Bylaws And Policies - Heringer RI

(*Potuguese Only)

Pursuant to the Brazilian Corporation Law and the Company´s Bylaws, the annual general meeting must be held up to the 30^th of April of each year. During the meeting, among other topics, the shareholders must resolve on the distribution of annual dividends. All shareholders, on the date of the statement of dividends, have the right to receive dividends.

The Company´s shareholders will resolve on the proposal of the Board of Directors for the allocation of the net income of the previous fiscal year. Pursuant to the Brazilian Corporation Law, net income is defined as the result which remains after the deduction of amounts related to income tax and social contribution, and any amount allocated to the profit-sharing payment to employees and managers.

Heringer´s mandatory dividend is of at least 25% of adjusted net income, in conformity with the Brazilian Corporation Law and the Company´s Bylaws, ascertained from the non-consolidated financial statements.

The annual statement of dividends, including the payment of dividends exceeding the minimum mandatory dividends, must be approved in the Annual General Meeting, by a majority of votes of Heringer´s shareholders, and will depend on several factors. Among these factors are the operating results, financial conditions, cash needs, ,Company´s prospective outlook and factors that Heringer´s Board of Directors and shareholders deem relevant.

The table below shows the dividends and interest on net equity distributed to Heringer´s shareholders in the given periods.


Years ended on December 31
2004	2005	2006	2007	2008
((in thousand of reais))
Dividends	10.148	0	12.396	15.274	0
% of Net Income deducted from the Legal Reserve	16,8%⁽¹⁾	0,0%⁽²⁾	33,8%⁽³⁾	25,4%⁽⁴⁾	0,0%

(1) Calculated by means of interest on shareholder´s equity, net of withheld income tax, to a percentage lower than the minimum statutory amount as a function of the tax deductibility benefit over the calculation basis. The shareholder resolved, at the meeting held on June 1, 2005, on the non-formation of a supplementary dividend provision.
(2) The Company did not distribute interest on shareholder´s equity due to the ascertainment of loss in its corporate operations.
(3) Calculated by means of interest on shareholder´s equity, net of withheld income tax, to a percentage lower than the minimum statutory amount as a function of the tax deductibility benefit over the calculation basis. The shareholders resolved, at a meeting held on Dec 27, 2006, on the approval of the payment of interest on shareholder´s equity.
(4) Calculated by means of interest on shareholder´s equity, net of withheld income tax, to a percentage lower than the minimum statutory amount as a function of the tax deductibility benefit over the calculation basis. The Board of Directors Meetings held on Nov 21, 2007 and Feb 16, 2008 approved the payment of interest on shareholder´s equity and its complement, respectively.