Reference Form 2011

Reference Form 2011 LIGHT SA
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Index
1.1 - Identification and Statement of Persons in Charge................................................................................................................ 4 2.1/2.2 - Auditors identification and compensation ......................................................................................................................... 5 2.3 - Other relevant information .................................................................................................................................................... 6 3.1 Financial Statements Consolidated ..................................................................................................................................... 7 3.2 Non-accounting measurements .............................................................................................................................................. 8 3.3 Subsequent events to the last financial statements .................................................................................................................. 9 3.4 Policy for the allocation of net income .................................................................................................................................. 10 3.5 Allocation of dividends and net income retention ................................................................................................................. 11 3.6 Dividends declared to the retained earnings account or profit reserves ................................................................................. 12 3.7 Level of indebtedness .......................................................................................................................................................... 13 3.8 Obligations in accordance with their type and maturity ....................................................................................................... 14 3.9 Other relevant information ................................................................................................................................................. 15 4.1 Risk factors description ....................................................................................................................................................... 16 4.2 Comments on future expectations of reducing or increasing the issuers exposure to these risks ........................................... 38 4.3 Non-confidential and relevant legal, administrative or arbitration proceedings .................................................................... 38 Proceeding n 2010.51.01.020848-6 .............................................................................................................................................. 70 4.4. Lawsuits, administrative or arbitration proceedings which are not confidential whose adversary parties are managers or former managers, controlling shareholder or former controlling shareholders or investors ........................................................ 113 4.5 Relevant confidential lawsuits ........................................................................................................................................... 114 4.6 Non-confidential and jointly relevant recurring or related lawsuits, administrative or arbitration proceedings ................... 115 4.7. Describe other relevant lawsuits not covered in previous items ............................................................................................ 128 4.8 Rules of the country of origin and the country where securities are held under custody ...................................................... 129 5.1 Description of the main market risks ................................................................................................................................. 130 5.2 Description of the market risk management policy............................................................................................................. 136 5.3 Significant changes in the main market risks ..................................................................................................................... 146 5.4 Other relevant information ............................................................................................................................................... 147 6.1/6.2/6.4 Incorporation of the issuer, duration, and date of registration at CVM ................................................................... 148 6.3 Brief History ..................................................................................................................................................................... 149 6.5 Major corporate events the issuer or any of its subsidiaries or associated companies have undergone ................................. 153 6.6 Information on filing for bankruptcy based on material amount or filing for court-supervised or out-of-court reorganization proceedings ............................................................................................................................................................................... 162 6.7 Other relevant information ............................................................................................................................................... 163 7.1 Description of the activities of the issuer and its subsidiaries .............................................................................................. 164 7.2 Operating segment information ......................................................................................................................................... 165 7.3 Information on products and services related to the operating segments ............................................................................ 166 7.4 Clients that account for more than 10% of total net revenues ............................................................................................. 187 7.5 Government regulations relevant effects on the issuers activities ....................................................................................... 187 7.6 Relevant revenues deriving from other countries ............................................................................................................... 196 7.7 Foreign regulations effects on the issuers activities............................................................................................................ 198 7.8 Relevant long-term relationships ....................................................................................................................................... 199 7.9 Other relevant information ............................................................................................................................................... 203 8.1 Description of the Economic Group ................................................................................................................................... 204 8.2 Organizational chart of Economic Group .......................................................................................................................... 205 8.3 - Restructuring operations ................................................................................................................................................... 206 8.4 Other relevant information ............................................................................................................................................... 208
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9.1 Relevant non-current assets - other ...................................................................................................................................... 209 9.1 Relevant non-current assets / 9.1.a Fixed assets .................................................................................................................. 214 9.1 Relevant non-current assets / 9.1.b - Patents, trademarks, licenses, concessions, franchises and technology transfer agreements ................................................................................................................................................................................................. 215 9.1 Relevant non-current assets / 9.1.c Interest in companies ................................................................................................... 216 9.2 Other relevant information .................................................................................................................................................. 222 10.1 - Overall financial and equity conditions ............................................................................................................................. 223 10.2. Operating and financial results.......................................................................................................................................... 240 10.3. Events with material effects caused or expected on the financial statements ....................................................................... 245 10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis ................................ 247 10.5 Critical accounting policies .............................................................................................................................................. 281 10.6. Internal controls related to the preparation of the financial statements level of efficiency and deficiency and auditors report recommendations ...................................................................................................................................................................... 282 10.7 Allocation of proceeds obtained from public tender offers and eventual bias .................................................................... 282 10.8 Relevant items not covered by the financial statements .................................................................................................... 284 10.9 - Comments on relevant items not covered by the financial statements ................................................................................ 284 10.10 Business plan ................................................................................................................................................................. 285 10.11 Other factors with relevant influence ............................................................................................................................. 288 11.1 - Disclosed projections and assumptions ............................................................................................................................. 289 11.2 - Monitoring of and amendments to the projections disclosed.............................................................................................. 289 12.1 - Description of the administrative structure ....................................................................................................................... 290 12.2 Rules, policies and practices related to the shareholders meetings ................................................................................... 308 12.3 - Dates and newspapers that publish the information required by Law 6,404/76 .................................................................. 311 12.4 Rules, policies and practices related to the Board of Directors .......................................................................................... 313 12.5 Description of the arbitration clause to solve conflicts by means of arbitration ................................................................. 314 12.6 / 8 Structure and professional experience of the Management and Fiscal Council ............................................................ 315 12.7 Structure of the statutory, audit, finance and compensation committees ........................................................................... 327 12.9 Existence of marital or stable relationship, or kinship up to second degree related to issuers Management, subsidiaries and controlling shareholders ............................................................................................................................................................ 330 12.10 Subordination relationship, rendering of services or control among Management and subsidiaries, controlling shareholders and others ................................................................................................................................................................................. 331 12.11- Agreements, including insurance policies to pay or refund expenses supported by Management ....................................... 