) and at Johnson & Johnson in Brazil for more than two and a half years. She started her activities at the Board
of Directors of Natura Cosméticos in 2016 and is currently an independent member of the Board of Directors of Natura &Co.
Holding S.A., member of the Organizational Development and Personnel Committee and of the Strategic Committee.
Carla is currently an independent member
of the Board of Directors of Lojas Marisa S.A. (Retail) and of Arco Platform Limited (Ed Tech). The aforementioned companies are
not part of the issuer’s economic group or controlled by a shareholder in the issuer that holds direct or indirect interest
equal to or greater than 5% of the same class or type of issuer’s security. She has not been subject, over the past five
(5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM) and
to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified her for the
performance of any professional or business activity. She does not fit the definition of politically exposed person, on the terms
of CVM Rule No. 301, of 1999.
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Nancy Killefer - 000.000.000-00
American
Passport 515398235
Nancy Killefer was a senior partner at
McKinsey & Company, an international management advisory company, until her retirement in August 2013. Ms. Killefer started
at McKinsey in 1979 and held a series of leadership offices, including member of the company’s governance board. Nancy also
led the recruitment sector and presided over several assessment and compensation committees. From 2000 to 2007, she managed McKinsey
office in Washington, D.C. From 1997 to 2000, Nancy was Deputy Secretary of the Management, Financial Officer and Operational Officer
of the US Treasury Department. In 2000, she returned to McKinsey to create and lead the Public Sector department. She was also
a member of the Oversight Board of the U.S. Internal Revenue Service, from 2000 to 2005, and chairperson of the same body from
2002 to 2004. In addition, she was chairwoman and member of the board of CSRA until 2018, a member of the board of Taubman &
Company until 2020 and member of The Advisory Board until 2017. Ms. Killefer was a member of the board of Avon Products, Inc. since
2013, and was Chairwoman of the Committee of Appointment and Corporate Governance and member of the Compensation Committee. In
2020, she was appointed by Natura &Co to occupy the position of independent member of the Group’s Board of Directors.
Ms. Killefer currently holds the following offices in other companies or organizations of the voluntary sector: (ii) Independent
Member of the Board of Directors and Member of the Compensation and Management Development Committee of Cardinal Health, Inc.;
and (ii) Independent Member of the Board of Directors and Chairwoman of the Privacy Committee and Member of the Audit Committee
of Facebook, Inc. The aforementioned companies are not part of the issuer’s economic group or controlled by a shareholder
in the issuer that holds direct or indirect interest equal to or greater than 5% of the same class or type of issuer’s security.
She has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified her for
the performance of any professional or business activity. She does not fit the definition of politically exposed person, on the
terms of CVM Rule No. 301, of 1999.
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Ian Martin Bickley - 000.000.000-00
British Passport No. 538953627
Mr. Bickley was Executive Officer at Tapestry,
Inc. (“Tapestry”), a company listed at NYSE encompassing modern luxury lifestyle and accessories brands, including
Coach, Kate Spade and Stuart Weitzman, until December 2018. Mr. Bickley held different executive offices at Tapestry (former Coach,
Inc.) between 1993 and 2018. From July 2017 to December 2018, Mr. Bickley was the President of Global Business and Strategic Alliances
Development for Tapestry. Previously, he held the office of President at the Coach International Group from August 2013 to July
2017, President at the Coach International from February 2006 to August 2013, President and CEO of Coach Japan from August 2001
to February 2006, Vice-President at Coach Japan from 1997 to 2001 and held other senior offices since he joined the company in
1993. Mr. Bickley became a member of the Board of Directors of Crocs, Inc, (CROX/NASDAQ) in 2015 and was a member of the Compensation
Committee from 2015 to 2019. Currently, he works at the Audit Committee (since 2019) and at the China Acceleration Committee as
Chairman (since 2019). Mr. Bickley joined the Board of Directors of Natura Cosméticos in 2019 and is currently an independent
member of the Board of Directors and member of the Strategic Committee of Natura & Co Holding S.A. The aforementioned companies
are not part of the issuer’s economic group or controlled by a shareholder in the issuer that holds direct or indirect interest
equal to or greater than 5% of the same class or type of issuer’s security.
He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity. He does not fit the definition of politically exposed person, on the
terms of CVM Rule No. 301, of 1999.
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Guilherme Peirão Leal - 383.599.108-63
Guilherme Peirão Leal holds a degree
in Business Administration from the University of São Paulo (USP) and is a former student of the Advanced Administration
Program of FDC/INSEAD. He is a co-founder of Natura Cosméticos and started his activities in the Company’s Board of
Directors in 1998. He is currently co-chairman of the Board of Directors of Natura &Co Holding and director of Instituto Natura.
In the past 25 years, he participated in the creation and promotion of various companies and social organizations, such as the
Abrinq Foundation for the Rights of Children and Adolescents, the Ethos Institute of Enterprises and Social Responsibility and
the Akatu Institute for Conscious Consumption. He also participated in institutions such as Ashoka – Social Entrepreneurship.
After 2000, he was closely involved in various environmental institutions, such as the Brazilian Fund for Biodiversity (Funbio)
and WWF Brasil. In 2007, he was one of the founders of Movimento Nossa São Paulo, which seeks to engage various sectors
of the local society aiming at a better, fairer and more sustainable city. Since 2008, he has been focused on structuring his legacy
through the Arapyaú Institute, an organization focused on sustainable development and education. In the national elections
of 2010, Guilherme Leal joined former Senator Marina Silva, then from the Green Party, as candidate for Vice- Presidency. Together,
they received approximately 20 million votes. In 2012, he helped to fund the Political Action Network for Sustainability - RAPS,
a non-partisan institution focused on identifying, supporting, developing and congregating political leaders committed to ethical
values and to the construction of an inclusive and sustainable development. In the same year, he joined the B-Team, a group formed
by international leaders, the purpose of which is to engage corporations and leaders from all over the word with a new vision of
business success, by incorporating social and environmental objectives into profit.
Guilherme currently holds the following
positions in other companies or organizations from the third sector: (i) Chief Executive Officer at Maraé Investimentos
Ltda. (Manager); (ii) Manager of Janos Administração e Participações Ltda. (Holding Company); (iii)
President of Utopia Participações S.A. (Holding Company); (iv) Executive Officer at Dédalus Administração
e Participações Ltda. (Management); (v) Executive Officer at SG Debret Participações Ltda. (Management);
(vi) Executive Officer at Modusvivendi Participações Ltda. (Ownership Interest); (vii) Chairman of the Board of Directors
of the Political Action Network for Sustainability - RAPS (Institute); (viii) Member of the Leadership Group of The BTeam (Association);
(ix) Member of the Board of Directors of the Arapyau Institute of Education and Sustainable Development (Institute); (x) Member
of the Board of Directors of Biofílica Investimentos Ambientais S/A (Investments), (xi) Member of the Board of Directors
of Instituto Natura (OSCIP), and (xii) Member of the Advisory Board of Sempre FEA (Association). Out of the companies mentioned
above, companies (i) to (vi) are part of the issuer’s economic group or are controlled by a shareholder that holds direct
or indirect interest equal to or greater than 5% of the same class or type of security. He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity.
|
He does not fit the definition of politically exposed person, on the terms of CVM Rule No. 301, of 1999.
|
Pedro Luiz Barreiros Passos - 672.924.618-91
Pedro Luiz Barreiros Passos is co-founder
of Natura Cosméticos and started his activities at the Board of Directors of the Company in 1998. He is currently co-chairman
of the Board of Directors and member of the Corporate Governance Committee of Natura &Co Holding S.A. and board member of Instituto
Natura. Pedro holds a Bachelor’s degree in Production Engineering from the Polytechnic School of the University of São
Paulo - USP, with a major in Business Administration from Getúlio Vargas Foundation - FGV. Pedro works in different entities
and organizations, as listed below:
(i) Member of the Board of Directors
of IEDI (Institute); (ii) Member of the Board of Directors of Fundação de Amparo à Pesquisa do Estado de
S. Paulo - FAPESP (Public Foundation); (iii) Member of the Board of Directors of Endeavor (Institute); (iv) Member of the
Board of Directors of Dom Cabral Foundation (Education); (v) Chairman of the Board of Directors of SOS Mata Atlântica
(Institute); (vi) Member of the Board of Directors of Instituto Semeia (Institute); (vii) Member of the Board of Directors of
AC Camargo since 2018 (Private Foundation); (viii) Member of the Board of Empresa Brasileira de Pesquisa e
Inovação Industrial – EMBRAPII (Private Association).
Out of the companies mentioned above, only
(i) and (ii) are part of the issuer’s economic group or controlled by the issuer’s shareholder that holds direct or
indirect interest equal to or greater than 5% of the same class or type of the issuer’s security. He has not been subject,
over the past five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission
(CVM) and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him
for the performance of any professional or business activity. He does not fit the definition of politically exposed person, on
the terms of CVM Rule No. 301, of 1999.
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Antônio Luiz da Cunha Seabra - 332.927.288-00
Antônio Luiz da Cunha Seabra founded
Natura Cosméticos in 1969 and started his activities at the Company’s Board of Directors in 1998. Since then he has
dedicated himself to the construction and development of said company. He started with a small store at Rua Oscar Freire wherein
he provided customized consultancy services. Five years later, he expanded the reach of his message and products by adopting the
sales method through relations with consultants as Natura’s business model. With a degree in Economics, Luiz Seabra developed
new products, languages and messages for the beauty industry. He participated actively in the transformation of the organization
in one of the largest cosmetics companies in the world, strongly committed with ethics and sustainability. He is currently co-chairman
of the Board of Directors of Natura &Co Holding S.A. and director of Instituto Natura.
Currently, Antonio Luiz holds the following
positions in other companies or organizations from the voluntary sector: (i) Executive Officer at Orexis Participações
Ltda. (Ownership Interests); (ii) Chief Executive Officer at VivaVida Instituto de Ações Solidárias (Institute);
(iii) Chief Executive Officer at Lisis Participações S.A (Holding Company); (iv) Executive Officer at Homagus Adm.
E Participações Ltda. (Administration); (v) Manager at Janos Com. Adm. e Participações Ltda. (Holding
Company); (vi) Managing Officer at Axioma Adm. e Participações Ltda. (Administration); (vii) Chief-Executive Officer
at Heuris Adm. e Consultoria Ltda. (Administration); (viii) Chief Executive Officer at Lisis Gestão de Participações
S.A.. Out of the companies mentioned above, all of them are part of the issuer’s economic group or controlled by the issuer’s
shareholder that holds direct or indirect interest equal to or greater than 5% of the same class or type of the issuer’s
security.
He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity. He does not fit the definition of politically exposed person, on the
terms of CVM Rule No. 301, of 1999.
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João Paulo Brotto Gonçalves
Ferreira - 050.269.878-00
João Paulo Brotto Gonçalves
Ferreira holds a degree in Electrical Engineering from the University of São Paulo (USP) and an executive MBA from the University
of Michigan, in the United States. João Paulo is an Executive Officer for Latin America and a member of the Group’s
Operational Committee. Since 2016, he has also held the office of Chief-Executive Officer of Natura Cosméticos, wherein
he was admitted in 2009 as vice-president of operations and logistics. Afterwards, he became vice-president of chains, responsible
for the Commercial Area and for Channel Development. Other roles at Natura included leading the International Operations and the
Sustainability Area. Prior to Natura, he worked at Unilever for 20 years, where he held the office of vice-president of supply
chain. João Paulo is a member of the Board of Instituto Natura and, since 2021, is also an independent member of the Board
of Directors of Infracommerce, a business digitalization solutions company.
He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity. He does not fit the definition of politically exposed person, on the
terms of CVM Rule No. 301, of 1999.
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David Philip Boynton - 000.000.000-00
British
Passport No. 099192751
Mr. Boynton holds a degree in food science
from the University of Leeds. With wide experience in premium retail business, he worked for 10 years at L’Occitane en Provence,
where he was a member of the global leadership committee and held several leadership offices - Market Administrative Officer of
the Western Hemisphere and Executive Officer of the USA; jointly representing a geographically diverse group of more than 600 boutiques
in 14 countries, including the USA, Western Europe and Australia. On several occasions, he led the global commercial and digital
strategies of L’Occitane and the creation of the concept of the shop. Prior to L’Occitane, he held several senior positions
at A.S. Watson in Hong Kong and Taiwan and has wide knowledge of the Northern region of Asia. Mr. Boynton was appointed CEO of
The Body Shop in December 2017, after having held the same office at Charles Tyrwhitt Limited, an international premium men’s
clothing company based in London.
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Michael O’Keeffe - 000.000.000-00
Passport No. PA7147579
Michael holds a bachelor’s degree
in Electronic Engineering (Hons) and computer science from La Trobe University, with over 20 years of experience, including general
management, corporate development, product development, manufacture, retail, business operation and strategy. He resided and worked
in several countries - Australia, the United Kingdom, Japan, France and Italy. Currently, he is the CEO and an officer at Aesop,
the world’s most creative and differentiated skin care company, with stores in 30 countries worldwide. He is specialized
in R&D and product development; Finance and accounting; M&A; IT and digital; marketing and branding; retail; international
business development.
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Robert Claus Chatwin - 570.897.013-87
Mr. Chatwin holds a degree in economics
and MBA from IMD in Switzerland. He is also an accountant certified by the Institute of Chartered Accountants of England and Wales
(ICAEW). He held several offices at Royal Philips Electronics,
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including as Global CEO Philips Avent, Vice-President of Mergers and Acquisitions and Head of New Business Strategy and Development in the Consumer Division in Amsterdam, and at Philips LATAM in São Paulo. He also worked at HSBC Investment Bank, in London, and at KPMG Corporate Finance, in London and in Brazil.
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Paula Leeson Fallowfield - 000.000.000-00
Passport No. 544133638
Paula Leeson Fallowfield is graduated in
Political Science from the University of Iowa. After her graduation, she held several offices in the Human Resources area in the
United States before moving to London, the United Kingdom, where she worked for Harrods, first leading the resources and talents
functions and, afterwards, as HR Deputy Officer. Ms. Fallowfield then incorporated her own company, “Fallow & Co.”,
with private registration in the United Kingdom and operating in Europe, Middle East and Asia. She developed a solid client basis
and provided resources, talent management services and supported the organizational restructuring of clients of the beauty and
luxury sector, such as LVMH, Burberry, Space NK, Links of London, Boden, L’Oreal, Estee Lauder and others. Ms. Fallowfield
resumed her in-house performance for the luxury brand Burberry, assuming functions such as Global Talent Vice-President and Human
Resources Vice-President for Europe, Middle East and Africa. She joined Aesop in 2017 as HR Officer and was responsible for all
human resources-related matters focused on organizational design; talent development; and core skills and resources. She became
a member of GOC in 2018 and currently leads the HR function of Natura & Co Group.
|
Joselena Peressinoto Romero - 120.693.958-39
Joselena Peressinoto Romero is a food engineer
and has participated in executive programs at Pennsylvania State University, Harvard Business School and INSEAD. Her career at
Natura Cosméticos started in 2010 when she was a Global Supply Chain Planning Officer. She currently holds the position
of Global Operating and Purchasing Officer and is a member of the Operating Committee of Natura &Co Holding S.A. Prior to that,
she held various local and regional leadership positions at Unilever. Her last office was vice-president of supply chain for Latin
America for Home Care Business.
She has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified her for
the performance of any professional or business activity. She does not fit the definition of politically exposed person, on the
terms of CVM Rule No. 301, of 1999.
|
Itamar Gaino Filho - 272.341.378-07
Itamar Gaino Filho holds a degree and a
master’s degree in Law from the Pontifical Catholic University of São Paulo (PUC-SP) and has a major from CEU Law
School, with experience in the legal, tax and compliance areas in large multinational companies. Prior to Natura&Co, he worked
as senior legal counsel for PepsiCo and in other leadership positions at General Motors, Monsanto and Femsa. Currently he holds
the office of Chief Legal and Compliance Officer at Natura &Co Group, is a member of the Group’s Operational Committee
and of the Board of Directors of subsidiaries Natura Cosméticos S.A., The Body Shop International Ltd., Avon Product Inc.
and Emeis Holdings (Aesop).
He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity. He does not fit the definition of politically exposed person, on the
terms of CVM Rule No. 301, of 1999.
|
José Antonio de Almeida Filippo
- 750.801.417-00
José Antonio de Almeida Filippo
holds a bachelor’s degree in Civil Engineering from the Federal University of Rio de Janeiro. He also participated in the
Management Development Program at Harvard University. Filippo joined Natura in May 2018 as Chief Financial and Investor Relations
Officer. Previously, he was Embraer’s chief financial officer. He currently holds the office of Chief Financial Officer and
is a member of the Operational Committee of Natura &Co Holding S.A. Prior to working for Embraer, Filippo was the chief financial
officer of Companhia Brasileira de Distribuição (part of the Pão de Açúcar Group), and he also
held the office of vice-president of finance and investor relations at CPFL Energia S.A.
He has not been subject, over the past
five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission (CVM)
and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified him for
the performance of any professional or business activity. He does not fit the definition of politically exposed person, on the
terms of CVM Rule No. 301, of 1999.
|
Silvia Freire Dente da Silva Dias Lagnado
- 086.908.868-85
Silvia Freire Dente da Silva Dias Lagnado
has been the Sustainable Growth Officer at Natura &Co Holding since February 1, 2020, having been an independent member of
the Board of Directors of the Company from July 2014 to February 20, 2020. Graduated in 1986 from the Polytechnic School of São
Paulo, she was Vice Executive President and Global Marketing Officer at McDonald’s Corporation from August 2015 to October
2019, and President of Bacardi Global Brands from June 2010 to November 2012. She also worked at Unilever from 1986 to 2010, having
been Global Executive Vice-President of the Culinary Category, in addition to having worked in various other international positions
during the 25 years in which she remained at the company. She was an independent member of the Boards of Sapient, headquartered
in Boston, USA, from 2013 to 2015, and Britvic Plc., from 2014, to 2015, a company dedicated to production and marketing of soft
drinks in the United Kingdom. She has not been subject, over the past five (5) years, to any criminal conviction; adverse judgment
in an administrative proceeding by the Securities Commission (CVM) and to any final and unappealable judgment, in the judicial
or administrative spheres, which suspended or disqualified her for the performance of any professional or business activity.
|
Kay Nemoto - 000.000.000-00
Japanese Passport No. TZ1377564
Kay Nemoto holds an MBA from the London
Business School. She started her career in the segment of banks and private equity, managing investment portfolio. An expert in
operational recovery of companies, she played a key role in the transformation and strategy of Avon, while she worked for the first
time with secondment at the company’s strategic partners, Cerberus Operations & Advisory Company (COAC), since July 2017.
Afterwards she assumed the position of Strategy Head and Human Resources Officer of Avon Products Inc. in February 2019, with the
purpose of streamlining Avon, with a mission to accelerating Avon’s recovery. Kay also played a key role in the M&A process
and in the planning of transactions and integration with Natura & Co.
During the time when she held the office
of operating executive of COAC, she successfully led recovery teams in several portfolio companies. She also has over 10 years
of experience in management consultancy and advisory positions, including at Ernst & Young, Operations Transaction Services
and AlixPartners, a consultancy company specialized in corporate reorganization and turnarounds. She has not been subject, over
the past five (5) years, to any criminal conviction; adverse judgment in an administrative proceeding by the Securities Commission
(CVM) and to any final and unappealable judgment, in the judicial or administrative spheres, which suspended or disqualified her
for the performance of any professional or business activity.
|
Angela Cretu - 000.000.000-00
|
Romanian Passport No. 054542845
Ms. Cretu has a MS degree from the Economic
Studies, Economic Cybernetics, Statistics and Information Technology of Bucharest in 1997 and concluded the Executive Education
Program at London Business School in 2006. She started her career at Avon 20 years ago and held several offices, including Vice-President
of Global Business Model Innovation at the principal place of business of New York, from 2009 to 2011, Vice-President of Avon Group
in Russia and Eastern Europe from 2011 to 2014, Vice-President of Avon Group in Turkey, Middle East and Africa, from 2014 to 2016,
Vice-President of Avon Group in Central Europe, from 2016 to 2020, and is currently the CEO of Avon International, part of Natura
& Co Group. She has not been subject, over the past five (5) years, to any criminal conviction; adverse judgment in an administrative
proceeding by the Securities Commission (CVM) and to any final and unappealable judgment, in the judicial or administrative spheres,
which suspended or disqualified her for the performance of any professional or business activity.
|
Type of Conviction
|
Description of Conviction
|
Gilberto Mifano - 566.164.738-72
N/A
|
|
Roberto de Oliveira Marques - 090.072.488-98
N/A
Fábio Colletti Barbosa - 771.733.258-20
N/A
|
|
Andrew George McMaster Jr. - 000.000.000-00
N/A
Luiz Carlos Passetti - 001.625.898-32 N/A
|
|
Carla Schmitzberger - 667.280.967-87
|
|
N/A
|
|
Nancy Killefer - 000.000.000-00 N/A
Ian Martin Bickley - 000.000.000-00 N/A
|
|
Guilherme Peirão Leal - 383.599.108-63 N/A
|
|
Pedro Luiz Barreiros Passos - 672.924.618-91 N/A
|
|
Antônio Luiz da Cunha Seabra - 332.927.288-00 N/A
|
|
João Paulo Brotto Gonçalves
Ferreira - 050.269.878-00 N/A
David Philip Boynton - 000.000.000-00 N/A
|
|
Michael O’Keeffe - 000.000.000-00 N/A
|
|
Robert Claus Chatwin - 570.897.013-87 N/A
|
|
Paula Leeson Fallowfield - 000.000.000-00
|
|
N/A
|
|
Joselena Peressinoto Romero - 120.693.958-39
N/A
Itamar Gaino Filho - 272.341.378-07 N/A
|
|
José Antonio de Almeida Filippo - 750.801.417-00 N/A
|
|
Silvia Freire Dente da Silva Dias Lagnado - 086.908.868-85 N/A
|
|
Kay Nemoto - 000.000.000-00
|
|
N/A
|
|
Angela Cretu - 000.000.000-00 N/A
|
|
12.9
– Existence of Marital Relationship, Steady Union or Family Relationship up to the 2nd Degree related to Issuer’s
Managers, Subsidiaries and Controlling Shareholders
Mr. Guilherme
Ruggiero Passos and Ms. Patrícia Ruggiero Passos, who are our indirect controlling shareholders, are son and daughter (first
degree relatives by consanguinity) of Mr. Pedro Luiz Barreiros Passos. Ms. Lucia Helena Rios Seabra, who is our controlling shareholder,
is married to Mr. Antônio Luiz da Cunha Seabra.
Except for
the situations indicated above, there is no family relationship between (i) our managers; (ii) our managers and the managers of
companies directly and indirectly controlled by our Company; (iii) our managers and our direct and indirect subsidiaries and our
direct or indirect controlling companies; and/or (iv) our managers and the managers of our direct and indirect controlling companies.
12.10
– Relationships of subordination, provision of services or control between managers and subsidiaries, controlling companies
and others
Some members
of our Board of Directors are also our controlling shareholders, as described below:
|
·
|
Mr.
Antonio Luiz da Cunha Seabra, Co-Chairman of the Board of Directors, is our controlling
shareholder and, jointly with Mrs. Lucia Helena Rios Seabra, form the control block “Seabra
Block”, and are signatories to the Shareholders’ Agreement.
|
|
·
|
Mr.
Antônio Luiz da Cunha Seabra is also our indirect controlling shareholder through
Orbix Multimercado Fundo de Investimento Crédito Privado Investimento no Exterior,
which is the direct controller of Kairós Fundo de Investimento em Ações
– Investimento no Exterior, which, in turn, has a direct ownership interest in
our Company.
|
|
·
|
Mr.
Guilherme Pedroso Leal, Co-Chairman of the Board of Directors, is our direct controlling
shareholder and, jointly with Mr. Felipe Pedroso Leal e Mr. Ricardo Pedroso Leal, form
the control block “Leal Block”, and are signatories to the Shareholders’
Agreement.
|
|
·
|
Mr.
Guilherme Peirão Leal is also our indirect controlling shareholder, through Sirius
III Multimercado Fundo de Investimento Crédito Privado Investimento no Exterior,
which holds a direct interest in our Company.
|
|
·
|
Mr.
Pedro Luiz Barreiros Passos, Co-Chairman of the Board of Directors, is a direct and indirect
controlling shareholder, through Passos Participações S.A., a joint-stock
company, and Fundo de Investimento de Ações Veredas – Investimento
no Exterior, an investment fund that, together with Mr. Passos, forms the control block
“Passos Block” and are signatories to the Shareholders’ Agreement.
|
|
·
|
In
addition, some members of the Board of Directors hold an ownership interest in companies
that have relationships with our Company and/or its subsidiaries, as detailed below:
|
|
·
|
Messrs.
Guilherme Peirão Leal, Pedro Luiz Barreiros Passos and Antonio Luiz da Cunha Seabra,
Co-Chairmen of our Board of Directors, indirectly hold control over Fundo Imobiliário
Bresco Logística, which incorporated, on August 30, 2019, Bres Itupeva Empreendimentos
Imobiliários Ltda., which provided services to a company controlled by our Company
over the last three years.
|
|
·
|
Messrs.
Guilherme Peirão Leal, Pedro Luiz Barreiros Passos and Antonio Luiz da Cunha Seabra
are also part of the group that controls Raia Drogasil S.A. This company has businesses
established with Natura (refer to section 16.1 “Policy of Transactions with Related
Parties” of this Reference Form).
|
NATURA &CO HOLDING S.A.
MANAGEMENT
PROPOSAL FOR THE ANNUAL AND EXTRAORDINARY
GENERAL MEETINGS
TO BE HELD ON APRIL 16, 2021
EXHIBIT
III
Item 13 of the Company’s Reference Form
13.1
– Description of the compensation policy or practice, including of the Board of Non-Statutory Officers
13.1
- Describe the policy or practice adopted for compensation of the board of directors, board of statutory and non-statutory officers,
fiscal committee, statutory committees, and of the audit, risk, financial and compensation committees, addressing the following
aspects:
(a) Objectives
of the compensation policy or practice, informing whether the compensation policy has been formally approved, the body responsible
for its approval, the date of approval and, if issuer discloses the policy, locations in the World Wide Web where the document
may be consulted:
Our Management
Compensation Policy was approved by the Board of Directors on July 17, 2019 and is available for consultation at the Company’s
investors relations website (https://ri.naturaeco.com/pt-br/), and at the Brazilian Securities
Commission – CVM website (www.cvm.gov.br).
Through
the Management Compensation Policy, the Company seeks to attract and retain talents in its management bodies, aligning the interests
of officers with those of the shareholders, so as to generate results and increase the Company’s value, always in compliance
with the social and environmental aspects and acknowledging the contribution of its professionals based on market references.
(b) Breakdown
of the compensation, stating:
(i) Description
of the compensation elements and their respective objectives
Board
of Directors
|
·
|
Fixed
Compensation: the fixed compensation is the basic compensation element of the members
of the Board of Directors, and is composed of:
|
(a) Management
Fee: the members of the Board of Directors will receive a monthly amount, paid twelve (12) times per year, aligned with the
market practices. The purpose of the fixed compensation is to compensate the dedication, responsibility and complexity inherent
to the position of a board member. For members residing in Brazil, the payment is indexed in reais (BRL). For members residing
outside Brazil, the amount is fixed in dollars (USD). This mechanism was defined to avoid fluctuation of the remuneration agreed
with the nonresident board members. In addition, board members who participate in committees receive additional monthly compensation
considering their role - committee leadership or a regular member.
(b) (Direct
and Indirect) Benefits: certain members of the Board of Directors may be eligible to the benefit package, including health
care, dental care plans, and life insurance, with the purpose of offering an attractive benefit package, appropriate to the general
market conditions.
|
·
|
Variable
compensation: members of the Board of Directors may be eligible to receive the variable
portion of the compensation by means of an annual incentive plan. It is a form of reward
for achieving goals based on economic, social and environmental factors that contribute
to reach our goals based on those factors. Its purpose is also to align the interests
of the board members with those of the shareholders, considering a combination of corporate
goals. As of January 2021, directors will no longer receive variable remuneration and
will begin to receive share-based compensation.
|
Share-based
compensation: Starting January 2021, we will grant share-based compensation as part of a long-term incentive program to the
members of the Board of Directors, based on
a
grant of restricted shares as a way of strengthening the relation between the compensation and the gains, in addition to building
value for the company in the long term.
Executive
Chairman of the Board of Directors and Chief Executive Officer of the Group: The composition of the compensation of
the Executive Chairman of the Board of Directors and Chief Executive Officer of the Group is different from the compensation of
the other members due to the position held, since, in addition to his legal attributions, he assists the Board of Directors in
the leadership of the Group Operational Committee, makes recommendations from the point of view of result, cash flow, resources
allocation and talent management, promotes synergy between the management of each Business Unit and collaborates in the individual
inspection of each of the Units.
Board
of Statutory and Non-Statutory Officers
|
·
|
Fixed
compensation: the annual fixed compensation is the main and fundamental element of
the compensation of the members of the Board of Officers, and it is based specially on
the position held and on the responsibilities fulfilled in the Company, as well as on
the individual experience, being composed of:
|
(a) Salary:
our Statutory and Non-Statutory Officers will receive a monthly amount, paid twelve (12) times a year, plus a thirteenth (13th)
salary and vacation allowance. Until December 2020, Statutory and Non-Statutory Officers also had a 14th salary, that has since
then been incorporated into the monthly salary and ceased to apply. This adjustment was made in order to harmonize the salary
structure between Natura and Avon, after its acquisition. The purpose of the fixed compensation is to compensate the responsibility
and complexity inherent to the position of statutory officer and non-statutory officer, in accordance with factors such as required
knowledge and impact on the result and takes into consideration market practice.
