CHAPTER I - COMPANY NAME, PRINCIPAL PLACE OF BUSINESS, CORPORATE PURPOSE AND DURATION

Article 1. BANCO INDUSVAL S.A. (“Bank”) is a private legal entity organized under a joint-stock company governed by these Bylaws and prevailing laws; in special Law 6404 of December 15th, 1976 and subsequent amendments (“Brazilian Corporation Law”).

Paragraph 1 – Upon the admission of the Bank in the special listing segment denominated Level 2 of Corporate Governance of BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros (respectively, “Level 2” and “BM&FBOVESPA”), the Bank, its shareholders, its management and the members of the Fiscal Board, whenever installed, are subject to the provisions of the Listing Rules of the Level 2 of Corporate Governance from BM&FBOVESPA (“Level 2 Listing Rules”).

Paragraph 2 – The provisions of Level 2 Listing Rules will prevail upon the statutory provisions in the event the rights of addresses of public offerings provided herein are impaired.

Article 2. The Bank’s principal place of business and jurisdiction is located in the City of São Paulo, State of São Paulo, and its Board of Directors shall establish its address.

Sole Paragraph. The Bank may open and close branches, branch offices, teller’s booths, administrative units and representation offices in Brazil and change its address upon resolution of the Executive Office.

Article 3. The corporate purpose of the Bank is to perform debtor/creditor and related transactions in connection with the respective business units authorized (commercial and investment banking and foreign exchange transactions), subject to the provisions of law and regulations in effect.

Paragraph 1. It may further participate in other companies as partner, shareholder, affiliate or controlling company, pursuant to prevailing laws and regulations applicable to institutions of the kind.

Paragraph 2. The Company may offer guarantees in favor of third parties pursuant to prevailing regulations.

Paragraph 3. The Company may perform purchase and sale transactions in the gold and securities markets.

Article 4. The Bank is established for an indeterminate period.

CHAPTER II - CAPITAL STOCK

Article 5. The Company’s capital stock, subscribed for and paid-up, is R$849,843,269.25 (eight hundred and forty-nine million, eight hundred and forty-three thousand, two hundred and sixty-nine Brazilian Reais and twenty-five cents), divided into 115,033,148 (one hundred and fifteen million, thirty-three thousand, one hundred forty-eight) registered common shares with no par value, and 37,494,103 (thirty-seven million, four hundred and ninety-four thousand, one hundred three) registered preferred shares with no par value.

 

Paragraph 1. Each common share shall carry one vote in General Meetings’ resolutions. In case of a public offering resulting from a possible transfer of Controlling Shares, the common shares not belonging to the Controlling Shareholder shall be entitled to the same price as that paid for the Controlling Shares, as defined in Chapter VIII hereof.

Paragraph 2. Each preferred share shall carry the right of restricted vote in General Meetings’ resolutions regarding exclusively the following issues:

  1.  transformation, merger or spin-off of the Company;
  2.  approval of contracts between the Bank and the Controlling Shareholder, directly or through third parties, as well as other companies in which the controlling shareholder has an interest, whenever, by virtue of legal or statutory provision, they are subject to the resolution of the General Meeting;
  3.  Appraisal of assets destined to the capital increase of the Bank;
  4.  selection of a specialized institution or company to determine the economic value of the Bank pursuant to paragraph one of Article 47;
  5.  amendment or revocation of statutory provisions that alter or modify any of the requirements of item 4.1 of Level 2 Regulation. This voting right shall prevail until the date in which the existing Corporate Governance Level 2 Participation Agreement is in force.

Paragraph 3. The preferred shares issued by the Bank ensure the following advantages:

  1. priority in capital reimbursement in case of liquidation of the Bank, without premium;
  2. participation in the profits distributed on a par with common shares; and
  3. the right to be included in public offerings in view of transfer of the Bank’s Control under the same price offered to Controlling shares, as stipulated in the Chapter IX hereof.

Paragraph 4. In addition to the priorities and advantages set out above, the General Meeting that shall resolve on the issuance of preferred shares may attribute additional priorities and advantages.

Paragraph 5. The Bank may acquire its own shares, upon authorization of the Board of Directors in order to cancel them or hold them in treasury for future transfer.

Article 6. The Bank is hereby authorized to increase its capital stock, irrespective of amendment to its bylaws, in up to fifty million (50,000,000) additional book-entry common or preferred registered shares, with no par value, upon resolution of the Board of Directors. The Board of Directors shall set the number, price and term for payment thereof, as well as other conditions for issue thereof within the cap authorized in this article.

Paragraph 1. The Bank’s capital increase upon issuance of shares may encompass one or more types or classes of shares, without bearing any proportional relation between shares of each type or class, with due regard for the cap set out in law, as regards the preferred shares.

Paragraph 2. The Board of Directors may resolve on the issuance of subscription warrants within the limit of the authorized capital.

Paragraph 3. Within the limit of the authorized capital and pursuant to the plan approved by the General Meeting, the Bank may grant call options to officers, employees or individuals rendering services thereto or to officers, employees or individuals rendering services to the companies under its control, except for the right of first refusal of shareholders upon granting and exercise of call options.

Paragraph 4. The Bank is hereby forbidden to issue debentures or founder’s shares.

Article 7. All shares of the Bank are in book-entry form and held in a trust account in a financial institution authorized by the Brazilian Securities Commission (“CVM”) and designated by the Board of Directors on behalf of its holders without issue of certificates.

Sole Paragraph. The transfer and registration costs relating to the book-entry shares may be charged directly from the shareholder by the book runner, as set out in the book-entry agreement.

Article 8. At the discretion of the Board of Directors, the right of first refusal may be excluded or reduced in the issue of shares and subscription warrants, the offering of which is made upon sale in the stock exchange or by public subscription or further upon exchange of shares under a public offering for acquisition of Control, pursuant to law and within the limit of the authorized capital.

CHAPTER III - GENERAL MEETING

Article 9. The General Meeting shall meet ordinarily once a year in the first four months following the closing of the fiscal year, and extraordinarily whenever called pursuant to Law No. 6404 of December 15, 1976, as amended (“Brazilian Corporation Law”) or these Bylaws or whenever required in the Company’s interest.

