Capital Stock
On February 10, 2009, 1,408,161 ordinary and 2,816,320 preferred shares with a value of R$58,974 were issued arising from the tax benefit resulting from the amortization of the goodwill recorded as counterpart to the special goodwill reserve fund originating from the takeover of Globotel Participações S.A., under the terms of CVM Instruction No. 319/99 (1,229,387 ordinary shares and 2,454,256 preferred shares with a value of R$73,378, on January 31, 2008). On December 31, 2009 the Company’s share capital is represented by 114,459,685 ordinary and 228,503,916 preferred shares with no par value.
Share capital may be raised to a maximum of R$6,500,000 without need for statutory amendment as per Article 168 of the Law of Corporations, as agreed by the Board of Directors who will determine conditions for the issue as per Article nº. 170, paragraph 1
st of the Law of Corporations.
Ownership of the Company’s share capital on December 31, 2009 and 2008 is shown below:
Click here to see the table.
The Company is controlled by GB Empreendimentos e Participações Ltda., whose shareholders are Organizações Globo (51%) and Grupo Telmex (49%).
The bylaws determine distribution of a mandatory dividend of 25% of net income adjusted as per Article nº 202 of the Brazilian Corporate Law.
The preferred shares shall be entitled to vote exclusively on the following matters: (a) transformation, incorporation, merger or split off of the Company; (b) valuation of assets intended to comprise the Company’s capital increase; (c) choice of specialized company to determine the economic value of the Company’s shares, according to the terms of Article 9, “iv”, of the Articles of Incorporation; and (d) amendments or revocation of provisions to the Articles of Incorporation which result in noncompliance on the part of the Company with those requirements provided for in Section IV, item 4.1, of the Corporate Governance Distinct Practices Regulation – Level 2, instituted by the São Paulo Stock Exchange (Bovespa), and they shall also be entitled to vote in regard to the approval of contracts between the Company and its majority shareholder, either directly or through third parties as well as other companies in which the majority shareholder holds interest, at any time in the future, on the basis of legal or statutory provision, the approval of these contracts is decided at the General Meeting.
Holders of ordinary and preferred shares are entitled by Brazilian law to a minimum dividend, payable in Brazilian reais, equivalent to 25% of local currency profit calculated in accordance with Brazilian Corporation Law. The preferred shares carry the right to receive in cash a dividend amount of 10% over the dividend available for distribution on the common shares.
Since preferred shares are not entitled to fixed or minimum dividends, they shall not acquire voting rights if the Company fails to pay dividends, but will take part on equal conditions with common shares regarding bonuses distribution. They may also represent two-thirds (2/3) of the total of shares issued by the Company. Their issuance may also be altered to the prior existing proportions between common and preferred shares.
Shareholders’ Agreement
On March 21, 2005, a Company Shareholders’ Agreement was executed, whereby any shareholder that wants to transfer part or all of its common shares to a third party must notify in writing the other Shareholders, extending preemptive rights.
The Company’s Board of Directors will be made up of 11 (eleven) effective members and the same number of alternate members, being, at least, twenty percent (20%) of its Independent Board members as defined in Regulation Level 2 of Bovespa’s Corporate Governance.
The Company’s Board of Directors, with a unified mandate of one year, which reelection is allowed, and at least one effective member and respective alternate by exclusive and separate appointment by Globo, three effective members and respective alternates by joint, exclusive and separate appointment by Embrapar and Embratel, six members by exclusive and separate appointment by GB Empreendimentos e Participações S.A. or their acceptable successors or assignees which individually or jointly hold over 50% common shares and whenever applicable, one member and respective alternate representing the minority Shareholders’ group. As defined in the second amendment to the Company’s Shareholders Agreement, entered into on April 28, 2006, Embrapar shall appoint for election and replacement one independent member and respective alternate, the votes of which shall not be entailed to the decisions made on Previous Meetings according to the provisions of the Shareholders’ Agreement.
Market value of Company shares
The market value of the Company’s shares, according to the most recent average quote of shares traded on the São Paulo Stock Exchange – Bovespa, was R$23.62 on December 31, 2009 (R$13.29 on December 31, 2008 and R$21.70 on January 1
st 2008). On December 31, 2009, the book value of the net equity of the Company was R$3,507,515 (December 31, 2008 R$2,771,567 and January 1
st, 2008 R$2,751,313). The equity value of the shares was R$10.23, R$8.18, and R$8.21, respectively.
Capital Reserves
Capital reserves are comprised of goodwill and premium on issuance of debentures reserves. The goodwill reserve was generated when Globotel Participações S.A. was merged into Net Serviços de Comunicação S.A. in August 2001. The goodwill capital reserve represents the tax effect of the goodwil that was transferred to the Company through the merger.
During the year ended December 31, 2009, the Company obtained tax benefits by cash savings of R$13,942 (R$58,974 on December 31, 2008), resulting from amortization of goodwill.
Observing the preemptive rights of the non-majority shareholders, the portion of the goodwill reserve related to tax benefits realized may be capitalized in 2010 in favor of the shareholder Globo Comunicação e Participações S.A. (successor to Roma Participações S.A.). The remaining shareholders have the option of exercising their right on the subscription of these shares.