(b) (Direct
and Indirect) Benefits: our statutory and non-statutory officers may be eligible to a benefit package including health care
plan, meal and transportation allowance, nursery allowance, car, private social security, life insurance and dental care with
the purpose of offering an attractive benefit package appropriate to the general market conditions.
|
·
|
Short-term
variable compensation: variable compensation is a compensation element that allows
us to recognize the achievement of goals based on economic, social and environmental
indicators that contribute for the Company to reach its goals related to such indicators.
Its purpose is also to align the interests of our Statutory and Non-Statutory Officers
with those of the shareholders, considering the combination of corporate goals that involve
other elements in addition to the financial indicators.
|
|
·
|
Share-based
compensation: we may grant share-based compensation as a part of a long-term incentive
program to the Officers based on the grant of call options or restricted shares as a
way of strengthening the relation between the compensation and the gains, in addition
to building value for the company in the long term.
|
Committees
|
·
|
Fixed
compensation: the Company currently has the following Committees: (i) Strategic Committee;
(ii) Corporate Governance Committee; (iii) People and Organizational Development Committee;
(iv) Group Operating Committee; and (v) Audit, Risk Management and Finance Committee.
The members of the Committees will receive a fixed amount paid to each one of their members,
with the purpose of specifically compensating the participation of our directors these
advisory bodies.
|
Fiscal
Committee
The Company’s
Fiscal Committee shall operate on a non-permanent basis and may be installed upon request by the shareholders and remunerated
in accordance with the applicable legal provisions. For this reason, we do not have a specific compensation policy for its members.
The compensation of the current Fiscal Committee members was determined by the Shareholders’ Meeting, in accordance with
applicable law.
(ii)
In relation to the last three fiscal years, the proportion of each element in the total compensation is:
According
to the table below, the proportions for the fiscal year ended December 31, 2020
December 31, 2020
|
Fixed
Compensation
|
Variable
Compensation
|
Share-based
Compensation
|
Benefits
|
Total
|
Board of Directors (*)
|
16,5%
|
23,5%
|
56,0%
|
3,9%
|
100.0%
|
Board of Officers (**)
|
37,0%
|
32,0%
|
27,0%
|
4,0%
|
100.0%
|
Fiscal
Committee
|
100%
|
0%
|
0%
|
0%
|
100.0%
|
(*) For
variable compensation we consider bonus amount.
(**) For
variable compensation we consider profit sharing.
The table
above does not consider amounts paid as hiring bonuses and benefits for terminating the position (reported in item 13.2 as “others”
and “post-employment benefits for terminating the position”) of the members of the Board of Directors and the Board
of Statutory Officers.
The Company
did not pay any compensation to the board of directors, statutory and non-statutory management in the fiscal year ended December
31, 2019 and December 31, 2018, considering that the incorporation of the Company occurred on January 21, 2019.
(iii)
Calculation and readjustment methodology of each of the compensation elements:
In order
to establish and readjust the fixed and variable compensation of our managers, we intend to perform, with the aid of advisory
companies and supervision by the People and Organizational Development Committee, the follow-up of the compensation variations
in the market, periodically comparing our compensation practices with reference markets, such as competitors of the segment of
consumer packaged goods, Brazilian multinational companies, companies listed in stock exchange or that have compensation strategies
similar to those of the Company.
In addition
to the readjustment based on the market parameters, the fixed compensation of the officers of the Company will be annually reviewed
based on the evolution of the experience and responsibility of the position, according to an assessment performed by the Corporate
Governance Committee and subsequently validated by the Board of Directors, as well as adjusted in accordance with the restatement
determined by the unions (such last criterion will be valid only for the board of non- statutory officers).
Compensation
readjustments may also be established in accordance with the individual negotiations made with the management members, which will
be conducted by the Corporate Governance Committee and subsequently submitted for approval of the Board of Directors.
The annual
variable compensation of the Board of Directors and the Profit-Sharing Program (PLR) of the board of officers will be bound to
a set of financial and non-financial goals, as established by
the Board
of Directors. The calculation of the amount to be paid is based on indicators that consider a set of short, medium and long-term
corporate objectives. The share-based compensation as a part of a long-term incentive program to the members of the Board of Directors
(not including the Executive Chairman of the Board of Directors and Chief Executive Officer of the Group who has a specific compensation
composition) based on the grant of restricted shares is a way of strengthening the relation between the compensation and the gains,
in addition to building value for the company in the long term. In order to establish and readjust the share-based compensation,
we consider compensation variations in the market, periodically comparing our compensation practices with reference markets, such
as competitors of the segment of consumer packaged goods, Brazilian multinational companies, companies listed in stock exchange
or that have compensation strategies similar to those of the Company. Any changes to the share-based compensation for Directors
must be approved by our Governance Committee, in accordance with the approved budget.
The compensation
readjustments of the Management will be made according to the internal policy, respecting the budget approved by the Board of
Directors and global compensation proposal of the Managers approved by the Shareholders at the Annual Shareholders’ Meeting.
(iv)
Rationale for the composition of the compensation:
The Company’s
compensation strategy combines short-term and long-term elements the purpose of which is to retain and compensate our professionals
in accordance with the responsibilities of their positions, the market practices and the level of competitiveness of the Company.
The variable
component, whether it is the short-term compensation or the long-term gains, represents a significant portion of the compensation
because we believe in the joint construction of value. In addition to the well-defined limits, all variable compensation is connected
to the effective achievement of the goals, that is, to exceeding the minimum expectations of growth annually established by the
Management. The system of performance indicators that measures this performance comprises the three sustainability dimensions
(economic, social and environmental).
The share-based
compensation programs seek to implement and strengthen the ownership sense of the participants in relation to the Company, intensifying
the relation between the compensation and the construction of the company’s value, in addition to the healthy growth of
the Company in the long term with the balanced distribution of the result when the business profitability allows. The share-based
compensation as a part of a long-term incentive program to the members of the Board of Directors is based on the grant of restricted
shares. For Board of Directors, the share-based compensation is based on the grant of restricted share and performance shares.
The performance
share-based component, applied for the statutory directors and Chairman of the Board of Directors and Chief Executive Officer
of the Group, represents a significant portion of their compensation because we believe in the joint creation of value. In addition
to the well-defined limits, all shared-based compensation is connected to the effective achievement of performance goals, that
must exceed the minimum expectations of growth annually established by Management. The system of performance indicators that measures
this performance comprises metrics related to profitability, return on invested capital and return to shareholders in relation
to the market.
(v)
The existence of members not compensated by the issuer and the reason for such fact
In the current
fiscal year, the Board of Statutory Officers of the Company will have a member not compensated for the position exercised at the
issuer, since he/she holds a compensated position at one of the subsidiaries of the Company.
(c) Main
performance indicators which are taken into consideration in the determination of each element of the compensation:
No performance
indicator is taken into consideration for the purposes of determining the fixed compensation or benefits of the managers, with
such compensation elements being established in accordance with the responsibility and complexity of the position, experience
of the professional, competitiveness and market practices. In addition, by establishing the fixed compensation, we take into consideration
the qualifications and experiences of each individual in the exercise of his/her duties.
In relation
to the variable compensation of the Board of Directors, Board of Officers and other employees, the following are taken into consideration:
|
·
|
Short-term
variable compensation: financial aspects, such as, for instance, Earnings Before
Interest, Taxes, Depreciation and Amortization (EBITDA), Revenue and Cash generation,
in addition to material issues on social and environmental aspects, such as, for instance,
Greenhouse gas relative (intensity) target, Packaging Commitments, B-CORP Certification,
Loyalty of Independent Beauty Consultants and Representatives Satisfaction. Market competitiveness
(Market Share) and People (Engagement) measures are also taken into account.
|
|
·
|
Long-term
variable compensation: value of our shares quoted in stock exchange and business
performance indicators, such as, for instance, metrics related to profitability, return
on invested capital and return to shareholders related to the market.
|
(d) How
compensation is structured in order to reflect the evolution of the performance indicators
The variable
portion of the managers’ compensation is connected to our performance in the concerned period. Thus, the amounts to be paid
by way of Bonus, profit sharing, or grant of call options or restricted shares depend on the evolution of the performance of our
results and goals previously defined for the Company and on the individual performance.
The follow-up
of the performance indicators is made on a quarterly basis and the final assessment of the financial results is made in the subsequent
year.
The performance
metrics defines the total variable compensation.
(e) How
the compensation policy or practice is aligned with the interests of the issuer in the short, medium and long term
We offer
a competitive compensation in the market, with the purpose of attracting and retaining talents who help us to reach our short-,
medium- and long-term objectives.
Considering
our business model, it is essential to retain qualified and experienced professionals in order to grow, and, therefore, our compensation
strategy must contain mechanisms that stimulate ongoing commitment for a long time, balancing development and growth with our
results and added value to shareholders.
As we take
into consideration financial indicators in addition to social and environmental elements to determine the variable compensation,
we ensure a sustainable compensation, without compromising any other investment, balancing a fixed compensation (as the base salary)
with short- and long-term incentives (which can be offered as the Company’s share-based compensation).
(f) Existence
of compensation borne by subsidiaries, direct or indirect controlled companies or controlling shareholders
Not applicable.
There is no compensation borne by subsidiaries, direct or indirect controlled companies or controlling shareholders due to the
position exercised at the issuer.
(g) Existence
of any compensation or benefit connected to the occurrence of a certain corporate event, such as disposal of issuer’s controlling
interest
There are
no compensations or benefits connected to the occurrence of corporate events.
(h) Practices
and procedures adopted by the board of directors to determine the individual compensation of the board of directors and the board
of officers, indicating:
|
(i)
|
Issuer’s
bodies and committees that are part of the decision-making process, identifying the manner in which they participate
|
Board
of Directors: the determination of the global value of the compensation of the members of the Board of Directors is made at
the annual shareholders’ meeting. Later, after a recommendation made by the Corporate Governance Committee, the Board of
Directors resolves on the appointment of board members in their advisory committees, and the individual assignment of the compensation
to each member. The Executive Chairman of the Board of Directors and Chief Executive Officer of the Group is assigned a differentiated
compensation due to the responsibilities of the position according to the Bylaws of the Company.
Board
of Statutory Officers: for definition of the individual compensation of the members of the Board of Officers, the Executive
Chairman of the Board of Directors and Chief Executive Officer of the Group makes a recommendation, with the support of the People
and Organizational Development Committee, based on the responsibilities of the positions and individual performance according
to the internal policy, respecting the budget approved by the Board of Directors and the global compensation proposal of the Managers
approved by the Shareholders at an Annual Shareholder’s Meeting.
|
(ii)
|
Criteria and methodology
used to set the individual compensation, indicating whether studies were used to verify the market practices and, if so, the comparison
criteria and scope of these studies
|
The criteria
used for definition of the individual compensation of the Company’s managers take into consideration the market practices
by means of salary survey conducted by a specialized compensation advisory company. The comparisons contemplate reference markets,
such as competitors of the segment of consumer packaged goods, Brazilian multinational companies, companies listed in stock exchange
or that have compensation strategies similar to those of Natura. The criteria for comparison and establishment of the individual
compensation consider the experience, responsibility of the position and results delivered, which are annually assessed.
|
(iii)
|
Frequency and
how the board of directors evaluates the adequacy of the issuer’s compensation policy
|
Annually
the Board of Directors will assess, based on the recommendations made by the People and Organizational Development Committee,
the adequacy of the compensation policy through the guidelines and objectives of the business and results of market researches
performed by the external advisory company, as previously described.
13.2
- Total compensation of the board of directors, the board of statutory officers and the fiscal committee
Total
compensation for the year ended – December 31, 2020 – Annual Amounts
|
Board
of Directors
|
Board
of Officers
|
Fiscal
Committee
|
Total
|
Total
members
|
12,17
|
4,67
|
3
|
19,84
|
Number
of compensated members
|
12,17
|
4,00
|
3
|
19,17
|
|
Annual
Fixed Compensation
|
Salary
or Management Fee
|
10,848.9
|
4,626.8
|
234.5
|
15,710.2
|
Direct
and Indirect Benefits
|
554.4
|
706.7
|
0
|
1,261.1
|
Participation
in Committees
|
448.1
|
0
|
0
|
448.1
|
Others
|
2,251.3
|
1,656.8
|
46.9
|
3,955.0
|
Description
of other fixed compensation
|
Related to
charges accruing on the Annual Fixed Compensation. See Obs. 2.
|
Related
to the charges accruing on the Annual Fixed Compensation. See Obs. 2.
|
Related
to the charges accruing on the Annual Fixed Compensation. See Obs. 2.
|
|
Variable
Compensation
|
Bonus
|
16,114.7
|
0
|
0
|
16,114.7
|
Profit
Sharing Program
|
0
|
5,348.0
|
0
|
5,348.0
|
Participation
in meetings
|
0
|
0
|
0
|
0
|
Commissions
|
0
|
0
|
0
|
0
|
Others
|
3,222.9
|
0
|
0
|
3,222.9
|
Description
of other variable compensation
|
Related to
charges accruing on the Variable Compensation. See Obs. 2.
|
|
|
Related
to charges accruing on the Variable Compensation. See Obs. 2.
|
Post-Employment
Benefit
|
0
|
0
|
0
|
0
|
Cessation
of exercise of the position
|
0
|
0
|
0
|
0
|
Share-based
compensation (including options)
|
44,503.5
|
5,574.8
|
0
|
50,078.3
|
Note
|
Considering
that the incorporation of the Company occurred on January 21,
2019, there has
|
Considering
that the incorporation of the Company occurred on January 21,
2019, there has
|
Considering
that the incorporation of the Company occurred on January 21,
2019, there has
|
|
|
not been any acknowledgment of compensation in years 2017, 2018 and 2019 to the members of the Board of Directors, of the Board of Statutory Officers and of the Fiscal Committee.
As approved at a special shareholders’ meeting held on July 17, 2019, no amount by way of compensation was due to the members of the management of the Company for the fiscal year of 2019. Furthermore, no Fiscal Committee was convened in that fiscal year.
|
not been any acknowledgment of compensation in years 2017, 2018 and 2019 to the members of the Board of Directors, of the Board of Statutory Officers and of the Fiscal Committee.
As approved at a special shareholders’ meeting held on July 17, 2019, no amount by way of compensation was due to the members of the management of the Company for the fiscal year of 2019. Furthermore, no Fiscal Committee was convened in that fiscal year.
|
not been any acknowledgment of compensation in years 2017, 2018 and 2019 to the members of the Board of Directors, of the Board of Statutory Officers and of the Fiscal Committee.
As approved at a special shareholders’ meeting held on July 17, 2019, no amount by way of compensation was due to the members of the management of the Company for the fiscal year of 2019. Furthermore, no Fiscal Committee was convened in that fiscal year.
|
|
Total
Compensation
|
77,943.8
|
17,913.2
|
281.4
|
96,138.4
|
Obs.1: total
members was calculated considering the annual average of number of members in each month of the year.
Obs.2: For
the Total compensation for the year ended – December 31, 2020 – Annual Amounts, the items marked “Others”
above include social charges due by the employer, pursuant to the guidance previously contained in Ofício Circular/CVM/SEP/No
2/2020 from February 28th, 2020, which was in force at the time.
Total
compensation estimated for 2021 – Annual Amounts
|
Board
of Directors
|
Board
of Officers
|
Fiscal
Committee*
|
Total
|
Total
members
|
13
|
6
|
3
|
19
|
Number
of compensated members
|
13
|
5
|
3
|
18
|
Annual Fixed Compensation
|
Salary
or Management Fee
|
12,771.2
|
5,871.5
|
117,3
|
18,760.0
|
Direct
and Indirect Benefits
|
580.5
|
1,110.8
|
0
|
1,691.3
|
Participation
in Committees
|
879.3
|
0
|
0
|
879.3
|
Others
|
-
|
-
|
-
|
-
|
Description
of other fixed compensation
|
Obs.
2
|
Obs.
2
|
Obs.
2
|
Obs.
2
|
Variable
Compensation
|
Bonus
|
10,254.8
|
0
|
0
|
10,254.8
|
Profit
Sharing Program
|
0
|
6,313.4
|
0
|
6,313.4
|
Participation
in meetings
|
0
|
0
|
0
|
0
|
Commissions
|
0
|
0
|
0
|
0
|
Others
|
-
|
-
|
-
|
-
|
Description
of other variable compensation
|
Obs.
2
|
Obs.
2
|
Obs.
2
|
Obs.
2
|
Post-Employment
Benefit
|
0
|
0
|
0
|
0
|
Cessation
of exercise of the position
|
0
|
0
|
0
|
0
|
Share-based
compensation (including options)
|
61,418.0
|
5,386.0
|
0
|
66,804.0
|
Total
Compensation
|
85,903.3
|
18,681.7
|
117.3
|
104,702.3
|
Obs.1: total
members was calculated considering the annual average of number of members in each month of the year.
Obs.2: For
the Total compensation estimated for 2021 – Annual Amounts, we did not include the social charges due by the employer, pursuant
to the revised guidance contained in Ofício Circular/CVM/SEP/N01/2021 from February 26th, 2021.
(*) Amount
considers the compensation of the current Fiscal Committee of the Company, due until the Company’s ordinary general meeting.
13.3 -
Variable compensation of the board of directors, the board of statutory officers and the fiscal committee
Estimated
amounts for 2021, as per our compensation plan (R$ thousand):
|
Board
of Directors (*)
|
Board
of Officers
|
Fiscal
Committee
|
Total
|
Number
of Members
|
13
|
6
|
0
|
19
|
Bonus
(*)
|
1
|
0
|
0
|
1
|
Minimum
estimated amount
|
7,691
|
0
|
0
|
7,691
|
Maximum
estimated amount
|
12,818.5
|
0
|
0
|
12,818.5
|
Amount
estimated in the compensation plan if goals are achieved
|
10,254.8
|
0
|
0
|
10,254.8
|
Profit
sharing
|
0
|
5
|
0
|
5
|
Minimum
estimated amount
|
0
|
4,735.0
|
0
|
4,735.0
|
Maximum
estimated amount
|
0
|
7,891.7
|
0
|
7,891.7
|
Amount
estimated in the compensation plan if goals were achieved
|
0
|
6,313.3
|
0
|
6,313.3
|
(*)
As of January 2021, board members will not have variable remuneration (bonus)
(**)
Not including charges.
|
Total
compensation for the year ended – December 31, 2020 – Annual Amounts
|
Board
of Directors
|
Board
of Officers
|
Fiscal
Committee
|
Total
|
Number
of Members
|
12,17
|
4,67
|
3
|
19,84
|
Bonus
|
12,17
|
0
|
0
|
0
|
Minimum
estimated amount
|
10,849.2
|
0
|
0
|
10,849.2
|
Maximum
estimated amount
|
18,082.0
|
0
|
0
|
18,082.0
|
Amount
estimated in the compensation plan if goals are achieved
|
14,465.6
|
0
|
0
|
14,465.6
|
Amount
paid (*)
|
16,114.7
|
0
|
0
|
16,114.7
|
Profit
sharing
|
0
|
4,67
|
0
|
0
|
Minimum
estimated amount
|
0
|
3,600.6
|
0
|
3,600.6
|
Maximum
estimated amount
|
0
|
6,000.9
|
0
|
6,000.9
|
Amount
estimated in the compensation plan if goals were achieved
|
0
|
4,800.7
|
0
|
4,800.7
|
Amount
paid (*)
|
|
5,341.1
|
|
5,341.1
|
(*)
Estimated amount considering draft achievements. Not including charges.
|
Considering
that the incorporation of the Company occurred on January 21, 2019, there has not been any acknowledgment of compensation in years
2018 and 2019 to the members of the Board of Directors, of the Board of Statutory Officers and of the Fiscal Committee.
13.4
- Share-based compensation plan of the board of directors and of the statutory board of officers
(a) General
terms and conditions
All our
long term incentive programs are administered by the Board of Directors, which can, observing the relevant legal provisions and
those specific for each program, have full power to organize and manage them, counting on our People and Organizational Development
Committee to advise it, being able to, at any time: establish the rules applicable to situations not addressed in the program,
provided that it does not affect, in a negative manner, any rights or obligations established in any agreements related to the
program, without the consent of the beneficiary.
Below, a
description of the shares call option or subscription programs currently in force:
2009
and 2015 Common Shares Purchase or Subscription Option Granting Programs
|
·
|
2009
Program: Common Shares Purchase or Subscription Option Granting Program, which replaced
the program approved by Natura Cosméticos shareholders on March 23, 2009 (“2009
Program”), establishes the general conditions for granting of purchase or subscription
option of shares issued by us (“Options”), with previously established
term and price, to our officers and employees, as well as to the officers and employees
of other companies that are or may be under the direct or indirect control of the Company
(“Eligible Associates”), as regulated in said program.
|
|
·
|
2015
Program: Common Shares Purchase or Subscription Option Granting Program, which replaced
the program approved by Natura Cosméticos shareholders on February 6, 2015 (“2015
Program”), which establishes the general conditions for the granting of Options,
with previously established term and price, to the Eligible Associates, as regulated
in said program.
|
2015
and 2017 Restricted Shares Programs
|
·
|
2015
Restricted Shares: Restricted Shares Granting Program for a group of executives and
associates eligible by the Board of Directors with the purpose of encouraging the improvement
of the management and their permanence in the Company, which replaced the program approved
by the shareholders of Natura Cosméticos on February 6, 2015 (“RSU Program”).
In order to become a participant in the RSU Program, the eligible associates must be
formally indicated by the Board of Directors, as defined in said program. The RSU Program
is for an undefined period and consists of the granting of common shares of the Company,
up to the annual limit of 0.20% of the shares that represent the total capital of the
Company, and the total shares not transacted in the sum of all active plans of the program
shall not exceed 0.65% of that capital. For each plan under the RSU Program, the Board
of Directors shall define a certain number of restricted shares to be distributed among
the participants.
|
|
·
|
2017
Restricted Shares: Second Share Granting Program, which replaced the program approved
by the shareholders of Natura Cosméticos on November 30, 2017 (“Second
RSU Program”). The Second RSU Program is intended for a group of executives
and associates eligible by the Board of Directors aiming at: (a) stimulating the improvement
of the Company’s and its Subsidiaries’ management, giving the Participants
the possibility of being shareholders of the Company, encouraging them to optimize all
aspects that may increase the value of the Company in the long term, as well as giving
them an entrepreneurial and corporate vision, harmonizing and improving the relationship
between the Company and its Subsidiaries; (b) stimulating the stay of the managers and
employees; and (c) increasing the attractiveness of the Company and its subsidiaries.
Said program is for an undefined period
|
and
consists of the granting of common shares of the Company, up to the annual limit of 0.10% of the shares that represent the total
capital of the Company, and the total shares not transacted in the sum of all active plans of the program shall not exceed 0.50%
of that capital.
2015
and 2017 Shares Purchase or Subscription Option Granting Program for Strategy Acceleration
|
·
|
2015
Strategy Acceleration Program: Shares Purchase or Subscription Option Granting Program
for Strategy Acceleration, which replaced the program approved by the shareholders of
Natura Cosméticos on July 27, 2015 (“Strategy Acceleration Program”).
The Strategy Acceleration Program consists of the free granting of purchase or subscription
options for common shares of the Company to a select group of managers and employees
chosen by the Board of Directors of the Company, as well as to a select group of managers
and employees of other companies that are or may be under the direct or indirect control
of the Company, whether they are domestic or foreign, as part of their compensation.
|
|
·
|
2017
Strategy Acceleration Program: Second Shares Purchase or Subscription Option Granting
Program for Strategy Acceleration, which replaced the program approved by Natura Cosméticos
shareholders on November 30, 2017 (“Second Strategy Acceleration Program”).
|
The Second
Strategy Acceleration Program consists of the free granting of purchase or subscription options for common shares of the Company
to a select group of managers and employees chosen by the Board of Directors of the Company, as well as to a select group of managers
and employees of other companies that are or may be under the direct or indirect control of the Company, whether they are domestic
or foreign, as part of their compensation.
2019
Long-Term Incentive Program: The Long-Term Incentive Program, which replaced the program approved by the shareholders of Natura
Cosméticos on April 12, 2019, consists of the granting of Performance Awards or Options to managers and employees of the
Company and of other companies which are or may be under the direct or indirect control of the Company, in Brazil or abroad (“Long-Term
Incentive Program”).
2019
Co-Investment Program: The Joint Investment Program, which replaced the program approved by the shareholders of Natura Cosméticos
on April 12, 2019, consists of the granting of Restricted Awards or Options to managers and employees of the Company and of other
companies which are or may be under the direct or indirect control of the Company, in Brazil or abroad (“Co- Investment
Program”).
(b) Main
objectives of the plan
All our
share purchase option and restricted share granting programs aim at (a) aligning shareholders’ and participants’ expectations
in relation to the long-term performance of the Company. (b) stimulating the improvement of the Company’s and its subsidiaries’
management, giving the participants the possibility of being shareholders of the Company, encouraging them to optimize all aspects
that may increase the value of the Company in the long term, as well as giving them an entrepreneurial and corporate vision, harmonizing
and improving the relationship between the Company and its subsidiaries; (b) stimulating the stay of the managers and employees;
and (d) increasing the attractiveness of the Company and its subsidiaries.
(c) How
the plan contributes to such objectives
The Company’s
programs connect more directly the performance of the Company to the quantity of shares to be received by participants. In addition,
by enabling participants to become shareholders of the Company, it is expected to retain talents and align their objectives with
those of the Company. It
is also
possible to achieve, through such models, the sharing of risks and gains of the Company, by increasing the value of the shares
granted within the scope of the programs.
(d) How
the plan is inserted in the issuer’s compensation policy
The compensation
models are part of the strategy for retention of managers and employees of the Company and of its subsidiaries, with their commitment
of value generation to the Company and to shareholders. Furthermore, it increases the variable component of the compensation of
participants of the entities of Natura &Co Group.
(e) How
the plan aligns the interests of managers and those of the issuer in the short, medium and long term
The grants
performed based on the different programs bring different mechanisms that allow the alignment of interests of Participants in
different time horizons. By means of the different programs, we seek to stimulate the improvement of our management and permanence
of our executives, aiming at gains enabled by commitment with the long-term results and by the short-term performance. Furthermore,
the programs aim at enabling the Company to obtain and keep the top executives’ services, offering to them the possibility
of becoming shareholders of the Company, under the terms and conditions provided for in the programs.
(f) Maximum
number of covered shares
The total
number of covered shares is defined in each of the programs of the Company, as described as follows:
2009
and 2015 Common Shares Purchase or Subscription Option Granting Programs
|
·
|
2009
Program: The maximum number of Options that may be annually granted shall be limited
to 0.75% of the shares that represent the total capital of the Company. Accordingly,
the total number of non-exercised Options, in the sum of all active Plans of the Program,
shall not exceed 4% of the shares that represent the total capital of the Company, as
long as the total number of Shares issued or that can be issued pursuant the Plan is
always within the authorized capital limit of the Company.
|
|
·
|
2015
Program: The maximum number of Options that may be annually granted shall be limited
to 0.55% of the shares that represent the total capital of the Company. Accordingly,
the total number of non-exercised Options, in the sum of all active Plans of the Program,
shall not exceed 3.35% of the shares that represent the total capital of the Company,
as long as the total number of Shares issued or that can be issued pursuant the Plan
is always within the authorized capital limit of the Company.
|
2015
and 2017 Restricted Shares Programs (RSU)
|
·
|
2015
Restricted Shares Programs
|
The
RSU Program consists of the granting of common shares of the Company, up to the annual limit of 0.20% of the shares that represent
the total capital of the Company, and the total shares not transacted in the sum of all active plans of the program shall not
exceed 0.65% of that capital.
|
·
|
2017
Second Restricted Shares Program
|
The
RSU Program consists of the granting of common shares of the Company, up to the annual limit of 0.10% of the shares that represent
the total capital of the Company, and the total shares not transacted in the sum of all active plans of the program shall not
exceed 0.50% of that capital.
2015
and 2017 Shares Purchase or Subscription Option Granting Program for Strategy Acceleration
|
·
|
Strategy
Acceleration Program
|
For
the Strategy Acceleration Program, the maximum number of Options that may be granted shall not exceed 1.5% of the shares that
represent the total capital of the Company, as long as the total number of shares issued or that can be issued pursuant to each
plan is always within the authorized capital limit of the Company. If any option is terminated or canceled without being fully
exercised, the shares connected to such options will become available again for future option grants.
|
·
|
Second
Strategy Acceleration Program
|
For
the Second Strategy Acceleration Program, the maximum number of Options that may be granted shall not exceed 1.5% of the shares
that represent the total capital of the Company, as long as the total number of shares issued or that can be issued pursuant to
each Plan is always within the authorized capital limit of the Company. If any option is terminated or canceled without being
fully exercised, the shares connected to such options will become available again for future option grants.
2019
Long-Term Incentive Program and Co-Investment Program
The
total number of new Shares and treasury Shares in relation to which there may be unvested Grants at any time pursuant to the Long-Term
Incentive Program and to the Co-Investment Program, plus the total number of new Shares and treasury Shares used for liquidation
of the grants under the terms of the Program and of the PCI, shall not exceed 5% of the total capital of the Company from time
to time.
(g) Maximum
number of options to be granted
See the
provisions of item (f) above.