Paragraph 1. General Meetings shall be called by resolution of the Board of Directors, or in the cases set forth in law, by the shareholders or the Fiscal Board upon call notice published within at least fifteen (15) days at first call and eight (8) days at second call.

Paragraph 2. The General Meeting to resolve on the cancellation of registration as a public-held company or withdraw of the Bank from Level 2 shall be called at least within thirty (30) days in advance.

Paragraph 3. The General Meeting may only resolve on the matters on the agenda stated in the corresponding call notice, with due regard for the exception set out in the Brazilian Corporation Law.

Paragraph 4. At the General Meetings, the shareholders shall submit within at least seventy-two (72) hours in advance, besides their identity card and/or the applicable corporate acts evidencing legal representation, as the case may be: (i) evidence issued by the book runner (art. 7) within five (5) days prior to the General Meeting; (ii) power of attorney with Principal’s signature certification; and/or (iii) as for the shareholders participating in fungible custody of registered shares, the statement containing their corresponding equity interest, issued by the competent body.

Paragraph 5. Minutes of General Meetings shall be drawn up in the Book of Minutes of General Meetings in summary form and published without signatures.

Article 10. The General Meeting shall be instated and presided over by the Chairman of the Board of Directors or, in his absence or impairment, by one of the Vice-Chairmans of the Board of Directors. In the absence, temporary impairment or vacancy in the position of Vice-Chairman of the Board of Directors, the remaining members of the Board of Directors shall appoint an alternate among the members thereof to preside over the General Meeting. The Chairman of the General Meeting shall appoint up to two (2) Secretaries.

Article 11. In addition to the duties prescribed by law, the General Meeting shall:

I. elect and dismiss the members of the Board of Directors and Fiscal Board, whenever instated;
II. set the annual global compensation of the members of the Board of Directors and Executive Office, as well as of the Fiscal Board, if instated;
III. amend the Bylaws;
IV. resolve on the winding-up, liquidation, consolidation, spin-off, merger of the Bank or of any company into or with the Bank;
V. ascribe stock dividends and decide on any grouping and splitting of shares;
VI. approve stock option plans for officers, employees or individuals that provide services to the Bank or to companies controlled by the Bank;
VII. resolve on the allocation of profits accrued at year-end and dividend distribution, according to the senior management proposal;
VIII. elect and dismiss the liquidator, as well as the Fiscal Board to operate during the liquidation period;
IX. resolve on the delisting from Level 2 in the events set out in article 41 hereof;
X. resolve on the cancellation of registration as a public-held company at CVM;
XI. choose the specialized institution or company responsible for preparing the Bank’s share appraisal report, among the companies referred to by the Board of Directors, in case of cancellation of registration as a public-held company or delisting from Level 2, as stipulated in Chapter IX hereof; and
XII. resolve on any matter submitted thereto by the Board of Directors.

CHAPTER IV - SENIOR MANAGEMENT BODIES

Section I – Standard Provisions for the Senior Management Bodies

Article 12. The Bank shall be managed by a Board of Directors (Conselho de Administração) and an Executive Office (Diretoria).

Paragraph 1. Investiture in office shall be made upon signing of the respective instrument drawn up on the proper book by the corresponding senior manager, after ratification thereof by the Central Bank of Brazil and prior signing of the Senior Managers’ Statement of Consent, pursuant to the Differentiated Corporate Governance Practices Rules Level 2 (“Listing Rules”), as well as to the compliance of the applicable legal provisions.

Paragraph 2. The senior managers shall serve until their respective successors take over, unless otherwise resolved on by the General Meeting or Board of Directors, as the case may be.

Paragraph 3. The positions of Chairman of the Board of Directors and Chief Executive Officer or the main executive of the Bank may not be accumulated by the same person.
 
Article 13. The General Meeting shall set the global compensation of the senior managers and the Board of Directors shall establish the individual compensation of the Board of Directors members and Officers in meeting.

Article 14. Any of the senior management bodies’ meetings shall be deemed validly instated with the attendance of a majority of their respective members and resolutions shall be taken by a majority vote of the attendees, with due regard for the provisions hereof.

Sole Paragraph. Prior call notice may only be waived as a condition for its validity when all the respective members are present in the meeting.

Section II – Board of Directors

Article 15. The Board of Directors shall be composed of at least six (6) and at most twelve (12) members, all of them shareholders elected or removed by the Annual General Meeting with a unified term of office of two (2) years, each year deemed a period between two (2) Annual General Meetings, with reelection allowed.

Paragraph 1. In the General Meeting whose purpose is to resolve on the election of Board of Directors members, the shareholders shall firstly set the actual number of Board of Directors members to be elected.

Paragraph 2. At least twenty percent (20%) of the Board of Directors members shall be Independent Board Members, as set out in Level 2 Listing Rules, and clearly so stated in the minutes of the General Meeting in which they are elected, The member(s) of the Board elected pursuant to article 141, Paragraphs 4 and 5 and article 239 of Law 6404/76 and as defined in Paragraph 4 of this article may also be considered independent.

Paragraph 3. Whenever calculating such percentage a fractional number or Board members is obtained, the number shall be rounded pursuant to the terms set forth in Level 2 Listing Rules.

Paragraph 4. For purposes of this Article, the expression “Independent Board Member” shall mean a Member that: (i) has no relation with the Bank, except for an equity interest in its capital stock; (ii) is not a Controlling Shareholder (as set out in Article 36 hereof), a spouse or relative up to the 2nd degree thereof, is not or has not been related to the Bank or to a Controlling company-related entity (except for the persons related to public teaching and/or research institutions) in the past three years; (iii) has not been an employee or officer of the Bank, Controlling Company or company controlled by the Bank in the past three years; (iv) is not a direct or indirect supplier or seller of services and/or products of the Bank, in a volume that shall entail loss of freedom; (v) is not an employee or senior manager of a company or entity offering or demanding services and/or products to or from the Bank; (vi) is not a spouse or relative up to the 2nd degree of any senior manager of the Bank; (vii) is not paid any compensation by the Bank besides that as a member (cash dividends resulting from equity interest are excluded from this restriction).  The Independent Member shall be expressly stated in the minutes of the General Meeting that elects him.

