Corporate Governance Practices

Responsible Sourcing of Minerals

It is our expectation that our suppliers will exercise due diligence, in accordance with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, on their entire supply chain with respect to the sourcing of tungsten acquired by us and used in our products, to determine whether that metal originates from the Democratic Republic of Congo or any adjoining country and, if so, to determine whether those metals directly or indirectly financed or benefited armed groups.  It is our policy to ensure that only responsibly sourced materials are in our supply chain, and this policy has been brought to the attention of our suppliers.

We filed a Form SD (Specialized Disclosure Report in relation to Conflict Minerals) with the U.S. Securities and Exchange Commission on May 26, 2020, a copy of which is available at the link below, as required by Rule 13p-1 under the Securities Exchange Act of 1934, as amended,  setting forth the results of our due diligence inquiry, as described in such Form SD.

Click here to access the Form SD

Quiet Period

In line with the best corporate governance practices and applicable standards, Gerdau adopts a fifteen (15)-day Quiet Period prior to the disclosure of its quarterly and annual financial statements. During the Quiet Period, Gerdau will not be allowed to provide clarification or comment on any type of information related to quarterly results and prospects. This initiative seeks to ensure the equity of the information disclosed.

Independent members in the Board of Directors

Transparency, accountability and fairness are the principles that guide the companies that adopt the best corporate governance practices. With the aim of improving their relationship with shareholders and the quality of the management of the business, Metalúrgica Gerdau S.A. and Gerdau S.A. have elected, at the General Shareholders’ Meetings, two independent members for their Boards of Directors. These officers are independent and contribute to the accomplishment of the Board’s routines, which consist mainly of the development strategies, approval budgets, establishment of investment and dividend policies and the definition of the capital and shareholding structures of the companies. According to the “Code of Corporate Governance Best Practices” outlined by the Brazilian Institute for Corporate Governance (IBGC), the presence of independent members ensure professionalism, independence and transparency of the Boards.

An independent director is characterized by:

  • Not having any relationship with the organization, except for a non-material interest in its capital;
  • Not being a controlling partner, member of the controlling group or any other group with a material interest, or a spouse or relative to the second degree of kinship of said persons or linked to organizations related to the controlling partner;
  • Not being bound by a shareholders’ agreement;
  • Not having been an employee or officer of the organization (or of its subsidiaries) in the last three (3) years;
  • Not being or having been a director at a subsidiary of the organization in the last three (3) years;
  • Not being involved in supplying, buying or offering (negotiating), directly or indirectly, services and/or products to the organization on a scale that is material to the director or to the organization;
  • Not being the spouse or relative to the second degree of kinship of any officer or manager of the organization;
  • Not receiving compensation from the organization other than the fees received for serving as director (dividends from non-material interests in the capital are not subject to this restriction);
  • Not having been a partner in the last three (3) years of any audit firm that conducts or has conducted audits of the organization in said period;
  • Not being a member of a non-profit entity that receives a significant amount of financial resources from the organization or from its related parties;
  • Remaining independent in relation to the CEO;
  • Not being financially dependent on the compensation received from the organization.
Board of Auditors

With the objective of improving their relationship with the capital markets and shareholders, and in compliance with Law No. 6.404/76 (Brazilian Corporate Law), in 2001 Metalúrgica Gerdau S.A. and Gerdau S.A. instituted a Board of Auditors (Conselho Fiscal; see section 161 of Law 6.404/76) comprising five effective members. The role of the Board of Auditors is to monitor and oversee the actions of management and the compliance with legal obligations, advise and issue opinions on the administration’s reports, advise on motions proposed by the Board of Directors, convene shareholder’s meetings whenever necessary and analyze and issue opinions on the financial statements. The members of the Board of Auditors are elected at the General Shareholders’ Meetings for a one-year term and may be re-elected.

In accordance with the provisions of the U.S. Sarbanes-Oxley Act, which seeks to increase transparency and the commitment of management to internal controls and to the disclosure of information, and which also applies to foreign companies listed at stock exchanges in the United States, Gerdau S.A. chose to expand the responsibilities of its Board of Auditors instead of creating an Audit Committee. Thus, on April 28, 2005, the General Shareholders’ Meeting approved changes in the Company’s bylaws concerning this issue. The new responsibilities include: to report and inquire into errors, fraud and trespassing, as well as to suggest corrective measures; supervise the hiring of services and the relationship with independent auditors; issue opinions on the internal accounting and audit controls. On that same shareholders’ meeting, a financial expert was also elected for the Board of Auditors.

