JBS N.V.’s capital structure is composed of:

(a) Class A Common Shares, which are admitted to trading on a stock exchange in the United States and confer the right to one vote per share at JBS N.V. shareholder meetings (“Class A Shares”);  

(b) Class B Common Shares, which are not admitted to trading on a stock exchange in the United States or on any other organized market, which confer ten votes per share at JBS N.V. shareholder meetings and are convertible into Class A Shares (“Class B Shares”);

Class A Shares and Class B Shares will have the same economic rights.

1.5.1 - The company’s articles of incorporation must establish that:

(i) transactions involving the direct or indirect disposal of a controlling stake must be accompanied by a public tender offer for the takeover bid addressed to all shareholders, at the same price and under the same conditions as those obtained by the selling shareholder;

(ii) the managers must comment on the terms and conditions of corporate reorganizations, capital increases and other transactions that give rise to a change of control, and state whether they ensure fair and equitable treatment for the company’s shareholders.  

Dutch law does not require such a provision to be included in the Articles of Association.  

However, in a public take-over situation, it is the fiduciary duty of the board to determine whether the offer is in the interest of the company and its stakeholders. The board will need to determine whether it recommends the public offer. In addition, U.S. tender offer rules would likely require the company (typically via a resolution of its board of directors) to state its opinion regarding a public take-over bid or explain why it is unable to take a position.

2.1.1 - The board of directors shall, without prejudice to other legal or statutory duties and other practices provided for in the Code:

(i) define business strategies, considering the impacts of the company’s activities on society and the environment, with a view to the company’s continuity and the creation of value in the long term;

(ii) periodically assess the company’s exposure to risks and the effectiveness of risk management systems, internal controls and theintegrity/compliance system and approve a risk management policy compatible with business strategies;

(iii) define the company’s ethical values and principles and ensure that the issuer maintains transparency in its relations with all stakeholders;

(iv) review the corporate governance system annually with a view to improving it.

2.2.1 - The articles of incorporation must establish that:

(i) the majority of the board of directors is made up of external members, with at least one third of independent members;

(ii) the board of directors must annually assess and disclose who the independent directors are, as well as indicate and justify any circumstances that may compromise their independence.

2.2.2 - The board of directors must approve an appointment policy that establishes:

(i) the process for appointing members of the board of directors, including an indication of the participation of other company bodies in this process;

(ii) that the board of directors should be composed taking into account the availability of time for its members to carry out their duties and the diversity of knowledge, experience, behavior, cultural aspects, age group and gender.    

The Company is partially compliant with the Code’s recommended practices, as it meets the requirements set forth in item “2.5.1,” despite not having a succession plan approved by the Board of Directors.

The Nomination Committee is responsible for developing the Director succession plan. Furthermore, the Global CEO is primarily responsible for making available his recommendations and evaluations of potential successors, along with a review of any recommended development plans for such individuals.

In addition, the Board of Directors, in conjunction with the Nomination Committee, must evaluate the performance of the Board itself, individual Directors, and Committees, always considering aspects related to the succession of Executive Directors. These discussions take place without the presence of the Executive Directors, reinforcing the independence and integrity of the succession process.

2.8.1 - The board of directors must have internal regulations governing its responsibilities, attributions and operating rules, including:

(i) the duties of the chairman of the board of directors;

(ii) the rules for replacing the chairman of the board in their absence or vacancy;

(iii) the measures to be adopted in situations of conflict of interest; and

(iv) the definition of sufficient time in advance for the receipt of materials for discussion at meetings, with the appropriate depth.

3.1.1 - Without prejudice to its legal and statutory duties and other practices provided for in the Code, the executive board shall:

(i) implement the risk management policy and, whenever necessary, to propose to the board any need to revise this policy in the light of amendments in the risks to which the company is exposed;

(ii) implement and maintain effective mechanisms, processes and programs for monitoring and disclosing financial and operational performance and the impacts of the company’s activities on society and the environment.

4.1.1 - The statutory audit committee must:

(i) have among its responsibilities that of advising the board of directors in monitoring and controlling the quality of financial statements, internal controls, risk management, and compliance;

(ii) be composed primarily of independent members and be coordinated by an independent director;

(iii) have at least one of its independent members with proven experience in corporate accounting, internal controls, finance, and auditing, cumulatively; and

(iv) have its own budget for hiring consultants on accounting, legal, or other matters, when the opinion of an external expert is necessary.

5.1.2 - The code of conduct, drawn up by the executive board, with the support of the conduct committee, and approved by the board of directors, must:

(i) discipline the company’s internal and external relations, expressing the expected commitment of the company, its directors, officers, shareholders, employees, suppliers and stakeholders to the adoption of appropriate standards of conduct;

(ii) manage conflicts of interest and provide for the abstention of the member of the board of directors, the audit committee or the conduct committee, if any, who, as the case may be, is conflicted;

(iii) clearly define the scope and breadth of the actions aimed at ascertaining the occurrence of situations understood to have been carried out with the use of inside information (e.g. use of inside information for commercial purposes or to obtain advantages in securities trading);

(iv) establish that ethical principles are the basis for negotiating contracts, agreements, proposals to amend the articles of incorporation, as well as the policies that guide the company as a whole, and to establish a maximum value for goods or services from third parties that managers and employees can accept free of charge or at a favored price.  

5.3.2 - The board of directors must approve and implement a related party transactions policy, which includes, among other rules:

(i) the provision that, prior to the approval of specific transactions or guidelines for the contracting of transactions, the board of directors shall request from the executive board market alternatives to the transaction with related parties in question, adjusted for the risk factors involved;

(ii) prohibition of forms of remuneration for advisors, consultants or intermediaries that generate a conflict of interest with the company, its managers, shareholders or classes of shareholders;

(iii) a ban on loans to the controlling shareholder and managers;

(iv) the hypotheses of transactions with related parties that must be based on independent appraisal reports, prepared without the participation of any party involved in the transaction in question, be it a bank, lawyer, specialized consulting firm, among others, based on realistic assumptions and information endorsed by third parties; and

(v) that corporate restructurings involving related parties must ensure equitable treatment for all shareholders.  

The Company is partially compliant with the Code’s recommended practice, as it meets the requirements set out in item “5.5.2”, although disbursements related to political activities are not approved by the Board of Directors.

The Company’s Code of Conduct, approved by the Board of Directors, states that donations to politicians and political parties on behalf of JBS are allowed only in compliance with local laws and upon a decision supported by the JBS Ethics Committee.