Paragraph 5. Upon expiration of the term of office of the Board of Directors members, they shall remain in office until the new elected members are invested in office.

Paragraph 6. A Board of Director member cannot have access to information or take part in Board of Directors’ meetings related to matters on which said member has or represents any conflicting interest with those of the Bank.

Paragraph 7. For better performance of its duties, the Board of Directors may organize committees or working groups with defined purposes, which shall act as ancillary bodies with no decision-making powers, always with the intention of assisting the Board of Directors, which shall be composed of persons designated thereby among the members of the senior management and/or other persons directly or indirectly related to the Bank.

Article 16. The Board of Directors shall have one (1) Chairman and two (2) Vice-Chairmans elected by the majority of votes of those attending the General Meeting that shall appoint the Board of Directors members, with due regard for the provisions of paragraph 3 in the events of vacancy and absence or impairment in the position of Chairman and Vice-Chairman.

Paragraph 1. The Chairman of the Board of Directors will coordinate the activities of the Board of Directors, the monitoring of the Company’s business and the strategic planning, as per the guidelines established by the Board of Directors. The Chairman of the Board of Directors shall call upon and preside over its meetings and the General Meetings, with due regard for the provisions of Article 10 hereof, as regards the General Meetings.

Paragraph 2. The Chairman of the Board of Directors shall cast his own vote and have a casting vote in case of a tie in Board of Directors resolutions.

Paragraph 3. In the event of vacancy in the position of Chairman of the Board of Directors and in the absences or temporary impairment thereof, the Vice-Chairman shall take office. In the absence, temporary impairment or vacancy in the position of Vice-Chairman, the Chairman shall appoint an alternate among the remaining members. In the events of temporary or permanent disqualification from office of any other Board Member, the remaining board members may appoint an alternate to serve on a temporary or permanent basis, with due regard for the legal provisions and those stated herein. In case of vacancy in the positions of the Bank’s Board of Directors in a number lower than six (6) members thereof, a General Meeting shall be called upon for conducting a new election.

Article 17. The Board of Directors shall meet ordinarily four (4) times a year and extraordinarily whenever called upon by the Chairman of the Board of Directors or by two (2) Board Members acting jointly.

Paragraph 1. The call notices for the meetings shall be made in writing or by e-mail sent to each member of the Board of Directors within at least five (5) business days in advance, unless the majority of its members stipulate a lower term. The Chairman of the Board of Directors may extraordinarily and urgently call a Board of Directors’ Meeting, in the manner set out in paragraph 1 within twenty-four (24) hours in advance. The resolutions taken at the Board of Directors’ meetings shall be limited to those stated in the written notice sent to the Board Members, stating the place, date and time of such meeting, as well as the agenda in brief terms.

Paragraph 2. All resolutions passed by the Board of Directors shall be stated in the minutes drawn up in the corresponding book of Minutes of Board of Directors’ Meetings.

Article 18. The Board of Directors shall be in charge of the following duties besides other duties prescribed by law or under these Bylaws:

I. to establish the Bank’s general business guidelines;
II. to elect and dismiss Officers, as well as establish their duties;
III. to set the Officers’ compensation, fringe benefits and other incentives, within the senior management global compensation cap approved by the General Meeting;
IV. to supervise the activities of the Executive Office, examine the company’s books and records at any time, request information regarding agreements that have been executed or are about to be executed and perform any other acts;
V.  to choose and dismiss the company’s Independent Auditors, as well as call them to provide clarification deemed necessary on any issue;
VI. to provide an opinion on the Senior Management Report, the Executive Office accounts and the Bank’s financial statements and resolve on the submission thereof to the General Meeting;
VII. to approve and review the capital budget and business plan, as well as make capital budget proposals to be submitted to the General Meeting for purposes of withholding profits;
VIII. to resolve on the instatement of the General Meeting whenever deemed convenient or in the event set out in article 132 of the Brazilian Corporation Law;
IX. to submit to the General Meeting a proposal for allocation of net profits at year-end, as well as review and resolve on balance sheets prepared on a half-yearly basis, or at shorter periods, as well as on the payment of dividends or interest on net equity resulting therefrom, and resolve on allocation of interim or periodical dividends to the accrued profits or profits reserve accounts existing at the time of preparation of the latest annual or half-yearly balance sheet;
X. to submit to the General Meeting a proposal for amendment to the Bylaws;
XI. to submit to the General Meeting a proposal for winding-up, consolidation, spin-off and merger of the Bank or merger into or with the Bank of any other companies, as well as authorize organization, winding-up or liquidation of any subsidiaries in Brazil or abroad;
XII. to pronounce itself previously on any matter to be submitted to the General Meeting
XIII. to authorize issuance of Bank’s shares, within the caps authorized under Article 6 hereof, by setting their price, payment term and issue conditions, further being allowed to exclude the right of first refusal or reduce the term for exercise thereof in the issuance of shares and subscription warrants, the offering of which shall be made upon sale in the stock exchange or by public subscription or under public offering for acquisition of Control pursuant to law;
XIV. to resolve on the issue of subscription warrants, as set out in paragraph 2 of Article 6 hereof;
XV.  upon approval of the General Meeting, to grant call options to officers, employees or individuals rendering services to the Bank or to the companies controlled thereby, with no right of first refusal to shareholders pursuant to the plans approved at the General Meeting;
XVI. to resolve on the Bank’s stock trading for purposes of cancellation or holding such stock in treasury and the corresponding disposal thereof, with due regard for the applicable legal provisions;
XVII. to authorize issuance or taking out of any credit instruments for raising of funds which are not included in the regular course of the Bank’s business or that may affect the Bank’s capital structure;
XVIII. to establish the amount of profit sharing for the officers and employees of the Bank and companies controlled thereby, being allowed to resolve not to ascribe any profit sharing thereto;
XIX. to decide on payment or credit of interest on net equity to the shareholders pursuant to applicable law;
XX. to authorize acquisition or transfer of equity investments, as well as authorize corporate joint ventures or strategic alliances with third parties;
XXI. to establish the maximum amounts for acquisition or transfer of the Bank’s fixed and current assets;
XXII. to authorize creation of in rem guarantees entailing encumbrance of twenty percent (20%) or more of the Bank’s assets;
XXIII. in special cases, to grant specific authorization in order for certain documents to be signed by only one Officer, which shall be put down in minutes drawn up in the proper book;
XXIV. to approve the hiring of a book-entry services company;
XXV. to approve policies on disclosure of information to the market and on trading the Bank’s securities;
XXVI. to set out the three-nominee list of institutions or companies specialized in economic appraisal of companies, for preparation of the Bank’s share appraisal report in case APO for cancellation of registration as a public-held company or delisting from Level 2, as set out in Article 42 hereof;
XXVII. to resolve on any matter submitted thereto by the Executive Office, as well as call upon the Executive Office members for joint meetings, whenever deemed convenient;
XXVIII. to establish Committees and their corresponding rules and authorities; and
XXIX. to resolve on the order of its works and adopt or establish internal rules for its operation, with due regard for the rules set out herein.
XXX. to opine favorably or against  any public offer for acquisition of shares issued by the Bank, through a prior informed opinion, disclosed 15 (fifteen) days prior to the publishing of the Notice of the public offering for acquisition of shares, which should address at least (i) the convenience and opportunity of the public offer for acquisition of shares in the interest of all of the shareholders and in relation to the liquidity of the securities by them held, (ii) the impact of public offering for acquisition of shares on the Bank’s interest, (iii) the strategic plans disclosed by the offerer in relation to the Bank, (iv) other items which the Board deems appropriate, as well as the information required by the rules set by the CVM (the Brazilian Securities and exchange Commission).
XXXI. to appoint and dismiss members of the Compensation Committee;
XXXII. to approve the operating rules that the Compensation Committee may establish for its own operation and become aware of the activities of the Compensation Committee, and
XXXIII. to define the remuneration of the members of the Compensation Committee.