Tag Along Right (100% preffered and voting shares)

The Brazilian Corporate Law (Law no. 6404/76), amended by Law no. 10.303, of October 31, 2001, introduced changes in the rights of minority shareholders. One such change is the requirement that new majority shareholder, in the event of a control trade, make a tender offer for the acquisition of voting shares at a price that is at least 80 percent of the consideration paid per voting share in the controlling block.

With the objective of adapting the bylaws of both Metalúrgica Gerdau S.A and Gerdau S.A. to this new situation, the shareholders, in General Meetings held on April 30, 2002, approved the 100% tag along right for all shareholders, both common and preferred. Therefore, all the shares in these companies have the right to be included in the eventuality of a control block trade at a price equal to the consideration paid for the voting shares in the controlling block.

With this change, the Gerdau Group sent another strong indication of its commitment to equal treatment to all its shareholders and to the strengthening and the development of the capital markets.

Bovespa Level 1

The São Paulo Stock Exchange BOVESPA names as “Distinct Corporate Governance Practices” a set of rules that must be followed by companies, management and controlling shareholders and that are considered relevant to enhance the perception of a stock and, as a consequence for a greater appreciation of shares and other assets issued by the companies. To adhere to these practices underscores the company’s efforts towards improving the relationship with investors and increases the potential for appreciation of its shares in the market. The companies that join the BOVESPA Level 1 Corporate Governance program must commit mainly to improving the disclosure of information to the market and to increase their shareholding dispersion.

The Gerdau Group, reaffirming its historical commitment to transparency, corporate governance and the strengthening of the capital markets first joined BOVESPA’s Level 1 Corporate Governance program with Gerdau S.A. Metalúrgica Gerdau S.A. also joined the Level 1 program two years later. Both companies comply with the requirements of Distinct Corporate Governance Practices, which include:

  • Maintenance of a minimum free float of at least 25% of the company’s capital stock;
  • Make public offers using mechanisms that capital dispersion of shares;
  • Improve quarterly information disclosure, including the presentation of consolidated financial statements and special reports;
  • Report trading operations of assets and derivatives issued by the company by controlling shareholders and executive officers;
  • Disclose an annual calendar of corporate events;
  • Present cash flow statements;
  • Hold public meetings with analysts and investors.

All these rules are consolidated in a Listing Regulation to which adherence is voluntary. The commitments made by the companies, their controlling shareholders and officers are set forth in an agreement between these parties and BOVESPA.

New York Stock Exchange (NYSE)

In 1997 the Securities and Exchange Commission (SEC) approved the Gerdau S.A. Level I American Depositary Receipt (ADR) program, as well as the Company’s listing on the NYSE. On March 10, 1999, Gerdau S.A. obtained the registration for the issuance of Level II ADRs and began trading on that stock exchange. ADRs enable American investors to buy shares of non-American companies. ADRs also grant foreign shareholders the same economic and corporate rights of Brazilian shareholders of Gerdau S.A.

The issuance of Level II ADRs registered at the NYSE means greater visibility for Gerdau in the U.S. market and allows a reduction in the cost of raising funds in that market. This level requires the filing of all registration forms described in the 1933 Securities Act and compliance with all disclosure requirements of the 1934 Securities Exchange Act.

The Depositary agent of Gerdau ADRs is JP Morgan, which is responsible for the maintenance of records, issuance, and cancellation of ADRs and the payment of dividend to the holders of these stocks.

NYSE Corporate Governance Rules

Under the Corporate Governance Rules of the New York Stock Exchange, currently in effect, Gerdau S.A. is required to disclose any significant ways in which its corporate governance practices differ from those required to be followed by domestic companies under NYSE listing standard. These significant differences are summarized below.

The Company is permitted to follow practice in Brazil in lieu of the provisions of the Corporate Governance Rules, except that are required to avail itself of an appropriate exemption to the requirement to have a qualifying audit committee under Section 303A.06 of the Rules and its Chief Executive Officer is obligated, under Section 303A.12(b), to promptly notify the NYSE in writing after any of its executive officers becomes aware of any material non-compliance with any applicable provisions of the Corporate Governance Rules.

Majority of Independent Directors: Under NYSE Rule 303A.01 domestic listed companies must have a majority of independent directors. The Company does not have a similar requirement under Brazilian practice and does not have a majority of independent directors serving on its board of directors.