341 12.12 Other relevant information ............................................................................................................................................ 342 13.1 Description of the policy or practice of compensation, including the non-statutory board of executive officers. ................. 343 13.2 Total compensation of the board of directors, the statutory board of executive officers and the fiscal council. ................... 347 13.3 Variable compensation of the board of directors, the statutory board of executive officers and the fiscal council: .............. 351 13.4 Share-based compensation plan of the board of directors and statutory board of executive officers: ................................. 355 13.5. - Shares or ownership interests and other convertible securities, held by Management and fiscal council members - by body: ................................................................................................................................................................................................. 360 13.6. Share-based compensation of the board of directors and statutory board of executive officers: ........................................... 361 13.7 - Information on outstanding options of the board of directors and statutory board of executive officers ............................. 364 13.8. Options exercised and shares granted as share-based compensation to the board of directors and the statutory board of executive officers ....................................................................................................................................................................... 364 13.9. Information necessary to understand the data disclosed in items 13.6 to 13.8, such as the pricing method of shares and options ................................................................................................................................................................................................. 365 13.10. Information on pension plans in effect for members of the board of directors and statuary board of executive officers: .... 366 13.11 - Maximum, minimum average individual compensation of the board of directors, the statutory board of executive officers and the fiscal council ................................................................................................................................................................. 368 13.12 Compensation or indemnification mechanisms for the members of the management in case of termination of employment or retirement ............................................................................................................................................................................. 369 13.15. Compensation of members of management and the fiscal council recognized in the result of the issuers direct or indirect controlling shareholders, jointly controlled companies and subsidiaries. ................................................................................... 372 13.16 Other relevant information ............................................................................................................................................ 378
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14.1 Description of human resources ......................................................................................................................................... 379 14.2 Relevant changes Human resources ................................................................................................................................ 381 14. 3 - Description of the issuers employee compensation policy ................................................................................................ 382 14.4 - Description of the relationship between the issuer and labor unions .................................................................................. 384 15.1/15.2 Shareholding position ............................................................................................................................................... 385 15.3 Distribution of Capital..................................................................................................................................................... 423 15.4 Shareholders organizational chart ................................................................................................................................... 424 15.5 Shareholders agreement filed at the Issuers headquarters or to which the controlling shareholders are a party ................. 425 15.6 Material changes in the interest held by members of the controlling group and issuers management ............................... 429 15.7 Other Relevant Information ............................................................................................................................................ 433 16.1 Description of the issuers rules, policies and practices regarding transactions with related third parties .......................... 434 16.2 Information on related-party transactions ....................................................................................................................... 435 16.3 Identify the actions taken to cope with conflicts of interests and demonstrate the strictly arms length nature of the conditions agreed or the appropriate compensatory payment ..................................................................................................... 438 17.1- Capital Stock .................................................................................................................................................................... 439 17.2- Capital stock increases ...................................................................................................................................................... 440 17.3 - Stock split, reverse split and bonus information ................................................................................................................ 443 17.4 Capital stock reduction information ................................................................................................................................ 444 17.5 - Other relevant information .............................................................................................................................................. 445 18.1- Share rights ...................................................................................................................................................................... 446 18.2 - Description of any provision restricting the voting rights of significant shareholders, or any rule requiring the same to perform any tender offer ........................................................................................................................................................... 448 18.3 Description of the exceptions and suspensive clauses concerning equity or political rights provided for in the bylaws........ 449 18.4 - Trading volume as well as highest and lowest quotes of securities traded .......................................................................... 450 18.5 Description of other securities issued ............................................................................................................................... 451 18.6 Brazilian markets in which the securities of the issuer are accepted for trading ................................................................ 452 18.7 Information on class and type of security accepted for trading on foreign markets ........................................................... 453 18.9 Description of the tender offers made by the issuer for the acquisition of shares issued by third parties ............................ 456 18.10 - Other relevant information ............................................................................................................................................ 457 19.1. Regarding the issuers buyback plans: .......................................................................................................................... 458 19.2 Breakdown of treasury shares ......................................................................................................................................... 459 19.3 Information on treasury shares on the closing date of the last fiscal year .......................................................................... 460 19.4. Provide other information the issuer deems as relevant ................................................................................................. 461 20.1. Information on policy on the trading of securities: ............................................................................................................. 462 20.2 Other relevant information .............................................................................................................................................. 464 21.1 - Describe the reporting standards, rules or internal procedures ......................................................................................... 465 21.2 Description of disclosure policy of material act or fact and procedures related to the maintenance of confidentiality of undisclosed material information............................................................................................................................................... 466 21.3 Management responsible for implementing, maintaining, assessing and inspecting the disclosure policy .............................. 468 21.4 Other information deemed as relevant ............................................................................................................................. 469 22.1 Acquisition or sale of any relevant asset that does not fit into the regular operation of the issuer businesses ....................... 470 22.2 - Significant changes in the conduction of the issuers businesses ......................................................................................... 471 22.3 - Relevant agreements executed by the issuer and its subsidiaries not directly connected with their operating activities ....... 472 22.4 Other information deemed as relevant ............................................................................................................................. 473
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1.1 - Identification and Statement of Persons in Charge
Person in charge of reference form content Position of the person in charge Person in charge of reference form content Position of the person in charge
Jerson Kelman Chief Executive Officer Joo Batista Zolini Carneiro Investor Relations Officer
The aforementioned executive officers declare that:
a.
they reviewed the reference form
b.
all information contained in the form comply with CVM Rule 480, especially Articles 14 and 19
c.
all the information contained herein accurately, precisely and completely represent the issuers economic and financial situation,
the risks inherent to its activities and the securities issued by the Company
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2.1/2.2 - Auditors identification and compensation

Does the company have an auditor? CVM Code YES 418-9 Brazilian KPMG Auditores Independentes CNPJ 57.755.217/0001-29 3/3/2008 Financial statements and fixed assets auditing, quarterly reviews, issue of comfort letter on the financial ratios, CVA review (Portion A items variation memorandum account) for the regulatory agency (Aneel).
Type of auditor Name/Corporate Name Individual Taxpayers Register (CNPF)/Corporate Taxpayer ID (CNPJ) Period of services rendered Description of services
Total amount of independent auditors compensation split into services
KPMG Auditores Independentes total compensation for services rendered in the last fiscal year ended December 31,2010 was R$781,000.00, of which R$720,000.00 refer to the financial statements auditing and R$61,000 refer to the CVA review (Portion A items variation memorandum account), RTE (extraordinary tariff recovery) and other fees. Not Applicable Not Applicable Period of services rendered
3/3/2008
Justification for auditors replacement Auditors reasons in case of disagreement with issuers justification Technical person in charge
Vnia Andrade de Souza
CPF
671.396.717-53
Address
Av. Almirante Barroso, 52, Sala 401, Centro, Rio de Janeiro, RJ, Brazil, CEP 20031-000, Phone number (21) 35159421, e-mail: vasouza@kpmg.com.br
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2.3 - Other relevant information 2.3. Provide other information the issuer deem as relevant Not applicable.