Section III – Executive Office

Article 19. The Executive Office, whose members shall be elected and dismissed at any time by the Board of Directors, shall be composed of at least three (3) and at most thirteen (13) members, who need not be shareholders, but must reside in Brazil. The Officers shall be designated as follows: two (2) Co-Chief Executive Officers (Co-CEOs), who will have identical privileges and duties; one (1) Investor Relations Officer (Diretor de Relações com Investidores); up to ten (10) Executive Officers, out of which a maximum of five (5) may be appointed as Vice President Officers, as defined by the Board of Directors, and the position of Investor Relations Officer may be coupled with the position of Co-Chief Executive Officer, Vice President Officer or Executive Officer. The Officers shall have a unified term of office of two (2) years; the expression year deemed a period between the first Board of Directors Meetings held after the Annual General Meetings in each fiscal year, with reelection permitted.

Paragraph 1. The positions of Co-Chief Executive Officers and Investor Relations Officer shall be compulsorily occupied.

Paragraph 2. The election of the Executive Office shall take place within five (5) business days after the Annual General Meeting is held. The term of office of the Officers shall be extended until investiture in office of the elected members. In the event of vacancy in the positions of the Bank’s Executive Office in a number lower than four (4) Officers, the Board of Directors shall meet within at most ten (10) days from notification of such fact to appoint new Officers.

Paragraph 3. In the temporary impairment or absence of any of the Co-Chief Executive Officers, said Officer shall be replaced by the other Co-Chief Executive Officer, while such impairment or absence shall last. In the temporary impairments or absences of both Co-Chief Executive Officers or of one Vice President Officer or one Executive Officer the absent or impaired Officer shall be replaced by one of the Vice President Officers or Executive Officers present and freely chosen by the Executive Office, who shall perform his original duties and those of the replaced Officer while such impairment or absence shall last.

Paragraph 4. It shall be incumbent on the:

I. Any of the Co-Chief Executive Officers: (i) to call upon and preside over the Bank’s meetings; (ii) to represent or appoint the Bank’s representative before the national financial system and trade associations; (iii) to structure the business of the Bank; (iv) to manage the banking transactions; (v) to establish internal and operating rules; (vi) to supervise performance of the Executive Office as well as all the Bank’s transactions; and (vii) to receive service of process.
II. Investor Relations Officer: (i) to coordinate, manage, direct and supervise the investor relations work, as well as represent the Bank before the shareholders, investors, market analysts, CVM, Stock Exchanges, the Central Bank of Brazil and other controlling bodies and institutions related to the activities performed in the capital market in Brazil or abroad; and (ii) other duties assigned thereto from time to time and established by the Board of Directors.
III. Vice President Officers and Executive Officers: to manage and supervise the areas assigned thereto by any of the Co-Chief Executive Officers.

Article 20. The Executive Office shall have powers to perform any acts necessary for regular operation of the Bank and achievement of its corporate purposes, however special they may be, including powers to waive rights, compromise and agree, with due regard for the applicable legal and statutory provisions, and shall be responsible for managing and directing the Bank’s business, especially:

I. to comply and cause compliance with these Bylaws and resolutions taken by the Board of Directors and General Meeting;
II. to prepare on a half-yearly basis the Senior Management Report, the Executive Office accounts and the Bank’s financial statements, accompanied by the independent auditors’ report, as well as the proposal for allocation of profits ascertained in the previous semester or tax year, for review by the Board of Directors and General Meeting;
III. to propose the capital budget and business plan to the Board of Directors; and
IV. to resolve on the opening or closing of branches, branch offices, teller’s booths, administrative units and representation offices in Brazil or abroad.

Article 21. The Executive Office shall validly be convened with the presence of at least a majority of its members and pass valid resolutions by majority votes, and in the event of a tie, the Co-Chief Executive Officers shall have a casting vote. Noted that in case of disagreement between the two Co-Chief Executive Officers, any of them shall have the casting vote.

Article 22. The Executive Office shall always meet at the call of (i) any of the Co-Chief Executive Officers; or (ii) any two (2) Vice President or Executive Officers.

Article 23. The call notices for the meetings shall be made in writing or by e-mail sent to the Officers within at least two (2) business days in advance, stating the agenda, the place, date and time of such meeting. The Executive Office meetings may be called upon on extraordinary or urgent cases within two (2) hours in advance.