(h) Shares
acquisition conditions
2009
Common Shares Purchase or Subscription Option Granting Program
In order
to become a participant of the program, the eligible associates must: (i) prove the investment of no more than 100% of the net
amount received as profit sharing and results of the period in the purchase of shares issued by us by means of the delivery to
the Company of the respective brokerage notes; (ii) sign the Private Instrument of Share Purchase or Subscription Option Granting
(“Option Agreement”) with the commitment to authorize the blocking of disposal of such shares; and (iii) prove,
in writing, by means of a communication sent to the Company, the intention to buy the shares.
2015
Common Shares Purchase or Subscription Option Granting Program
In order
to become a participant of the program, the eligible associates must: (i) prove the investment of no more than 50% of the net
amount received as profit sharing and results of the period in the purchase of shares issued by us by means of the delivery to
the Company of the respective brokerage notes; (ii) sign the Private Instrument of Share Purchase or Subscription Option Granting
(“Option Agreement”) with the commitment to authorize the blocking of disposal of such shares; and (iii) prove,
in writing, by means of a communication sent to the Company, the intention to buy the shares.
2015
and 2017 Restricted Shares Programs
2015
Program: In order to become a participant in said program, the eligible associates must be
formally
indicated by the Board of Directors. The granting of Restricted Shares is performed upon execution of Granting Agreements between
the Company and Participants, which shall specify, without prejudice to other conditions defined by the Board of Directors, the
quantity of Restricted Shares object of the granting and the terms and conditions for acquisition of rights related to the Restricted
Shares.
The Board
of Directors may subordinate the acquisition of rights related to the Restricted Shares to certain conditions, as well as impose
restrictions to their transfer.
2017
Program: The granting of Restricted Shares is performed upon execution of Granting Agreements between the Company and
Participants, which shall specify, without prejudice to other conditions defined by the Board of Directors, the quantity of Restricted
Shares object of the granting and the terms and conditions for acquisition of rights related to the Restricted Shares.
Without
prejudice to the provisions above, the number of Restricted Shares to be granted to Participants will be assessed as provided
below:
|
(i)
|
Participants
of the Program may opt for investing up to one hundred percent (100%) of the Authorized
Monies in the purchase of shares of the Company; and
|
|
(ii)
|
For
each Blocked share acquired by Participant according to item (i) above, the Company will
grant to Participant three (3) Restricted Shares, under which he/she will have the fully
acquired right on three (3) equal annual installments, on each anniversary of the Date
of Granting, provided that the Blocked Period provided for in the program, as well as
the other applicable conditions, have been complied with.
|
2015
and 2017 Shares Purchase or Subscription Option Granting Program for Strategy Acceleration
The Program
consists of the free granting of purchase or subscription options of common shares of the Company to a select group of managers
and employees chosen by the Board of Directors of the Company, as well as to a select group of managers and employees of other
companies that are or may be under the direct or indirect control of the Company.
2019
Long-Term Incentive Program:
The Board
of Directors, in accordance with the Program, will define the Granting, whether of Options or Conditional Grants, to be distributed
among Participants.
The Grants
of the Program may be subject to Performance Conditions, to be defined by the Board of Directors at each Granting. The Performance
Conditions may be changed after a Granting, provided that (i) the occurrence of an event that causes the Board to deem such change
appropriate is verified, (ii) the Performance Condition changed is not materially more or less difficult to be complied with
than the original Performance Condition, had the relevant event had not occurred; and (iii) the Board acts in a fair and reasonable
manner upon performing such change.
Additionally,
as an essential condition for the indication of Participant to be deemed valid and binding, Participant shall execute the private
instrument of Granting, expressly adhering to the Program and representing to be aware of all its terms and conditions, including
the restrictions contained therein.
2019
Co-Investment Program:
At every
year of effectiveness of the Program and in accordance with its terms and conditions, the Board of Directors of the Company may
elect the Participants. As an essential condition for the indication of Participant to be deemed valid and binding, Participant
shall execute the private instrument of call option granting, expressly adhering to the Program and representing to be aware of
all its terms and conditions, including the restrictions contained therein.
Without
prejudice to the provisions above, the number of Options or Restricted Shares to be granted to Participants will be assessed as
provided below:
|
(i)
|
The
Participants in the Program may opt for receiving a maximum percentage (to be defined
by the Board of Directors) of their annual bonus or results and profit sharing (“Investment
Amount”) in Conditional Grants or Options, according to the approved plan;
|
|
(ii)
|
The
number of Shares that will be received by Participant will correspond to the Investment
Amount divided by the Market Value (defined in the program), rounded to the closer whole
number; and
|
|
(iii)
|
For
each Share received pursuant to the previous item, the Company will grant to Participant
a Matching Granting, pursuant to a Conditional Granting or an Option.
|
(i) Criteria
to determine the purchase price or exercise
2009
and 2015 Common Shares Purchase or Subscription Option Granting Programs
The Subscription
or Purchase price of each Share shall correspond to the Value of the Company’s Share, determined in accordance with the
established criteria:
- The
amount corresponding to the simple average of the last 30 auctions occurred over the last 60 consecutive days counted as from
the term of 5 days before approval of the Plan, including the 5th day, always adopting the average daily quotation of each auction;
- If
there are not 30 auctions within the term of 60 days mentioned above, the average referred to above will be obtained considering
the totality of the auctions that occurred in said period, in a minimum of 3 auctions;
- If
there are not at least 3 auctions within the 60 days mentioned above, the last auctions prior to the 60 days shall be considered,
until the minimum number of 3 auctions is reached.
2015
and 2017 Restricted Shares Programs
The fair
value of the restricted shares granted is calculated based on the binomial pricing method and recognized as expense in the result
during the period. In the Restricted Shares model, the amount received in the delivery of these shares will represent a gain to
the participants.
2015
and 2017 Shares Purchase or Subscription Option Granting Program for Strategy Acceleration:
The Subscription
or Purchase Price of each Share shall correspond to the Value of the Company’s Share, determined in accordance with the
established criteria:
- The
amount corresponding to the simple average of the last 30 auctions occurred over the last 60 consecutive days counted as from
the term of 5 days before approval of the Plan, including the 5th day, always adopting the average daily quotation of each auction;
- If
there are not 30 auctions within the term of 60 days mentioned above, the average referred to above will be obtained considering
the totality of the auctions that occurred in said period, in a minimum of 3 auctions;
- If
there are not at least 3 auctions within the 60 days mentioned above, the last auctions prior to the 60 days shall be considered,
until the minimum number of 3 auctions is reached.
2019
Long-Term Incentive Program
The Options
will cost R$ 0.01 per Share for Participant. The Conditional Grants will have no cost for Participant or, if necessary, in accordance
with the applicable legislation, will have a cost of R$ 0.01 per Share.
2019
Co-Investment Program
The Matching
Grants, if structured as Options, will cost R$ 0.01 per Share for Participant. If structured as Conditional Grants, they will
have no cost for Participant or, if necessary, in accordance with the applicable legislation, will have a cost of R$ 0.01 per
Share.
(j) Exercise
timing criteria
2009
Program: Regarding the Options’ vesting and exercise term, at the end of the third year as from the date of the
Board of Directors’ Meeting that approves the Option Granting Plan, half the options will become vested, and, if exercised,
the remaining balance of 50% of the Options will be canceled. Also, at the end of the fourth year as from the date of the Board
of Directors’ Meeting that approves the Options Granting Plan, the totality of the options granted will become vested and
can be exercised.
2015
Program: The Options will vest to the extent that the Participant remains continuously connected as manager or employee
of the Company, during the period between the Date of Granting and the dates below, in the following proportions:
- 1/3
after the 2nd anniversary of the Date of Granting.
- 2/3
after the 3rd anniversary of the Date of Granting; and the totality after the 4th anniversary of the Date of Granting.
The maximum
term for the exercise of Options is eight years for both Programs, as from the date of the Board of Directors’ Meeting that
approves the Option Granting Plan.
2015
and 2017 Restricted Shares Programs
2015
Program: The rights of the participants in relation to the Restricted Shares shall only be fully acquired to the extent
that the Participant remains continuously connected as Manager or associate of the Company, during the period between the date
of granting and the dates below, in the following proportions:
(i) 1/3
after the 2nd anniversary of the Date of Granting.
(ii) 2/3
after the 3rd anniversary of the Date of Granting; and
(iii) the
balance after the 4th anniversary of the Date of Granting.
2017
Program: The rights of the participants in relation to the restricted shares shall only be fully acquired to the extent
that the Participant remains continuously connected as manager or associate of the Company, during the period between the date
of granting and the dates below, in the following proportions:
(i) 1/3
after the 1st anniversary of the Date of Granting.
(ii) 1/3
after the 2nd anniversary of the Date of Granting; and
(iii) 1/3
after the 3rd anniversary of the Date of Granting.
2015
and 2017 Shares Purchase or Subscription Option Granting Program for Strategy Acceleration: For both Plans, the exercise
of the option is defined below:
(i) 50%
after the 4th anniversary of the Date of Granting.
(ii) 50%
after the 5th anniversary of the Date of Granting.
The Maximum
Term for the Exercise of the Options as defined in the Program is eight (8) years counted as from the date of approval of each
Strategy Acceleration Plan.
2019
Long-Term Incentive Program
The Granting
will become exercisable to the extent Participant remains continuously connected to the concerned Company as manager or employee,
except for occasional dismissal rules regarding Participant or special situations (change of control and other events) established
in the Program, during the period from the date of granting to:
(i) the
3rd anniversary of the Date of Granting; and
(ii) If
the Granting is subject to performance conditions or other conditions, the date on which the Board of Directors determines that
such conditions were complied with, whichever occurs last.
If the Granting
is an Option, except as otherwise defined by the Board of Directors, the term for the exercise of a Granting will be of 30 days
after the Option becomes exercisable.
For the
grants to be performed in 2020, the Vesting term may be suspended if Participant requests a non-paid leave, being resumed after
his/her return to issuer.
2019
Co-Investment Program
The Granting
will become exercisable to the extent Participant remains continuously connected to the concerned company as manager or employee,
except for occasional dismissal rules regarding Participant or special situations (change of control and other events) established
in the Program. Each Granting will be divided into three tranches (“Tranche”), and the first and second Tranches
will correspond to one third of the total number of Shares linked to a Granting each, and the third Tranche will correspond to
the balance of the Shares in the referred to Granting.
The Tranches
will become exercisable within the following terms:
|
·
|
On
the first anniversary of the Granting, for the first Tranche;
|
|
·
|
On
the second anniversary of the Granting, for the second Tranche; and
|
|
·
|
On
the third anniversary of the Granting, for the third Tranche.
|
If the Granting
is an Option, except as otherwise defined by the Board of Directors, the term for the exercise of a Granting will be of 30 days
after the Option becomes exercisable.
For the
grants to be performed in 2020 and onwards, the Vesting term may be suspended if Participant requests a non-paid leave, being
resumed after his/her return to issuer.
(k) Liquidation
Form
For all
modalities of long-term incentive programs (except for the Long-Term Incentive Program and the Joint Investment Program, described
below), the form of liquidation is physical, with the delivery of shares (i) at the exercise of the granted options, and they
are issued by us, through a capital increase, or we may, at our exclusive discretion, transfer shares held in treasury; and (ii)
directly,
in case of restricted shares, and they are transferred from treasury by us.
For the
Long-Term Incentive Program and the Co-Investment Program, with the purpose of satisfying a Granting under the terms of the Program,
the Company, subject to the applicable law and regulations, may: (i) issue new Shares; (ii) transfer treasury shares; (iii) transfer
Shares from an “employee benefit trust”; or (iv) register depositary receipts linked to Shares.
(l) Share
transfer restrictions
The shares
acquired or subscribed in conformity with the exercise of the options granted within the scope of the shares purchase or subscription
option granting programs can be freely negotiated by their holders, without any restrictions.
2015
Restricted Shares Programs
For the
2015 Restricted Shares Programs, the restricted shares cannot be negotiated before the lapse of the terms mentioned in the programs.
Thus, the rights of the Participants in relation to the Restricted Shares shall only be fully acquired to the extent that the
Participant remains continuously connected as manager or employee of the Company, during the period between the Date of Granting
and the dates below, in the following proportions:
(a) 1/3
after the 2nd anniversary of the Date of Granting;
(b) 2/3
after the 3rd anniversary of the Date of Granting; and
(c) The
balance after the 4th anniversary of the Date of Granting.
2017
Restricted Shares Programs
For the
2017 Restricted Shares Programs, the restricted shares cannot be negotiated before the lapse of the terms mentioned in the programs.
Thus, the rights of the Participants in relation to the Restricted Shares shall only be fully acquired to the extent that the
Participant remains continuously connected as manager or employee of the Company, during the period between the Date of Granting
and the dates below, in the following proportions:
(a) 1/3
after the 1st anniversary of the Date of Granting;
(b) 2/3
after the 2nd anniversary of the Date of Granting; and
(c) the
balance after the 3rd anniversary of the Date of Granting.
2019
Co-Investment Program
In the Co-Investment
Program, except in the event of Dismissal, the Shares object of the Investment Granting may not be transferred until occurrence
of Vesting and liquidation of the Options or Conditional Grants of the Matching Granting. Any attempt of transfer of the Investment
Grants will result in the expiry of the corresponding Matching Granting.
(m) Criteria
and events that, if verified, will entail the suspension, change or extinction of the plan
Regarding
the three modalities of the existing Programs (2009 and 2015 Common Shares Purchase or Subscription Option Granting Program, 2015
and 2017 Restricted Shares Programs and 2015 and 2017 Shares Purchase or Subscription Option Granting Program for Strategy Acceleration)
it is incumbent upon the Shareholders’ Meeting to approve and therefore to change, suspend or extinguish the Program. Each
and every change in the programs, proposed by the Board of Directors, shall be submitted to the approval of the Shareholders’
Meeting and, once approved, it can only reach the shares purchase option to be granted. The occurrence of factors that cause serious
change in the economic view and that compromise our financial situation is among the causes that may generate
the change
or extinction of said programs.
For the
Long-Term Incentive Program and for the Co-Investment Program, any significant change in the case law and in the tax, labor, social-security
laws and regulations and laws and regulations related to capital markets applicable to long-term incentive programs may result
in the partial or full review of the Program, or even in its suspension or termination.
(n) Effects
of the exit of the manager from the issuer’s bodies on his rights provided for in the share-based compensation plan
2009
Program:
The cases
of Dismissal of Participants shall be treated as follows: Dismissal of the Participant with cause or by his or her request:
|
·
|
Dismissal
of the Participant with cause or by his or her request:
|
- Non-vested
Options will be canceled;
- Vested
Options, but which have not yet been exercised, cannot be exercised;
|
·
|
Dismissal
Without Cause:
|
- Non-Vested
Options will be treated as indicated below;
- Vested
Options, but which have not yet been exercised, can be exercised within at most thirty (30) days from the dismissal or from the
date when the blocked period ends, if the dismissal occurs during a period blocked for negotiation of the Shares;
|
·
|
Dismissal
immediately after retirement for time of service and/or age
|
- Non-Vested
Options shall be treated as indicated below and shall have their exercise conditioned upon the granting by the National Social
Security Institute - INSS of the retirement request made by the Participant, or upon the granting of equivalent provision if Participant
does not reside in Brazil;
-Vested
Options, but which have not yet been exercised, can be exercised within at most ninety (90) days or from the date when the blocked
period ends, if the dismissal occurs during a period blocked for negotiation of the Shares.
The exercise
due to retirement for time of service or age is conditioned upon the granting by the National Social Security Institute - INSS
of the retirement request made by the Participant or upon the granting of equivalent provision if Participant does not reside
in Brazil..
|
·
|
Dismissal
due to permanent disability:
|
- Non-Vested
Options can be exercised after termination of the employment agreement due to granting of retirement for permanent disability;
- Vested
Options, but which have not yet been exercised, can be exercised.
|
·
|
Dismissal
due to death of the Participant:
|
- Non-Vested
Options can be exercised after death of Participant;
- Vested
Options, but which have not yet been exercised, can be exercised.
In the events
provided for in the Sections that deal with Dismissal without cause and Dismissal for retirement for time of service and/or age
above, the Non-Vested Options will be proportionally reduced, based on the period from the date of granting and the date of Dismissal
in relation to the Vesting Term of the Options. Such Non-Vested Options will become Vested Options on the date when they would
become exercisable pursuant to the program and can be exercised within at most ninety (90) days or from the date when the blocked
period ends, if the Dismissal occurs during a period blocked for negotiation of the Shares. The other Non-Vested Options will
be canceled.
2015
Program
The cases
of Dismissal of Participants shall be treated as follows:
|
(a)
|
Dismissal
of the Participant with cause or by his or her request:
|
- Non-vested
Options will be canceled;
- Vested
Options, but which have not yet been exercised, cannot be exercised and will be canceled;
|
(b)
|
Dismissal
without cause:
|
- Non-Vested
Options will be treated as described below;
- Vested
Options, but which have not yet been exercised, can be exercised within at most thirty (30) days from the Dismissal or from the
date when the blocked period ends, if the Dismissal occurs during a period blocked for negotiation of the Shares;
|
(c)
|
Dismissal
immediately after retirement for time of service and/or age
|
- Non-Vested
Options shall be treated as described below and shall have their exercise conditioned upon the granting by the National Social
Security Institute - INSS of the retirement request made by the Participant, or upon the granting of an equivalent provision if
Participant does not reside in Brazil;
- Vested
Options, but which have not yet been exercised, can be exercised within at most ninety (90) days or from the date when the blocked
period ends, if the Dismissal occurs during a period blocked for negotiation of the Shares. The exercise by dismissal immediately
after retirement for time of service or age is conditioned upon the granting by the National Social Security Institute - INSS
of the retirement request made by the Participant, or upon the granting of an equivalent provision if Participant does not reside
in Brazil.
|
(d)
|
Dismissal
due to permanent disability:
|
- Non-Vested
Options and Vested Options, but which have not yet been exercised, can be exercised within one hundred and eighty (180) days from
the termination of the employment agreement due to the granting of retirement due to permanent disability, regardless of the term
set forth in item 9 above, by the Participant or his or her legal representative (guardian), upon the presentation to the Company
of the relevant proof of granting of retirement due to permanent disability issued by INSS - National Social Security Institute,
or a similar document in case the Participant does not reside in Brazil, and consequent termination of the employment agreement.
|
(e)
|
Dismissal
due to death of the Participant:
|
- Non-Vested
Options and Vested Options, but which have not yet been exercised, can be exercised after the death of the Participant, upon the
presentation to the Company of the appropriate documentation of the Participant’s probate, within one hundred and eighty
(180) days from the appointment of the executor by the court, provided that the probate proceedings have been started within six
(6) months from the date of the Participant’s death, regardless of the term set forth in item 9.1 above.
In the events
provided for in items (b) and (c) above, the Non-Vested Options will be proportionally reduced, based on the period from the Date
of Granting and the Date of Dismissal in relation to the Vesting Term of the Options. Such Non-Vested Options will become Vested
Options on the date when they would be exercisable pursuant to the 2015 Program and can be exercised within at most ninety (90)
days or from the date when the blocked period ends, if the Dismissal occurs during a period blocked for negotiation of the Shares.
The other Non-Vested Options will be canceled.
RSU
Program
Except as
provided for below, in the events of Dismissal of the Participant with cause or by his or her request, the Restricted Shares Not
Fully Acquired will be automatically extinguished, by operation of law, regardless of previous notice or notification, with no
entitlement to any indemnification. The Board of Directors may, if it deems relevant, resolve differently from what is herein
provided for in relation to one or more participants, under the program.
In case
of Dismissal based on granting of retirement due to permanent disability, the Restricted Shares Not Fully Acquired can be fully
acquired within one hundred and eighty (180) days from the
termination
of the employment agreement due to the granting of retirement due to permanent disability, by the Participant or his or her legal
representative (guardian), upon the presentation to the Company of the relevant proof of granting of retirement due to permanent
disability issued by INSS - National Social Security Institute, or a similar document in case the Participant does not reside
in Brazil, and relevant termination of the employment agreement. The Board of Directors may, at its exclusive discretion, extend
the term mentioned above.
In case
of Dismissal due to the death of the Participant, the Restricted Shares Not Fully Acquired can be fully acquired after the death
of the Participant, upon the presentation to the Company of the appropriate documentation of the Participant’s probate,
within one hundred and eighty (180) days from the appointment of the executor by the court, provided that the probate proceedings
have been started within six (6) months from the date of the Participant’s death, regardless of the term established in
the program. The Board of Directors may, at its exclusive discretion, extend the terms mentioned above.
In the events
of Dismissal of Participant without cause and Dismissal immediately after retirement for time of service and/or age, the Restricted
Shares Not Fully Acquired will be proportionally reduced, based on the period from the Date of Granting and the date of Dismissal
in relation to the terms provided for in the program. Such Restricted Shares Not Fully Acquired will become fully acquired on
the date when they would become exercisable pursuant to the program and can be exercised within at most ninety (90) days or from
the date when the blocked period ends, if the Dismissal occurs during a period blocked for negotiation of the Shares. The other
Restricted Shares Not Fully Acquired will be canceled.
Second
RSU Program
In the event
of Dismissal of Participant by initiative of the Company and/or by the respective Subsidiary, due to cause motivated by Participant,
or by initiative without cause by Participant himself/herself, the Restricted Shares Not Fully Acquired will be automatically
extinguished, by operation of law, regardless of previous notice or notification, and with no entitlement to any indemnification.
In the event
of Dismissal of Participant by initiative of the Company and/or of the Subsidiary, with no cause motivated by Participant, or
by initiative of Participant himself/herself due to cause motivated by the Company:
(i) any
Restricted Shares that have been specifically granted to Participant as a part of the incentive package for his/her contracting
by the Company (sign-on incentives) will be fully acquired by Participant; and
(ii) any
Restricted Shares that have been granted by the Company to Participant in addition to the Restricted Shares provided for in item
(i) above will be calculated and fully transferred to Participant proportionally from the Date of Granting to the date corresponding
to twenty-four (24) months as from the date of Dismissal of Participant.
Observing
the guidelines approved at a Shareholders’ Meeting and the applicable law, the Board of Directors of the Company shall,
as part of its duties, establish in the respective Plans the events that will characterize cause motivated by Participant and
cause motivated by the Company in the Dismissal of Participants for the purposes of this Program, it being certain that death
of Participant or his/her permanent disability, provided that duly certified by medical experts, may not in any event be deemed
cause in the Dismissal of Participants for the purposes of this Program.
The Board
of Directors may, if it deems relevant, resolve differently from what is herein provided for in relation to one or more participants,
under the program.
Strategy
Acceleration Program
The cases
of Dismissal of Participants shall be treated as follows:
(a) Dismissal
of the Participant with cause or by his or her request:
- Non-vested
Options will be canceled;
- Vested
Options, but which have not yet been exercised, cannot be exercised and will be canceled;
(b) Dismissal
of the Participant without cause before the third anniversary of the Date of Granting:
- Options
will be canceled;
(c) Dismissal
of the Participant without cause after the third anniversary of the Date of Granting: The Board of Directors may, if it considers
pertinent, determine that the Participant can retain part of his or her Options if he or she is dismissed without cause after
the third anniversary of the Date of Granting. Such Options can only be exercised in the periods and according to the procedures
set out in item 9 of this Program. In that case, the conditions shall be determined by the Board of Directors at the time;
(d) Dismissal
immediately after retirement for time of service and/or age:
- Non-vested
Options will be canceled;
- Vested
Options, but which have not yet been exercised, can be exercised within at most ninety (90) days from the Dismissal or from the
date when the blocked period ends, if the Dismissal occurs during a period blocked for negotiation of the Shares. The ninety (90)-day
term for the exercise due to retirement for time of service and/or age is counted from the date of granting by the National Social
Security Institute - INSS of the retirement request made by the Participant, or upon the granting of equivalent provision if Participant
does not reside in Brazil. The Board of Directors may, at its exclusive discretion, extend the terms mentioned above.
(e) Dismissal
due to permanent disability:
- Non-Vested
Options and Vested Options, but which have not yet been exercised, can be exercised within at most one hundred and eighty (180)
days from the Dismissal or from the date when the blocked period ends, if the Dismissal occurs during a period blocked for negotiation
of the Shares. The one hundred and eighty (180)-day term for the exercise due to permanent disability is counted from the date
of issuance by the National Social Security Institute - INSS of the relevant proof of granting of retirement due to permanent
disability presented to the Company by the Participant or by his or her legal representative, or the issuance of a similar document,
in case the Participant does not reside in Brazil. The Board of Directors may, at its exclusive discretion, extend the terms mentioned
above.
(f) Dismissal
due to death:
-Non-Vested
Options and Vested Options, but which have not yet been exercised, can be exercised after the death of the Participant within
up to one hundred and eighty (180) days from the appointment of the executor by the Court, provided that the probate proceedings
have been started within six months from the date of the Participant’s death. The Board of Directors may, at its exclusive
discretion, extend the terms mentioned above.
In the events
provided for in items (b) and (c) above, the Non-Vested Options will be proportionally reduced, based on the period from the Date
of Granting and the Date of Dismissal in relation to the Vesting Term of the Options. Such Non-Vested Options will become Vested
Options on the date when they would become exercisable pursuant to the program and can be exercised within at most ninety (90)
days or from the date when the blocked period ends, if the Dismissal occurs during a period blocked for negotiation of the Shares.
The other Non-Vested Options will be canceled.
Second
Strategy Acceleration Program
In the event
of Dismissal of Participant by initiative of the Company and/or by the respective subsidiary, due to cause motivated by Participant,
or by initiative without cause by Participant
himself/herself,
the Non-Vested Options will be canceled, and the Vested Options, but which have not yet been exercised, cannot be exercised and
will be canceled.
In the event
of Dismissal of Participant by initiative of the Company and/or of the respective subsidiary, with no cause motivated by Participant,
or by initiative of Participant himself/herself due to cause motivated by the Company:
(i) Any
Options that have been specifically granted to Participant as a part of incentive packages for his/her contracting by the Company
(sign-on incentives), whether they are Vested or Non-Vested, will become exercisable by Participant in full for a term of one
(1) year counted as from the Date of Dismissal; and
(ii) any
Options that have been granted by the Company to Participant in addition to the Options provided for in item (i) above and which
still are Non-Vested Options on the Date of Dismissal will have the following treatment: (a) one-third (1/3) of the Non-Vested
Options granted in the year prior to the Date of Dismissal, (b) two-thirds (2/3) of the Non-Vested Options granted in the second
year prior to the Date of Dismissal, and (c) three-thirds (3/3) of the Non-Vested Options granted in the third and fourth years
prior to the Date of Dismissal will become exercisable by Participant in full for a term of one (1) year counted as from the Date
of Dismissal.
Observing
the guidelines approved at a Shareholders’ Meeting and the applicable law, the Board of Directors of the Company shall,
as part of their duties, establish in the respective Plan the events that will characterize cause motivated by Participant and
cause motivated by the Company in the Dismissal of Participants for the purposes of this Program, it being certain that death
of Participant or his/her permanent disability, provided that duly certified by medical experts, may not in any event be deemed
cause in the Dismissal of Participants for the purposes of this Program.
The Board
of Directors may, if it deems relevant, resolve differently from what is herein provided for in relation to one or more participants,
under the program.
Long-Term
Incentive Program and Co-Investment Program
If there
is a Dismissal before the Regular Vesting Date of a Granting due to:
(a) Death
of Participant;
(b) Illness
or disability of Participant (evidenced as the Board may deem satisfactory);
(c) Retirement
of Participant:
(i) At
the age of contractual retirement or when achieving eligibility for retirement for time of service (in both cases, only if such
concepts are applicable in accordance with the local laws); or
(ii) Otherwise,
by the approval of the Board, at its discretion;
(d) Redundancy
of Participant (such redundancy as part of a redundancy program that results in the redundancy of nine or more employees and/or
managers as deemed satisfactory by the Board, and if such concept is applicable under the terms of the relevant local laws);
(e) The
connection or the office of Participant is or with a company that is no more a Member of Natura Group or that relates to a business
or part of a business transferred or sold to another one other than a Member of Natura Group; or
(f) In
any other circumstances where the Board determines that this Rule should be applied in relation to the Granting, then, subject
to the Regular Date of Vesting and other occasional restrictions, such Granting will be exercisable on the Regular Date of Vesting,
except if there is a reason for dismissal for death (or another one, at the discretion of the Board), when such Granting will
be exercisable on the Anticipated Vesting Date. Unless otherwise established by the Board, the Grants will be subject to a proportional
reduction in the stipulated number of Shares, based on the period beginning on the Date of Granting and ending on the Date of
Dismissal related to the Regular Vesting Period of the Tranche.
For Grants
to be made in 2020 in the Long-Term Incentive Program and the Co-Investment Program,
in the event
of a Participant’s Dismissal within six months from the Date of Grant, the proportional reduction rule in the previous paragraph
will not apply, so that, unless otherwise determined by the Board, all Participant Matching Grants will expire.
13.5
– Share-based compensation
13.5
- Regarding the share-based compensation recognized in the results of the last 3 fiscal years and that estimated for the current
fiscal year, of the board of directors and the board of statutory officers, prepare a table with the following content:
Amounts
estimated for the 2021 fiscal year.
The table
below refers to the estimate of grants to be made in 2021.