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3.1 Financial Statements Consolidated

(R$) Shareholders Equity Total Assets Net Revenues/Intermediation Revenues Financing/Insurance Premium Gains Gross Profit Net Income Number of Shares, Ex-Treasury (Units) Equity Value per Share (R$ - Unit) Net Income (Loss) per share Fiscal year (12/31/2010) 3,330,144,000.00 9,594,924,000.00 6,508,584,000.00 1,874,743,000.00 575,150,000.00 203,934,060,000 16.329510 2.820270 Fiscal year (12/31/2009) 3,553,628,000.00 9,850,647,000.00 6,206,897,000.00 1,787,847,000.00 588,804,000.00 203,934,060,000 17.425380 2.887230 Fiscal year (12/31/2008) 3,465,817,000.00 9,981,381,000.00 5,386,644,000.00 1,754,739,000.00 974,453,000.00 203,933,778,000 16.994820 4.778280
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3.2 Non-accounting measurements 3.2 If the issuer disclosed in the last fiscal year, or wishes to disclose non-accounting measurements in this form, such as, EBITDA or EBIT, the issuer should: a. inform the amount of the non-accounting measurements
Fiscal years ended on December 31 EBITDA
R$ thousand 2010 1,584,647 2009 1,381,111 2008 1,504,125
b.
reconcile between disclosed amounts and amounts of audited financial statements
Fiscal years ended on December 31 Net Profit / Loss (+) Financial Result (+) Other Operating Revenues (Expenses) (+) Income Tax and Social Contribution (+) Depreciation and Amortization EBITDA
R$ thousand 2010 575,150 319,394 (9,828) 347,469 352,432 1,584,647 2009 588,804 84,929 (8,287) 372,108 343,557 1,381,111 2008 974,453 (94,392) 10,090 301,531 312,443 1,504,125
c. explain why the measurement used is the most appropriate for a correct understanding of the Companys financial conditions and the results of its operations EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) is the financial ratio utilized to estimate a companys operational cash flow excluding its capital structure, tax effects and other accounting effects that do not directly affect cash or the companys results of operations, thus, this ratio is the most appropriate for a correct understanding of a companys financial and operational conditions. Note that EBITDA is additional information to the Companys financial statements and should not be used in replacement of audited results.
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3.3 Subsequent events to the last financial statements 3.3. Identify and comment any subsequent event to the last financial statements of the fiscal year-end that may alter them significantly1 There were no subsequent events to the last financial statements that alter them in any significant way.
Upon the presentation of the reference form due to request of securities offering registration, the information should refer to subsequent events to the last accounting information disclosed by the issuer.
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3.4 Policy for the allocation of net income 3.4 Describe the policy for the allocation of net income of the last 3 fiscal years, indicating: Fiscal years ended in 2008, 2009 and 2010: a) Profit retention rules: The Profit Retention Reserve was created with the Net Income of the remaining fiscal year after allocations based on the capital budget approved by the Board of Directors and at the Shareholders Meeting. b) Rules for allocation of dividends Shareholders allocation of dividends is recognized as liabilities in the year-end financial statements, based on the Company's Bylaws. Any amount above the minimum mandatory dividend only is accrued on the date they are approved by shareholders at the Shareholders Meeting. c) Periodicity of dividend payment Dividends shall be proposed for examination of the Companys Shareholders Meeting, at least, once a year. d) Eventual restrictions on the payment of dividends imposed by legislation or special rules applicable to the issuer, as well as contracts, court, administrative or arbitration decisions. ICPC 08 establishes that dividends in amount above the minimum mandatory dividend provided for by laws, not yet approved at the Shareholders Meeting, shall be reported and indicated in shareholders equity. According to previous accounting practice, these dividends additional to the minimum mandatory dividend were deducted from shareholders equity and recognized in liabilities.
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3.5 Allocation of dividends and net income retention

(R$) Adjusted net income Dividend allocated to adjusted net income ratio Rate of return on the shareholders equity Total dividend distributed Retained net income Retention approval date Retained net income Other Common Common Amount 350,979,000.00 Fiscal year ended 12/31/2010 546,393,000.00 64.000000 17.000000 350,979,000.00 195,414,000.00 4/28/2011 Dividend paid 5/18/2011 Amount 432,340,207.00 Fiscal year ended 12/31/2009 558,562,000.00 77.000000 17.000000 432,340,207.00 142,249,000.00 3/22/2010 Dividend paid 4/1/2010 Amount 91,770,000.00 407,868,000.00 Fiscal year ended 12/31/2008 948,009,000.00 53.000000 29.000000 499,638,000.00 448,371,000.00 3/18/2009 Dividend paid 11/27/2009 4/2/2009
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3.6 Dividends declared to the retained earnings account or profit reserves 3.6. For the last 3 fiscal years, inform if dividends were declared to the retained earnings account or reserves recorded in previous fiscal years The Board of Directors Meeting held on November 6, 2009 approved Lights distribution of dividends totaling ninety-four million, seven hundred, twenty-nine thousand, seven hundred, ninety-nine reais and ninety centavos (R$94,729,799.90) to the profit reserve account recorded in the balance sheet as of December 31, 2008, corresponding to forty-six centavos (R$0.46) per share. The Special Shareholders Meeting held on September 23, 2010 approved the Managements proposal for the distribution of interim dividends totaling three hundred, sixty-three million, two thousand, six hundred, twenty-six reais and eighty centavos (R$363,002,626.80) to Light S.A.s shareholders, referring to the profit reserve recorded in the balance sheet of December 31, 2009, corresponding to R$1.78 per share. In 2008, no dividends were distributed to retained earnings account or profit reserves of previous fiscal years.