Article 24. All resolutions taken by the Executive Office shall be put down in minutes drawn up in the proper book of minutes of the Executive Office meetings and signed by the Officers present therein.

Article 25. The Bank shall assume obligations upon (i) the signing of two Officers acting jointly; (ii) the signing of one Officer and one attorney-in-fact appointed pursuant to paragraph 1 below; (iii) the signing of two attorneys-in-fact appointed pursuant to paragraph 1 below.

Paragraph 1. All powers of attorney shall be granted by two Officers acting jointly, by means of a proxy instrument with specific powers therefore and a definite term, except for the ad judicia powers of attorney, on which event such power of attorney may be granted for an indefinite term by means of a public or private instrument. The Bank may be represented as plaintiff or defendant in court by any Officer or attorney-in-fact acting severally.

Paragraph 2. The acts of the Officers involving the Bank in any obligations regarding business unrelated to its corporate purposes, such as financings, sureties, aval guarantees or favorable guarantees whether or not related to the Bank’s business, as well as personal advantages directly or indirectly offered by third parties because of such Officers’ position shall be forbidden.

Paragraph 3. With regard to timely compliance with court orders of any nature, in relation to acts that must be performed by the Bank, as a result of notices or orders, except for those related to service of process, all legal and fault-based liability will lie with the Attorney responsible for the Legal Department or with his or her substitute, based on a formal declaration signed upon assumption of such position.

CHAPTER V - OMBUDSMAN

Article 26 - The Bank will have one (1) Ombudsman, who will act on behalf of all the Institutions that are part of the same economic group as Banco Indusval S.A. and are authorized to operate by the Banco Central of Brazil, and who will be designated and removed from office by the Executive Committee, with a term-in-office of one (1) year.

Article 27 - The office of Ombudsman will be permanent, and the Ombudsman’s responsibility is to ensure strict observance of the legal rules and regulations related to consumer rights and to act as a channel for communication between the Institution as stated in Article 26 and the clients and users of their products and services, including the mediation of conflicts.

Article 28 - The Ombudsman will have the following duties:

I. to receive, record, provide supporting documentation, analyze, and formally and adequately deal with complaints from the clients and users of the products and services of the Institutions stated in Article 26 that are not resolved through the habitual treatment dispensed by branches and other service locations;
II. to provide the necessary explanations and notify complainants of the progress of their complaints and the actions taken;
III. to inform the complainants of the expected date of a final answer, which will not exceed ten days;
IV. to forward a conclusive answer to the complaint submitted by the complainants within the time stated in part III;
V. to propose to the Board of Directors measures aimed at correcting or enhancing procedures and routines, after analyzing the complaints received;
VI. to prepare and forward to internal auditors and to the board of directors at the end of each semiannual period, a quantitative and qualitative report on actions taken as Ombudsman, including the proposals mentioned in part V.

Article 29 - The Ombudsman will be provided with adequate working conditions, so that his or her actions are based on transparency, autonomy, impartiality, and non-conflict of interests.

Article 30 - The Ombudsman will have access to the information necessary to prepare an appropriate response to the complaints received, with full administrative support, and may request information and documents to carry out his or her activities.

CHAPTER VI - FISCAL BOARD

Article 31. The Fiscal Board shall operate on a non-permanent basis with powers and duties conferred thereon pursuant to law and shall only be instated by resolution of the General Meeting or at the request of shareholders in the events prescribed by law.

Article 32. Whenever instated, the Fiscal Board shall be composed of at least three (3) and at most five (5) sitting members and a like number of alternates, who need not be shareholders, and who may be elected or removed from office at any time by the General Meeting.

Paragraph 1. The members of the Fiscal Board shall have a unified term of office of one (1) year, reelection being permissible.

Paragraph 2. The members of the Fiscal Board shall elect its Chairman during its first meeting.

Paragraph 3. The investiture in office shall be made by an instrument drawn up in the proper book and signed by the Fiscal Board member then invested in Office, waived any warranty, after the approval of their names by the Central Bank of Brazil and prior subscription of the Consent of the members of the Fiscal Board, pursuant to the Level 2 Corporate Governance Listing Rules, and the applicable legal requirements.

Paragraph 4. The Fiscal Board members shall be replaced in their absences or impairments by the respective alternates.

Paragraph 5. In case of vacancy in the position of Fiscal Board member, the corresponding alternate shall fill in such position; if there is no alternate, the General Meeting shall be convened to elect the member to occupy such vacant position.

Article 33. Whenever instated, the Fiscal Board shall meet pursuant to law and review the financial statements at least on a quarterly basis.

Paragraph 1. Irrespective of any formalities, the Fiscal Board meeting shall be deemed regularly instated with the attendance of all Fiscal Board members.

Paragraph 2. The Fiscal Board shall pronounce itself by a supermajority quorum with the attendance of a majority of its members.

Paragraph 3. All resolutions taken by the Fiscal Board shall be stated in minutes drawn up in the corresponding book of Minutes and Opinions of the Fiscal Board and signed by the Members then present.

Article 34. The compensation of the Fiscal Board members shall be set by the General Meeting that shall elect them, with due regard for paragraph 3 of Article 162 of the Brazilian Corporation Law.

CHAPTER VII - COMPENSATION COMMITTEE

Article 35 - The Compensation Committee shall be composed of at least 3 (three) and maximum 6 (six) members, individuals residing in the country, elected and dismissed by the Board of Directors, which shall fix their remuneration, and will act on behalf of all the institutions of the financial conglomerate, authorized to operate by the Central Bank of Brazil ("institutions of the conglomerate").

Paragraph 1. The term of office of members of the Remuneration Committee is 2 (two) years, prohibited the permanence of a Committee member for more than 10 (ten) years.

Paragraph 2. The Compensation Committee shall:

I. report directly to the Board of Directors;
II. have at least one member that is not an officer or director of the Bank;
III. be composed by members that have the skills and experience necessary to exercise competent and independent judgment about the Bank's remuneration policy, including the impact of the policy on risk management.

