Comparison between the New York Stock Exchange’s Listing Rules and CSNs Corporate Governance Practice
In accordance with new corporate governance rules for foreign listed companies established by the New York Stock Exchange ("NYSE"), CSN must disclose any significant levels in which its corporate governance practices differ from those followed by U.S. companies under NYSE listing standards. The following is a summary of those differences.
Independent Board Members
Under NYSE standards, listed companies listed on US stock exchanges must have a majority of independent board members. CSN is not legally required to have a majority of independent board members, but it is believed that five of a total of seven directors are independent.
Under NYSE standards, non-management directors of listed companies listed on US stock exchanges must meet at regularly scheduled executive sessions without the presence of the management. Since Brazilian legislation does not have a similar standards, CSNs non-management directors do not meet in executive sessions without the presence of the management.
Nominating/Corporate Governance Committee
US companies listed on the NYSE are required to have a nominating/corporate governance committee composed entirely of independent members, with a written charter that covers certain minimum specified duties. The Brazilian legislation does not impose this obligation, and CSN currently does not have a nominating/corporate governance committee.
NYSE listing standards require US companies to have a compensation committee composed entirely of independent members, with a written charter that covers certain minimum specified duties. In Brazil, the human resources director is responsible for compensation and related matters, and, when necessary, the Chief Executive Officer is consulted.
Under NYSE listing standards, a listed company must have an audit committee composed of a minimum of three independent members that comply with the independence requirements of Rule 10A-3 pursuant to the Stock Exchange Act, with a written charter that covers certain minimum specified duties. In June 2005, an Audit Committee was installed, in accordance with the SEC rules and, as required, is composed of three independent members of CSN’s Board of Directors.
Shareholder Approval of Equity Compensation Plans
Under NYSE listing standards, shareholders must be given the opportunity to vote on all equity compensation plans and material revisions thereto, with limited exemptions set forth in the NYSE rules. CSN currently does not have such a plan, and according to its bylaws, the shareholders’ pre-approval would be required for the adoption an equity compensation plan.
Corporate Governance Guidelines
Under NYSE listing standards, a listed company in the US must adopt and disclose corporate governance guidelines that specify certain basic matters. CSN adopted the following corporate governance guidelines, based on the Brazilian legislation, on the Companys Code of Ethics and other institutional guidelines:
- Insider trading policy concerning securities issued by CSN;
- Disclosure of material facts;
- Disclosure of annual financial reports;
- Confidential policies and procedures; and
- Duties and activities related to the Disclosure Committee for the Sarbanes-Oxley Act.
Code of Conduct and Business Ethics
NYSE listing standards require US companies to adopt and disclose a code of conduct and business ethics for board members, officers and employees; and promptly disclose any waivers to the code for board members or executive officers. The applicable Brazilian legislation does not have a similar requirement. CSN adopted a Code of Ethics applicable to members of the Company’s Board of Directors, officers and employees, and believes that this code complies with NYSE’s requirements. The Code of Ethics can be accessed on this website, and a copy can be obtained from CSN.
Under NYSE listing standards, the Chief Executive Officer of a listed company in the US must annually certify that he or she is not aware of any non-compliance with NYSE corporate governance standards by the company. However, the Chief Executive Officer of a Brazilian listed company is required to promptly notify the NYSE in writing after any executive officer becomes aware of any material non-compliance with any provisions of the NYSE corporate governance rules applicable to the company.
More information about CSNs corporate governance practices and the applicable Brazilian Law are available on this website, on the documents filed by CSN with SEC on Form 6-K and CSNs Annual Report, Form 20-F filed annually with the US SEC.