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3.7 Level of indebtedness

Fiscal Year 12/31/2010 Total amount of debt of any nature Type of ratio Indebtedness ratio Description and reason for the use of another ratio 1.88000000
2,472,601,258.00 Indebtedness ratio
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3.8 Obligations in accordance with their type and maturity

Fiscal year (12/31/2010) Type of Debt Security Interest Floating Guarantee Unsecured Debt Total Notes
Less than one year 0.00 0.00 301,730,813.00 301,730,813.00
One to three years 0.00 9,904,313.00 5,294,992.00 15,199,305.00
Three to five years 0.00 330,783,482.00 891,994,554.00 1,222,778,036.00
Over five years 44,960,687.00 419,554,469.00 468,377,948.00 932,893,104.00
Total 44,960,687.00 760,242,264.00 1,667,398,307.00 2,472,601,258.00
Reference Form 2011 LIGHT SA Version : 4
3.9 Other relevant information 3.9. Provide other information the issuer deems as relevant Not applicable.
4.1 Risk factors description

4.1 Describe all the risk factors that may influence investment decisions, especially those related to the following:
The risks described herein are those that, according to the Companys understanding, may substantially and adversely affect its business, its financial situation and results of operations, thus, influencing eventual investment decisions related to the Company. a. risks to the issuer If Light Servios de Eletricidade S.A. (Light SESA) is unable to successfully control its power losses, the Company's business, its financial condition and results may be substantially and adversely affected. Light SESA is subject to two types of electricity loss: technical and non-technical losses. Technical losses occur during the ordinary course of electric power distribution. Non-technical losses result from energy theft, as well as fraud, power measurement errors and erroneous electric bills. Light SESAs technical losses of electricity in 2010 were 6.3% of Wire Charge2, compared to 6.4% in 2009 and 6.1% in 2008. Non-technical losses of electricity as of 2009 started to be reported also over the electricity billed on the low voltage market, making it compatible with the amendments introduced by Aneel in the final Tariff Review, ratified in October 2009. The amendment is more compatible with concessionaires reality, as in fact non-technical losses are found on the low voltage market. According to this methodology, elecitricity non-technical losses in 2010 were 41.8%, and accounted for 42.5% and 41.7% in 2009 and 2008, respectively. Higher electricity losses would substantially and adversely affect the Companys business, financial condition and results of operations.
The Brazilian Electricity Regulatory Agency (Aneel) when it calculates tariff only considers 5.61% of technical losses and a downward trend for non-technical losses, so the first year of the tariff cycle starts at 38.98% on the low voltage market and 31.82% in the last year. Thus, the positive difference between the technical and non-technical losses verified by the Company and the standard established by Aneel in the year under consideration characterizes a loss in the Company's results of operations.
All the energy circulating through the transmission and distribution system of Light SESA
4.1 Risk factors description Due to these technical and non-technical losses, the amount of electricity bought by Light SESA is greater than the amount delivered to and paid for by consumers. This fact increases Light SESAs electricity acquisition costs, which generates an adverse effect on Light SESAs operating margins given that Light SESA cannot completely transfer these additional costs to consumers.
The implementation of the Companys business strategy, as well as its future growth, will require additional capital that may not be available, or if available, may not be so under favorable conditions. The implementation of the Companys business strategy, as well as its future growth, both requires significant fixed asset investments. Probably, the Company may seek additional capital, either through the issue of debt instruments, the contracting of loans or the issue of securities on the capital markets. The Companys future funding capacity will rely on its future profitability, as well as the worlds political and economic scenario, including Brazil, which are affected by factors beyond the Companys control. When additional capital is required, maybe this is not available on the credit market, or funding is available, but not under favorable conditions. If the Company incurs in additional indebtedness, the risks associated with its financial leverage may increase, such as, the possibility of the Company not being able to generate sufficient cash to pay the principal, interest rates or other debtrelated charges, causing a relevant adverse effect on the Company. Moreover, potential indebtedness may reduce the Companys operational and financial flexibility.
Court and administrative disputes may adversely affect the Companys results. On February 28,2011, Light S.A. and its subsidiaries were parties of nearly forty-one thousand, two hundred and fifteen (41,215) civil, tax, labor, environmental and regulatory lawsuits and administrative proceedings. Contingencies estimated on December 31, 2010 were R$4,036,100,000.00 (excluding proceedings with inestimable value and those seeking non-pecuniary damages). On December 31,2010, approximately five hundred, sixty-five million, eight hundred, thirty thousand reads (R$565,830,000.00) were accrued on the Companys balance sheet in order to deal with probable losses. Therefore, on December 31, 2010, the provision for contingencies deriving from civil, tax, labor, pension, environmental and regulatory lawsuits and administrative proceedings totaled five hundred, sixty-five million, eight hundred and thirty thousand reads (R$565,830,000.00).
4.1 Risk factors description Unfavorable decisions or agreements related to these proceedings or legal or administrative disputes may result in significant cash disbursement by the Company, which could significantly and negatively affect its financial condition. Moreover, unfavorable court decisions or agreements in amount higher than the value accrued by the Company may adversely affect its results. For more information, see item 4.3 of this Form.
Assured energy of the Companys power plants could be reduced. Pursuant to Decree 2,655 of July 2, 1998, each hydroelectric power plant participating in the National Interconnected System (SIN)3 will correspond to an amount of Assured Energy4 through a mechanism to compensate for energy it effectively generates. The Assured Energy related to each plant participating in the Energy Relocation Mechanism (MRE)5 will constitute the limit of energy that can be contracted from the systems hydroelectric generation companies and is reviewed every five years or upon the occurrence of a material event. Reviews may not imply a reduction greater than 5% of the value established in the last review, and reductions on the whole are restricted to 10% of the base value established by the Concession Agreement. On November 18, 2004, the Ministry of Mines and Energy (MME) issued the Ordinance 303, establishing that the physical guarantee of hydroelectric generation projects, except for the Itaipu Binacional, is the value effective on that date as assured energy until December 31, 2014. The Company cannot guarantee that its Assured Energy will not be reduced as of 2015 and that the Companys results of operations will not be adversely affected to the extent is Assured Energy is reduced.
Resources allocated by the Company to meet pension plan liabilities may be less than the estimated value of these liabilities.
3 4
National Interconnected System
Amount of a plant's electric power established by the Granting Authority in the respective concession agreement, which shall be made available for sale. 5 Mechanism to relocate energy destined to distribute the hydrological risk between generation companies, to the extent that each generation company has assured the payment of the full amount of Assured Energy, while MRE members jointly are able to meet MRE assured energy levels.