Paragraph 3. Completed the maximum period provided for in paragraph 1 above, the member of the Remuneration Committee can only re-integrate such a body in the Bank a minimum of 3 (three) years.

Paragraph 4. In case of vacancy by resignation or dismissal reducing the number of members to less than 3 (three), the Board of Directors shall promptly elect a replacement to serve until the expiration of the term of the replaced member.

Paragraph 5. The Compensation Committee meets semi-annually or extraordinarily when called by any of its members, given that the meeting of the Remuneration Committee will only be valid with the presence of most of its members.

Article 36. In addition to the responsibilities provided by law or regulation, the following will also be responsibilities of the Remuneration Committee:

I. to develop the remuneration policy for the management of the institutions of the Conglomerate, proposing to the Board the various forms of fixed and variable compensation, and benefits and special programs for recruitment and termination;

II. to supervise the implementation and operation of the management  compensation policy of the institutions of the conglomerate;

III. to review the management compensation policy for the institutions conglomerate annually, recommending to the Board its correction or improvement;

IV. to propose to the Board the amount of the global remuneration of the management to be submitted to the Annual Shareholders Meeting, under art. 152 of Law No. 6404, 1976;

V. to analyze future scenarios, internal and external, and their impact on the remuneration policy for directors;

VI. to analyze the management compensation policy of the institutions of the conglomerate in relation to market practices, in order to identify significant discrepancies compared to similar companies, and proposing the necessary adjustments;

 VII. to ensure that the management compensation policy is permanently compatible with the risk management policy, with the goals and current and expected financial situation of the institution and with the current regulation.

Article 37 - The Compensation Committee shall prepare on annual basis within ninety (90) days from the base date of December 31st, a document entitled "Report of the Compensation Committee," which should be made available to the Central Bank of Brazil for a minimum period of five (5) years.

CHAPTER VIII - PROFIT DISTRIBUTION

Article 38. The fiscal year shall begin on January 1st and end on December 31st.

Sole Paragraph. At the end of every semester, on June 30th and December 31st of every year, the Executive Office shall cause the Bank’s financial statement to be prepared, in compliance with applicable legal provisions.

Article 39. Along with the year-end financial statements, the Board of Directors shall approve allocation of the year-end net profits, ad referendum of the Annual General Meeting, calculated after deduction of the amounts referred to in article 190 of the Corporation Law, pursuant to paragraph 1 of such article, adjusted for purposes of calculation of dividends under article 202 of said law, subject to the following order of deduction:

(a) five percent (5%) shall be used, before any other allocation, for creation of a legal reserve, which shall not exceed twenty percent (20%) of the Company’s capital stock. In the fiscal year in which the balance of the legal reserve, plus the amounts of the capital reserves dealt with in article 182, paragraph 1 of the Corporation Law, exceeds thirty percent (30%) of the Company’s capital stock, allocation of a portion of the year-end net profits to a legal reserve shall not be mandatory;
(b) a portion, upon proposal of the senior management bodies, may be allocated to the creation of a contingency reserve and capitalization of the same reserves created in previous fiscal years, under article 195 of the Corporation Law;
(c) a portion shall be allocated to payment of a compulsory dividend not below, in each fiscal year, twenty-five percent (25%) of the annual adjusted net profits, as provided for in article 202 of the Corporation Law;
(d) in the fiscal year in which the amount of the compulsory dividend, calculated pursuant to item (c) above, exceeds the realized portion of the year-end profits, the General Meeting may, upon proposal of the senior management bodies, allocate the excess dividend to the creation of a realizable profit reserve, as provided for in article 197 of the Corporation Law; and
(e) the remaining year-end net profits, after the above deductions, shall be allocated as proposed by the Board of Directors, ad referendum of the General Meeting, including for the purpose of creating the reserves dealt with in article 40 below, pursuant to article 194 of the Corporation Law;

Paragraph 1. The members of the Board of Directors and of the Executive Office will take part in the Company’s profits, subject to the limits and restrictions prescribed by law.  The Board of Directors will regulate the individual distribution of the profit sharing amounts among the members of the Board and the Executive Office;

Paragraph 2.  The distribution of profits to the members of the Board of Directors and of the Executive Office may only occur in the fiscal years in which the shareholders are ensured payment of the minimum compulsory dividend provided for in the Company’s Bylaws.

Article 40. By proposal of the Board of Directors ad referendum of the General Meeting, a resolution may be passed for the creation of the following reserves: Working Capital Reserve and Reserve for Equalization of Dividends.

Paragraph 1.   The Reserve for Equalization of Dividends shall be limited to forty percent (40%) of the Company’s capital stock and shall be intended to ensure availability of funds for payment of dividends, including in the form of interest on equity, or advances thereof, with a view to keeping a flow of distributions to the shareholders; it will be made up of funds:

(a) capped at 50% of the year-end net profits, adjusted pursuant to article 202 of the Corporation Law;
(b) capped at 100% of the realized portion of the Revaluation Reserves, posted as accrued profits;
(c) capped at 100% of the amount of adjustments in the previous years, posted as accrued profits;
(d) resulting from the credit related to advance dividends.

Paragraph 2.  The Working Capital Reserve shall be limited to thirty percent (30%) of the Company’s capital stock and shall be intended to provide financial resources for operation of the Company; it shall be made up of funds capped at 20% of the year-end net profits, adjusted pursuant to article 202 of the Corporation Law.

Article 41. The Bank shall prepare semi-annual balance sheets and may also prepare balance sheets at shorter intervals, and by resolution of the Board of Directors declare:

(a) payment of dividends or interest on net equity to the ascertained profits account under the semi-annual balance sheet attributed to the mandatory dividend amount, if any;
(b) dividend distribution within intervals lower than six (6) months, or interest on net equity attributed to the mandatory dividend amount, if any, provided that the total dividends paid in each semester of the fiscal year do not exceed the capital reserve amount; and
(c) payment of interim dividend or interest on net equity to the accrued profits account or existing profit reserve in the last semi-annual or annual balance sheet attributed to the mandatory dividend amount, if any.

Article 42. The General Meeting shall resolve on capitalization of the capital or profit reserves, including those stated in interim balance sheets, with due regard for applicable laws.

