Directives
Aracruz acts in a responsible manner and fully complies with Brazilian corporate law and foreign legislation applicable to companies that have shares listed on stock exchanges in United States and in Spain as well as the rules of the São Paulo (Bovespa), New York (NYSE) and Latibex (Madrid) stock exchanges.
The corporate governance model follows the guidelines established by the Board of Directors, while also respecting the Company´s by-laws. The principles that orient the Corporate Governance model are transparency, a clear definition of functions, management independence, equitable treatment of shareholders and accountability.
The Board of Directors is composed of 10 full members and an equal number of alternates, none of whom exercise an executive position in the Company and who are elected by the shareholders to a three-year term of office during a General Shareholders Meeting:
- To establish the general orientation of the Company´s businesses and formulate the respective economic-financial policy;
- To supervise the operation and the management of the Company, deciding about questions relating to strategy, investments, organization and finances;
- To elect, from among its members, the Chairman and the Vice Chairman of the Board;
- To elect the Company´s Executive Officers;
- To approve the Company´s organizational structure;
- To orient and offer advice to the Executive Officers regarding all topics of interest to the Company;
- To designate the creation of internal committees, whose function is to assist the Board in specific subjects.
Currently there are six committees:
- Strategic Committee
- Sustainability Committee
- Audit Committee
- Financial Committee
- Tax Planning Committee
- Compensation Committee
Aracruz's Fiscal Council sits on a permanent basis and has three members and an equal number of alternates, elected at a General Shareholders Meeting, of which one of its members, and respective alternate, are elected in a separate vote by holders of preferred shares.
The Executive Officers consist of four members, one of whom is the president and CEO, who are responsible for the management and administration of the business and its operational activities as well as the appraisal of strategic projects, subject to the approval of the Board of Directors. The Executive Officers meet two times per month, or whenever necessary.
The Executive Officers are supported by two non-statutory Associate Directors and a management group that currently consists of 16 Interface Managers, who are appointed and report directly to the Executive Officers. The Associate Directors and the Interface Managers are responsible for the daily management of the Company in the following main activities:
Associate Directors
- Legal
- Sustainability and Corporate Relations
Interface Managers
- Industrial Operations - UBR
- Industrial Operations - UG
- Forestry Operations
Commercialization, Sales and Logistics
- Pulp Sales - USA
- Pulp Sales - Asia
- Pulp Sales - Europe
- Port Operations
- Controlling
- Treasury
- Information Technology
- Planning
- Research and Development
- Human Resources
- Supplies
- Engineering and Projects
The Executive Officers also have the support of seven tactical committees, whose function is to help them with specific topics. These are:
- Commercial Department Committee/Operations Department Committee - discussion of the main demands of customers and products that require the approval and/or guidelines of the Executive Officers;
- Management systems Committee - critical analysis of the Company´s management systems (ISO 9001, 14001 and CERFLOR);
- Environmental Committee;
- Product and Process Committee;
- Forestry Operations Development Committee;
- Outsourcing Committee;
- Logistics Committee.
Aracruz has policies governing its forestry, financial, environment, health and safety, supplier relationships, political contributions and anticompetitive practices activities as well as a Policy for Disclosure and Use of Information regarding relevant acts or facts, approved by the Board of Directors, that is in compliance with CVM Instruction no. º 358/02. Furthermore, Aracruz has rules regarding the trading of the Company´s securities by its managers, controlling shareholders, members of the Fiscal Council and others with access to information related to a relevant act or fact, adjusted to the conditions of CVM Instruction no. º 358/02.
The corporate governance practices adopted voluntarily by Aracruz have ensured it Bovespa Level 1 classification since April 2002. Highlights of the practices adopted by Company include: maintenance in circulation of 45% of the shares it has issued; the commitment to make public offerings for the placement of shares through mechanisms that favor the dispersion of capital; the constant improvement in the quality of the information that is provided quarterly, which is consolidated and submitted to special review; the wide-ranging disclosure of operations by controlling shareholders or the Company´s administrators involving its securities, as well as shareholder agreements and eventual stock option programs; and, furthermore, the publicizing of an annual calendar of corporate events.
In 2005, we continued the work that was initiated in 2003 to satisfy the requirements of the Sarbanes-Oxley Act (SOX) - passed in 2002 and applicable to foreign companies listed on the New York Stock Exchange, and also recommended for Bovespa Corporate Governance Level 1 companies. The faults discovered through a risk survey are being solved by implementing new controls and the review of some procedures, seeking certification by the outside auditors at the end of 2006, without any reservations, of the effectiveness of the internal controls attested to by the Company´s management.
Also during 2005 adjustments were made to the Audit Committee seeking to place it in compliance with the SOX requirements. A specialist in Brazilian and U.S. accounting and financial practices was appointed and aspects regarding the independence of its members were adjusted.
Aracruz's relationship with its independent auditors regarding the provision of services not related to the outside audit is based upon the principle of preserving the independence of the auditor.
In 2005, the Company contracted other services from this auditor not directly linked to the audit of financial statements in the total amount of approximately R$180,000, which represented 29% of the total of the professional fees related to outside auditing services.
Prior to the contacting of other professional services not related to outside accounting audits, the Company formally adopts the procedure to consult the Independent Auditors in order to be assured that the provision of said services will not affect the independence and objectivity necessary for the performance of the independent audit services as well as to obtain the approval of its Audit Committee.
Following the CVM ruling regarding the changing of the independent auditors, we announce that the last alteration occurred in 2004, and that the next one will take place in 2009. The periods audited by the current firm range from January 1, 2004 to December 31, 2008.
Last update on May 5, 2006