4.1 Risk factors description Liabilities related to the Companys supplementary pension plans for the Companys employees stood at R$1,016.2 million on December 31, 2010. The agreement is annually adjusted by deficit or surplus recorded at Braslight, accordingly, the falling due amounts may increase or decrease. This adjustment is fully recognized in the sponsors net income, as financial result. Referring to the Companys employee supplementary private pension plans, if the Companys actuarial estimates are incorrect, or in the assumption of reductions in the long term of interest rates, decrease in securities market values held by the plan or any other adverse changes, the position of its pension plans may be significantly harmed, thereby affecting the frequency and the growing level of contributions to the made by the Company to its employees private pension plans. The Companys liabilities related to pension funds may be higher than the Company currently estimates, and as a result, the Company may be required to make additional contributions to its employees pension plans, which may adversely affect its results. Moreover, the criteria used to determine the value of the Companys contribution to meet its pension liabilities towards its participants and beneficiaries of its supplementary pension plans may be reviewed by the National Superintendence of Supplementary Pension, thus, increasing the Companys liabilities.
The Company is responsible for any losses resulting from improper accrual of electric power services and its insurance coverage might not completely cover such damages. In accordance with Brazilian legislation, the Company is objectively liable for direct or indirect losses and damages, resulting from the provision of inadequate electric power services. Moreover, the Companys distribution facilities may be, together with its generation facilities, liable for losses and damages caused to third parties resulting from outages or problems in the generation, transmission or distribution systems, whenever these outages or problems are not attributed to an identified item of the Electric System National Operator (ONS)6, irrespective of guilty.
Electric System National Operator
4.1 Risk factors description Contingencies resulting from these outages or problems not covered by the Companys insurance policies or exceeding coverage values may result in additional costs to the Company and may substantially and adversely affect its business, financial condition and results of operations.
If the Company is unable to comply with its investment program within proper terms, the operation and development of its business may be substantially and adversely affected. The Companys ability to complete its investment program relies on several factors, which include its capacity to obtain and maintain its environmental licenses (mainly those related to generation activities), to charge proper tariffs for its services and its access to domestic and international capital markets, in addition to several other operational and regulatory circumstances. According to the new methodology for the 2nd cycle of distribution companies tariff reviews, investments in electricity networks proposed by concessionaires are considered by Aneel in order to calculate the value of electric power tariff review. In the second tariff review of Light SESA that took place in November 2008 and ratified in October 2009, Aneel considered annual investments of R$364 million for the period from November 2009 to October 2013. In the next tariff review to occur in 2013, the investments effectively made by the Company shall be used, and if the Company has not invested the approved amount, the difference will be reduced from Portion B7, which is calculated in the next review. The Company cannot guarantee with certainty that will be able to raise the financial recourses necessary to conclude its proposed investment program, given that the impossibility to do so may adversely and materially affect its operations and the development of its business.
The construction, expansion, operation and maintenance of facilities and equipment used to generate and distribute electric power involve a great amount of risk. The construction, maintenance, expansion and operation of facilities and equipment to generate and distribute energy involve several risks, including:
This is the portion of Required Revenue that includes the manageable costs related to electric power distribution
activities, such as operating costs, return on investments and reinstatement quota in accordance with ANEEL Regulatory Resolution 234 of October 31, 2006.
4.1 Risk factors description - incapacity to obtain governmental permits and approval; - unavailability of equipment; - unavailability distribution and/or transmission systems; - power outage; - interruptions at work; - strikes and other labor disputes; - community protests; - hydrological and meteorological interferences; - unexpected engineering or environmental problems; - construction and operation delays, or unforeseen surplus costs; - changes in currently existing subsidies; - need for high capital investments; and - unavailability of adequate financing. The Companys insurance does not cover some of these risks. The occurrence of these problems may adversely affect the Companys capacity to generate and/or distribute energy in quantities that meet its projections or its obligations towards clients, which may materially and adversely affect its financial situation and results of operations.
The Company may be compelled to bear eventual indemnities resulting from discussions on the ownership of its properties. The Company develops its activities in vast territorial areas, covering several properties that, even though they have been utilized for many years, may be irregular concerning their legal status, which includes the legal ownership of some properties. The production and distribution of electric power is an essential service and therefore, all the activities performed in said properties, whether or not they have regular standing, they are protected by the "Ongoing Public Utility Services Principle. However, properties that are not directly utilized by the Company in the generation and distribution of electric power do not enjoy this same protection. It is not possible to rule out the possibility of the Company being compelled to bear eventual indemnities related to the use of irregular properties not subject to the aforementioned protection, which may adversely affect its business and results of operations.
4.1 Risk factors description Considering that a substantial portion of the Companys assets are concerned with the supply of an essential public utility, these assets will not be available for liquidation in case of bankruptcy and will not be subject to seizure to post bond in court. A substantial portion of the Companys assets is considered by Brazilian courts to be concerned with the supply of an essential public utility. Thus, these assets will not be available for liquidation in case of bankruptcy or seizure to post bond in court and, in the event of bankruptcy, in accordance with terms of the concession and Brazilian legislation, will revert to the federal government. If future damages to be paid by the federal government to the company for these reversals are less than the market value of the reversed assets, these restrictions on liquidation and seizure will significantly reduce the values that the Company would be entitled to in the event of liquidation.
The quality of the supply to the Rio de Janeiro metropolitan area relies on the Companys generation activities. The water and electric power supply systems in the Rio de Janeiro metropolitan area are interconnected. Today, nearly 96% of the water that supplies Rio de Janeiro metropolitan area passes through the Lajes complex hydroelectric power plants, whose concession is owned by Light. The high level of complexity of the water adduction system in this complex requires coordination between the many entities involved, even for maintenance operations that would be simple to perform on other power plants. If an accident were to occur in the system, there is the risk of water availability or drinkability to the population of the Rio de Janeiro Metropolitan area be compromised.
b.
risks to the issuers controlling shareholder, either direct or indirect, or controlling group
The Company is controlled by few shareholders who act in a coordinated manner, and their interest may conflict with those of potential share investors. As of March 31, 2010, the Company was controlled by a group of four shareholders (Controlling Shareholders): Companhia Energtica de Minas Gerais (CEMIG), Rio Minas Energia Participaes S.A. (RME) and Luce Empreendimentos e Participaes S.A. (LEPSA).