Article 43. The dividends not received or demanded shall be time-barred within three (3) years as of the date on which they have been made available to the shareholder and shall inure to the benefit of the Bank.

CHAPTER IX - TRANSFER OF SHARE CONTROL, CANCELLATION OF REGISTRATION AS A PUBLIC-HELD COMPANY, DELISTING FROM LEVEL 2

Section I - Definitions

Article 44. For purposes of this Chapter VIII, the terms in capital letters below shall have the following meanings:

“Controlling Shareholder” means the shareholder or group of shareholders which exercises the Bank’s Controlling Power.
 
“Selling Controlling Shareholder” means the Controlling Shareholder when said shareholder sells the Bank’s Control.

“Control Shares” means the group of shares ensuring its holders direct or indirect several or joint exercise of the Bank’s Controlling Power.

“Outstanding Shares” means all shares issued by the Bank, except for those held by the Controlling Shareholder or persons related thereto, by the Bank’s senior managers and those held in treasury and special class preferred shares with the objective to ensure different political rights, are not transferable and are the exclusive property of privatizing entity.
 
“Transfer of the Bank’s Control” means the transfer of the Control Shares to third parties for a fee.

“Buyer” means the party to which the Selling Controlling Shareholder transfers the Bank’s Controlling Power.

“Controlling Power” or “Control” means the power actually used to directly or indirectly manage the corporate activities and guide the operation of the Bank’s bodies, directly or indirectly, effectively or by operation of law independent from the shareholding position. Ownership control shall be presumed in relation to the person or group of persons bound by a shareholders’ agreement or under Common control, which hold shares ensuring a supermajority of the votes of the shareholders present in the past three General Meetings of the Bank, although such person or group of persons do not hold shares ensuring a supermajority of the voting capital.

“Economic Value” means the value of the Bank and of its shares to be ascertained by a specialized company, upon use of a recognized methodology or based on any other criteria to be stipulated by CVM.

Section II – Transfer of the Bank’s Control

Article 45. Direct or indirect Transfer of the Bank’s Control either by means of one single or successive transactions shall be made under a suspensive or resolutory condition that the acquirer undertakes to perform a public offering for acquisition of all shares held by the remaining shareholders, with due regard for the terms and conditions set out in prevailing laws and in the Level  2 Listing Rules, so that said shareholders are ensured equal treatment as that afforded to the Selling Controlling Shareholder.

Paragraph 1. To the public offering object of this article it will still required: (i) when there is the onerous assignment of rights to subscribe for shares and other securities or rights related to securities convertible into shares, which will result in a Change of Control of the Bank; or (ii) in case of transfer of control of a company holding the Power to Control of the Bank, and, in this case, the Assigning Controlling Shareholder shall be obliged to restate to BM&FBOVESPA the value assigned to the Bank such sale and attach documentation supporting such valuation.

Paragraph 2. Transfer of the Bank’s Control shall depend on approval of the Central Bank of Brazil.

Paragraph 3. The Bank shall not register any transfer of shares to the Acquirer or to those that may hold Controlling Power while said parties do not sign the Instrument of Consent of Controlling Shareholders referred to in the Level 2 Listing Rules.

Paragraph 4. No Shareholders’ Agreement resolving on exercise of Control Power may be registered at the Bank’s principal place of business without the signatories thereof having signed the Instrument of Consent referred to in Level 2 Listing Rules.

Article 46. The public offering dealt with in the previous article shall be effective:
I.  in case of assignment for a fee of share subscription rights, which may result in transfer of the Bank’s Control; or

II. in case of transfer of control of a Company that holds the Bank’s Controlling Power, and in such event, the Selling Controlling Shareholder shall be required to inform BM&FBOVESPA the value attributed to the Bank in such transfer and attach documents evidencing it.

Article 47. The party the Controlling Power by virtue of a private share purchase agreement executed with the Controlling Shareholder, involving any number of shares, shall be required:

I.  to perform the public offering set out in Article 45 hereof;

II. to pay, under the following terms, an amount equivalent to the difference between the public offering price and the price paid by each share eventually acquired in the stock Exchange in the six (6) months prior to the date of acquisition of Controlling Power, duly updated until the date of effective payment. The referred amount shall be distributed among all those people that sold shares of the Bank in the trading sessions in which the Acquirer made acquisitions, in the proportion to the net selling balance of each person. The distribution will be made by BM&FBOVESPA under the terms of its regulations.

III. to take the necessary measures to reestablish the minimum twenty-five percent (25%) of the total outstanding shares of the Bank within the six (6) months following Control acquisition.

Section III – Cancellation of Registration as a Public-held Company and Delisting from Level 2

Article 48. In the public offering for acquisition of shares to be compulsorily performed by the Controlling Shareholder or the Bank for cancellation of registration of the Bank as a public-held company, the minimum price to be offered shall correspond to the Economic Value ascertained under an appraisal report as stipulated in Paragraphs 1 and 2 of Article 52 hereof, and under the applicable legal and regulatory requirements.
 
Article 49. Should the shareholders resolve on the delisting of the Bank from Level 2 for their securities not to be registered in Level 2; or due to corporate reorganization in which the shares resulting from the surviving company are not admitted for trading under Level 2 within one hundred and twenty (120) days from the date of the General Meeting that approved the transaction, the Controlling Shareholder shall perform a public offering for acquisition of shares held by the remaining shareholders of the Bank, the minimum price of which to be offered shall correspond to the Economic Value ascertained under the appraisal report referred to in Paragraphs 1 and 2 of Article 52 hereof, and with due regard for applicable rules and regulations.

Sole Paragraph. The Controlling Shareholder is not required to make the public offer to acquire shares referred to in the caption of this Article if the Bank quits Level 2 of Corporate Governance in virtue of the execution of the agreement for the Bank’s participation in the special segment of the BM&FBOVESPA called New Market ("Novo Mercado") or if the company resulting from reorganization obtains authorization for securities trading on the Novo Mercado within one hundred twenty (120) days from the date of the general meeting which approved the transaction.
 
