Annual Report 2009 - Isagen

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ANNUAL REPORT 2009 / ISAGEN S.A. E.S.P.18CHANGES TO GOODGOVERNANCE PRACTICESHandling conflicts of interestGiving heed to the recommendations of theevaluation conducted in 2008, which werereviewed by the Board’s Affairs Committee,the Board of Directors approved an adjustmentto the definition of conflicts of interestcontained in the Good Governance Code.The foundation for such change is that: (i)Conflict of interest does not only arise fromwork functions; (ii) Conflict of interest arisesnot only from decision-making, but also fromfactual circumstances that take away objectivity;(iii) Conflict of interest also arises whenacting through third parties.Additionally, the procedure for disclosure ofconflict was adjusted, including aspects notpreviously expressed, such as: (i) Whenevermanagement staff members are involved(CEO and Board of Directors Members), allowreporting of the conflict to the Boardthrough the General Secretary Office, andexclude involved Board Member from deliberationor decision-making regarding the solutionto conflict; (ii) When associates are involved,disclosure of conflict and reply fromthe superior by the same means (written evidence),to enable traceability; if the immediatesuperior is also involved in conflict, itmust be referred to the next higher superiorfor solution.Criteria applicable to trading of sharesUpon recommendation of the Board AffairsCommittee, the Board of Directors authorizedissuing of Resolution No. 112 of 2009revoking Resolution 102 of 2008, aimed atregulating trading of shares and otherISAGEN securities by its Managers andAssociates. The new Resolution adjustedthe following aspects:(i) Definition of the concept of “speculation”,specifying it and separating theconcept of insider information.(ii) Obligation of every associate to NOTspeculate, and for ISAGEN Managersand Management Team members torequest authorization from Board ofDirectors to trade ISAGEN shares.(iii) Ratification of the duty to refrain fromusing insider information for tradingISAGEN shares, applicable to everyassociate.(iv) Application of provisions of section (iii)above, whenever trading bonds or domesticdebt bonds, being understoodthat their trading is not subject to requestof previous authorization providedfor in (ii) above, except when tradingconvertible bonds, in which case, regulationin force for trading of shareswould be applicable.(v) Non-applicability of the Resolution duringsale processes when these latter involveexercising a Preemptive Right orare conducted under general and uniformconditions, as is the case withthe processes under Law 226 of 1995and the Tender Offer included in theShareholders’ Agreement.Contents Letter from the CEO Achievements2009Good GovernancePractices EvaluationCorporateManagementFinancial Management
ANNUAL REPORT 2009 / ISAGEN S.A. E.S.P.19EVALUATION 20091. IDENTIFICATIONOF THE CORPORATION2. FRAME OF ACTION3. HANDLING OFCONFLICTS OF INTEREST4. EQUITABLE TREATMENTOF SHAREHOLDERS5. THE CORPORATIONAND ITS GOVERNMENT6. CONTROL MECHANISMS7. DISCLOSURE OFINFORMATIONCONCLUSION1. IDENTIFICATION OF THE CORPORATION1.1. NATURE AND CORPORATE PURPOSEIn its Meeting No. 178 of January 29 of 2009, the Board of Directors approvedpresentation to the Shareholders’ Meeting of a proposal to reform the Bylaws,based on the legal need to widen the Company’s corporate purpose, to expresslyand specifically include mining exploration and exploitation, only in the normalcourse of activities required to develop and operate generation projects.Accordingly, the Shareholders’ Meeting of March 24 of 2009 decided to amendthe Bylaws by adding to the Corporate Purpose paragraph of Article 5, a numberwith the following wording: “Carry out mining exploration and exploitationactivities (mines and quarries) necessary for development and execution ofgeneration projects”.1.2. APPLICABLE REGULATIONAccording to the audits conducted along the year 2009, the Company carriedout its acts and contracts in accordance with applicable regulation.2. FRAME OF ACTION2.1. MANAGEMENT MODELAlong 2009, the most important changes to the Management Model were:Philosophy: Corporate Social Responsibility became explicit as a Companynotion and some adjustments were made with respect to principles.Corporate Foundations: Adjustments were made to the definitions of values,to make them more comprehensible and adequate to corporate declarations.Work Organization: As a result of the planning processes developed in theyears 2008 and 2009, the need became evident to adjust ISAGEN’s work organizationin order to make it fit the corporation’s reality. The most importantchanges include:Contents Letter from the CEO Achievements2009Good GovernancePractices EvaluationCorporateManagementFinancial Management
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