4.1 Risk factors description The power of control is shared by these shareholders who entered into a shareholders agreement regulating the exercise of power of control in the Company and its Subsidiaries, among other regulations8. Controlling Shareholders may find themselves in a situation in which their interests conflict with those of the Company. In particular, Controlling Shareholders control the decisions of the Companys Shareholders Meetings and may elect a majority of the Companys Board of Directors. Controlling shareholders can also oversee the Company's actions in the strategic, financial, distribution areas, as well as the acquisition or sale or encumbrance of assets. The Controlling Shareholders decisions on these issues may differ from the decision expected by minority shareholders.
c.
risks to its shareholders The Company may find itself in need of additional capital in the future, raised through the
issue of shares, which could result in the reduction of the value of shares or the dilution of investors' interest in the Company's capital stock. The Company may find itself in need of additional capital in the future, to be raised through the public or private issue of stocks or other securities convertible into shares. Any funding through the tender offer of shares or other securities convertible into shares may exclude its shareholders preemptive right, which could affect the price of shares and result in the dilution of the investors' interest in the capital stock.
d.
risks to subsidiaries and associated companies The payment of dividends by Light S.A. depends on the results of its Subsidiaries. The Company is a non-operating holding company that controls entities operating in the
distribution, generation and sale of electricity. The payment of dividends derives from the net income distributed among subsidiaries. The Company may not have enough resources to pay dividends to its shareholders if Subsidiaries are not in the condition to distribute profit.
Light S.A.s direct or indirect subsidiaries are as follows: Light SESA, Light Energia, Light ESCO, Light Hidro,
Lightger, Itaocara, HIE, Lightcom, Axxiom and Instituto Light.
4.1 Risk factors description e. risks to suppliers The outsourcing of a substantial portion of the Companys activities may adversely affect its management. On December 31, 2010, the Company had effective agreements with 155 outsourced companies and service providers, which on their turn, employed nearly 8,010 persons to provide services to the Company, both in main activities - such as power cut and restart and in the ancillary activities such as security, cleaning and surveillance- currently accounting for an average monthly cost of R$29 million to the Company. In 2007, the Labor Prosecution Office (MPT) filed a public civil action against Light Servios de Eletricidade S.A. (Light SESA) pleading for: (i) interlocutory relief (ii) definitively forbidding the engagement of companies only for the mere supply of labor, except for casual labor; not hire outsourced workers with individuality and subordination; not hire outsourced workers related to main and ancillary activities; in the event of default, a daily fine of R$10,000.00 per worker found irregular, reversible to the Worker Support Fund (FAT). Trial court granted relief to the case sentencing Light SESA to not engage companies (including cooperatives, contractors and other related companies and segments) for the mere supply of labor, except for casual labor; the court ordered Light SESA to no longer hire outsourced workers with the purpose of providing recurring services related to the main or ancillary activities, whose performance would require the workers individuality and direct subordination to the client under the penalty of employment relationship being characterized; ordered the payment of indemnity amounting to ten million reais (R$10,000,000.00); and it confirmed on the merits, the interlocutory relief effects. Light SESA lodged Ordinary Appeal and Writ of Prevention. The writ of prevention was accepted, granting supersedeas effect to the Ordinary Appeal. This result was positive for Light SESA, since it postponed the sanctions mentioned in the interlocutory relief to be applied. Subsequently, the Ordinary Appeal lodged by Light SESA was heard and accepted by unanimous vote of the 8th Panel of the Superior Labor Court (TST): judgment was reversed, deeming all the motions groundless.
4.1 Risk factors description The 8th Panel of TST judged an appeal and by unanimous vote heard and judged it on the merit, which was rejected, upholding favorable decision to Light SESA. In view of lack of appeal from the Labor Prosecution Office, a final and unappealable court decision was rendered on March 25, 2011. The discussion on the possibility of outsourcing the main activities of public utility concessionaires currently divides the opinions of the Superior Labor Court justices. It is possible to find court decisions that validate said outsourcing, based on Article 25, Paragraph 1 of Law 8,987/95, as well as decisions that consider the outsourcing null and void, based on the Precedent 331 of the Superior Labor Court. In 2008, the Special Department of Employment Dispute (SDI) of the Superior Labor Court judged an appeal involving Centrais Eltricas Gois and by a majority of votes (8 to 6), declared illegal the outsourcing of services related to the concessionaires main activities. Justice Vieira de Mello Filho, who cast the winning vote, based his vote on Article 25 of Law 8,987/95 arguing that it regulates on an administrative basis, thus, it cannot conflict with or revoke the Labor Law assumptions, the principles and values of which are distinct (the Labor Law, according to the Justice, substantially protects one value: the human labor provided to the benefit of another party, on a recurring and onerous basis and under legal subordination, apart from an insufficient concept of individualism, protecting the individual under the effect of a greater concept, i.e., the dignity of the human-being). Therefore, in these cases, the SDI of the Superior Labor Court found to be illegal the outsourcing of labor. The Defendant filed an extraordinary appeal against such decision, the admissibility of which has not yet been decided by the Superior Labor Court. This decision, however, does not mean that the Superior Labor Court will uphold this ruling, whether because of changes in the structure of SDI or because this matter will be decided by the federal supreme court. Therefore, it is impossible to affirm which decision will prevail at the Superior Labor Court. A final decision unfavorable to the Company may adversely affect its business, financial condition and results of operations.
f.
risks to its clients Consumers using the Companys network may no longer use it.
4.1 Risk factors description A significant amount of the Companys net operating revenue, 1.7% in 2010, derived from TUSD payments for the use of its network by Free Consumers10 in the concession area, which totaled 47 on December 31, 2010. If these Free Consumers directly connect to the Base Network11, the Company will suffer collection losses. The Company cannot assure that its main Free Consumers are not currently evaluating the possibility of connecting themselves directly to the Base Network or of implementing projects to produce their own energy, which anyway may substantially and adversely affect the Company's results of operations. Moreover, the TUSD is a tariff established by Aneel based on inflation and expansion, maintenance and operating investments made on the network verified in the previous year, so that the Companys results of operations may be adversely affected to the extent that the TUSD is not properly adjusted by Aneel.
9
The Companys results may be affected by increases in delays and delinquency by clients. According to Aneel regulations, the allowance for doubtful accounts for credits billed and overdue depends on the category of the consumer under consideration: (i) 90 days for residential consumers; (ii) 180 days for commercial consumers; (iii) 360 days for industrial or public sector clients; and (iv) deadline defined on a case-by-case basis for Large Clients12. In recent years, the Company has faced problems in collecting amounts due from defaulting consumers who did not pay on due date the electric bills, including clients providing basic services, such as, private hospitals.