Share
Call Option Plan
SHARE-BASED COMPENSATION
- STOCK OPTIONS - ESTIMATED FOR THE
FISCAL YEAR TO END ON December 31, 2021
|
|
Board
of
Directors
|
Board
of
Statutory
Officers
|
Total
number of members
|
13
|
6
|
Number
of compensated members
|
13
|
5
|
Weighted
average price of exercise
|
|
|
(a)
Outstanding options at the beginning of the fiscal year
|
7,174,799
|
1,039,421
|
(b)
Options lost during the fiscal year
|
-
|
-
|
(c)
Options exercised during the fiscal year (*)
|
-
|
-
|
(d)
Options expired during the fiscal year (*)
|
-
|
-
|
(e)
Options to be granted during the fiscal year (**)
|
912,135
|
169,067
|
Potential
dilution in case of exercise of all options granted
|
0.59%
|
0.09%
|
(*) In relation
to the options lost and exercised, it is not possible to make an estimate regarding the fiscal year that will end on December
31, 2021, taking into account the variation presented in the last years.
(**) Estimated,
may change.
Restricted
Shares / Conditioned Grants
COMPENSATION BASED ON
RESTRICTED SHARES - ESTIMATED FOR THE
FISCAL YEAR TO END ON December 31, 2021
|
|
Board
of
Directors
|
Board
of
Statutory
Officers
|
Total
number of members
|
13
|
6
|
Number
of compensated members
|
1
|
5
|
Weighted
average price of exercise
|
|
|
(a)
Outstanding restricted Shares at the
beginning of the fiscal year
|
385,816
|
104,014
|
(b)
Restricted shares lost during the fiscal year
|
-
|
-
|
(c)
Restricted shares exercised during the fiscal year (*)
|
-
|
-
|
(d)
Restricted shares expired during the fiscal year (*)
|
-
|
-
|
(e)
Restricted shares to be granted during the fiscal year
|
-
|
-
|
Potential
dilution in case of exercise of all restricted shares granted
|
-
|
-
|
Amounts
for the 2020 fiscal year.
The table
below refers to the grants that were made in the fiscal year ended on December 31, 2020.
Share
Call Option Plan
SHARE-BASED COMPENSATION
– STOCK OPTIONS - FISCAL YEAR TO END ON
December 31, 2020
|
|
Board
of
Directors
|
Board
of
Statutory
Officers
|
Total
number of members
|
13
|
6
|
Number
of compensated members
|
1
|
5
|
Weighted
average price of exercise
|
|
|
(a)
Outstanding options at the beginning of the fiscal year
|
5,700,000
|
1,254,084
|
(b)
Options lost during the fiscal year
|
-
|
-
|
(c)
Options exercised during the fiscal year (*)
|
-
|
362,742
|
(d)
Options expired during the fiscal year (*)
|
-
|
-
|
(e)
Options to be granted during the fiscal year
|
1,474,799
|
148,079
|
Potential
dilution in case of exercise of all options granted
|
0.52%
|
0.10%
|
(*) In relation
to the options lost and exercised, it is not possible to make an estimate regarding the fiscal year that will end on December
31, 2020, taking into account the variation presented in the last years.
Restricted
Shares / Conditioned Grants
COMPENSATION BASED ON
RESTRICTED SHARES - FISCAL YEAR TO END
ON December 31, 2020
|
|
Board
of
Directors
|
Board
of
Statutory
Officers
|
Total
number of members
|
13
|
6
|
Number
of compensated members
|
1
|
5
|
Weighted
average price of exercise
|
|
|
(a)
Outstanding restricted Shares at the beginning of the fiscal year
|
705,052
|
186,010
|
(b)
Restricted shares lost during the fiscal year
|
-
|
-
|
(c)
Restricted shares exercised during the fiscal year (*)
|
-
|
-
|
(d)
Restricted shares expired during the fiscal year (*)
|
-
|
-
|
(e)
Restricted shares to be granted during the fiscal year
|
-
|
-
|
Potential
dilution in case of exercise of all restricted shares granted
|
-
|
-
|
Considering
that the incorporation of the Company occurred on January 21, 2019, there has not been any recognition of compensation in years
2017, 2018 and 2019 for the members of the Board of Directors and of the Board of Statutory Officers.
As approved
at a special shareholders’ meeting held on July 17, 2019, no amount by way of compensation was due to the members of the
management of the Company for the fiscal year of 2019.
13.6
– Outstanding options
13.6
- Regarding the outstanding options of the board of directors and of the board of statutory officers at the end of the last fiscal
year, prepare a table with the following content
Amounts
related to 2020
|
Board of Officers
|
Number
of members
|
3.0
|
In
relation to the Options
|
-
|
2018
Plan (tranche 2)
|
2018
Plan (tranche 3)
|
Quantity
|
-
|
58,980
|
58,980
|
Exercisable
quantity
|
-
|
-
|
-
|
Date
when they have or will become exercisable
|
-
|
March
12, 2021
|
March
12, 2022
|
Maximum
term for exercise of the Options
|
-
|
March
12, 2026
|
March
12, 2026
|
Lock-up
period for transfer of shares
|
-
|
N/A
|
N/A
|
Weighted
average price of exercise
|
-
|
16.83
|
16.83
|
Fair
Option value on the date of grant
|
-
|
8.09
|
8.21
|
Fair
value of total Options on the last day of the fiscal year
|
-
|
477,148
|
484,226
|
|
|
|
|
|
|
Board of Officers
|
Number
of members
|
4.0
|
In
relation to the Options
|
2019
Plan (tranche 1)
|
2019
Plan (tranche 2)
|
2019
Plan (tranche 3)
|
Quantity
|
68,419
|
68,419
|
68,419
|
Exercisable
quantity
|
-
|
-
|
-
|
Date
when they have or will become exercisable
|
March
20, 2021
|
March
20, 2022
|
March
20, 2023
|
Maximum
term for exercise of the Options
|
March
20, 2027
|
March
20, 2027
|
March
20, 2027
|
Lock-up
period for transfer of shares
|
N/A
|
N/A
|
N/A
|
Weighted
average price of exercise
|
23.41
|
23.41
|
23.41
|
Fair
Option value on the date of grant
|
11,79
|
11,82
|
11,71
|
Fair
value of total Options on the last day of the fiscal year
|
806,656
|
808,709
|
801,183
|
|
Director
|
Number
of members
|
1.0
|
In
relation to the Options
|
2019
Plan (tranche 1)
|
2019
Plan (tranche 2)
|
|
Quantity
|
950,000
|
950,000
|
|
Exercisable
quantity
|
-
|
-
|
|
Date
when they have or will become exercisable
|
March
20, 2023
|
March
20, 2024
|
|
Maximum
term for exercise of the Options
|
March
20, 2027
|
March
20, 2028
|
|
Lock-up
period for transfer of shares
|
-
|
-
|
|
Weighted
average price of exercise
|
23.41
|
23.41
|
|
Fair
Option value on the date of grant
|
11.71
|
11.50
|
|
Fair
value of total Options on the last day of the fiscal year
|
11,122,491
|
10,927,491
|
|
|
Director
|
Number
of members
|
1.0
|
In
relation to the Options
|
2017
Plan (tranche 1)
|
2017
Plan (tranche 2)
|
2018
Plan (tranche 1)
|
2018
Plan (tranche 2)
|
Quantity
|
950,000
|
950,000
|
950,000
|
950,000
|
Exercisable
quantity
|
-
|
-
|
-
|
-
|
Date
when they have or will become exercisable
|
July
12, 2021
|
July
12, 2022
|
March
12, 2022
|
March
12, 2023
|
Maximum
term for exercise of the Options
|
-
|
-
|
-
|
-
|
Lock-up
period for transfer of shares
|
-
|
-
|
-
|
-
|
Weighted
average price of exercise
|
12.04
|
12.04
|
16.83
|
16.83
|
Fair
Option value on the date of grant
|
9.58
|
9.67
|
8.21
|
8.32
|
Fair
value of total Options on the last day of the fiscal year
|
9,101,000
|
9,186,500
|
7,799,500
|
7,904,000
|
|
Board of Officers
|
Number
of members
|
3.0
|
In
relation to the restricted shares
|
2017
Plan
-
Restricted
shares (tranche 1)
|
2017
Plan
-
Restricted
shares (tranche 2)
|
2017
Plan
-
Restricted
shares (tranche 3)
|
2018
Plan
-
Restricted
shares (tranche 1)
|
2018
Plan
-
Restricted
shares (tranche 2)
|
2018
Plan
-
Restricted
shares (tranche 3)
|
Quantity
|
|
|
11,676
|
|
11,669
|
11,669
|
Exercisable
quantity
|
|
|
-
|
|
-
|
-
|
Date
when they have or will become exercisable
|
|
|
March
10, 2021
|
|
March
12, 2018
|
March
12, 2018
|
Maximum
term for exercise of the Options
|
|
|
March
10, 2021
|
|
March
12, 2021
|
March
12, 2022
|
Lock-up
period for transfer of shares
|
|
|
N/A
|
|
N/A
|
N/A
|
Weighted
average price of exercise
|
|
|
-
|
|
-
|
-
|
Fair
Option value on the date of grant
|
|
|
-
|
|
-
|
-
|
Fair
value of total Options on the last day of the fiscal year
|
|
|
-
|
|
-
|
-
|
|
Board of Officers
|
Number
of members
|
5.0
|
In
relation to the restricted shares
|
2019
Plan -
Restricted
shares (tranche 1)
|
2019
Plan -
Restricted
shares (tranche 2)
|
2019
Plan -
Restricted
shares (tranche 3)
|
Quantity
|
23,000
|
23,000
|
23,000
|
Exercisable
quantity
|
-
|
-
|
-
|
Date
when they have or will become exercisable
|
March
20, 2021
|
March
20, 2022
|
March
20, 2023
|
Maximum
term for exercise of the Options
|
March
20, 2021
|
March
20, 2022
|
March
20, 2023
|
Lock-up
period for transfer of shares
|
-
|
-
|
-
|
Weighted
average price of exercise
|
-
|
-
|
-
|
Fair
Option value on the date of grant
|
-
|
-
|
-
|
Fair
value of total Options on the last day of the fiscal year
|
-
|
-
|
-
|
|
Director
|
Number
of members
|
1.0
|
In
relation to the restricted shares
|
2018
Restricted
Shares
(tranche 3)
|
2019
Plan -
Restricted
shares (tranche 1)
|
2019
Plan -
Restricted
shares
(tranche 2)
|
2019
Plan -
Restricted
shares
(tranche 3)
|
Quantity
|
73,872
|
|
155,972
|
155,972
|
Exercisable
quantity
|
-
|
|
-
|
-
|
Date
when they have or will become exercisable
|
March
12, 2021
|
|
March
20, 2021
|
March
20, 2022
|
Maximum
term for exercise of the Options
|
-
|
|
-
|
-
|
Lock-up
period for transfer of shares
|
N/A
|
|
N/A
|
N/A
|
Weighted
average price of exercise
|
-
|
|
-
|
-
|
Fair
Option value on the date of grant
|
-
|
|
-
|
-
|
Fair
value of total Options on the last day of the fiscal year
|
-
|
|
-
|
-
|
|
Board of Officers
|
Number
of members
|
5.0
|
In
relation to the CIP
|
2020
Plan – CIP
(tranche
1)
|
2020
Plan - CIP
(tranche
2)
|
2020
Plan - CIP
(tranche
3)
|
Quantity
|
28,996
|
28,996
|
28,996
|
Exercisable
quantity
|
-
|
-
|
-
|
Date
when they have or will become exercisable
|
March
27, 2021
|
March
27, 2022
|
March
27, 2023
|
Maximum
term for exercise of the Options
|
March
27, 2021
|
March
27, 2022
|
March
27, 2023
|
Lock-up
period for transfer of shares
|
-
|
-
|
-
|
Weighted
average price of exercise
|
0.01
|
0.01
|
0.01
|
Fair
Option value on the date of grant
|
29,00
|
29,00
|
29,00
|
Fair
value of total Options on the last day of the fiscal year
|
840,874
|
840,874
|
840,874
|
|
Director
|
Number
of members
|
1.0
|
In
relation to the CIP
|
2020
Plan – CIP
(tranche
1)
|
2020
Plan - CIP
(tranche
2)
|
2020
Plan -
CIP
(tranche 3)
|
|
Quantity
|
293,503
|
293,503
|
293,503
|
|
Exercisable
quantity
|
-
|
-
|
-
|
|
Date
when they have or will become exercisable
|
March
27, 2021
|
March
27, 2022
|
March
27, 2023
|
|
Maximum
term for exercise of the Options
|
-
|
|
-
|
|
Lock-up
period for transfer of shares
|
N/A
|
|
N/A
|
|
Weighted
average price of exercise
|
0.01
|
0.01
|
0.01
|
|
Fair
Option value on the date of grant
|
29,00
|
29,00
|
29,00
|
|
Fair
value of total Options on the last day of the fiscal year
|
8,511,587
|
8,511,587
|
8,511,587
|
|
|
Board of Officers
|
Number
of members
|
5.0
|
In
relation to the LTIP
|
2020
Plan- LTIP
(Cliff)
|
|
|
Quantity
|
61,092
|
|
|
Exercisable
quantity
|
-
|
|
|
Date
when they have or will become exercisable
|
March
27, 2023
|
|
|
Maximum
term for exercise of the Options
|
March
27, 2023
|
|
|
Lock-up
period for transfer of shares*
|
12
months
|
|
|
Weighted
average price of exercise
|
0.01
|
|
|
Fair
Option value on the date of grant
|
73,46
|
|
|
Fair
value of total Options on the last day of the fiscal year
|
4,487,818
|
|
|
(*) Not
applied to all board of officers.
|
Director
|
Number
of members
|
1.0
|
In
relation to the LTIP
|
2020
Plan – LTIP
(cliff)
|
|
|
|
Quantity
|
594,290
|
|
|
|
Exercisable
quantity
|
-
|
|
|
|
Date
when they have or will become exercisable
|
March
27, 2023
|
|
|
|
Maximum
term for exercise of the Options
|
-
|
|
|
|
Lock-up
period for transfer of shares
|
12
months
|
|
|
|
Weighted
average price of exercise
|
0.01
|
|
|
|
Fair
Option value on the date of grant
|
73,46
|
|
|
|
Fair
value of total Options on the last day of the fiscal year
|
43,656,543
|
|
|
|
13.7 –
Exercised options and delivered shares
13.7 -
Regarding the exercised options and delivered shares related to the share-based compensation of the board of directors and of
the board of statutory officers over the last 3 fiscal years, prepare a table with the following content
Amounts
2020 fiscal year
Board of Officers
|
Number
of members*
|
5
|
Regarding
the restricted shares delivered
|
“AR2016”
Plan
|
“AR2017”
Plan
|
“AR2018”
Plan
|
Shares
delivered
|
8,672
|
11,662
|
61,662
|
Weighted
average purchase price
|
25,00
|
38,78
|
32,89
|
Board of Directors
|
Number
of members*
|
1
|
Regarding
the restricted shares delivered
|
“AR2017”
Plan
|
“AR2018”
Plan
|
|
Shares
delivered
|
89,416
|
73,872
|
|
Weighted
average purchase price
|
47,04
|
32,89
|
|
Board of Directors
|
Number
of members*
|
3
|
Regarding
the options exercised
|
2013
Plan
|
Strategic
Acceleration
Plan 2016
|
2018
Plan
|
Number
of options exercised
|
71,676
|
220,000
|
8,000
|
Exercise
value
|
37,64
|
11,28
|
16,83
|
Total
value of the difference between the exercise value and the market value of the shares related to the options exercised
|
10,48
|
32,37
|
33,65
|
Considering
that the incorporation of the Company occurred on January 21, 2019, there has not been any recognition of compensation nor any
issuance of share-based remuneration in years 2017, 2018 and 2019 for the members of the Board of Directors and of the Board of
Statutory Officers.
As approved
at a special shareholders’ meeting held on July 17, 2019, no amount by way of compensation was due to the members of the
management of the Company for the fiscal year of 2019.
13.8 –
Share/Option pricing
13.8
- Summary description of the information required to understand the data stated in items
13.5 through
13.7, as well as an explanation of the share and option pricing method.
2020 Restricted Shares, Performance Shares and
Strategy Acceleration Plan
|
|
Board
of Directors
|
Board
of Officers
|
a) pricing model
|
Binomial
|
Binomial
|
b) data and assumptions used in the pricing
model, including average weighted price of the shares, exercise price, expected volatility, expected life of the option, expected
dividends and the risk-free interest rate.
|
Volatility
of approximately 49%; Dividend yield of 0.00%; Risk-free interest rate of 4.83%
up to 6.03%.
|
Volatility of approximately 49%; Dividend yield of 0.00%; Risk-free
interest rate of 4.83% up to 6.03%
|
c) method used and assumptions made to
incorporate the expected effects of early exercise.
|
N/A
|
N/A
|
d) method
of determination of the expected volatility.
|
Standard deviation of
the last 820 days.
|
Standard deviation of the last
820 days.
|
2019 Options, Restricted Shares and Strategy
Acceleration Plan
|
|
Board
of Directors
|
Board
of Officers
|
a) pricing model
|
Binomial
|
Binomial
|
b) data and assumptions used in the pricing
model, including average weighted price of the shares, exercise price, expected volatility, expected life of the option, expected
dividends and the risk-free interest rate.
|
Volatility of approximately 38%; Dividend yield of 1.17%; Risk-free interest rate of 6.41% up to 8.78%.
|
Volatility of
approximately 38%; Dividend yield of 1.17%; Risk-free interest rate of 6.41% up to 8.78%
|
c) method used and assumptions made to
incorporate the expected effects of early exercise.
|
N/A
|
N/A
|
d) method of determination of the expected
volatility.
|
Standard deviation of
the last 740 days.
|
Standard deviation of the last 740 days.
|
2018 Options, Restricted Shares and Strategy
Acceleration Plan
|
|
Board
of Directors
|
Board
of Officers
|
a) pricing model
|
Binomial
|
Binomial
|
b) data and assumptions used in the pricing
model, including average weighted price of the shares, exercise price, expected volatility, expected life of the option, expected
dividends and the risk-free interest rate.
|
Volatility
of approximately 39%; Dividend yield of 2.31%; Risk-free interest rate of 6.17% up
to
8.74%.
|
Volatility of approximately 39%; Dividend yield of 2.31%; Risk-free
interest rate of 7.38% up to 8.71%.
|
c) method used and assumptions made to
incorporate the expected effects of early exercise.
|
N/A
|
N/A
|
d) method of determination of the expected volatility.
|
Standard deviation of
the last 740 days.
|
Standard deviation of the
last 740 days.
|
2017 Options, Restricted Shares and Strategy
Acceleration Plan
|
|
Board
of Directors
|
Board
of Officers
|
a) pricing model
|
N/A
|
Binomial
|
b) data and assumptions used in the pricing
model, including average weighted price of the shares, exercise price, expected volatility, expected life of the option, expected
dividends and the risk-free interest rate.
|
N/A
|
Volatility of approximately
41.9%; Dividend yield of 3.3%;
Risk-free interest rate of 9.4 up
to 9.6%.
|
c) method used and assumptions made to
incorporate the expected effects of early exercise.
|
N/A
|
N/A
|
d) method of determination of the expected
volatility.
|
N/A
|
Standard deviation of the last 740 days.
|
e) if any
other characteristic of the option were incorporated in the calculation of its fair value.
|
N/A
|
N/A
|
Amounts related to 2016:
|
Restricted Shares and Options Plan
|
|
Board of Directors
|
Board of Officers
|
a) pricing model
|
N/A
|
Binomial
|
b) data and assumptions used in the pricing
model, including average weighted price of the shares, exercise price, expected volatility, expected life of the option, expected
dividends and the risk-free interest rate.
|
N/A
|
Volatility of approximately
37.2%; Dividend yield of 3.4%;
Risk-free interest rate of 12.9 up
to 13.2%.
|
c) method used and assumptions made to
incorporate the expected effects of early exercise.
|
N/A
|
N/A
|
d) method of determination of the expected
volatility.
|
N/A
|
Standard deviation of the last
740 days.
|
e) if any other characteristic of the option
were incorporated in the calculation of its fair value.
|
N/A
|
N/A
|
Strategy Acceleration Program
|
|
Board of Directors
|
Board of Officers
|
a) pricing
model
|
N/A
|
Binomial
|
b) data and assumptions used in the pricing
model, including average weighted price of the shares, exercise price, expected volatility, expected life of the option, expected
dividends and the risk-free interest rate.
|
N/A
|
Volatility of approximately 39.4%; Dividend yield of 4.6%; Risk-free
interest rate of 11.5 up to 12.1%.
|
c) method used and assumptions made to
incorporate the expected effects of early exercise.
|
N/A
|
N/A
|
d) method of determination of the expected
volatility.
|
N/A
|
Standard deviation of the last 740 days.
|
e) if any other characteristic of the option
were incorporated in the calculation of its fair value.
|
N/A
|
N/A
|
13.9
– Interests held per body
13.9
- State the number of shares or membership units (quotas) directly or indirectly held in Brazil or abroad, and other securities
convertible into shares or membership units issued by issuer, its direct or indirect controlling shareholders, subsidiaries or
companies under common control, by members of the board of directors, board of statutory officers or fiscal committee, grouped
per body
Body
|
Common
Shares
|
Board
of Directors
|
477,062
|
Board
of Officers
|
537,552
|
Fiscal
Committee
|
0
|
13.10
- Information Regarding the Social Security Plans Granted to the Members of the Board of Directors and to the Statutory Officers
13.10
- Information regarding the social security plans granted to the members of the board of directors and to the statutory officers
|
Board
of Directors
|
Board
of Officers
|
Total
number of members
|
12,17
|
6
|
Number
of compensated members
|
0
|
3
|
Plan
name
|
-
|
Itaú
Vida e Previdência S.A.
|
Number
of managers who are able to retire
|
-
|
0
|
Conditions
to retire early
|
-
|
N/A
|
Updated
accumulated value of contributions accumulated up to the end of the last fiscal year, discounting the portion related to contributions
made directly by the administrators.
|
-
|
1,087.1
|
Total
accumulated value of the contributions made during the last fiscal year, less the portion related to contributions made directly
by the administrators
|
-
|
55.1
|
Possibility
of early redemption and conditions (**)
|
-
|
Yes;
however, on the part of the company, only with the termination of the employee and after 5 years of contribution to the plan
|
(*) 60 years
of age having ended the employment relationship with Company.
(**) Redemption
of the total or partial portability of the accumulated balance may be made at any time, referring to the employee’s contributions,
respecting the 60-day grace period from the date of adhesion to the benefit or 60-day interval from the last redemption. When
redeeming porting total or partial contributions, the employee loses the proportional value of the company / matching
13.11
– Maximum, minimum and average individual compensation of the board of directors, of the board of statutory officers and
of the fiscal committee
Total
compensation for the year ended – December 31, 2020 – Annual Amounts
|
Board
of Directors
|
Board
of Officers
|
Fiscal
Committee
|
Total
members
|
12,17
|
4,67
|
3
|
Number
of compensated members
|
12,17
|
4,00
|
3
|
Highest
remuneration value (Reais)
|
66,170.8
|
5,694.2
|
140.7
|
Lowest
remuneration value (Reais)*
|
1,227.1
|
1,392.4
|
140.7
|
Average
remuneration value (Reais)
|
6,301.5
|
3,745.3
|
140.7
|
*For the
value of the lowest individual annual remuneration, members who have not exercised at least 12 months in the function were disregarded.
13.12
- Compensation or indemnification mechanisms for managers in the event of dismissal or retirement
Within the
scope of its activity, and based on the market practice, the Company negotiates confidentiality and non-compete agreements with
members of its management in case of dismissals. Such agreements establish the compensation to the Managers for the assumed non-competition
and confidentiality obligations.
The Company
has arranged Directors and Officers Civil Liability Insurance (D&O). For further information on their terms, see item 12.11
of this Reference Form.
As provided
for in its Bylaws, the Company shall indemnify and hold their managers, committee members and other employees that hold management
positions or roles harmless, in case of any damage or loss incurred in view of the regular exercise of their duties in the Company.
The indemnification will not apply in case (i) of acts practiced outside the exercise of their powers and duties; (ii) of bad
faith, willful misconduct, gross negligence or fraud; (iii) of acts practiced in their own interest or in the interest of third
parties to the detriment of the Company’s corporate interest; (iv) of indemnifications arising from corporate proceedings
set out in article 159 of Law No. 6,404/76 or reimbursement for losses set out in article 11, 5th paragraph, II of Law No. 6,385,
of December 7, 1976; and (v) the beneficiary is indemnified under the terms of the D&O Insurance, mentioned above, among other
events. The indemnification agreement template to be used by the Company is available on https://ri.naturaeco.com/en/.
Finally,
under the terms of the share-based compensation programs of the Company, in the events of dismissal or retirement, managers may
retain a portion or all rights granted, according to the rules applicable to each program and referred to in item 13.4 of this
Reference Form.
13.13
– Percentage of the total compensation held by managers and fiscal committee members related to the controlling shareholders
13.13
- As for the last three fiscal years, state the percentage of the total compensation of each body as recognized in the issuer’s
results related to members of the board of directors, of the board of statutory officers or of the fiscal committee who are related
to the direct or indirect controlling shareholders, as defined in the accounting rules dealing with this issue
Amounts
for the 2020 fiscal year.
|
Board
of Directors
|
Board
of Officers
|
Fiscal
Committee
|
%
of the total compensation
|
5,0%
|
0%
|
0%
|
Considering
that the incorporation of the Company occurred on January 21, 2019 and that no payment was made by the Company to its managers
in the fiscal year of 2019, there has not been acknowledgment of any compensation in years 2018 and 2019 for the members of the
Board of Directors, of the Board of Statutory Officers and of the Fiscal Committee.
13.14
– Managers’ and Fiscal Committee Members’ compensation, grouped per body, received for any reason other than
their positions
13.14
- As for the last three fiscal years, state the amounts recognized in the issuer’s results as compensation of members of
the board of directors, of the board of statutory officers or of the fiscal committee, grouped per body, for reasons other than
their positions, e.g. commissions and advisory or consulting services rendered
The members
of the Board of Directors, of the Fiscal Committee and of the Board of Statutory Officers never received compensation other than
those related to the position they hold in the Company and/or in the management of its subsidiaries and controlled companies.
13.15
- Managers’ and Fiscal Committee Members’ Compensation Recognized in the Result of Direct or Indirect Controlling
Shareholders of Companies Under Common Control With and Companies Controlled By Issuer
13.15
- Managers’ and fiscal committee members’ compensation recognized in the result of direct or indirect controlling
shareholders of companies under common control with and companies controlled by issuer
Compensation
received due to the position held in the issuer
As reported
in item 13.1(f) above, there was no compensation borne by subsidiaries, direct or indirect controlled companies or controlling
shareholders due to the position exercised at the issuer.
Fiscal
year 2020 - other compensations received
Body
|
Board
|
Board
of Officers
|
Fiscal
Committee
|
TOTAL
|
Direct
and indirect controlling shareholders
|
0
|
0
|
0
|
0
|
Issuer’s
subsidiaries
|
0
|
10,405.3
|
0
|
10,405.3
|
Companies
under common
control
|
0
|
0
|
0
|
0
|
In the table
above, the compensations received refer to the position of one Statutory Officer held in the issuer’s subsidiary, Natura
Cosméticos S.A., as mentioned in item 13.1.b.v above, due to the position exercised at such subsidiary. These values include
fixed compensation/ management fee, variable compensation, share-based compensation, private pension plan and benefits, as well
as the charges on these compensations.
Fiscal
year 2019 – other compensations received
Body
|
Board
|
Board
of Officers
|
Fiscal
Committee
|
TOTAL
|
Direct
and indirect controlling shareholders
|
0
|
0
|
0
|
0
|
Issuer’s
subsidiaries
|
26,706.8
|
7,733.7
|
0
|
31,440.4
|
Companies
under common
control
|
0
|
0
|
0
|
0
|
In the table
above, the compensations received refer to the position of Directors and Statutory Officers held in the issuer’s subsidiary,
Natura Cosméticos S.A. These values include fixed compensation/ management fee, variable compensation, share-based compensation,
private pension plan and benefits, as well as the charges on these compensations.
As previously
mentioned, no amount by way of compensation was due to the members of the management of the Company for the fiscal year of 2019,
in relation to the position exercised at the Company.
13.16
- Other relevant information
At the issuer’s
ordinary annual general meeting occurred on April 30, 2020 (“2020 AGM”), the Company shareholders approved
the global compensation of the management for the period from May 2020 to April 2021, in the total amount of up to R$81,065,749.62.
The Company
management explained at the time, through the management proposal for the 2020 AGM, that the amount of R$81,065,749.62 considered
that no variable compensation (bonus, profit participation and corresponding charges) would be paid to the Company’s statutory
management, assuming that the goals for this compensation component would not be met due to the potential impacts of Covid-19.
2020 was
a time to care. The Company focused on ensuring the health and safety of its associates, of its network of consultants and representatives,
and of its business partners, prioritized essential products, including significant donations, and worked to strengthen its capital
structure to absorb the possible impacts brought by Covid-19 on results. Even in the face of a challenging scenario, the Company
demonstrated resilience, and reported net revenue growth of 12.1% in BRL (-2.3% in constant currency) in 2020, outperforming the
CFT1 market. The strength of the Group’s social
selling model, iconic brands, advancement of digitalization and omnichannel strategy around the world, resulted in exceptional
performance in recent quarters. The Company ended the year with great confidence in its business model and brands as a result
of the efforts, resilience, and dedication of its network of associates and executives.
