According to Brazilian Corporate Law, the Fiscal Council is independent of the management and external auditors of TOTVS. The primary responsibility of the Fiscal Council is to monitor the management’s activities, scrutinize the financial statements and to report its findings to shareholders.
TOTVS‘ Fiscal Council is a non-permanent body but may be set up during any year if requested by shareholders, as described below. At present, TOTVS does not have a Fiscal Council.
The Fiscal Council shall have three members and three alternate members. Pursuant to CVM Instruction 324 of January 19, 2000, the Fiscal Council may be convened by Shareholders Meeting at the request of shareholders representing at least 2% of the common shares, with a mandate until the first Annual General Meeting following to its installation. However, for that minority shareholders to be able to elect separately one member of the Fiscal Council and his alternate, they must own at least 10% of the common shares. In this case, the other shareholders may elect two members and two alternates.
The Fiscal Council cannot have members of the Board of Directors, Executive Board or other employees of a subsidiary or another group company, or any relative of a TOTVS administrator.