Distribution System Usage Tariff, owed by users (generation companies and free consumers) to distribution
companies for the use of their distribution network (voltage below 230 kV).
10
Consumers can freely negotiate the acquisition of electric power with any power suppliers who operate on the
market through the signing of Bilateral ACL Agreements. Pursuant to prevailing laws, Free Consumers are those (a) whose Consumer Unit has a minimum contracted demand of 3 MW met by voltage equal to or above 69 kV; and (b) those having a minimum contracted demand of 3 MW in any hour-seasonal tariff system met by any voltage, but connected after July 7, 1995.
11
Group of lines of transmission, bus, power transformers and equipment with voltage equal to or greater than
230 kV, or facilities with lower voltage defined by Aneel.

12
Clients linked to the medium and high voltage segments networks.
4.1 Risk factors description Over the past years, the Company has been facing difficulties to collect the amount due by defaulting consumers on respective maturity dates, electricity bills, including basic service providers, such as private hospitals. On December 31, 2010, total balance of overdue electricity bills summed up R$1,662.5 million, of which, according to Aneels criteria, R$1,060.0 million had been accrued in the doubtful account and R$602.5 million overdue, but not accrued. The Company cannot assure that it will manage to implement all the measures necessary to reduce delinquency nor if implemented, these measures will not assure lower delinquency. If this occurs, the Companys financial conditions and results of operations may be adversely affected.
g.
risks to the economy sectors where the issuer operates The Company relies, to a great extent, on the economy of the State of Rio de Janeiro. Even if the Company were to expect an increase in consumption by clients outside the State of
Rio de Janeiro, its business depends and the Company believes that it will continue to rely, to a great extent, on the economic conditions of the State of Rio de Janeiro, which in turn is affected by Brazils economic conditions. The Company cannot assure that the economic conditions of the State of Rio de Janeiro will remain favorable in the future, as well as it cannot assure that an increase in population in its concession area will result in the Companys corresponding growth.
The Company cannot assure the renewal of the Concession Agreement. The Company conducts its generation and distribution activities in accordance with the Concession Agreement entered into with the federal government to expire in June 2026. The Federal Constitution states that any concession related to public utility must be granted through a bidding process. In 1995, in an effort to implement the constitution provisions, the Brazilian government created certain laws and regulations, together known as the Law of Concessions, in order to enact certain laws and regulations, known as the Law of Concessions that rules the bidding processes in the granting of a concession.
4.1 Risk factors description In accordance with the Law of Concessions, after changes in the New Model Law of the Electricity Sector13, upon concessionaires request, existing concessions may have their terms extended by the Brazilian government for additional 30 year-periods without being subject to a new bidding process, provided that this concessionaire has achieved minimum standards of performance and if the proposal is deemed acceptable by the Brazilian government. Considering the level of discretion granted to Aneel by the Law of Concessions and concession agreements in relation to the renewal of current concessions term, and given the lack of longstanding precedents related to the exercise of discretion by Aneel and the construal and application of the Law of Concessions, the Company cannot assure that it will obtain new concessions or that its concessions will be extended in terms as favorable as those currently in force.
Amendments to Brazilian tax laws may adversely affect the Companys results of operations. The federal government regularly implements amendments to tax laws that affect Brazilian Energy Market consumers, the Company, distribution companies and industrial consumers. These changes include adjustments to applicable rates and, occasionally, the imposition of temporary taxes from which resources are allocated to certain purposes determined by the federal government. These measures may increase the Companys tax liabilities, which in turn may influence the Companys profitability and adversely affect its results of operations. If the Company is unable to transfer costs from additional taxes to its consumers, offsetting said effects in its cost structure, the Companys results of operations and financial condition may be adversely affected. The risk factors listed below can be found in item 5.1. referring to market risk: Adverse political and economic conditions; Exchange rate fluctuation; Monetary policy of the federal government and/or increase in interest rates; Inflation and government measures to fight against inflation;
13
Law 10,848 of March 15, 2004, regulated by Decree 5,163 of July 30, 2004, Decree 5,175 of August 9, 2004
and Decree 5,184 of August 16, 2004.
4.1 Risk factors description Political, economic and social events and the perception of risk in other countries, especially emerging economies; h. International financial crisis.
risks to the regulation of sectors where the issuer operates The Company is subject to comprehensive legislation and regulation imposed by the federal
government and Aneel, not being able to foresee the effects of eventual amendments to law or regulations currently in force on its business or results of operations. Due to the nature of public utility, the main activity of the Companys Subsidiaries is to distribute electricity, which is broadly regulated and supervised by the federal government, especially through the Ministry of Mines and Energy (MME), in addition to Aneel and other state regulatory agencies. The federal government, especially through MME and Aneel, historically performs an important level of authority and influence on the business of companies operating in Brazils electricity sector. Aneel regulates several aspects of the business of companies operating in Brazils electricity sector, including need of investments, expenses and determination of revenue, including by ratifying the tariffs charged to Captive Clients14. The agency aims at ensuring the regularity, continuity, efficiency, safety, modernity, universality and courtesy when providing services, in addition to maintaining acceptable tariffs. These activities are intensively regulated by laws, decrees, executive orders, ordinances and resolutions, among other legislative acts and regulations. Amendments to the laws and regulations related to the electricity sector may adversely affect the Company.
Tariffs charged by the Company for the sale of electricity to Captive Clients are determined by Aneel in accordance with the Concession Agreement, and the Companys operating revenue may be substantially and adversely affected if Aneel takes measures related to tariffs not favorable thereto.
14
Consumers who cannot freely negotiate the acquisition of electric power and are served by their respective
local distribution companies to which they are directly connected.
