BRAZILIAN ELECTRIC POWER CO | CIK:0001439124 |

 

NOTE 35 — EQUITY

 

35.1. — Share Capital

 

The Share Capital as of December 31, 2017, is R$ 31,305,331 (R$ 31,305,331 as of December 31, 2016) and its shares have no face value. Preferred shares have no voting rights and are not convertible into common stocks, however, they have priority in the reimbursement of capital and distribution of dividends at the annual rate of 8% for class “A” shares (subscribed to by June 24, 1969) and 6% for class “B” shares (subscribed to by June 24, 1969), calculated on the capital corresponding to each class of shares.

 

The share capital is represented by 1,352,634,100 book-entry shares, and is distributed, by main shareholders and types of shares, as of December 31, 2017, as follows:

 

 

 

Of the total of 493,174,166 shares in the hands of minority shareholders, 256,655,099, or 52.04%, are owned by non-resident investors, being 139,011,556 common shares, 28 class “A” preferred shares and 117,643,515 class “B” preferred shares.

 

Of the total shareholders that reside abroad, 27,781,555 common shares and 14,470,255 class “B” preferred shares are held in custody and tied to American Depositary Receipts (ADRs) program and are traded on the New York Stock Exchange (NYSE).

 

35.2 — Capital Reserves

 

 

35.3 — Loss Absorption

 

The reserves to be absorbed are shown in the table below, which represents the Management’s proposal on the destination of the 2017 result to be resolved at the Annual General Shareholders Meeting (AGO), to be held on April 28, 2018.

 

Absorption of losses

 

 

Absorption of reserves

 

 

35.4 — Profit Reserve

 

 

35.5 Dividend distribution policy

 

According to Eletrobras’ Bylaws, on the net income for the year:

 

(i) 5% (five percent) will be allocated, prior to any other destination, to the legal reserve, up to the maximum limit set forth in Brazilian Corporation Law, which currently stands at 20% (twenty percent) of share capital;

(ii) 1% (one percent) may be used to establish a reserve for technical-economic feasibility studies and projects in the electricity sector, whose accumulated balance may not exceed 2% (two percent) of the paid-up capital;

(iii) 50% (fifty percent) may be allocated to the investment reserve of companies that are concessionaries of public electric power services, whose accumulated balance may not exceed 75% (seventy-five percent) of the paid-up capital; and

(iv) up to 1% (one percent) may be used to cover social assistance to the Company’s employees, subject to the limit of 1% (one percent) of the paid-up capital.

 

The preferred shares of class “A” will have priority in receiving the dividends distributed in each fiscal year, at the rate of 8% (eight percent) per annum over the capital relative to that type and class of shares, to be equally apportioned among them.

 

The preferred shares of class “B”, in turn, will have priority in receiving the dividends distributed in each fiscal year, these incidents at the rate of 6% (six percent) per annum, on the capital relative to that class and class shares, to be among them equally apportioned.

 

The preferred shares will participate, under equal conditions, with the common shares in the distribution of the dividends distributed in each fiscal year, after having secured to the common shares a dividend whose value is the lower of those attributed to the preferred classes. The preferred shares are entitled to receive dividends distributed in the fiscal year, for each share, at least 10% (ten percent) higher than that attributed to each common share in the respective fiscal year.

 

Due to the accumulated loss position as mentioned above, there is no proposition of dividends as of December 31. 2017.