In light
of the above, the Management has proposed that the general meeting should approve the amendment to the global compensation of
the Company’s management for the period of May, 2020 to April 2020 to R$98.933.977,48, essentially to incorporate to the
global compensation of this period the amounts paid as bonus/profit participation.
In order
to support the management proposal for the adjustment of the global compensation paid for the period of May 2020 – April,
2021, and allow shareholders to properly analyze it, see below a table comparing (i) the shareholder approved proposal for the
global compensation amount of the Board of Directors and Board of Executive Officers for the period of May 2020 – April
2021; (ii) the actual amounts paid as compensation for the period of May 2020 to April 2021; and (iii) the proposed amount for
the global compensation of the management for the period of May 2021 – April 2022.
Pursuant
to the revised guidance issued by the CVM in Ofício Circular/CVM/SEP/N01/2021 dated February 26th, 2021, companies are
now required to disclose management compensation amounts net of social charges dye by the employer as contained in Section 13.2
above.
However,
the global management compensation originally approved and the actual amounts incurred for the period May, 2020 – April
2021 were determined and approved by the Company shareholders pursuant to the previous guidance, which included such charges
in the compensation proposal.
In this
sense, in order to preserve the comparability of the estimated compensation for the upcoming May 2021 – April 2022 period
with the historical numbers, the table below is being presented according to the previous methodology, which includes labor
charges due by the employer. These charges are disclosed in item “4. Others”.
For information
purposes, with respect to the proposed management compensation for the period between May 2021 and April 2022 contained in the
management proposal submitted for approval by
____________________
1 Cosmetics,
Fragrance and Toiletries market performance: Company estimate based on global peers’ net revenue vs prior year of
approximately -8.3% in FY20 (in reported FX), as reported by the companies or estimates published on Bloomberg for those who
have not yet reported.
the Company’s
shareholders, which considers the new methodology (i.e., net of labor charges due by the employer), the amount is R$ 104.585.615,4.
Under the previous methodology, as included below, this amount corresponds to R$ 111,692.3 million.
Comparison
between Natura Holding’s global management compensation: (i) Approved for May 2020-April 2021; (ii) actual compensation
paid for the same period in 2020; and (iii) management proposal for approval for the same period of 2021 (amounts in R$, except
for number of members)
Description
|
Approved
- May 2020 - April 2021
|
Actual
- May 2020 - April 2021
|
Approved
x Realized - May2020 -
April
2021
|
Proposed
May 2021 - April 2022
|
Proposed
May 2021 - April 2022
vs
Realized May 2020 - April 2021
|
|
Board
of Directors
|
Board
of Officers
|
Fiscal Com-
mittee
|
Total
|
Board
of Directors
|
Board
of Officers
|
Fiscal
Com-
mittee
|
Total
|
%
|
Board
of Director s
|
Board
of Officers
|
Fiscal
Com- mittee
|
Total
|
R$
|
%
|
Number of
members
|
13
|
6
|
3
|
22
|
12,17
|
6
|
3
|
21,17
|
|
13
|
6
|
0
|
19
|
|
|
Number
of compensated members
|
13
|
5
|
3
|
21
|
12,17
|
5
|
3
|
20,17
|
|
13
|
5
|
0
|
18
|
|
|
1.
Fixed Compensation
|
11.836,2
|
6.285,0
|
377,1
|
18.498,3
|
11.702,4
|
5.827,5
|
351,8
|
17.881,8
|
-3,3%
|
12.771,2
|
5.871,4
|
0,0
|
18.642,6
|
760,9
|
4%
|
2.
Benefits
|
837,4
|
977,7
|
0,0
|
1.815,1
|
562,8
|
949,6
|
-
|
1.512,4
|
-16,7%
|
580,4
|
1.110,8
|
0,0
|
1.691,2
|
178,8
|
12%
|
3.
Participation in Committees
|
480,0
|
0,0
|
0,0
|
480,0
|
476,2
|
0,0
|
-
|
476,2
|
-0,8%
|
879,6
|
0,0
|
0,0
|
879,6
|
403,4
|
85%
|
4.
Others
|
2.463,2
|
2.240,9
|
75,4
|
4.779,5
|
2.451,2
|
2.198,1
|
70,4
|
4.719,7
|
-1,3%
|
2.730,2
|
2.325,6
|
0,0
|
5.055,7
|
336,1
|
7%
|
5.
Bonus
|
-
|
-
|
0,0
|
0,0
|
16.114,7
|
-
|
-
|
16.114,7
|
-
|
10.254,8
|
-
|
0,0
|
10.254,8
|
-5.859,9
|
-36%
|
6.
Profit Sharing (PLR)
|
-
|
-
|
0,0
|
0,0
|
-
|
5.348,1
|
-
|
5.348,1
|
-
|
-
|
6.313
|
0,0
|
6.313,4
|
965,3
|
18%
|
7.
Others
|
11.871,6
|
1.937,3
|
0,0
|
13.808,9
|
3.222,9
|
-
|
-
|
3.222,9
|
-76,7%
|
2.051
|
-
|
0,0
|
2.051,0
|
-1.172,0
|
-36%
|
8.
Post-Employment Benefits (cessation of the exercise in the position)
|
0,0
|
0,0
|
0,0
|
0,0
|
0,0
|
0,0
|
0,0
|
0,0
|
0,0
|
0,0
|
0,0
|
0,0
|
0,0
|
0,0
|
0,0
|
9.
Share-based compensation (6)
|
36.655,6
|
5.480,8
|
0,0
|
42.136,4
|
44.505,5
|
5.574,8
|
-
|
50.080,3
|
18,9%
|
61.418
|
5.386
|
0,0
|
66.804,0
|
16.724
|
33%
|
10.
Monthly Compensation Amount
|
5.345,3
|
1.410,1
|
37,7
|
6.793,2
|
6.586,3
|
1.658
|
35,2
|
8.280
|
21,9%
|
7.557,1
|
1.750,6
|
0,0
|
9.307,7
|
1.028
|
12%
|
11.
Total Compensation
|
64.144,0
|
16.921,7
|
452,5
|
81.518,2
|
79.035,8
|
19.898
|
422,1
|
99.356,1
|
21,9%
|
90.685,1
|
21.007,2
|
0,0
|
111.692,3
|
12.336
|
12%
|
For the
fiscal year 2021 (comprising the period of May 2021 to April 2022), the proposed Company’s global compensation (under the
previous methodology) is of R$111,692.3 million. As indicated in the chart, the differences between the proposed global compensation
for the Company and the compensation actually paid for Natura Holding for the year 2020 (comprising the period of May, 2021 and
April, 2022) are mainly due to: (i) variations in FX rate over the periods considered; (ii) the proposal to elect an additional
member to the Board of Directors; and (iii) the implementation of a LTI (Long Term Incentive) plan for executives (Plan 2021-
23).
The global
compensation paid by Natura Holding in 2020, represented 0.32% of the Group’s Net Revenue in 2020 Revenue. With respect
to the proposed global compensation of the Company for 2021 (comprising the period of May, 2021 to April, 2022), the Company expects
that such percentage will remain substantially the same, when compared to the 2021 estimated1
net revenue of the Group.
_____________________
1
Estimated, aggregated and adjusted (unaudited) information from Natura &Co Group, for information and reference purposes only.
NATURA
&CO HOLDING S.A.
MANAGEMENT
PROPOSAL FOR THE ANNUAL AND EXTRAORDINARY
GENERAL MEETINGS
TO BE HELD ON APRIL 16, 2021
EXHIBIT
IV
Proposal for Amendment to the Bylaws and Comparative Chart
Bylaws of Natura &Co containing
the proposed amendments in highlight
Exhibit IV –
Draft of new Bylaws
BYLAWS
OF
NATURA &CO HOLDING S.A.
Chapter
I
NAME, PRINCIPAL PLACE OF BUSINESS, OBJECT AND DURATION
Article 1 - NATURA
&CO HOLDING S.A. (“Company”) is governed by these Bylaws and applicable legislation, especially Law
No. 6,404, of December 15, 1976 (“Law No. 6,404/76”).
Sole Paragraph - With the
admission of the Company to Novo Mercado of B3 S.A. - Brasil, Bolsa, Balcão (“B3”), the Company, the
shareholders thereof, including controlling shareholders, managers and members of the fiscal council, if any, shall subject themselves
to the provisions of the Novo Mercado Rules.
Article 2 - The
Company has its principal place of business and jurisdiction in the City of São Paulo, State of São Paulo.
Sole Paragraph - The Company
may open branches, agencies, warehouses, offices and any other establishments in the country as per the resolutions taken by the
Board of Officers.
Article 3 - The
Company’s corporate purpose is to manage equity interests in companies that develop their core activities in the beauty field,
including, but not limited to, fragrances, skincare products, haircare products and make-up, or in a field similar or complementary
to that of beauty, including, but not limited to, home and fashion, as quotaholder or shareholder, in Brazil or abroad.
Paragraph
1 - The Company may directly develop other activities similar or complementary to the corporate purpose described in Article
3.
Paragraph
2 - The development of the activities by the companies in which the Company holds any type of direct or indirect interest takes
into account the following factors: (i) the short- and long-term interests of the Company and shareholders thereof, and (ii) the
short- and long-term economic, social, environmental, and legal effects, with respect to the associates, suppliers, partners, clients
and other creditors thereof, as well as the communities in which the Company operates locally and globally.
Article 4 - The
Company is incorporated for an indefinite term of duration.
Chapter
II
SHARE CAPITAL, SHARES AND SHAREHOLDERS
Article 5 - The
Company’s capital stock, fully subscribed and paid up, is of twelve billion, five hundred
and eighty-six million, nine hundred and seventy-eight thousand, four hundred and nine reais and eighty-three centavos (R$12,586,978,409.83)
twelve billion, six hundred and eight million, four hundred and fifty-one thousand,
four hundred and sixty-one reais and forty- eight centavos (R$12.608.451.461,48), divided into one
billion, three hundred and seventy-
five million,
eighteen thousand, one hundred and forty (1,375,018,140) one billion, three hundred
and seventy-one million, eight hundred and nineteen thousand, three hundred and four (1.375.819.304) registered common shares,
with no par value.
Article 6 - The
Company shall be authorized to increase its share capital, regardless of a bylaws amendment, up to the limit of one billion and
five hundred million (1,500,000,000) common shares, with no par value, as resolved by the Board of Directors, which shall set the
conditions of the issuance, including the price and term for full payment.
Paragraph
1 - Within the authorized capital limit, the Board of Directors may resolve on the issue of convertible debentures and subscription
warrants, as well as the capital increase upon capitalization of profits or reserves, with or without stock dividends.
Paragraph
2 - The Company’s Board of Directors may grant call options or options for subscription of shares, in accordance with
plans or programs approved at the General Meeting, to its managers and employees, as well as to the managers and employees of other
companies that are directly or indirectly controlled by the Company, without preemptive rights for shareholders upon the granting
or exercise of the options, observing the balance of the authorized capital limit on the exercise date of such options for subscription
of shares, together with the balance of treasury shares on the exercise date of the call options.
Article 7 - The
share capital shall be exclusively represented by common shares and each common share shall entail the right to one vote in the
shareholders’ resolutions.
Article 8 - All
of the Company’s shares shall be held in book-entry form, in the name of their holders, and shall be held in a trust account
with a financial institution authorized by the Brazilian Securities and Exchange Commission (“CVM”).
Sole Paragraph - The transfer
cost of the shares may be charged directly to the shareholder by the depositary institution, as may be defined by the custody agreement,
with due regard to the maximum limits set by CVM.
Article 9 - The
issue of new shares, debentures convertible into shares or subscription warrants, the placement of which is carried out through
sale in a stock exchange, public subscription or exchange for shares in a public offer of shares pursuant to articles 257 to 263
of Law No. 6,404/76, or, also, pursuant to special law regarding tax incentives, it may occur without the shareholders being granted
a preemptive right for the subscription or with the reduction of the minimum term set forth by law for the exercise thereof.
Chapter
III
GENERAL MEETING AND MANAGEMENT OF THE COMPANY
Section
I
GENERAL MEETING
Article 10 - The
General Meeting may gather, on an ordinary basis, once a year and, on an extraordinary basis, when called pursuant to the law or
these Bylaws.
Paragraph
1 - The resolutions of the General Meeting shall be made by absolute majority of the votes, excluding blank votes, unless otherwise
set forth in the applicable legislation.
Paragraph
2 - The General Meeting may only resolve on matters set out in the agenda, included in the respective call notices.
Article 11 - The
General Meeting may be held and presided over by any of the Co-chairmen of the Board of Directors or, if absent or prevented from
attending the meeting, by the Executive Chairman of the Board of Directors, or, if the Co-chairmen of the Board of Directors and
the Executive Chairman of the Board of Directors are absent or prevented from attending the meeting, by the Corporate Governance
Officer of the Company, or anyone appointed by either of them. The Chairman of the General Meeting may appoint up to two (2) secretaries.
Article 12 - The
General Meeting shall, in addition to the duties set forth by law:
(i) elect
and dismiss members of the Board of Directors and of the Fiscal Council, as the case may be;
(ii) set
the global compensation of the members of the Board of Directors and of the Board of Officers, as well as that of the members of
the Fiscal Council, if convened;
(iii) approve
any splitting or grouping of shares;
(iv) approve
share-based compensation programs for its managers and employees, as well as managers and employees of other companies directly
or indirectly controlled by the Company;
(v) resolve
on the allocation of the net profits of the year and on the distribution of dividends;
(vi) elect
the liquidator, as well as the Fiscal Council that shall operate during the winding-up period; and
(vii) resolve
on the Company’s exit from the Novo Mercado of B3.
Sole Paragraph - The Chairman
of the Meeting shall comply and cause compliance with the provisions of the shareholders’ agreements filed at the Company’s
principal place of business, and any votes cast opposing to the content of such agreements may not be taken into account.
Section
II
MANAGEMENT BODIES
Subsection I
General Provisions
Article 13 - The
Company shall be managed by the Board of Directors and by the Board of Officers.
Paragraph
1 - The investiture in office shall occur through an instrument of investiture, which shall state that the individual shall
be subject to the commitment clause referred to in Article 36 of these Bylaws, drafted in a proper book, and signed by the manager
that was invested in office, with any management guarantee being waived.
Paragraph
2 - The managers shall hold their offices until the investiture of the substitutes thereof.
Paragraph
3 - The managers, in the exercise of their duties, shall observe the short- and long-term interests of the Company, including
the interests and expectations of the shareholders, associates, suppliers, partners, clients and other creditors, of the communities
in which the Company operates locally and globally, as well as the impacts on the environment.
Article 14 - The
Meeting shall determine the annual global allowance for allocation among the managers and the Board of Directors shall be responsible
for allocating the amount individually, in compliance with the provisions set forth in these Bylaws.
Article 15 - Any
of the management bodies may validly meet with the attendance of the majority of its members and make resolutions by the vote of
the majority of those in attendance.
Paragraph
1 - In the event of a tie in the voting of a matter at a meeting of the Board of Directors, the Co-Chairman of the Board of
Directors presiding the meeting shall have the casting vote regarding the resolution.
Paragraph
2 - Prior call notice of the meeting, as a condition for being valid, can only be waived if all members thereof attend such
meeting, and for such purpose, the votes cast in writing shall be accepted.
Paragraph
3 - The meetings of the management bodies may be held exceptionally by conference call, video conference, email or any other
means of communication that allows for the identification of the members and simultaneous communication with all other persons
attending the meeting.
Paragraph
4 - Members who attend the meetings by conference call, video conference or other means of communication under the terms of
the paragraph above shall confirm their vote by means of a statement sent immediately after the meeting has ended to the person
presiding the meeting, by letter, fax, email or another means of communication that allows for the identification of the member.
Once the statement is received, the chairman of the meeting shall be vested with full powers to sign the minutes of the meeting
on behalf of the referred member.
Subsection II
Board of Directors
Article 16 - The
Board of Directors shall be composed of at least nine (9) and at most thirteen (13) members, all of which are elected and
may be removed by the General Meeting, for a unified term of office of up to two (2) years, reelection being permitted.
Paragraph
1 - The Board of Directors will be mostly comprised of external members. Among the members
of the Board of Directors, at least, one third (1/3) two (2)
or twenty percent (20%), whichever is greater, shall be independent directors, according to the definition of the
Novo Mercado Rules, and the determination of the individuals appointed to the board of directors as independent directors is to
be resolved at the general meeting that elects them, provided that the directors elected through the option provided for in article
141, paragraphs 4 and 5, of Law No. 6,404/76, will also be deemed as independent directors in the event the Company has a controlling
shareholder. When, by virtue of compliance with the percentage referred to above,
the result is a fractional number
of directors, it will be rounded-up to the subsequent whole number.
Paragraph
2 - The members of the Board of Directors must have an unblemished reputation. Those who (i) hold positions in companies that
may be considered competitors of the Company or (ii) have or represent conflicting interests with the Company may not be elected,
except as otherwise approved by the General Meeting.
Paragraph
3 - Pursuant to art. 115, paragraph 1, of Law No. 6,404/76, the exercise of the voting rights, in the election of the members
of the Board of Directors, in circumstances that constitute a conflict of interests with the Company, is forbidden.
Paragraph
4 - A member of the Board of Directors may not have access to information or attend meetings of the Board of Directors related
to matters to which he/she has or represents a conflicting interest with the Company.
Paragraph
5 - The Board of Directors may, for a better performance of its duties, create committees or work groups with defined objectives,
which shall be composed of persons appointed thereby from among the members of the administration and/or other persons directly
or indirectly related to the Company.
Article 17 - In
the election of the members of the Board of Directors, the General Meeting shall first determine, by majority vote, the number
of Board members to be elected by majority or multiple vote (if requested), and such number may be increased by up to one (1) member,
in the event of the election of one (1) separate member by shareholders representing 10% of the capital stock, as provided for
in paragraphs 4 and 5, of article 141, of Law No. 6,404/76.
Sole Paragraph - If the
multiple vote process is not requested, according to the law, the General Meeting may vote through slates previously registered
with the presiding board, which shall ensure the right to appoint one member to the holders of ten percent (10%) or more, individually
or in block, of the Company’s common shares. The presiding board shall not accept the registration of any slate in violation
of the provisions of this Article.
Article 18 - The
Board of Directors shall have up to three (3) Co-Chairmen, as well as one Executive Chairman of the Board of Directors and one
Main Executive of the Group, who shall be elected by majority vote of its members, at the first meeting of the Board of Directors
immediately after the investiture of such members, or whenever there is a vacancy or resignation in those positions.
Paragraph
1 - The positions of Co-Chairman of the Board of Directors and Group’s Main Executive cannot be held by the same person.
Paragraph
2 - The positions of Executive Chairman of the Board of Directors and Group’s Main Executive cannot be held by the same
person.
Paragraph
3 - The members of the Board of Directors, at the first meeting after their investiture in office, shall also determine the
number of Co-Chairmen and then, appoint, among them, who will preside the meetings of the Board of Directors for the term of office.
Paragraph
4 - In addition to their legal attributions, the elected Co-Chairmen shall have the following attributions:
(a) to
coordinate the activities of the Board of Directors, seeking effectiveness and the good performance of the body and each of its
members, acting as a link between the Board of Directors and the Group’s Main Executive;
(b) to
foster the vision of the Company in accordance with its values, identity and origin;
(c) to
maintain and develop the institutional relationships of the Company with entities and authorities with the purpose of promoting
and safeguarding the interests of the Company;
(d) to
keep and promote the relationship with the shareholders of the Company;
(e) to
promote the vision, image and aspects of the independent Business Units within the Company and toward third parties;
(f) to
review and propose the compensations for the Executive Chairman of the Board of Directors and the Group’s Main Executive.
(g) with
the support of the Executive Chairman of the Board of Directors and the committees, to organize and coordinate the meeting agendas
of the Company’s Board of Directors, the meeting calendars and General Meetings of the Company, call and preside over meetings
of the Company’s Board of Directors, ensure that the directors receive the appropriate information for each meeting, as well
as ensure the proper functioning of the body;
(h) to
set forth and monitor the process for evaluation of the Executive Chairman of the Board of Directors and the Group’s Main
Executive, of other members of the Company’s Board of Directors, individually, and of the Board of Directors itself, as well
as its committees, as full boards, and the governance office;
(i) to
coordinate the preparation and updating of the plan for succession of the Group’s Main Executive; and
(j) at
least one of them shall comprise and preside over the Corporate Governance Committee and at least
one of them shall participate in the Organizational Development and Personnel Committee.
Paragraph
5 - The Executive Chairman of the Board of Directors shall have, in addition to his legal attributions as a member of the Board
of Directors, the following attributions:
(a) to
monitor the execution of the activities related to the general planning and execution of the Group’s long and short-term
strategies, in accordance with the purposes and interests of the group, set by the Company’s shareholders and Board of Directors;
(b) to
propose the governance, pace and levels of interaction between the Company’s Operational Committee, the executive committees
of each Business Unit, the Board of Directors, the Board of Officers and the shareholders of the Company;
(c) to
collaborate with the Company’s Board of Directors in the inspection of each Business Unit;
(d) to
support the Co-Chairmen of the Board of Directors in the organization and coordination of the meeting agendas of the Company’s
Board of Directors, the schedules of the Company’s meetings and General Meetings, call the meetings of the Company’s
Board of Directors, and ensure that the directors receive the appropriate information for each meeting, and ensure the proper functioning
of the body; and
(e) to
support the Co-Chairmen of the Board of Directors in the process for evaluation of the members of the Company’s Board of
Directors, individually, and of the Board of Directors itself, as well as its committees, as full boards, and the governance office.
Paragraph
6 - The Group’s Main Executive shall have, in addition to the legal attributions as a member of the Board of Directors,
the following duties as main executive of the business group constituted by the Company and its subsidiaries, controlled companies
and affiliates (“Group”):
(a) to
preside over the Operational Committee of the Group and coordinate the action of the officers of the Company and its subsidiaries,
controlled companies and affiliates, keeping each Business Unit with their own executive committees and offices;
(b) to
foster collaboration and synergy between the management of each Business Unit, referring the questions to the Board of Directors
of the Company and the respective committees;
(c) to
propose to the Board of Directors of the Company, over time, the attributions and duties dedicated to the Company and Business
Units; and
(d) to
make recommendations to the Company’s Board of Directors and the Board of Officers regarding the management of the Group,
from an outcome point of view, including resource allocations between business units, talent management and cash flow, to ensure
that the management is aligned with the objectives and interests approved by the Board of Directors and the shareholders of the
Company.
Paragraph
7 - In the event of vacancy in the position of member of the Board of Directors, the substitute will be appointed by the remaining
members, and will temporarily exercise the term of office until the date of the next General Meeting to be held, which will appoint
a new member (which may be the member temporarily appointed by the Board of Directors), who will serve for the remainder of the
term until the end of the unified term of office. For the purposes of this Paragraph, vacancy will occur with the dismissal, death,
resignation, proven impediment or disability.
Article 19 - The
Board of Directors will hold regular meetings four (4) times a year and may hold extraordinary meetings whenever called by the
Co-Chairman appointed under the terms of Paragraph 3 of Article 18 or by the majority of board members.
Paragraph
1 - Notice to all meetings will be given at least seventy-two (72) hours in advance.
Paragraph
2 - All Board of Directors resolutions must be recorded in minutes transcribed on the appropriate book of the Board of Directors
and executed by all attending directors.
Paragraph
3 - In the event of temporary absence of any member of the Board of Directors, it may be substituted at Board meetings by another
director expressly appointed thereby, in which case such representative should be under a specific power of attorney, stating,
among other things, the votes to be cast on the items of the agenda for each meeting. In this case, the director who is replacing
the absent director, in addition to his own vote, shall cast the early vote of the absent director.
Article 20 - The
Board of Directors shall, in addition to the other duties attributed thereto by law or by the Bylaws:
(i) exercise
the normative functions regarding the Company’s activities, being entitled to call up for analysis and resolution any matter
that is not understood as being under the exclusive authority of the General Meeting or the Board of Officers;
(ii) establish
the general orientation of the Company’s businesses;
(iii) elect
and dismiss the Officers of the Company;
(iv) attribute
to the Officers their respective functions, observing the provisions of these Bylaws;
(v) resolve
on the calling of the General Meeting, when deemed appropriate, or in the case of article 132 of the Law No. 6,404/76;
(vi) supervise
the Officers’ management by inspecting, at any time, the Company’s books and documents, and requesting information
on agreements executed or which are in the process of being executed and any other acts;
(vii) analyze
the quarterly results of the operations of the Company;
(viii) choose
and remove independent auditors;
(ix) call
the independent auditors to provide the clarifications it deems necessary;
(x) evaluate
the Management Report and the accounts of the Board of Officers, and resolve on their submission to the General Meeting;
(xi) approve
annual and multi-annual budgets, strategic plans, expansion projects and investment programs, as well as monitor their implementation;
(xii) approve
the creation and dissolution of a subsidiary and the Company’s interest held in the capital of other companies, in Brazil
or abroad, as well as the installation of branches, agencies, warehouses, offices and any other establishments of the Company abroad;
(xiii) determine
the execution of inspections, audits or rendering of accounts in the Company’s subsidiaries, controlled companies or affiliates,
as well as in any foundations sponsored thereby;
(xiv) previously
issue statements on any subject to be submitted to the General Meeting;
(xv) authorize
the issue of shares of the Company, within the limits authorized in article 6 of these Bylaws, establishing the issue conditions,
including the paying-up price and term, being also able to exclude the preemptive right or reduce the period for its exercise in
the issue of shares, subscription warrants and convertible debentures, whose placement is made by means of sale on the stock exchanges
or by public subscription or in public offer for acquisition of control, under the terms set forth by law;
(xvi) resolve
on the Company’s acquisition of its own shares to hold them in treasury and/or subsequent cancellation or disposal;
(xvii) resolve
on the issue of subscription warrants and approve the capital increase upon capitalization of profits and reserves, with or without
stock bonus, pursuant to Article 6, Paragraph 1, of these Bylaws;
(xviii) grant
restricted shares and call options or options for subscription of shares, in accordance with plans or programs approved at the
General Meeting, to its managers and employees, as well as to the managers and employees of other companies that are directly or
indirectly controlled by the Company, without preemptive rights for shareholders upon the granting or exercise of the options,
observing the balance of the authorized capital limit on the exercise date of the options for subscription of shares, together
with the balance of treasury shares on the exercise date of the call options;
(xix) establish
the amount of the profit sharing of the officers, managers and employees of the Company;
(xx) resolve
on the issuance of debentures;
(xxi) authorize
the Company to post bond with respect to third-party obligations, except in case of wholly-owned subsidiaries of the Company;
(xxii) approve
the Board of Officers’ authority and policies, as well as any amendments thereto, which shall include rules for (a) the acquisition
of fixed and intangible assets and the assumption of financial commitments, (b) the encumbrance of fixed and intangible assets,
(c) the contracting of any fundraising and the issue of any credit instruments to raise funds, whether bonds, notes, commercial
papers, promissory notes and others, commonly used in the market, also deciding on its issue and redemption conditions, among other
rules of authority, as well as the supervision of compliance with such policy by the members of the board of officers;
(xxiii) approve
hiring of a trustee institution to provide bookkeeping services;
(xxiv) provide,
in compliance with the rules of these Bylaws and applicable legislation, the order of its work and adopt or issue rules for its
operation;
(xxv) pronounce
itself for or against any public offer of shares and other securities convertible into or exchangeable
for shares issued by the Company, by means of a prior substantiated opinion, disclosed within fifteen (15) days as of the
publication of the call notice of the public offer of shares, which shall address, at least: (i) the
convenience and opportunity of
the public offer of shares regarding the interest of the group of shareholders, including the price and the potential impacts on
the liquidity of the shares; (ii) the strategic plans disclosed by the offeror in relation to the Company; and (iii) regarding
alternatives to the acceptance of the public offer of shares available on the market, as well as the information required by the
applicable rules established by CVM;
(xxvi) resolve
on (i) the statement of interim dividends, pursuant to Article 3231, paragraph 3 of
these Bylaws; and (ii) the payment or credit of interest on equity during the year to the shareholders, pursuant to the applicable
law; e
(xxvii) define
the individualization of the global compensation of managers approved by the General Meeting;
(xxviii) provide
a statement on the terms and conditions of corporate restructuring, capital increases and other transactions giving rise to change
of control, and decide whether these transactions assure fair and equitable treatment to the Company’s shareholders;
(xxix) assess
and annually disclose a list of the independent members of the Board of Directors, as well as indicate and justify any circumstances
that may compromise their status as independent members; and
(xxx) resolve
on transactions with related parties under its authority, as set forth in the corresponding policy of the Company to be approved
by the Board of Directors.
Subsection III
Board of Officers
Article 21 - The
Board of Officers, whose members may be elected and removed by the Board of Directors at any time, shall be composed of at least
two (2) and at most nine (9) members, namely one Financial Officer, one Legal and Compliance Officer, one Global Operations and
Procurement Officer, one Executive Officer for Latin America, one Corporate Governance Officer, one Investor Relations Officer
and the remaining may be Executive Officers, all of whom shall serve for a term of three (3) years, reelection being permitted,
and the position of Investor Relations Officer must be filled.
Paragraph
1 - The election of the Board of Officers shall occur preferably at the first meeting of the Board of Directors held after
the Annual General Meeting.
Paragraph
2 - In the case of absence or temporary impediment, the Officers will be replaced by another Officer, chosen by the Group’s
Main Executive. In case of vacancy, an interim substitute shall be appointed, until the Board of Directors elects a permanent replacement
to serve the remainder of the term.