Separate meetings of non-management directors: Under NYSE Rule 303A.03, the non-management directors of each domestic listed company must meet at regularly scheduled executive sessions without management. Gerdau does not have a similar requirement under Brazilian practice, and its Board includes both executive and non-executive directors. Executive and non-executive directors do not meet separately. The Company’s independent directors do not meet separately from directors who are not independent.

Nominating/corporate governance committee: Under NYSE Rule 303A.04, a domestic listed company must have a nominating/corporate governance committee composed entirely of independent directors. While the Company is not required to have such a committee under Brazilian law, it has a Corporate Governance Committee that is composed by a majority of independent directors. The purpose of this Committee is to provide its views to the board in respect of the best practices in Corporate Governance.

Compensation Committee: Under NYSE Rule 303A.05, a domestic listed company must have a compensation committee composed entirely of independent directors. Gerdau is not required to have such a committee under Brazilian practice. It has established a Remuneration and Succession Committee to advise the full Board on employee and executive compensation and recruitment, incentive-compensation plans and related matters, but such committee does not have a separate charter and is composed by a majority of independent directors. Its full Board of Directors otherwise is directly responsible for employee and executive compensation and recruitment, incentive-compensation and related matters.

Audit Committee: Under NYSE Rule 303A.06 and the requirements of Rule 10A-3 of the Securities and Exchange Commission, domestic listed companies are required to have an audit committee consisting entirely of independent directors that otherwise complies with Rule 10A-3. In addition, the audit committee must have a written charter that addresses the matters outlined in NYSE Rule 303.A.06(c), has an internal audit function and otherwise fulfills the requirements of the NYSE and Rule 10A-3. There is no requirement for an audit committee under Brazilian law and there are features of Brazilian law that require adaptation of the independent audit committee rule to local practice, as permitted by NYSE Rule 303A.06 and Rule 10A-3. Gerdau has a board of auditors (conselho fiscal) that currently performs certain of the functions prescribed for the audit committee, although the scope of its duties is not entirely compatible with the requirements of U.S. law and the NYSE rules. The company has adapted its corporate governance practices and the functions of the board of auditors (with certain limitations due to Brazilian corporate law that qualify for an exemption as authorized by the SEC) to assure compliance with the requirements of the NYSE Rule and Rule 10A-3.

Equity Compensation Plans: Under NYSE Rule 303A.08, shareholders must be given the opportunity to vote on all equity-compensation plans and material revisions thereto, with certain limited exemptions as described in the Rule. The General Shareholders’ meeting held on April 30, 2003 approved the establishment by the Board of a stock option plan for executives. Any material changes to such plan, or a new or different plan if established, would require the favorable vote of holders of the common shares of the Company. Holders of preferred shares, including holders of Gerdau’s ADSs, would not have the opportunity to vote on such a plan or any revisions thereto.

Corporate governance guidelines: Under NYSE Rule 303A.09, domestic listed companies must adopt and disclose their corporate governance guidelines. Gerdau does not have a similar requirement under Brazilian law, although it does establish operating principles for its executive management and it observes the requirements of Instruction 358 of the Brazilian Securities Commission (CVM) concerning trading in its shares. In addition, it has adhered to the Level I listing standards of the BOVESPA.

Code of Business Conduct and Ethics: Under NYSE Rule 303A.10, domestic listed companies must adopt and disclose a code of business conduct and ethics for directors, officers and employees and promptly disclose any waivers of the code for directors or executive officers. Gerdau has a similar requirement under Brazilian law and it has adopted a code of ethics that applies to its directors, officers and employees. The code does not apply to Gerdau Ameristeel, Sidenor and Villares, each of which has its own separate policy. The Company is currently working on revising the code so that it will apply also to Gerdau Ameristeel, Sidenor and Villares. A copy of Gerdau’s Ethical Guidelines can be accessed on the Company’s website at and a copy can be obtained from us by contacting us at the contact information at this website.

The Company has also voluntarily adhered to the Level I listing standards of the Sao Paulo Stock Exchange (BOVESPA) on which its shares are traded, which impose heightened standards of disclosure, transparency and corporate governance on Gerdau.


Since December 2, 2002 preferred shares of Gerdau S.A. are traded at the Latibex, a section of the Madrid Stock Exchange devoted to Latin American companies with stocks quoted and traded in euros. The stocks of Latin American companies are traded and paid for as the stocks of any other Spanish company, with straightforward and efficient access to the European capital markets, overcoming operational and legal complexities and reducing risk.

Last update: November 23, 2023