Article 50. In the event there is no Controlling Shareholder, if it is deliberated the delisting of the Company from Level 2 of Corporate Governance for the securities it has issued to be registered for trading outside of Level 2 of Corporate Governance, or by virtue of corporate reorganization in which the company resulting from this reorganization does not have its securities admitted to trading on Level 2 of Corporate Governance or in Novo Mercado  within one hundred twenty (120) days from the date of the general meeting which approved the transaction, the delisting from Level 2 is subject to the public offer to acquire shares under the same terms in the article above.

Paragraph 1. The above referred general meeting shall determine those responsible for conducting the public offer of shares, which present at the meeting, shall expressly undertake the obligation to perform the offer.

Paragraph 2. In the absence of a definition of those responsible for the public offer to acquire shares, in the case of corporate reorganization, in which the surviving company does not have its securities admitted to trading under Level 2 of Corporate Governance, the shareholders that favorably voted for the reorganization shall conduct such offer.

Article 51. The delisting of the Company from Level 2 of Corporate Governance as a result of breach of obligations under the Level 2 Listing Rules is subject to the execution of a public offer for acquisition of shares, at least by the Economic Value of the shares to be determined in an appraisal report mentioned in Article 54 hereof, subject to the prevailing laws and regulations.

Paragraph 1. The Controlling Shareholder shall proceed the public offer for acquisition of shares referred to in the caption of this Article.

Paragraph 2. In the event there is no controlling shareholder and the delisting from Level 2 Corporate Governance referred to in the caption of this Article as a result of a resolution of the general meeting, the shareholders that voted in favor of the resolution which led to the respective breacher shall make the public offer for acquisition of shares referred to in the caption of this article.

Paragraph 3. In the event there is no Controlling Shareholder and the Company leaves Level 2 of Corporate Governance in the caption as a result of an act or fact produced by the management, the Directors of the Company shall call a general meeting of shareholders which agenda shall be on how to remedy the breach obligation in the Level 2 Listing Rules or, if necessary, to resolve on the delisting of the Company from Level 2 of Corporate Governance.

Paragraph 4. If the general meeting referred to in Paragraph 3 above deliberates for delisting from Level 2 of Corporate Governance, the general meeting shall set the responsible for the public offer for acquisition of shares referred to in the caption, which present at the meeting, shall expressly undertake the obligation to perform the offer.

Article 52. The appraisal report dealt with in articles 48 and 49 hereof shall be prepared by a specialized company, with evidenced experience and independent from the Bank, its senior managers and/or Controlling Shareholder(s), also meeting the requirements under Paragraph 1 of article 8 of the Brazilian Corporation Law (6404/76) and state the liability set forth in Paragraph 6 of said Article 8.

Paragraph 1. The selection of the specialized company for appraisal of the Bank’s Economic Value set out in articles 48 and 49 shall be under the authority of the General Meeting, upon submission by the Board of Directors of a three-nominee list, and the corresponding resolution shall be taken by supermajority vote of the Outstanding Shares cast in the General Meeting resolving on the issue, the blank votes not being computed, and independent from type or class each share is equivalent to one vote. The meeting set forth in this paragraph 1, if instated at first call, shall have the attendance of shareholders representing at least twenty percent (20%) of the total Outstanding Shares or else, if instated at second call, may have the attendance of any number of shareholders representing the Outstanding Shares.

Paragraph 2. The costs for preparation of the appraisal report shall be fully borne by the parties responsible for performance of the public offering for acquisition of shares, as the case may be.

Section IV – Standard Provisions

Article 53. It is possible to conduct one sole public offering for acquisition of shares for more than one of the purposes set out in Chapter IX hereof or in the rules issued by CVM, provide that it be possible to match the procedures for all types of public offerings for acquisition of shares and that the recipients thereof incur no losses and that an authorization be given by CVM, whenever so required by applicable laws.

Article 54. The Bank or the shareholders responsible for conducting the public offering for acquisition of shares set out in this Chapter IX or in the rules issued by CVM may ensure its actual performance by means of any shareholder, third party and the Bank, as the case may be. The Bank or shareholder, as the case may be, shall not be exempted from the obligation of performing said public offering for acquisition of shares until same is concluded in compliance with applicable rules.

CHAPTER X - ARBITRATION COURT

Article 55. The Bank, its shareholders, senior managers and members of the Fiscal Board hereby undertake to settle by arbitration, by means of the Market Arbitration Chamber,  any and all dispute or controversy between them, especially relating to or resulting from application, validity, effectiveness, construction, violation and the effects thereof of the provisions stated in the Brazilian Corporation Law, in these Bylaws,  in the rules issued by the National Monetary Council, the Central Bank of Brazil and by the Brazilian Securities and Exchange Commission (CVM), as well as the other rules applicable to the capital markets at large, in addition to those of the Level 2 Listing Rules, in the Arbitration Rules of the Market Arbitration Chamber established by BM&FBOVESPA, and the Agreement for Participating in Level 2 of Corporate Governance.

Sole Paragraph. The Brazilian law shall be solely applicable to the merit of any and all dispute, as well as to the enforcement, construction and validity of this arbitration clause. The arbitration proceeding shall take place in the City of São Paulo, State of São Paulo, where the arbitration award shall be rendered.

CHAPTER XI - LIQUIDATION OF THE BANK

Article 56. The Bank shall go into liquidation in the events prescribed by law, and the General Meeting shall appoint the liquidator or liquidators as well as the Fiscal Board to officiate throughout the liquidation period, with due regard for legal formalities.

CHAPTER XII - FINAL AND TEMPORARY PROVISIONS

Article 57. Any matters not expressly dealt with herein shall be settled by the General Meeting and regulated pursuant to the Brazilian Corporation Law.
                                            
Article 58. In order to entail obligations for the Bank, the shareholders’ agreements regulating the purchase and sale of shares, right of first refusal thereof, exercise of voting rights or controlling powers shall be previously approved by the Central Bank of Brazil and shelved in the Bank’s principal place of business, and the Bank shall be entitled to request clarification from the shareholders for full performance of the obligations incumbent thereon. Registration of share transfer and counting of the votes cast during the General Meeting or at a Board of Directors meeting in opposition to the terms of said agreements shall be forbidden.