Paragraph
3 - The Officers may accumulate positions, observing the minimum number of two (2) members.
Article 22 - The
Board of Officers has all powers to take the actions necessary to represent the Company and consummate the corporate purpose, however
special they may be, including to waive rights, settle and agree, pursuant to the applicable legal or statutory provisions, with
the resolutions taken by the General Meeting and by the Board of Directors
and the provisions and restrictions of authorities
assigned to them by the Board of Directors, being especially responsible for:
(i) complying
with and causing compliance with these Bylaws and the resolutions of the Board of Directors and of the General Shareholders’
Meeting;
(ii) prepare
and submit to the Group’s Operational Committee, each year, the strategic plan, its annual reviews, and the general budget
of the Company, making sure they are executed, so that they are later sent to the Board of Directors, pursuant to article 26, item
“c”, of these Bylaws;
(iii) resolving
on the establishment, transfer and closing of branches, agencies, warehouses, offices and any other establishments of the Company
in Brazil;
(iv) deciding,
up to the authority limit determined by the Board of Directors, on the acquisition, disposal and/or encumbrance of fixed and intangible
assets and financial commitments associated with projects in which the Company intends to invest;
(v) submitting,
on a yearly basis, the Management Report and the accounts of the Board of Officers, together with the report of the independent
auditors, and the proposal pertaining to the use of profits ascertained in the previous year, to the appraisal of the Board of
Directors; and
(vi) submitting,
on a quarterly basis, the detailed economic and financial interim balance sheet of the Company and controlled companies thereof.
Article 23 - The
Officers, in addition to the activities attributed to them by the Board of Directors, shall have the following duties:
Paragraph
1 - It is incumbent upon the Chief Financial Officer:
(a) to
plan, implement and coordinate the Company’s financial policy, in addition to organizing, preparing and controlling the Company’s
budget;
(b) to
prepare financial statements, and to manage the accounting activities and the treasury of the Company, in compliance with applicable
legal requirements;
(c) to
provide guidance to the Company on any decision-making that involves financial risks;
(d) to
prepare financial reports and provide information on his or her areas of responsibility to the bodies of the Company;
(e) plan
and execute management policies within his or her scope; and
(f) other
duties that may be assigned thereto from time to time by the Group’s Main Executive.
Paragraph
2 - It is incumbent upon the Legal and Compliance Officer:
(a) to
advise and assist the Company with respect to legal matters;
(b) to
defend the interests of the Company before third parties;
(c) to
develop and coordinate the compliance program of the Company; and
(d) other
duties that may be assigned thereto from time to time by the Group’s Main Executive.
Paragraph
3 - It is incumbent on the Global Operations and Procurement Officer:
(a) to
prepare the Company’s mid- and long-term commercial strategy, through interactions with the departments of the Industrial,
Supply, Logistics and Order Cycle areas;
(b) to
monitor the Company’s short-term commercial performance; and
(c) other
duties that, from time to time, are determined by the Group’s Main Executive.
Paragraph
4 - It is incumbent on the Executive Officer for Latin America:
(a) to
evaluate, define and implement the Company’s business strategies in Latin America, leading the functional and business areas,
as well as the future expansion of business to new countries; and
(b) other
duties that, from time to time, are determined by the Group’s Main Executive.
Paragraph
5 – It is incumbent on the Corporate Governance Officer:
(a) to
organize and act as secretary at the meetings of the Board of Directors and its committees, being responsible for preparing the
minutes of these meetings;
(b) to
organize the processes for integrating new members of the Board of Directors, boards and committees and new officers into the Group;
(c) to
assist the chairman of the Board of Directors in defining relevant matters in the agendas of meetings and optimizing human resources
and infrastructure;
(d) to
establish the best dialog between the Board of Directors and the Group’s executive areas;
(e) to
prepare the annual calendar of activities of the Board of Directors and the Annual General Shareholders’ Meeting;
(f) to
guide the governance agents on their rights and obligations; and
(g) other
duties that, from time to time, are determined by the Group’s Main Executive.
Paragraph
6 - It is incumbent upon the Investor Relations Officer:
(a) to
represent the Company before the Brazilian Securities and Exchange Commission – CVM and other control bodies and institutions
that act in the capital market;
(b) to
provide information to investors, CVM, stock exchanges in which the Company has its securities negotiated and other bodies related
to the activities developed in the capital market, in accordance with applicable laws, in Brazil and abroad;
(c) to
keep the registration of the Company as a publicly-held company updated with CVM; and
(d) other
duties that may be assigned thereto from time to time by the Group’s Main Executive.
Paragraph
7 - It is incumbent upon the Executive Officers, in addition to other attributions set forth by the Board of Directors:
(a) to
foster the development of the activities of the Company, with due regard to its corporate purpose;
(b) to
coordinate the activities of the Company and controlled companies thereof;
(c) to
conduct the budgetary management of areas of the Company under their supervision, including management and cost control;
(d) to
coordinate the actions of his/her area and specific responsibilities with that of the other officers; and
(e) to
represent the Company before clients, the press, the society and legal, corporate and governmental entities, safeguarding the interests
of the organization and caring for its image;
(f) other
duties that may be assigned thereto from time to time by the Group’s Main Executive.
Article 24 - As
a general rule and except for the cases covered in the subsequent paragraphs, the Company will always be legally represented by
two (2) Officers, or one (1) Officer and one (1) attorney-in-fact, or two (2) attorneys-in-fact, within the limits of the respective
powers of attorney.
Paragraph
1 - The acts for which these Bylaws require the prior consent of the Board of Directors may only be performed after this condition
has been met.
Paragraph
2 - The Company may be represented by one (1) single Officer or one (1) attorney-in-fact in the following cases:
(a) where
the act to be performed requires a single representative, the Company will be represented by any Officer or attorney-in-fact with
special powers;
(b) with
respect to receiving and giving acquittance for amounts owed to the Company, as well as in the case of any correspondence that
is not binding upon the Company and the performance of simple administrative routine acts, including those performed before public
agencies, mixed-capital companies, the Federal Revenue Office, State Treasury Offices, Municipal Treasury Offices, Commercial Registries,
Labor Court, the Social Security Institute (INSS), the Severance Indemnity Fund
(FGTS) and its
collection banks and other similar acts, and before the National Health Surveillance Agency; and
(c) in
the case the Company is represented by the Investor Relations Officer before representing the
Company before CVM and other control bodies and institutions that operate in the capital market.
Paragraph
3 - The Board of Directors may authorize the performance of other acts binding upon the Company by only one of the members
of the Board of Officers or an attorney-in-fact, acting alone, or even by the adoption of the limitation of authority criteria,
to restrict, in certain cases, the representation of the Company to only one Officer or attorney-in-fact.
Paragraph
4 - When appointing attorneys-in-fact, the following rules shall be complied with:
(a) all
powers of attorney shall be granted jointly by any two (2) Officers;
(b) if
the purpose of the power of attorney is to take actions that require the prior authorization of the Board of Directors, the granting
thereof shall be expressly conditioned upon the obtainment of such authorization, which shall be stated in the content thereof;
and
(c) unless
otherwise approved by the Board of Directors, all powers of attorney granted on behalf of the Company shall have a limited term
of effectiveness, except for powers of attorney for representation in administrative proceedings or with a clause granting general
authority to the attorney.
Paragraph
5 - The actions taken in violation of the provisions set forth in this Article shall not be valid nor shall they be binding
upon the Company.
Subsection IV
Group’s Operational Committee
Article 25 - The
Group’s Operational Committee, an advisory body directly linked to the Board of Directors, with operational autonomy, shall
be composed of the following members:
(a) the
Group’s Main Executive;
(b) the
main executive of each of the Group’s Business Units, as defined by the Board of Directors; and
(c) other
directors or executive officers of the Company nominated by the Group’s Main Executive and appointed by the Board of Directors.
Paragraph
1 - The Group’s Operational Committee will be chaired by the Group’s Main Executive.
Paragraph
2 - The Board of Directors shall approve the Internal Rules of the Group’s Operational Committee, which shall set forth
rules regarding call notice, establishment, voting, and frequency of meetings, terms of office, and activities of the Chairman
of the Group’s Operational Committee, among other things.
Article 26 - It
is incumbent upon the Group’s Operational Committee:
(a) to
assist the Board of Directors in the definition and implementation of the global strategy and in the development of the Group’s
activities, as well as in the supervision of each Business Unit, monitoring the implementation of decisions taken within the scope
of the Board of Directors;
(b) to
identify synergies and opportunities for the Group between each Business Unit, both from the point of view of revenue as well as
costs;
(c) to
review and submit to the Board of Directors the strategic plan, its annual reviews and the general budget of the Company, including
the allocation of resources between the Business Units in accordance with the Group’s strategic and business plan and supervise
its execution;
(d) to
watch over the organizational aspects of the Group, making recommendations to the Board of Directors on measures necessary for
its fluidity and efficiency;
(e) to
act as a forum for discussion and recommendations on back office structures, procurement, IT platforms, real estate structure,
capital and supply chain structure and other topics of interest to the Company; and
(f) to
foster the creation of Centers of Excellence among the Business Units.
Subsection V
Audit, Risk Management and Finance Committee
Article 27 - The
Audit, Risk Management and Finance Committee (“Audit Committee”), an advising body directly related to the Board
of Directors, with operational autonomy, shall be composed of at least three (3) members:
(i) at
least one (1) of whom must be an Independent Director (as defined in the Novo Mercado Rules), to be appointed by the Board of Directors;
(ii) at
least one (1) of whom must have recognized experience in corporate accounting matters, in compliance with the applicable rules
issued by CVM;
(iii) a
least one (1) of whom may not be a member of the Company’s Board of Directors; and
(iv) one
(1) of whom may accumulate the qualifications described in items “(i)” and “(ii)” above.
Paragraph
1 -The Audit Committee shall be coordinated by a Chairman designated upon appointment of the members of the Audit Committee,
among the Independent Directors.
Paragraph
2 - The Board of Directors shall approve the Internal Rules of the Audit Committee, which shall set forth rules regarding call
notice, establishment, voting, and frequency of meetings, terms of office, requirements on the qualifications of its members and
activities of the Chairman of the Audit Committee, among other things.
Paragraph
3 - The Audit Committee shall have its own budget, approved by the Board of Directors, intended to cover expenses with its
operation and with the hiring of consultants for accounting, legal or other matters, when the opinion of an external or independent
expert is necessary.
Article 28 - The
Audit Committee shall:
(i) issue
an opinion to the Board of Directors regarding the choice and hiring or dismissal of independent audit services of the Company,
being responsible for defining the compensation and supervision of the independent auditors, and for monitoring the effectiveness
of the work of the independent auditors and their independence, as well as for assessing the annual work plan of the independent
auditor and submitting it for appraisal of the Board of Directors;
(ii) approve,
prior to the resolution by the Board of Directors, any audit or extra- audit services provided by the independent auditor;
(iii) assist
the Board of Directors in monitoring and controlling the quality of the financial statements and assess the quarterly information,
interim statement and financial statements;
(iv) assist
the Board of Directors in monitoring the effectiveness of risk management processes and the compliance duty and monitor the activities
of internal audit and the internal control area of the Company;
(v) assist
the Board of Directors in monitoring the effectiveness of risk management and assess and monitor the risk exposure of the Company;
(vi) assess,
monitor, and recommend to the management the correction or improvement of the internal policies of the Company, including the policies
on transactions with related parties;
(vii) have
the means to receive, hold and treat information regarding relevant errors or frauds related to accounting, audit, internal controls
and financial statements, as well as non-compliance with legal and normative provisions applicable to the Company, in addition
to internal rules and codes, including with the projection of specific procedures for protection of the provider and confidentiality
of the information;
(viii) other
duties set forth in the Internal Rules of the Audit Committee.
Section
III
FISCAL COUNCIL
Article 29 - The
Company’s Fiscal Council, with the duties set forth by law, shall be composed of three (3) members and an equal number of
alternates.
Paragraph
1 - The Fiscal Council shall not operate on a permanent basis and shall only be installed upon call by the shareholders, in
accordance with the legal provisions.
Paragraph
2 Paragraph 2 - The investiture of the Fiscal Council members, whether sitting members or alternates thereof, shall be conditioned
upon the execution of the instrument of investiture, which shall set forth that it shall be subject to the commitment
clause referred to in Article
36 of these Bylaws, as well as the compliance with the applicable legal requirements.
Chapter
IV
DISTRIBUTION OF PROFITS
Article 30 - The
fiscal year shall start on January 1 and end on December 31 of each year.
Paragraph
1 - At the end of each fiscal year, the Board of Officers shall prepare, pursuant to the applicable legal principles, the following
financial statements:
(a) balance
sheet;
(b) profit
and loss statement;
(c) statement
of comprehensive income;
(d) statement
of stockholders’ equity;
(e) statement
of cash flows;
(f) value
added statement; and
(g) explanatory
notes to the financial statements.
Paragraph
2 - The Board of Directors shall submit to the Annual General Meeting a proposal on the intended allocation of net profits,
together with the financial statements of the year, subject to the provisions set forth in these Bylaws and in the law.
Article 31 - The
shareholders shall be entitled to receive, in each year, as dividends, a minimum mandatory percentage of thirty percent (30%) on
the net profit, with the following adjustments:
(i) the
addition of the amounts resulting from the reversal, in the year, of reserves for previously created contingencies;
(ii) the
decrease of the amounts intended, in the exercise, for the creation of the legal reserve and reserves for contingencies; and
(iii) whenever
the amount of the minimum compulsory dividend exceeds the realized portion of the net profit for the year, the management may propose,
and the General Meeting may approve, the allocation of the excess to create an unrealized profit reserve (article 197 of Law No.
6,404/76).
Paragraph
1 - The Meeting may assign to the managers a share in the profits, subject to the relevant legal limits. The payment of such
profit sharing is conditioned upon the allocation to the shareholders of the mandatory dividend referred to in this Article. Whenever
the semi-annual balance sheet is prepared and interim dividends are paid based on it in an amount at least equal to thirty percent
(30%) on the net profits of such period, calculated pursuant to this Article, a share of the semi-annual profits may be paid to
the managers, upon resolution of the Board of Directors, by referendum of the General Meeting.
Paragraph
2 - The Meeting may resolve on, at any time, distributing dividends due to preexisting profit reserves or profits accrued in
the previous years, thus kept as a result of a resolution of the Meeting, after the mandatory dividend referred to in this Article
is assigned to the shareholder in each year.
Paragraph
3 - The Company may prepare semi-annual or interim balance sheets. The Board of Directors may resolve on the distribution of
dividends from the account of profits ascertained in those balance sheets. The Board of Directors may also declare interim dividends
from the account of accrued profits or from profits reserves existing in those balance sheets or in the last annual balance sheet.
Paragraph
4 - The dividends not claimed within three (3) years shall become time- barred to the benefit of the Company.
Paragraph
5 - The Board of Directors may pay or credit interest on net equity, pursuant to the applicable legislation.
Article 32 - The
General Meeting may resolve on the capitalization of reserves created in semi-annual or interim balance sheets.
Chapter
V
DISPOSAL OF SHARE CONTROL AND OPA AS A RESULT OF REACHING A
RELEVANT INTEREST
Section
I
DISPOSAL OF SHARE CONTROL
Article 33 - The
direct or indirect disposal of the Company’s control, through a single transaction or through successive transactions, shall
be contracted under the condition precedent or condition subsequent that the purchaser undertakes to carry out the public offer
of shares, the object of which shall be the shares issued by the Company and held by other shareholders, observing the conditions
and the terms set forth in the legislation and in the prevailing regulations and in the Novo Mercado Rules, so as to ensure them
a treatment equal to that provided to the disposing party.
Section
II
OPA AS A RESULT OF REACHING A RELEVANT INTEREST
Article 34 - Any
Relevant Shareholder that acquires or becomes the owner of shares issued by the Company in an amount equal to or higher than twenty-five
percent (25%) of the total number of shares issued by the Company shall, within sixty (60) days as of the date of acquisition or
the event that resulted in the ownership of shares in an amount equal to or higher than twenty-five (25%) of the total number of
shares issued by the Company, register or apply for registration of, as the case may be, a public offer for the acquisition of
all shares issued by the Company (“OPA”), in compliance with the provisions of the applicable CVM regulations,
the regulations of B3 and the terms of this Article.
Paragraph
1 - The OPA shall be (i) directed indistinctly to all shareholders of the Company, (ii) carried out in an auction to be performed
at B3, (iii) launched with the price determined pursuant to the provisions of paragraph 2 below, and (iv) paid at sight, in Brazilian
currency, against the acquisition under the OPA of shares issued by the Company.
Paragraph
2 - The acquisition price in the OPA of each share issued by the Company cannot be lower than the result obtained applying
the following formula:
OPA Price = Share Value
Where:
‘OPA Price’
means the acquisition price of each share issued by the Company in the OPA set forth in this article.
‘Share Value’
means the greatest amount between: (i) the highest unit price achieved by shares issued by the Company during the period of twelve
(12) months prior to the OPA in any stock exchange in which the Company’s shares are traded, (ii) the highest unit price
paid by the Relevant Shareholder, at any time, for one share or tranche of shares issued by the Company; and (iii) the amount equivalent
to twelve (12) times the Company’s Average Consolidated EBITDA (as defined in paragraph 11 below) minus the Company’s
net consolidated debt, divided by the total number of shares issued by the Company.
Paragraph
3 - The conduct of the OPA referred to in the main section of this Article shall not exclude the possibility of another shareholder
of the Company or, if applicable, the Company itself, preparing a competitive OPA, pursuant to the applicable regulations.
Paragraph
4 - The conduct of the OPA referred to in the main section of this Article may be waived upon affirmative vote of the shareholders
representing the majority of the share capital at an extraordinary general meeting of the Company convened specially to resolve
on the OPA.
Paragraph
5 - The Relevant Shareholder shall be obliged to comply with any CVM requests or requirements related to the OPA, within the
maximum terms set forth in the applicable regulations.
Paragraph
6 - If the Relevant Shareholder fails to comply with the obligations imposed by this article, including with respect to the
observance of the maximum terms to comply with any CVM requests or requirements, if applicable, the Company’s Board of Directors
shall convene an Extraordinary General Meeting, in which the Relevant Shareholder may not vote, to resolve on the suspension of
the exercise of the Relevant Shareholders’ rights that failed to comply with any obligation imposed by this Article, pursuant
to the provisions of article 120 of Law No. 6,404/76.
Paragraph
7 - Any Relevant Shareholder that acquires or becomes the holder of other rights, including of usufruct or entailment, over
the shares issued by the Company in an amount equal to or higher than twenty-five percent (25%) of the total number of shares issued
by the Company shall be equally obliged to, within the maximum term of sixty (60) days counted as from the date of such acquisition
or the event that resulted in the ownership of such rights over shares in an amount equal to or higher than twenty-five percent
(25%) of the total number of shares issued by the Company, register or apply for registration of, as applicable, an OPA, pursuant
to the terms described in this Article 34.
Paragraph
8 - The obligations set out in article 254-A of Law No. 6,404/76 and in articles 33 and 35 of these Bylaws do not exempt the
Relevant Shareholder from complying with the obligation set forth in this Article.
Paragraph
9 - The provisions of this Article 34 do not apply if a person becomes the holder of shares issued by the Company in an amount
in excess of twenty-five percent (25%) of the total number of shares issued thereby as a result of (i) the merger of another company
into the Company, (ii) the merger of shares from another company into the Company or (iii) the subscription of shares of the Company,
carried out in a sole IPO approved at a General Meeting of the Company, convened by its Board of Directors, and the capital increase
proposal of which has determined the setting of the issue price of the shares based on an economic value obtained from a report
on the economic and financial assessment of the Company prepared by a specialized institution or company with proven experience
in the assessment of publicly-held companies.
Paragraph
10 - For purposes of calculation of the twenty-five percent (25%) of the total shares issued by the Company described in the
main section of this Article, the involuntary accretions of equity interests as a result of the cancellation of treasury shares
or a reduction in the Company’s share capital with the cancellation of shares.
Paragraph
11 - For purposes of these Bylaws, the capitalized terms below shall have the following meanings:
“Relevant Shareholder”
means any person (including, but not limited to, any individual or legal entity, investment fund, condominium, securities portfolio,
universality of rights, or other type of organization, resident, domiciled or with principal place of business in Brazil or abroad),
or a group of persons bound by a voting trust with the Relevant Shareholder and/or that acts representing the same interest as
the Relevant Shareholder, that may subscribe and/or acquire shares of the Company. The examples of persons who may represent the
interests of the Relevant Shareholder include any person
(i) that
is directly or indirectly controlled or managed by such Relevant Shareholder, (ii) that
controls or manages, in any way, the Relevant Shareholder, (iii) that is directly or indirectly controlled or managed by any person
that directly or indirectly controls such Relevant Shareholder, (iv) in which the controlling shareholder of such Relevant Shareholder
holds, directly or indirectly, an equity interest equal to or higher than thirty percent (30%) of the share capital, (v) in which
such Relevant Shareholder holds, directly or indirectly, an equity interest equal to or higher than thirty percent (30%) of the
share capital, or (vi) that holds, directly or indirectly, an equity interest equal to or higher than thirty percent (30%) of
the share capital of the Relevant Shareholder.
“Outstanding Shares”
means all shares issued by the Company, except for those (i) held directly or indirectly by the Controlling Shareholder and/or
persons related thereto; (ii) held in the Company’s treasury; (iii) held by a company controlled by the Company; and (iv)
held directly or indirectly by the managers of the Company.
“Company’s Average
Consolidated EBITDA” is the arithmetic means of the Company’s Consolidated EBITDA related to the two (2)
most recent full fiscal years.
“Company’s Consolidated
EBITDA” means the Company’s consolidated operating profit before the net financial expenses, income tax and
social contribution,
depreciation, depletion and amortization,
as ascertained based on the consolidated audited financial statements related to the end of the most recent fiscal year made available
by the Company to the market.
Paragraph
12 - If CVM regulations applicable to the OPA set forth in this Article determine the adoption of a calculation criterion to
set the acquisition price of each share of the Company in the OPA that results in an acquisition price higher than that determined
pursuant to Paragraph 2 above, the acquisition price calculated pursuant to CVM regulations shall prevail in the execution of the
OPA set forth in this Article.
Article 35 - Any
Relevant Shareholder that has subscribed for and/or acquired shares issued by the Company in an amount equal to or higher than
thirty percent (30%) of the total number of the Company’s Outstanding Shares and that wishes to carry out a new acquisition
of shares issued by the Company in an stock exchange shall be obliged to, prior to each new acquisition, inform the Company and
B3 in writing of its intention to acquire other shares issued by the Company, at least three (3) business day prior to the expected
date of the new acquisition of shares, always pursuant to the prevailing legislation, CVM regulations and applicable B3 regulations.
Sole Paragraph - If the
Relevant Shareholder fails to comply with the obligations imposed by this Article, the Company’s Board of Directors shall
convene an Extraordinary General Meeting, in which the Relevant Shareholder may not vote, to resolve on the suspension of the exercise
of the Relevant Shareholders’ rights that failed to comply with any obligation imposed by this Article, pursuant to the provisions
of article 120 of Law No. 6,404/76.
Chapter
VI
ARBITRATION COURT
Article 36 - The
Company, its shareholders, managers and Fiscal Council members, whether sitting or alternates, if any, undertake to solve, through
arbitration, before the Market Arbitration Chamber, pursuant to its regulations, any disputes that may arise among them, related
to or as a result of being an issuer, shareholders, managers and Fiscal Council members, specially arising out of the provisions
set forth in Law No. 6,385, of December 7, 1976, in Law No. 6,404/76, in the Company’s Bylaws, in the rules issued by the
National Monetary Council, by the Central Bank of Brazil and by CVM, as well as in the other rules applicable to the operation
of the capital market in general, in addition to those set out in the Novo Mercado Rules, the other regulations of B3 and in the
Novo Mercado Participation Agreement.
Chapter
VII
COMPANY’S LIQUIDATION
Article 37 –
The Company shall be liquidated in cases determined by law, and the General Meeting shall elect the liquidator or liquidators,
as well as the Fiscal Council that shall operate during said period, in compliance with the legal formalities.
Chapter
VIII
INDEMNIFICATION AGREEMENT
Article 38 - Within
the limits set forth in this Article, the Company shall indemnify and hold their Directors, Officers, Committee members and their
other employees holding management positions or roles in the Company (jointly or separately, “Beneficiaries”)
harmless, in case of
any damage or loss actually incurred by
the Beneficiaries in view of the regular exercise of their duties in the Company.
Paragraph
1 - The Company shall not indemnify the Beneficiary for (i) actions taken out of the scope of the exercise of the duties or
powers; (ii) actions taken with bad faith, gross negligence, fault or fraud; (iii) actions taken to their own benefit or that of
third parties, in violation of the company’s corporate interest; (iv) indemnifications resulting from a social action set
forth in article 159 of Law No. 6,404/76 or reimbursement of losses addressed in article 11, paragraph 5, II, of Law No. 6,385,
of December 7, 1976; and (v) other exclusions of indemnification set forth in the indemnification agreement entered into with the
Beneficiary.
Paragraph
2 - In case the Beneficiary is sentenced, by a final and unappealable court, arbitration or administrative decision and which
cannot be appealed in view of the actions taken (i) out of the scope of the exercise of their duties; (ii) with bad-faith, gross
negligence or fraud; or (iii) in their own interest or that of third parties, in violation of the Company’s corporate interest,
they shall reimburse the Company for all costs and expenses incurred with the legal assistance, pursuant to the prevailing legislation.
Paragraph
3 - The indemnification conditions and limits that are object of this Article shall be established in an indemnification agreement,
the standard form of which shall be approved by the Board of Directors, without prejudice to the contracting of a specific insurance
to cover for management risks.
Chapter
IX
FINAL AND TRANSITIONAL PROVISIONS
Article 39 –
Events not mentioned in these Bylaws shall be settled at the General Meeting and under the provisions of Law No. 6,404/76, with
due regard to the Novo Mercado Rules.
Article 40 –
The Company shall comply with the shareholders’ agreements filed at its principal place of business, and the members of the
presiding board of the General Meeting or of the Board of Directors shall be expressly forbidden from accepting and considering
any vote by any shareholder, signatory to the shareholders’ agreement duly filed at the principal place of business, cast
in violation of what was agreed upon in such agreement, and the Company shall also be expressly forbidden from accepting and proceeding
with the transfer of shares and/or encumbrance and/or assignment of a preemptive right to subscription of shares and/or other securities
in violation of the provisions and terms agreed upon in the shareholders’ agreements.
Article 41 - The
Company may not grant financing or guarantees of any type to third parties, in any way, for businesses foreign to its corporate
interests.
Sole Paragraph - The Company
may not grant financing or guarantees of any type, in any way, to the controlling shareholders.
Article 42 - The
provisions of Section II of Chapter V of these Bylaws do not apply to the Company’s shareholders who are signatories of the
Company’s Shareholders Agreement, dated September 4, 2019 and filed at the headquarters of the Company, as well as to the
purchasers of shares of the Company through Permitted Transfers, as defined in such Company’s Shareholders Agreement, including,
but not limited to, purchasers who are (i) descendants and spouses, heirs or testamentary heirs of the shareholders, who acquire
the related shares (and/or shares issued by Natura Cosméticos S.A. that may contribute to the
capital of the Company), as a result of
the advance of a legitimate, inheritable donation or succession; or (ii) holding companies, investment funds, trusts or similar
trust entities, whose beneficiaries are the shareholders, their descendants, spouses, heirs or testamentary heirs.
Comparative
Chart of the proposed amendments to the Bylaws of Natura &Co
Exhibit
IV – Comparative Board and Justification to Amend the Bylaws
Current Wording of the Company’s Bylaws
|
Proposed
Amendments to the Company’s Bylaws
|
Justifications
|
Article 5 - The Company’s share capital, fully subscribed and paid up, is of twelve billion, five hundred and eighty-six million, nine hundred and seventy-eight thousand, four hundred and nine reais and eighty-three centavos (R$12,586,978,409.83), divided into one billion, three hundred and seventy- five million, eighteen thousand, one hundred and forty (1,375,018,140) registered common shares, with no par value.
|
Article 5 - The Company’s share capital, fully subscribed and paid up, is of twelve billion, five hundred and eighty-six million, nine hundred and seventy-eight thousand, four hundred and nine reais and eighty-three centavos (R$12,586,978,409.83) twelve billion, six hundred and eight million, four hundred and fifty-one thousand, four hundred and sixty-one reais and forty-eight centavos (R$ 12.608.451.461,48), divided into one billion, three hundred and seventy-five million, eighteen thousand, one hundred and forty (1,375,018,140) one billion, three hundred and seventy-five million, eight hundred and nineteen thousand, three hundred and four (1.375.819.304) registered common shares, with no par value.
|
The Company’s Management proposes the amendment so as to reflect the amount of the capital stock confirmed at the Board of Directors’ Meeting held on March 16, 2021, which was increased from twelve billion, five hundred and eighty-six million, nine hundred and seventy-eight thousand, four hundred and nine reais and eighty-three centavos (R$12,586,978,409.83), divided into one billion, three hundred and seventy-five million, eighteen thousand, one hundred and forty (1,375,018,140) registered common shares, with no par value, to twelve billion, six hundred and eight million, four hundred and fifty- one thousand, four hundred and sixty-one reais and forty-eight centavos (R$12.608.451.461,48), divided into one billion, three hundred and seventy-five million, eight hundred and nineteen thousand, three hundred and four (1.375.819.304) registered common shares, with no par value, as a result of the exercise of call options or options to subscribe common shares issued by the Company, by the Company’s managers and employees, as well as by the managers and employees of the companies directly or indirectly controlled by it, who participate in the current long- term incentive plans, as authorized by the wording of article 6, paragraph 2, of the Company’s Bylaws.
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Article 16 – (...)
Paragraph 1 - Among the members of
the Board of Directors, at least two (2) or twenty percent (20%),
|
Article 16 – (...)
Paragraph 1 - The
Board of Directors will be mostly comprised of external members. Among the members
|
The Brazilian Corporate Governance Code (“CBGC”), created under the coordination of the Brazilian Institute of Corporate Governance, sets forth a set of practices for publicly-held companies, based on an
|
Current Wording of the Company’s Bylaws
|
Proposed Amendments to the Company’s
Bylaws
|
Justifications
|
whichever is greater, shall be independent board members, according to the definition of the Novo Mercado Rules, and the determination of the individuals appointed to the board of directors as independent board members is to be resolved at the general meeting that elects them, provided that board members elected through the option provided for in article 141, paragraphs 4 and 5, of Law No. 6,404/76, will also be deemed as independent board members in the event the Company has a controlling shareholder. When, by virtue of compliance with the percentage referred to above, the result is a fractional number of board members, it will be rounded-up to the subsequent whole number.
|
of the Board of Directors, at least one third (1/3) two (2) or twenty percent (20%), whichever is greater, shall be independent board members, according to the definition of the Novo Mercado Rules, and the determination of the individuals appointed to the board of directors as independent board members is to be resolved at the general meeting that elects them, provided that board members elected through the option provided for in article 141, paragraphs 4 and 5, of Law No. 6,404/76, will also be deemed as independent board members in the event the Company has a controlling shareholder. When, by virtue of compliance with the percentage referred to above, the result is a fractional number of board members, it will be rounded-up to the subsequent whole number.
|
“apply or explain” approach.
Pursuant to CVM Rule No. 480/09, publicly-held
companies must provide a Report on the adoption of the practices recommended by CBGC on an annual basis.
The practice recommended in its item 2.2.1(i)
sets forth the following:
“2.2.1 The bylaws must establish that:
(i) the board of directors shall be mostly composed of external members, with, at least, one third of independent members; (...)”
In order to adopt the recommended practice
and improve its corporate governance practices, we propose the amendment of the Company’s Bylaws so that the foregoing principle
be adopted.
Irrespective of the amendment to the Bylaws
proposed herein, the Company already meets the proposed rule, considering that, out of the twelve (12) members who currently compose
its Board of Directors, eight (8) are independent members, which corresponds to 67% of independent members. Similarly, a majority
of the members of the Board of Directors of the Company are deemed external members.
|
Article 18 – The Board of Directors shall be comprised of up to three (3) Co-Chairmen, as well as an Executive Chairman of the Board of Directors and
|
Article 18 – The Board of Directors shall be comprised of up to three (3) Co-Chairmen, as well as an Executive Chairman of the Board of Directors and
|
Pursuant to the Bylaws, the Co-Chairmen of the Board of Directors will be elected by the majority vote of the other members of the Board of Directors, and
|
Current Wording of the Company’s Bylaws
|
Proposed Amendments to the Company’s
Bylaws
|
Justifications
|
the Group’s Main Executive, who shall
be elected by the majority vote of its members, at the first meeting of the Board of Directors immediately after the investiture
of such members, or whenever there is a vacancy or resignation in those positions.
Paragraph 4 - In addition to their
legal attributions, the elected Co-Chairmen shall have the following attributions:
(j) at least one of them shall participate
and preside over the Corporate Governance Committee, and at least one of them shall participate in the Organizational Development
and Personnel Committee.
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the Group’s Main Executive, who shall
be elected by the majority vote of its members, at the first meeting of the Board of Directors immediately after the investiture
of such members, or whenever there is a vacancy or resignation in those positions.
Paragraph 4 - In addition to their
legal attributions, the elected Co-Chairmen shall have the following attributions:
(j) at least one of them shall participate
and preside over the Corporate Governance Committee. and at least one of them shall participate
in the Organizational Development and Personnel Committee.
|
they have several specific attributions,
which positions are currently occupied by representatives related to the controlling shareholders of the Company.
The Organizational Development and Personnel
Committee of the Company is a non-statutory committee of the Company currently presided over by an independent board member, and
the majority of its members are independent board members.
The proposed amendment to the Bylaws, by
lifting the mandatory participation of one of the co-chairman in the Organizational Development and Personnel Committee, will reinforce
the independent nature of the committee and the corporate governance practices of the Company, since a member of said Committee
will be appointed by the Board of Directors which is mostly composed of independent board members.
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Article 20 – (...)
(xxv) pronounce itself for or against any
public offer of shares contemplating shares issued by the Company, by means of a prior substantiated opinion, disclosed within
fifteen (15) days as of the publication of the call notice of the public offer of shares, which shall address, at least: (i) the
convenience and opportunity of the public offer of shares regarding the interest of the group of shareholders, including the price
and the potential impacts on the liquidity of the shares; (ii) the strategic plans disclosed by the offeror in relation to
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Article 20 – (...)
(xxv) pronounce itself for or against public
offer of shares and other securities convertible into or exchangeable for shares issued
by the Company, by means of a prior substantiated opinion, disclosed within fifteen (15) days as of the publication of the call
notice of the public offer of shares, which shall address, at least: (i) the convenience and opportunity of the public offer of
shares regarding the interest of the group of shareholders, including the price and the potential impacts on the liquidity of the
shares; (ii) the
|
The practice recommended in item 1.6.1 of
CBGC sets forth the following:
“1.6.1. The bylaws shall set forth
that the board of directors must give its opinion regarding any Public Offer of Shares, which object is the shares or securities
convertible into or exchangeable for shares issued by the company, which shall include, among other relevant information, the opinion
of the management on the potential acceptance of the Public Offer of Shares and on the company’s economic value.”
|
Current Wording of the Company’s Bylaws
|
Proposed Amendments to the Company’s
Bylaws
|
Justifications
|
the Company; and (iii) regarding alternatives to the acceptance of the public offer of shares available in the market, as well as the information required by the applicable rules established by the Brazilian Securities and Exchange Commission (“CVM”);
|
strategic plans disclosed by the offeror in relation to the Company; and (iii) regarding alternatives to the acceptance of the public offer of shares available in the market, as well as the information required by the applicable rules established by the Brazilian Securities and Exchange Commission (“CVM”);
|
In order to adopt the recommended practice and improve its corporate governance practices, we propose the amendment of the Company’s Bylaws so that the foregoing principle be adopted.
|
Article 20 – (...)
(xxvi) resolve on (i) the statement of interim
dividends, pursuant to Article 32, paragraph 3, of these Bylaws; and (ii) the payment or credit of interest on equity during the
year to the shareholders, pursuant to the applicable law; and
|
Article 20 – (...)
(xxvi) resolve on (i) the statement of interim
dividends, pursuant to Article 32 31,
paragraph 3, of these Bylaws; and (ii) the payment or credit of interest on equity during the year to the shareholders, pursuant
to the applicable law; and
|
The amendment is intended to correct a cross- reference mistake made to another article of the Company’s Bylaws, having no material impact on the Company.
|
Not applicable.
|
Article 20 – (...)
(xxviii) provide
a statement on the terms and conditions of corporate restructuring, capital increases and other transactions giving rise to change
of control, and decide whether these transactions ensure fair and equitable treatment to the Company’s shareholders;
|
The practice recommended in item 1.5.1(ii)
of CBGC sets forth the following:
“1.5.1 The company’s bylaws
shall set forth as follows: (...) (ii) the managers shall provide a statement on the terms and conditions of corporate restructuring,
capital increases and other transactions giving rise to change of control, and decide whether these transactions ensure fair and
equitable treatment to the Company’s shareholders.”
In order to adopt the recommended practice
and improve its corporate governance practices, we propose the amendment of the Company’s Bylaws so that the foregoing principle
be adopted.
|
Current Wording of the Company’s Bylaws
|
Proposed Amendments to the Company’s
Bylaws
|
Justifications
|
Not applicable.
|
Article 20 – (...)
(xxix) assess and annually
disclose a list of the independent members of the Board of Directors, as well as indicate and justify any circumstances that may
compromise their status as independent members; and
|
The practice recommended in item 2.2.1(ii)
of CBGC sets forth the following:
“2.2.1 The bylaws must establish that:
(...) (ii) the board of directors shall assess and annually disclose who the independent board members are, as well as indicate
and justify any circumstances that may compromise their independence. (...)”
In order to adopt the recommended practice
and improve its corporate governance practices, we propose the amendment of the Company’s Bylaws so that the foregoing principle
be adopted.
|
Not applicable.
|
Article 20 – (...)
(xxx) resolve on transactions
with related parties under its authority, as set forth in the corresponding policy of the Company to be approved by the Board of
Directors.
|
The practice recommended in item 5.3.1 of
CBGC sets forth the following:
“5.3.1 The bylaws shall set forth
which transactions with related parties shall be approved by the board of directors, with the exclusion of any members with potentially
conflicting interests.”
In order to adopt the recommended practice
and improve its corporate governance practices, we propose the amendment of the Company’s Bylaws so that the foregoing principle
be adopted.
|
Article 24 – (...)
Paragraph 2 - (...)
(c) in the case the Company is
represented by the Investor Relations Officer before representing the Company before CVM and other control bodies and
|
Article 24 – (...)
Paragraph 2 - (...)
(c) in the case the Company is
represented by the Investor Relations Officer before representing the Company before CVM and
other control bodies and
|
The amendment is intended to correct the wording of said item, to remove redundant text “before representing the Company”, having no material impact on the Company.
|
Current Wording of the Company’s Bylaws
|
Proposed Amendments to the Company’s
Bylaws
|
Justifications
|
institutions that operate in the capital market.
|
institutions that operate in the capital market.
|
|
* * *
Proposed
restated Bylaws of Natura &Co
Exhibit IV –
Draft of new Bylaws
BYLAWS
OF
NATURA &CO HOLDING S.A.
Chapter
I
NAME, PRINCIPAL PLACE OF BUSINESS, OBJECT AND DURATION
Article 1 - NATURA
&CO HOLDING S.A. (“Company”) is governed by these Bylaws and applicable legislation, especially Law
No. 6,404, of December 15, 1976 (“Law No. 6,404/76”).
Sole Paragraph - With
the admission of the Company to Novo Mercado of B3 S.A.- Brasil, Bolsa, Balcão (“B3”), the Company, the
shareholders thereof, including controlling shareholders, managers and members of the fiscal council, if any, shall subject themselves
to the provisions of the Novo Mercado Rules.
Article 2 - The
Company has its principal place of business and jurisdiction in the City of São Paulo, State of São Paulo.
Sole Paragraph - The Company
may open branches, agencies, warehouses, offices and any other establishments in the country as per the resolutions taken by the
Board of Officers.
Article 3 - The
Company’s corporate purpose is to manage equity interests in companies that develop their core activities in the beauty field,
including, but not limited to, fragrances, skincare products, haircare products and make-up, or in a field similar or complementary
to that of beauty, including, but not limited to, home and fashion, as quotaholder or shareholder, in Brazil or abroad.
Paragraph
1 - The Company may directly develop other activities similar or complementary to the corporate purpose described in Article
3.
Paragraph
2 - The development of the activities by the companies in which the Company holds any type of direct or indirect interest takes
into account the following factors: (i) the short- and long-term interests of the Company and shareholders thereof, and (ii) the
short- and long-term economic, social, environmental, and legal effects, with respect to the associates, suppliers, partners, clients
and other creditors thereof, as well as the communities in which the Company operates locally and globally.
Article 4 - The
Company is incorporated for an indefinite term of duration.
Chapter
II
SHARE CAPITAL, SHARES AND SHAREHOLDERS
Article 5 - The
Company’s capital stock, fully subscribed and paid up, is twelve billion, six hundred and eight million, four hundred and
fifty-one thousand, four hundred and sixty-one reais and forty-eight centavos (R$12.608.451.461,48), divided into one billion,
three hundred
and seventy-one million, eight hundred
and nineteen thousand, three hundred and four (1.375.819.304) registered common shares, with no par value.
Article 6 - The
Company shall be authorized to increase its share capital, regardless of a bylaws amendment, up to the limit of one billion and
five hundred million (1,500,000,000) common shares, with no par value, as resolved by the Board of Directors, which shall set the
conditions of the issuance, including the price and term for full payment.
Paragraph
1 - Within the authorized capital limit, the Board of Directors may resolve on the issue of convertible debentures and subscription
warrants, as well as the capital increase upon capitalization of profits or reserves, with or without stock dividends.
Paragraph
2 - The Company’s Board of Directors may grant call options or options for subscription of shares, in accordance
with plans or programs approved at the General Meeting, to its managers and employees, as well as to the managers and
employees of other companies that are directly or indirectly controlled by the Company, without preemptive rights for
shareholders upon the granting or exercise of the options, observing the balance of the authorized capital limit on the
exercise date of such options for subscription of shares, together with the balance of treasury shares on the exercise date
of the call options.
Article 7 - The
share capital shall be exclusively represented by common shares and each common share shall entail the right to one vote in the
shareholders’ resolutions.
Article 8 - All
of the Company’s shares shall be held in book-entry form, in the name of their holders, and shall be held in a trust account
with a financial institution authorized by the Brazilian Securities and Exchange Commission (“CVM”).
Sole Paragraph - The transfer
cost of the shares may be charged directly to the shareholder by the depositary institution, as may be defined by the custody agreement,
with due regard to the maximum limits set by CVM.
Article 9 - The
issue of new shares, debentures convertible into shares or subscription warrants, the placement of which is carried out through
sale in a stock exchange, public subscription or exchange for shares in a public offer of shares pursuant to articles 257 to 263
of Law No. 6,404/76, or, also, pursuant to special law regarding tax incentives, it may occur without the shareholders being granted
a preemptive right for the subscription or with the reduction of the minimum term set forth by law for the exercise thereof.
Chapter
III
GENERAL MEETING AND MANAGEMENT OF THE COMPANY
Section
I
GENERAL MEETING
Article 10 - The
General Meeting may gather, on an ordinary basis, once a year and, on an extraordinary basis, when called pursuant to the law or
these Bylaws.
Paragraph
1 - The resolutions of the General Meeting shall be made by absolute majority of the votes, excluding blank votes, unless otherwise
set forth in the applicable legislation.
Paragraph
2 - The General Meeting may only resolve on matters set out in the agenda, included in the respective call notices.
Article 11 - The
General Meeting may be held and presided over by any of the Co-chairmen of the Board of Directors or, if absent or prevented from
attending the meeting, by the Executive Chairman of the Board of Directors, or, if the Co-chairmen of the Board of Directors and
the Executive Chairman of the Board of Directors are absent or prevented from attending the meeting, by the Corporate Governance
Officer of the Company, or anyone appointed by either of them. The Chairman of the General Meeting may appoint up to two (2) secretaries.
Article 12 - The
General Meeting shall, in addition to the duties set forth by law:
(i) elect
and dismiss members of the Board of Directors and of the Fiscal Council, as the case may be;
(ii) set
the global compensation of the members of the Board of Directors and of the Board of Officers, as well as that of the members of
the Fiscal Council, if convened;
(iii) approve
any splitting or grouping of shares;
(iv) approve
share-based compensation programs for its managers and employees, as well as managers and employees of other companies directly
or indirectly controlled by the Company;
(v) resolve
on the allocation of the net profits of the year and on the distribution of dividends;
(vi) elect
the liquidator, as well as the Fiscal Council that shall operate during the winding-up period; and
(vii) resolve
on the Company’s exit from the Novo Mercado of B3.
Sole Paragraph - The Chairman
of the Meeting shall comply and cause compliance with the provisions of the shareholders’ agreements filed at the Company’s
principal place of business, and any votes cast opposing to the content of such agreements may not be taken into account.
Section
II
MANAGEMENT BODIES
Subsection I
General Provisions
Article 13 - The
Company shall be managed by the Board of Directors and by the Board of Officers.
Paragraph
1 - The investiture in office shall occur through an instrument of investiture, which shall state that the individual shall
be subject to the commitment clause referred to in Article 36 of these Bylaws, drafted in a proper book, and signed by the manager
that was invested in office, with any management guarantee being waived.
Paragraph
2 - The managers shall hold their offices until the investiture of the substitutes thereof.
Paragraph
3 - The managers, in the exercise of their duties, shall observe the short- and long-term interests of the Company, including
the interests and expectations of the shareholders, associates, suppliers, partners, clients and other creditors, of the communities
in which the Company operates locally and globally, as well as the impacts on the environment.
Article 14 - The
Meeting shall determine the annual global allowance for allocation among the managers and the Board of Directors shall be responsible
for allocating the amount individually, in compliance with the provisions set forth in these Bylaws.
Article 15 - Any
of the management bodies may validly meet with the attendance of the majority of its members and make resolutions by the vote of
the majority of those in attendance.
Paragraph
1 - In the event of a tie in the voting of a matter at a meeting of the Board of Directors, the Co-Chairman of the Board of
Directors presiding the meeting shall have the casting vote regarding the resolution.
Paragraph
2 - Prior call notice of the meeting, as a condition for being valid, can only be waived if all members thereof attend such
meeting, and for such purpose, the votes cast in writing shall be accepted.
Paragraph
3 - The meetings of the management bodies may be held exceptionally by conference call, video conference, email or any other
means of communication that allows for the identification of the members and simultaneous communication with all other persons
attending the meeting.
Paragraph
4 - Members who attend the meetings by conference call, video conference or other means of communication under the terms of
the paragraph above shall confirm their vote by means of a statement sent immediately after the meeting has ended to the person
presiding the meeting, by letter, fax, email or another means of communication that allows for the identification of the member.
Once the statement is received, the chairman of the meeting shall be vested with full powers to sign the minutes of the meeting
on behalf of the referred member.
Subsection II
Board of Directors
Article 16 - The
Board of Directors shall be composed of at least nine (9) and at most thirteen (13) members, all of which are elected and may be
removed by the General Meeting, for a unified term of office of up to two (2) years, reelection being permitted.
Paragraph
1 - The Board of Directors will be mostly comprised of external members. From the members of the Board of Directors, at least,
one third (1/3) shall be independent directors, according to the definition of the Novo Mercado Rules, and the determination of
the individuals appointed to the board of directors as independent directors is to be resolved at the general meeting that elects
them, provided that the directors elected through the option provided for in article 141, paragraphs 4 and 5, of Law No. 6,404/76,
will also be deemed as independent directors in the event the Company has a controlling shareholder. When, by virtue of compliance
with the percentage referred to above, the result is a fractional number of directors, it will be rounded-up to the subsequent
whole number.
Paragraph
2 - The members of the Board of Directors must have an unblemished reputation. Those who (i) hold positions in companies that
may be considered competitors of the Company or (ii) have or represent conflicting interests with the Company may not be elected,
except as otherwise approved by the General Meeting.
Paragraph
3 - Pursuant to art. 115, paragraph 1, of Law No. 6,404/76, the exercise of the voting rights, in the election of the members
of the Board of Directors, in circumstances that constitute a conflict of interests with the Company, is forbidden.
Paragraph
4 - A member of the Board of Directors may not have access to information or attend meetings of the Board of Directors related
to matters to which he/she has or represents a conflicting interest with the Company.
Paragraph
5 - The Board of Directors may, for a better performance of its duties, create committees or work groups with defined objectives,
which shall be composed of persons appointed thereby from among the members of the administration and/or other persons directly
or indirectly related to the Company.
Article 17 - In
the election of the members of the Board of Directors, the General Meeting shall first determine, by majority vote, the number
of Board members to be elected by majority or multiple vote (if requested), and such number may be increased by up to one (1) member,
in the event of the election of one (1) separate member by shareholders representing 10% of the capital stock, as provided for
in paragraphs 4 and 5, of article 141, of Law No. 6,404/76.
Sole Paragraph - If the
multiple vote process is not requested, according to the law, the General Meeting may vote through slates previously registered
with the presiding board, which shall ensure the right to appoint one member to the holders of ten percent (10%) or more, individually
or in block, of the Company’s common shares. The presiding board shall not accept the registration of any slate in violation
of the provisions of this Article.
Article 18 - The
Board of Directors shall have up to three (3) Co-Chairmen, as well as one Executive Chairman of the Board of Directors and one
Chief Executive of the Group, who shall be elected by majority vote of its members, at the first meeting of the Board of Directors
immediately after the investiture of such
members, or whenever there is a vacancy or resignation in those positions.
Paragraph
1 - The positions of Co-Chairman of the Board of Directors and Chief Executive of the Group cannot be held by the same person.
Paragraph
2 - The positions of Executive Chairman of the Board of Directors and Chief Executive of the Group cannot be held by the same
person.
Paragraph
3 - The members of the Board of Directors, at the first meeting after their investiture in office, shall also determine the
number of Co-Chairmen and then, appoint, among them, who will preside the meetings of the Board of Directors for the term of office.
Paragraph
4 - In addition to their legal attributions, the elected Co-Chairmen shall have the following attributions:
(a) to
coordinate the activities of the Board of Directors, seeking effectiveness and the good performance of the body and each of its
members, acting as a link between the Board of Directors and the Chief Executive of the Group;
(b) to
foster the vision of the Company in accordance with its values, identity and origin;
(c) to
maintain and develop the institutional relationships of the Company with entities and authorities with the purpose of promoting
and safeguarding the interests of the Company;
(d) to
keep and promote the relationship with the shareholders of the Company;
(e) to
promote the vision, image and aspects of the independent Business Units within the Company and toward third parties;
(f) to
review and propose the compensations for the Executive Chairman of the Board of Directors and the Chief Executive of the Group.
(g) with
the support of the Executive Chairman of the Board of Directors and the committees, to organize and coordinate the meeting agendas
of the Company’s Board of Directors, the meeting calendars and General Meetings of the Company, call and preside over meetings
of the Company’s Board of Directors, ensure that the directors receive the appropriate information for each meeting, as well
as ensure the proper functioning of the body;
(h) to
set forth and monitor the process for evaluation of the Executive Chairman of the Board of Directors and the Chief Executive of
the Group, of other members of the Company’s Board of Directors, individually, and of the Board of Directors itself, as well
as its committees, as full boards, and the governance office;
(i) to
coordinate the preparation and updating of the plan for succession of the Chief Executive of the Group; and
(j) at
least one of them shall comprise and preside over the Corporate Governance Committee.
Paragraph
5 - The Executive Chairman of the Board of Directors shall have, in addition to his legal attributions as a member of the Board
of Directors, the following attributions:
(a) to
monitor the execution of the activities related to the general planning and execution of the Group’s long and short-term
strategies, in accordance with the purposes and interests of the group, set by the Company’s shareholders and Board of Directors;
(b) to
propose the governance, pace and levels of interaction between the Company’s Operational Committee, the executive committees
of each Business Unit, the Board of Directors, the Board of Officers and the shareholders of the Company;
(c) to
collaborate with the Company’s Board of Directors in the inspection of each Business Unit;
(d) to
support the Co-Chairmen of the Board of Directors in the organization and coordination of the meeting agendas of the Company’s
Board of Directors, the schedules of the Company’s meetings and General Meetings, call the meetings of the Company’s
Board of Directors, and ensure that the directors receive the appropriate information for each meeting, and ensure the proper functioning
of the body; and
(e) to
support the Co-Chairmen of the Board of Directors in the process for evaluation of the members of the Company’s Board of
Directors, individually, and of the Board of Directors itself, as well as its committees, as full boards, and the governance office.
Paragraph
6 - The Chief Executive of the Group shall have, in addition to the legal attributions as a member of the Board of Directors,
the following duties as main executive of the business group constituted by the Company and its subsidiaries, controlled companies
and affiliates (“Group”):
(a) to
preside over the Operational Committee of the Group and coordinate the action of the officers of the Company and its subsidiaries,
controlled companies and affiliates, keeping each Business Unit with their own executive committees and offices;
(b) to
foster collaboration and synergy between the management of each Business Unit, referring the questions to the Board of Directors
of the Company and the respective committees;
(c) to
propose to the Board of Directors of the Company, over time, the attributions and duties dedicated to the Company and Business
Units; and
(d) to
make recommendations to the Company’s Board of Directors and the Board of Officers regarding the management of the Group,
from an outcome point of view,
including resource allocations
between business units, talent management and cash flow, to ensure that the management is aligned with the objectives and interests
approved by the Board of Directors and the shareholders of the Company.
Paragraph
7 - In the event of vacancy in the position of member of the Board of Directors, the substitute will be appointed by the remaining
members, and will temporarily exercise the term of office until the date of the next General Meeting to be held, which will appoint
a new member (which may be the member temporarily appointed by the Board of Directors), who will serve for the remainder of the
term until the end of the unified term of office. For the purposes of this Paragraph, vacancy will occur with the dismissal, death,
resignation, proven impediment or disability.
Article 19 - The
Board of Directors will hold regular meetings four (4) times a year and may hold extraordinary meetings whenever called by the
Co-Chairman appointed under the terms of Paragraph 3 of Article 18 or by the majority of board members.
Paragraph
1 - Notice to all meetings will be given at least seventy-two (72) hours in advance.
Paragraph
2 - All Board of Directors resolutions must be recorded in minutes transcribed on the appropriate book of the Board of Directors
and executed by all attending directors.
Paragraph
3 - In the event of temporary absence of any member of the Board of Directors, it may be substituted at Board meetings by another
director expressly appointed thereby, in which case such representative should be under a specific power of attorney, stating,
among other things, the votes to be cast on the items of the agenda for each meeting. In this case, the director who is replacing
the absent director, in addition to his own vote, shall cast the early vote of the absent director.
Article 20 - The
Board of Directors shall, in addition to the other duties attributed thereto by law or by the Bylaws:
(i) exercise
the normative functions regarding the Company’s activities, being entitled to call up for analysis and resolution any matter
that is not understood as being under the exclusive authority of the General Meeting or the Board of Officers;
(ii) establish
the general orientation of the Company’s businesses;
(iii) elect
and dismiss the Officers of the Company;
(iv) attribute
to the Officers their respective functions, observing the provisions of these Bylaws;
(v) resolve
on the calling of the General Meeting, when deemed appropriate, or in the case of article 132 of the Law No. 6,404/76;
(vi) supervise
the Officers’ management by inspecting, at any time, the Company’s books and documents, and requesting information
on agreements executed or which are in the process of being executed and any other acts;
(vii) analyze
the quarterly results of the operations of the Company;
(viii) choose
and remove independent auditors;
(ix) call
the independent auditors to provide the clarifications it deems necessary;
(x) evaluate
the Management Report and the accounts of the Board of Officers, and resolve on their submission to the General Meeting;
(xi) approve
annual and multi-annual budgets, strategic plans, expansion projects and investment programs, as well as monitor their implementation;
(xii) approve
the creation and dissolution of a subsidiary and the Company’s interest held in the capital of other companies, in Brazil
or abroad, as well as the installation of branches, agencies, warehouses, offices and any other establishments of the Company abroad;
(xiii) determine
the execution of inspections, audits or rendering of accounts in the Company’s subsidiaries, controlled companies or affiliates,
as well as in any foundations sponsored thereby;
(xiv) previously
issue statements on any subject to be submitted to the General Meeting;
(xv) authorize
the issue of shares of the Company, within the limits authorized in article 6 of these Bylaws, establishing the issue conditions,
including the paying-up price and term, being also able to exclude the preemptive right or reduce the period for its exercise in
the issue of shares, subscription warrants and convertible debentures, whose placement is made by means of sale on the stock exchanges
or by public subscription or in public offer for acquisition of control, under the terms set forth by law;
(xvi) resolve
on the Company’s acquisition of its own shares to hold them in treasury and/or subsequent cancellation or disposal;
(xvii) resolve
on the issue of subscription warrants and approve the capital increase upon capitalization of profits and reserves, with or without
stock bonus, pursuant to Article 6, Paragraph 1, of these Bylaws;
(xviii) grant
restricted shares and call options or options for subscription of shares, in accordance with plans or programs approved at the
General Meeting, to its managers and employees, as well as to the managers and employees of other companies that are directly or
indirectly controlled by the Company, without preemptive rights for shareholders upon the granting or exercise of the options,
observing the balance of the authorized capital limit on the exercise date of the options for subscription of shares, together
with the balance of treasury shares on the exercise date of the call options;
(xix) establish
the amount of the profit sharing of the officers, managers and employees of the Company;
(xx) resolve
on the issuance of debentures;
(xxi) authorize
the Company to post bond with respect to third-party obligations, except in case of wholly-owned subsidiaries of the Company;
(xxii) approve
the Board of Officers’ authority and policies, as well as any amendments thereto, which shall include rules for (a) the acquisition
of fixed and intangible assets and the assumption of financial commitments, (b) the encumbrance of fixed and intangible assets,
(c) the contracting of any fundraising and the issue of any credit instruments to raise funds, whether bonds, notes, commercial
papers, promissory notes and others, commonly used in the market, also deciding on its issue and redemption conditions, among other
rules of authority, as well as the supervision of compliance with such policy by the members of the board of officers;
(xxiii) approve
hiring of a trustee institution to provide bookkeeping services;
(xxiv) provide,
in compliance with the rules of these Bylaws and applicable legislation, the order of its work and adopt or issue rules for its
operation;
(xxv) pronounce
itself for or against any public offer of shares and other securities convertible into or exchangeable for shares issued by the
Company, by means of a prior substantiated opinion, disclosed within fifteen (15) days as of the publication of the call notice
of the public offer of shares, which shall address, at least: (i) the convenience and opportunity of the public offer of shares
regarding the interest of the group of shareholders, including the price and the potential impacts on the liquidity of the shares;
(ii) the strategic plans disclosed by the offeror in relation to the Company; and (iii) regarding alternatives to the acceptance
of the public offer of shares available on the market, as well as the information required by the applicable rules established
by CVM;
(xxvi) resolve
on (i) the statement of interim dividends, pursuant to Article 31, paragraph 3 of these Bylaws; and (ii) the payment or credit
of interest on equity during the year to the shareholders, pursuant to the applicable law;
(xxvii) define
the individualization of the global compensation of managers approved by the General Meeting;
(xxviii) provide
a statement on the terms and conditions of corporate restructuring, capital increases and other transactions giving rise to change
of control, and decide whether these transactions assure fair and equitable treatment to the Company’s shareholders;
(xxix) assess
and annually disclose a list of the independent members of the Board of Directors, as well as indicate and justify any circumstances
that may compromise their status as independent members; and
(xxx) resolve
on transactions with related parties under its authority, as set forth in the corresponding policy of the Company to be approved
by the Board of Directors.
Subsection III
Board of Officers
Article 21 - The
Board of Officers, whose members may be elected and removed by the Board of Directors at any time, shall be composed of at least
two (2) and at most nine (9) members, namely one Financial Officer, one Legal and Compliance Officer, one Global Operations and
Procurement Officer, one Executive Officer for Latin America, one Corporate Governance Officer, one Investor Relations Officer
and the remaining may be Executive Officers, all of whom shall serve for a term of three (3) years, reelection being permitted,
and the position of Investor Relations Officer must be filled.
Paragraph
1 - The election of the Board of Officers shall occur preferably at the first meeting of the Board of Directors held after
the Annual General Meeting.
Paragraph
2 - In the case of absence or temporary impediment, the Officers will be replaced by another Officer, chosen by the Chief Executive
of the Group. In case of vacancy, an interim substitute shall be appointed, until the Board of Directors elects a permanent replacement
to serve the remainder of the term.
Paragraph
3 - The Officers may accumulate positions, observing the minimum number of two (2) members.
Article 22 - The
Board of Officers has all powers to take the actions necessary to represent the Company and consummate the corporate purpose, however
special they may be, including to waive rights, settle and agree, pursuant to the applicable legal or statutory provisions, with
the resolutions taken by the General Meeting and by the Board of Directors and the provisions and restrictions of authorities assigned
to them by the Board of Directors, being especially responsible for:
(i) complying
with and causing compliance with these Bylaws and the resolutions of the Board of Directors and of the General Shareholders’
Meeting;
(ii) prepare
and submit to the Group’s Operational Committee, each year, the strategic plan, its annual reviews, and the general budget
of the Company, making sure they are executed, so that they are later sent to the Board of Directors, pursuant to article 26, item
“c”, of these Bylaws;
(iii) resolving
on the establishment, transfer and closing of branches, agencies, warehouses, offices and any other establishments of the Company
in Brazil;
(iv)
deciding, up to the authority limit determined by the Board of Directors, on the acquisition, disposal and/or encumbrance of
fixed and intangible assets and financial commitments associated with projects in which the Company intends to invest;
(v) submitting,
on a yearly basis, the Management Report and the accounts of the Board of Officers, together with the report of the independent
auditors, and the
proposal pertaining to the use
of profits ascertained in the previous year, to the appraisal of the Board of Directors; and
(vi) submitting,
on a quarterly basis, the detailed economic and financial interim balance sheet of the Company and controlled companies thereof.
Article 23 - The
Officers, in addition to the activities attributed to them by the Board of Directors, shall have the following duties:
Paragraph
1 - It is incumbent upon the Chief Financial Officer:
(a) to
plan, implement and coordinate the Company’s financial policy, in addition to organizing, preparing and controlling the Company’s
budget;
(b) to
prepare financial statements, and to manage the accounting activities and the treasury of the Company, in compliance with applicable
legal requirements;
(c) to
provide guidance to the Company on any decision-making that involves financial risks;
(d) to
prepare financial reports and provide information on his or her areas of responsibility to the bodies of the Company;
(e) plan
and execute management policies within his or her scope; and
(f) other
duties that may be assigned thereto from time to time by the Chief Executive of the Group.
Paragraph
2 - It is incumbent upon the Legal and Compliance Officer:
(a) to
advise and assist the Company with respect to legal matters;
(b) to
defend the interests of the Company before third parties;
(c) to
develop and coordinate the compliance program of the Company; and
(d) other
duties that may be assigned thereto from time to time by the Chief Executive of the Group.
Paragraph
3 - It is incumbent on the Global Operations and Procurement Officer:
(a) to
prepare the Company’s mid- and long-term commercial strategy, through interactions with the departments of the Industrial,
Supply, Logistics and Order Cycle areas;
(b) to
monitor the Company’s short-term commercial performance; and
(c) other
duties that, from time to time, are determined by the Chief Executive of the Group.
Paragraph
4 - It is incumbent on the Executive Officer for Latin America:
(a) to
evaluate, define and implement the Company’s business strategies in Latin America, leading the functional and business areas,
as well as the future expansion of business to new countries; and
(b) other
duties that, from time to time, are determined by the Chief Executive of the Group.
Paragraph
5 – It is incumbent on the Corporate Governance Officer:
(a) to
organize and act as secretary at the meetings of the Board of Directors and its committees, being responsible for preparing the
minutes of these meetings;
(b) to
organize the processes for integrating new members of the Board of Directors, boards and committees and new officers into the Group;
(c) to
assist the chairman of the Board of Directors in defining relevant matters in the agendas of meetings and optimizing human resources
and infrastructure;
(d) to
establish the best dialog between the Board of Directors and the Group’s executive areas;
(e) to
prepare the annual calendar of activities of the Board of Directors and the Annual General Shareholders’ Meeting;
(f) to
guide the governance agents on their rights and obligations; and
(g) other
duties that, from time to time, are determined by the Chief Executive of the Group.
Paragraph
6 - It is incumbent upon the Investor Relations Officer:
(a) to
represent the Company before the Brazilian Securities and Exchange Commission – CVM and other control bodies and institutions
that act in the capital market;
(b) to
provide information to investors, CVM, stock exchanges in which the Company has its securities negotiated and other bodies related
to the activities developed in the capital market, in accordance with applicable laws, in Brazil and abroad;
(c) to
keep the registration of the Company as a publicly-held company updated with CVM; and
(d) other
duties that may be assigned thereto from time to time by the Chief Executive of the Group.
Paragraph
7 - It is incumbent upon the Executive Officers, in addition to other attributions set forth by the Board of Directors:
(a) to
foster the development of the activities of the Company, with due regard to its corporate purpose;
(b) to
coordinate the activities of the Company and controlled companies thereof;
(c) to
conduct the budgetary management of areas of the Company under their supervision, including management and cost control;
(d) to
coordinate the actions of his/her area and specific responsibilities with that of the other officers; and
(e) to
represent the Company before clients, the press, the society and legal, corporate and governmental entities, safeguarding the interests
of the organization and caring for its image;
(f) other
duties that may be assigned thereto from time to time by the Chief Executive of the Group.
Article 24 - As
a general rule and except for the cases covered in the subsequent paragraphs, the Company will always be legally represented by
two (2) Officers, or one (1) Officer and one (1) attorney-in-fact, or two (2) attorneys-in-fact, within the limits of the respective
powers of attorney.
Paragraph
1 - The acts for which these Bylaws require the prior consent of the Board of Directors may only be performed after this condition
has been met.
Paragraph
2 - The Company may be represented by one (1) single Officer or one (1) attorney-in-fact in the following cases:
(a) where
the act to be performed requires a single representative, the Company will be represented by any Officer or attorney-in-fact with
special powers;
(b) with
respect to receiving and giving acquittance for amounts owed to the Company, as well as in the case of any correspondence that
is not binding upon the Company and the performance of simple administrative routine acts, including those performed before public
agencies, mixed-capital companies, the Federal Revenue Office, State Treasury Offices, Municipal Treasury Offices, Commercial Registries,
Labor Court, the Social Security Institute (INSS), the Severance Indemnity Fund (FGTS) and its collection banks and other similar
acts, and before the National Health Surveillance Agency; and
(c) in
the case the Investor Relations Officer represents the Company before CVM and other control bodies and institutions that operate
in the capital market.
Paragraph
3 - The Board of Directors may authorize the performance of other acts binding upon the Company by only one of the members
of the Board of Officers or an attorney-in-fact, acting alone, or even by the adoption of the limitation of authority criteria,
to restrict, in certain cases, the representation of the Company to only one Officer or attorney-in-fact.
Paragraph
4 - When appointing attorneys-in-fact, the following rules shall be complied with:
(a) all
powers of attorney shall be granted jointly by any two (2) Officers;
(b) if
the purpose of the power of attorney is to take actions that require the prior authorization of the Board of Directors, the granting
thereof shall be expressly conditioned upon the obtainment of such authorization, which shall be stated in the content thereof;
and
(c) unless
otherwise approved by the Board of Directors, all powers of attorney granted on behalf of the Company shall have a limited term
of effectiveness, except for powers of attorney for representation in administrative proceedings or with a clause granting general
authority to the attorney.
Paragraph
5 - The actions taken in violation of the provisions set forth in this Article shall not be valid nor shall they be binding
upon the Company.
Subsection IV
Group’s Operational Committee
Article 25 - The
Group’s Operational Committee, an advisory body directly linked to the Board of Directors, with operational autonomy, shall
be composed of the following members:
(a) the
Chief Executive of the Group;
(b) the
main executive of each of the Group’s Business Units, as defined by the Board of Directors; and
(c) other
directors or executive officers of the Company nominated by the Chief Executive of the Group and appointed by the Board of Directors.
Paragraph
1 - The Group’s Operational Committee will be chaired by the Chief Executive of the Group.
Paragraph
2 - The Board of Directors shall approve the Internal Rules of the Group’s Operational Committee, which shall set forth
rules regarding call notice, establishment, voting, and frequency of meetings, terms of office, and activities of the Chairman
of the Group’s Operational Committee, among other things.
Article 26 - It
is incumbent upon the Group’s Operational Committee:
(a) to
assist the Board of Directors in the definition and implementation of the global strategy and in the development of the Group’s
activities, as well as in the supervision of each Business Unit, monitoring the implementation of decisions taken within the scope
of the Board of Directors;
(b) to
identify synergies and opportunities for the Group between each Business Unit, both from the point of view of revenue as well as
costs;
(c) to
review and submit to the Board of Directors the strategic plan, its annual reviews and the general budget of the Company, including
the allocation of resources between the Business Units in accordance with the Group’s strategic and business plan and supervise
its execution;
(d) to
watch over the organizational aspects of the Group, making recommendations to the Board of Directors on measures necessary for
its fluidity and efficiency;
(e) to
act as a forum for discussion and recommendations on back office structures, procurement, IT platforms, real estate structure,
capital and supply chain structure and other topics of interest to the Company; and
(f) to
foster the creation of Centers of Excellence among the Business Units.
Subsection V
Audit, Risk Management and Finance Committee
Article 27 - The
Audit, Risk Management and Finance Committee (“Audit Committee”), an advising body directly related to the Board
of Directors, with operational autonomy, shall be composed of at least three (3) members:
(i) at
least one (1) of whom must be an Independent Director (as defined in the Novo Mercado Rules), to be appointed by the Board of Directors;
(ii) at
least one (1) of whom must have recognized experience in corporate accounting matters, in compliance with the applicable rules
issued by CVM;
(iii) a
least one (1) of whom may not be a member of the Company’s Board of Directors; and
(iv) one
(1) of whom may accumulate the qualifications described in items “(i)” and “(ii)” above.
Paragraph
1 -The Audit Committee shall be coordinated by a Chairman designated upon appointment of the members of the Audit Committee,
among the Independent Directors.
Paragraph
2 - The Board of Directors shall approve the Internal Rules of the Audit Committee, which shall set forth rules regarding call
notice, establishment, voting, and frequency of meetings, terms of office, requirements on the qualifications of its members and
activities of the Chairman of the Audit Committee, among other things.
Paragraph
3 - The Audit Committee shall have its own budget, approved by the Board of Directors, intended to cover expenses with its
operation and with the hiring of consultants for accounting, legal or other matters, when the opinion of an external or independent
expert is necessary.
Article 28 - The
Audit Committee shall:
(i) issue
an opinion to the Board of Directors regarding the choice and hiring or dismissal of independent audit services of the Company,
being responsible for defining the compensation and supervision of the independent auditors, and for monitoring the effectiveness
of the work of the independent auditors and their independence, as well as for assessing the annual work plan of the independent
auditor and submitting it for appraisal of the Board of Directors;
(ii) approve,
prior to the resolution by the Board of Directors, any audit or extra- audit services provided by the independent auditor;
(iii) assist
the Board of Directors in monitoring and controlling the quality of the financial statements and assess the quarterly information,
interim statement and financial statements;
(iv) assist
the Board of Directors in monitoring the effectiveness of risk management processes and the compliance duty and monitor the activities
of internal audit and the internal control area of the Company;
(v) assist
the Board of Directors in monitoring the effectiveness of risk management and assess and monitor the risk exposure of the Company;
(vi) assess,
monitor, and recommend to the management the correction or improvement of the internal policies of the Company, including the policies
on transactions with related parties;
(vii) have
the means to receive, hold and treat information regarding relevant errors or frauds related to accounting, audit, internal controls
and financial statements, as well as non-compliance with legal and normative provisions applicable to the Company, in addition
to internal rules and codes, including with the projection of specific procedures for protection of the provider and confidentiality
of the information;
(viii) other
duties set forth in the Internal Rules of the Audit Committee.
Section
III
FISCAL COUNCIL
Article 29 - The
Company’s Fiscal Council, with the duties set forth by law, shall be composed of three (3) members and an equal number of
alternates.
Paragraph
1 - The Fiscal Council shall not operate on a permanent basis and shall only be installed upon call by the shareholders, in
accordance with the legal provisions.
Paragraph
2 - The investiture of the Fiscal Council members, whether sitting members or alternates thereof, shall be conditioned upon
the execution of the instrument of investiture, which shall set forth that it shall be subject to the
commitment clause referred to
in Article 36 of these Bylaws, as well as the compliance with the applicable legal requirements.
Chapter
IV
DISTRIBUTION OF PROFITS
Article 30 - The
fiscal year shall start on January 1 and end on December 31 of each year.
Paragraph
1 - At the end of each fiscal year, the Board of Officers shall prepare, pursuant to the applicable legal principles, the following
financial statements:
(a) balance
sheet;
(b) profit
and loss statement;
(c) statement
of comprehensive income;
(d) statement
of stockholders’ equity;
(e) statement
of cash flows;
(f) value
added statement; and
(g) explanatory
notes to the financial statements.
Paragraph
2 - The Board of Directors shall submit to the Annual General Meeting a proposal on the intended allocation of net profits,
together with the financial statements of the year, subject to the provisions set forth in these Bylaws and in the law.
Article 31 - The
shareholders shall be entitled to receive, in each year, as dividends, a minimum mandatory percentage of thirty percent (30%) on
the net profit, with the following adjustments:
(i) the
addition of the amounts resulting from the reversal, in the year, of reserves for previously created contingencies;
(ii) the
decrease of the amounts intended, in the exercise, for the creation of the legal reserve and reserves for contingencies; and
(iii) whenever
the amount of the minimum compulsory dividend exceeds the realized portion of the net profit for the year, the management may propose,
and the General Meeting may approve, the allocation of the excess to create an unrealized profit reserve (article 197 of Law No.
6,404/76).
Paragraph
1 - The Meeting may assign to the managers a share in the profits, subject to the relevant legal limits. The payment of such
profit sharing is conditioned upon the allocation to the shareholders of the mandatory dividend referred to in this Article. Whenever
the semi-annual balance sheet is prepared and interim dividends are paid based on it in an amount at least equal to thirty percent
(30%) on the net profits of
such period, calculated pursuant
to this Article, a share of the semi-annual profits may be paid to the managers, upon resolution of the Board of Directors, by
referendum of the General Meeting.
Paragraph
2 - The Meeting may resolve on, at any time, distributing dividends due to preexisting profit reserves or profits accrued in
the previous years, thus kept as a result of a resolution of the Meeting, after the mandatory dividend referred to in this Article
is assigned to the shareholder in each year.
Paragraph
3 - The Company may prepare semi-annual or interim balance sheets. The Board of Directors may resolve on the distribution of
dividends from the account of profits ascertained in those balance sheets. The Board of Directors may also declare interim dividends
from the account of accrued profits or from profits reserves existing in those balance sheets or in the last annual balance sheet.
Paragraph
4 - The dividends not claimed within three (3) years shall become time- barred to the benefit of the Company.
Paragraph
5 - The Board of Directors may pay or credit interest on net equity, pursuant to the applicable legislation.
Article 32 - The
General Meeting may resolve on the capitalization of reserves created in semi-annual or interim balance sheets.
Chapter
V
DISPOSAL OF SHARE CONTROL AND OPA AS A RESULT OF REACHING A
RELEVANT INTEREST
Section
I
DISPOSAL OF SHARE CONTROL
Article 33 - The
direct or indirect disposal of the Company’s control, through a single transaction or through successive transactions, shall
be contracted under the condition precedent or condition subsequent that the purchaser undertakes to carry out the public offer
of shares, the object of which shall be the shares issued by the Company and held by other shareholders, observing the conditions
and the terms set forth in the legislation and in the prevailing regulations and in the Novo Mercado Rules, so as to ensure them
a treatment equal to that provided to the disposing party.
Section
II
OPA AS A RESULT OF REACHING A RELEVANT INTEREST
Article 34 - Any
Relevant Shareholder that acquires or becomes the owner of shares issued by the Company in an amount equal to or higher than twenty-five
percent (25%) of the total number of shares issued by the Company shall, within sixty (60) days as of the date of acquisition or
the event that resulted in the ownership of shares in an amount equal to or higher than twenty-five (25%) of the total number of
shares issued by the Company, register or apply for registration of, as the case may be, a public offer for the acquisition of
all shares issued by the Company (“OPA”), in compliance with the provisions of the applicable CVM regulations,
the regulations of B3 and the terms of this Article.
Paragraph
1 - The OPA shall be (i) directed indistinctly to all shareholders of the Company, (ii) carried out in an auction to be performed
at B3, (iii) launched with the price determined pursuant to the provisions of paragraph 2 below, and (iv) paid at sight, in Brazilian
currency, against the acquisition under the OPA of shares issued by the Company.
Paragraph
2 - The acquisition price in the OPA of each share issued by the Company cannot be lower than the result obtained applying
the following formula:
OPA Price = Share Value
Where:
‘OPA Price’
means the acquisition price of each share issued by the Company in the OPA set forth in this article.
‘Share Value’
means the greatest amount between: (i) the highest unit price achieved by shares issued by the Company during the period of twelve
(12) months prior to the OPA in any stock exchange in which the Company’s shares are traded, (ii) the highest unit price
paid by the Relevant Shareholder, at any time, for one share or tranche of shares issued by the Company; and (iii) the amount equivalent
to twelve (12) times the Company’s Average Consolidated EBITDA (as defined in paragraph 11 below) minus the Company’s
net consolidated debt, divided by the total number of shares issued by the Company.
Paragraph
3 - The conduct of the OPA referred to in the main section of this Article shall not exclude the possibility of another shareholder
of the Company or, if applicable, the Company itself, preparing a competitive OPA, pursuant to the applicable regulations.
Paragraph
4 - The conduct of the OPA referred to in the main section of this Article may be waived upon affirmative vote of the shareholders
representing the majority of the share capital at an extraordinary general meeting of the Company convened specially to resolve
on the OPA.
Paragraph
5 - The Relevant Shareholder shall be obliged to comply with any CVM requests or requirements related to the OPA, within the
maximum terms set forth in the applicable regulations.
Paragraph
6 - If the Relevant Shareholder fails to comply with the obligations imposed by this article, including with respect to the
observance of the maximum terms to comply with any CVM requests or requirements, if applicable, the Company’s Board of Directors
shall convene an Extraordinary General Meeting, in which the Relevant Shareholder may not vote, to resolve on the suspension of
the exercise of the Relevant Shareholders’ rights that failed to comply with any obligation imposed by this Article, pursuant
to the provisions of article 120 of Law No. 6,404/76.
Paragraph
7 - Any Relevant Shareholder that acquires or becomes the holder of other rights, including of usufruct or entailment, over
the shares issued by the Company in
an amount equal to or higher
than twenty-five percent (25%) of the total number of shares issued by the Company shall be equally obliged to, within the maximum
term of sixty (60) days counted as from the date of such acquisition or the event that resulted in the ownership of such rights
over shares in an amount equal to or higher than twenty-five percent (25%) of the total number of shares issued by the Company,
register or apply for registration of, as applicable, an OPA, pursuant to the terms described in this Article 34.
Paragraph
8 - The obligations set out in article 254-A of Law No. 6,404/76 and in articles 33 and 35 of these Bylaws do not exempt the
Relevant Shareholder from complying with the obligation set forth in this Article.
Paragraph
9 - The provisions of this Article 34 do not apply if a person becomes the holder of shares issued by the Company in an amount
in excess of twenty-five percent (25%) of the total number of shares issued thereby as a result of (i) the merger of another company
into the Company, (ii) the merger of shares from another company into the Company or (iii) the subscription of shares of the Company,
carried out in a sole IPO approved at a General Meeting of the Company, convened by its Board of Directors, and the capital increase
proposal of which has determined the setting of the issue price of the shares based on an economic value obtained from a report
on the economic and financial assessment of the Company prepared by a specialized institution or company with proven experience
in the assessment of publicly-held companies.
Paragraph
10 - For purposes of calculation of the twenty-five percent (25%) of the total shares issued by the Company described in the
main section of this Article, the involuntary accretions of equity interests as a result of the cancellation of treasury shares
or a reduction in the Company’s share capital with the cancellation of shares.
Paragraph
11 - For purposes of these Bylaws, the capitalized terms below shall have the following meanings:
“Relevant
Shareholder” means any person (including, but not limited to, any individual or legal entity, investment fund,
condominium, securities portfolio, universality of rights, or other type of organization, resident, domiciled or with
principal place of business in Brazil or abroad), or a group of persons bound by a voting trust with the Relevant Shareholder
and/or that acts representing the same interest as the Relevant Shareholder, that may subscribe and/or acquire shares of the
Company. The examples of persons who may represent the interests of the Relevant Shareholder include any person
(i) that is directly or indirectly controlled or managed by such Relevant
Shareholder, (ii) that controls or manages, in any way, the Relevant Shareholder, (iii)
that is directly or indirectly controlled or managed by any person that directly or indirectly controls such Relevant
Shareholder, (iv) in which the controlling shareholder of such Relevant Shareholder holds, directly or indirectly, an equity
interest equal to or higher than thirty percent (30%) of the share capital, (v) in which such Relevant Shareholder holds,
directly or indirectly, an equity interest equal to or higher than thirty percent (30%) of the share capital, or (vi) that
holds, directly or indirectly, an equity interest
equal to or higher than thirty
percent (30%) of the share capital of the Relevant Shareholder.
“Outstanding Shares”
means all shares issued by the Company, except for those (i) held directly or indirectly by the Controlling Shareholder and/or
persons related thereto; (ii) held in the Company’s treasury; (iii) held by a company controlled by the Company; and (iv)
held directly or indirectly by the managers of the Company.
“Company’s Average
Consolidated EBITDA” is the arithmetic means of the Company’s Consolidated EBITDA related to the two (2)
most recent full fiscal years.
“Company’s Consolidated
EBITDA” means the Company’s consolidated operating profit before the net financial expenses, income tax and social
contribution, depreciation, depletion and amortization, as ascertained based on the consolidated audited financial statements related
to the end of the most recent fiscal year made available by the Company to the market.
Paragraph
12 - If CVM regulations applicable to the OPA set forth in this Article determine the adoption of a calculation criterion to
set the acquisition price of each share of the Company in the OPA that results in an acquisition price higher than that determined
pursuant to Paragraph 2 above, the acquisition price calculated pursuant to CVM regulations shall prevail in the execution of the
OPA set forth in this Article.
Article 35 - Any
Relevant Shareholder that has subscribed for and/or acquired shares issued by the Company in an amount equal to or higher than
thirty percent (30%) of the total number of the Company’s Outstanding Shares and that wishes to carry out a new acquisition
of shares issued by the Company in an stock exchange shall be obliged to, prior to each new acquisition, inform the Company and
B3 in writing of its intention to acquire other shares issued by the Company, at least three (3) business day prior to the expected
date of the new acquisition of shares, always pursuant to the prevailing legislation, CVM regulations and applicable B3 regulations.
Sole Paragraph - If the
Relevant Shareholder fails to comply with the obligations imposed by this Article, the Company’s Board of Directors shall
convene an Extraordinary General Meeting, in which the Relevant Shareholder may not vote, to resolve on the suspension of the exercise
of the Relevant Shareholders’ rights that failed to comply with any obligation imposed by this Article, pursuant to the provisions
of article 120 of Law No. 6,404/76.
Chapter
VI
ARBITRATION COURT
Article 36 - The
Company, its shareholders, managers and Fiscal Council members, whether sitting or alternates, if any, undertake to solve, through
arbitration, before the Market Arbitration Chamber, pursuant to its regulations, any disputes that may arise among them, related
to or as a result of being an issuer, shareholders, managers and Fiscal Council members, specially arising out of the provisions
set forth in Law No. 6,385, of December 7, 1976, in Law No. 6,404/76, in the Company’s Bylaws, in the rules issued by the
National Monetary Council, by the Central Bank of Brazil and by CVM, as well as in the other rules applicable
to the operation of the capital market
in general, in addition to those set out in the Novo Mercado Rules, the other regulations of B3 and in the Novo Mercado Participation
Agreement.
Chapter
VII
COMPANY’S LIQUIDATION
Article 37 –
The Company shall be liquidated in cases determined by law, and the General Meeting shall elect the liquidator or liquidators,
as well as the Fiscal Council that shall operate during said period, in compliance with the legal formalities.
Chapter
VIII
INDEMNIFICATION AGREEMENT
Article 38 - Within
the limits set forth in this Article, the Company shall indemnify and hold their Directors, Officers, Committee members and their
other employees holding management positions or roles in the Company (jointly or separately, “Beneficiaries”)
harmless, in case of any damage or loss actually incurred by the Beneficiaries in view of the regular exercise of their duties
in the Company.
Paragraph
1 - The Company shall not indemnify the Beneficiary for (i) actions taken out of the scope of the exercise of the duties or
powers; (ii) actions taken with bad faith, gross negligence, fault or fraud; (iii) actions taken to their own benefit or that of
third parties, in violation of the company’s corporate interest; (iv) indemnifications resulting from a social action set
forth in article 159 of Law No. 6,404/76 or reimbursement of losses addressed in article 11, paragraph 5, II, of Law No. 6,385,
of December 7, 1976; and (v) other exclusions of indemnification set forth in the indemnification agreement entered into with the
Beneficiary.
Paragraph
2 - In case the Beneficiary is sentenced, by a final and unappealable court, arbitration or administrative decision and which
cannot be appealed in view of the actions taken (i) out of the scope of the exercise of their duties; (ii) with bad-faith, gross
negligence or fraud; or (iii) in their own interest or that of third parties, in violation of the Company’s corporate interest,
they shall reimburse the Company for all costs and expenses incurred with the legal assistance, pursuant to the prevailing legislation.
Paragraph
3 - The indemnification conditions and limits that are object of this Article shall be established in an indemnification agreement,
the standard form of which shall be approved by the Board of Directors, without prejudice to the contracting of a specific insurance
to cover for management risks.
Chapter
IX
FINAL AND TRANSITIONAL PROVISIONS
Article 39 –
Events not mentioned in these Bylaws shall be settled at the General Meeting and under the provisions of Law No. 6,404/76, with
due regard to the Novo Mercado Rules.
Article 40 –
The Company shall comply with the shareholders’ agreements filed at its principal place of business, and the members of the
presiding board of the General Meeting or of the Board of Directors shall be expressly forbidden from accepting and considering
any
vote by any shareholder, signatory to the
shareholders’ agreement duly filed at the principal place of business, cast in violation of what was agreed upon in such
agreement, and the Company shall also be expressly forbidden from accepting and proceeding with the transfer of shares and/or encumbrance
and/or assignment of a preemptive right to subscription of shares and/or other securities in violation of the provisions and terms
agreed upon in the shareholders’ agreements.
Article 41 - The
Company may not grant financing or guarantees of any type to third parties, in any way, for businesses foreign to its corporate
interests.
Sole Paragraph - The Company
may not grant financing or guarantees of any type, in any way, to the controlling shareholders.
Article 42 - The
provisions of Section II of Chapter V of these Bylaws do not apply to the Company’s shareholders who are signatories of the
Company’s Shareholders Agreement, dated September 4, 2019 and filed at the headquarters of the Company, as well as to the
purchasers of shares of the Company through Permitted Transfers, as defined in such Company’s Shareholders Agreement, including,
but not limited to, purchasers who are (i) descendants and spouses, heirs or testamentary heirs of the shareholders, who acquire
the related shares (and/or shares issued by Natura Cosméticos S.A. that may contribute to the capital of the Company), as
a result of the advance of a legitimate, inheritable donation or succession; or (ii) holding companies, investment funds, trusts
or similar trust entities, whose beneficiaries are the shareholders, their descendants, spouses, heirs or testamentary heirs.