4.1 Risk factors description Light SESAs tariffs are determined in accordance with the Concession Agreement and regulations and decisions made by Aneel, which exercises its discretion in regulatory activities. Distribution companies concession agreements and Brazilian law establish a tariff ceiling mechanisms that allows for three different types of tariff adjustments: (1) an annual adjustment; (2) a periodic review; and (3) an extraordinary review. Distribution companies can request an adjustment every year, which is prepared to mitigate certain inflation effects on tariffs and transfer certain changes in structural costs of distribution companies to consumers, especially those costs beyond their control, such as of the acquisition cost of electricity by distribution companies and certain regulatory charges, including fees for the use of transmission and distribution equipment. Moreover, Aneel conducts a periodic review every five years seeking to identify variations in costs, as well as establish the factor based on the operational efficiency of each distribution companies, which will be applied in the index of the next annual tariff adjustments in order to share related gains with consumers. Distribution companies can also request an extraordinary review of their tariffs if unforeseen costs significantly alter their structural costs. The second periodic tariff review by Light SESA occurred in November 2008, and its provisional results were ratified by Aneel Ratification Resolution 734 of November 4, 2008, corresponding to a 4.70% increase in the Companys electricity tariffs. With the completion of improvements to the methodology for the second cycle of tariff reviews, the definitive result was ratified by Aneel Ratification Resolution 891 of October 13, 2009 and the tariffs increased to 4.80%. On November 4, 2009, Aneel also approved an annual average increase of 5.65%. The Brazilian Electricity Regulatory Agency ANEEL, in a public meeting held on November 3,2010, approved a report authorizing an average tariff adjustment of Light Servios de Eletricidade S.A. (Light SESA) of 6.99% for a 12-month period as of November 7, 2010. The index of adjustment is composed of two components: structural component, which now is an integral part of the tariff of 8.31% and the financial component, exclusively applied to the next 12 months, of -1.33%.
4.1 Risk factors description The Company cannot assure that Aneel will establish favorable tariffs, especially during current tariff review process, or in any other future tariff review process. Moreover, if adjustments are not granted by Aneel during proper time, the Company's business, financial conditions and results of operations may be substantially and adversely affected. It is worth mentioning that Aneel decisions on the Company's tariffs may be purpose of legal objections by the Public Prosecution Office in the defense of the widespread interests of consumers under the Companys concession area, consumers defense agencies or the consumers themselves, given the nature of the public utility service provided by the Company. Therefore, eventual court decisions unfavorable to the Company in disputes questioning tariff reviews or adjustments granted by Aneel may adversely affect the Companys business, financial condition and operating revenue. The Company could be punished by Aneel for not complying with the Concession Agreement, which could result in fines, penalties and, depending on the severity of the infringement, the termination of the concession.
The Company performs its generation and distribution activities in accordance with the Concession Agreement executed with the federal government, so that Aneel may impose penalties if the Company fails to comply with any provision of the agreement, including the minimum quality standards determined by Aneel for the generation and distribution of electricity, as well as the improvement of the services. Depending of the severity of the infringement, these penalties may include from warnings to fines until the termination of the concession. Moreover, Aneel has the power to terminate the Company's concessions before the dates stipulated in the concession agreements if the case of bankruptcy or dissolution, or through expropriation in the name of public interest. The Company cannot assure that it will not be punished by Aneel. The indemnity to which the Company will be entitled with the revocation of the concession may not be sufficient to reverse the full value of certain assets. If the Concession Agreement is terminated due to the Companys guilty, the indemnity paid by Aneel may be substantially reduced upon the imposition of fines or penalties. Likewise, the imposition of fines or penalties on the Company or the revocation of the concession may substantially and materially affect the Companys business, financial condition and results of operations.
4.1 Risk factors description The rules for the sale of electricity and the market conditions may expose the Company to price volatility on the spot market. In accordance with rules established by the New Model Law of the Electricity Sector, the generation company pertaining to a group of companies in the energy sector may not sell energy directly to distribution company of this same group. As a result, the generation company must sell the electricity produced on the market regulated by public auctions conducted by Aneel or the ACL15. Legislation allows distribution companies to purchase energy from generation companies on the ACR16 to reduce the quantity of energy contracted until a certain limit, thereby exposing generation companies to the risk of not reaching energy adequate prices. Agreements signed by the ACL with consumers who are not allowed to buy energy directly from generation companies or energy traders (Free Consumers) also establish the possibility of reducing energy originally contracted (approximately 10%), which may substantially and adversely affect the Company's business, financial condition and results of operations. At initial auctions held in 2004, the Companys contracted 95% of its Assured Energy to mature in 2013 and 2014. The Company cannot assure that the total volume of energy will be re-contracted until the contracts expiration dates, thereby leaving the Company vulnerable to the prices effective on the spot market. Out of all Assured Energy, 43.6% has already been re-contracted to be delivered as of 2013. If the Company is unable to sell all of its energy capacity at auctions or on the ACL, it may be compelled to sell electricity on the spot market, where prices can be fairly volatile. If this were to occur when spot market prices are low, the Companys revenue and results of operations may be substantially and adversely affected.
15
Free Contracting Market. In ACL, electricity purchase and sale operations are carried out at prices freely
negotiated between generation companies, free consumers and electricity trading companies.
16
Regulated Contracting Market. In ACR, electricity purchase and sale operations are carried out at prices
obtained through public auctions in order to serve the distribution companies captive consumers market.
4.1 Risk factors description If the Company finds itself in a situation in which it doesn't have the energy sufficient to fulfill its commitments, it will have to acquire additional energy on the spot market in order to meet its supply needs, and will thus be forced to pay prices higher than the payments it will receive from clients, which may substantially and adversely affect the Company's business, financial condition and results of operations.
Incorrect estimates of the energy demand for areas under the Companys concession may adversely affect its results of operations. The Company cannot be able to fully transfer the energy acquisition costs through tariffs. The Company cannot assure that its estimates for energy demand will be assertive. If there are significant variations between energy demand estimates and the volume of energy acquired, the results of its operations may be adversely affected. The New Model Law of the Electricity Sector sets forth that distribution companies must assure services to all its markets, and must inform the MME of energy demand foreseen in concession areas for the next five years. If demand foreseen is incorrect and the distribution company acquires less electricity than is needed, the distribution company must correct its contracting by means of A-1 auctions, adjustment auctions and MCSD17. This is due to the fact that, if demand estimates are far lower than real energy demand, and the distribution company does not participate in the aforementioned auctions and adjustment mechanisms, the distribution company must purchase electricity on the CCEE18 spot market at highly volatile prices that may be far higher than prices negotiated at auctions. In this situation, the distribution company will pay a penalty at the CCEE and maybe will not be able to transfer all additional costs resulting from these purchases to consumers.
17 18
Surplus and Deficit Compensation Mechanism. Electricity Trading Board, a private, non-profit corporation overseen by Aneel, whose main role is making the
trading of electricity on the SIN feasible and is responsible for registering CCEARs, the agreements resulting from market adjustments and the volume of energy contracted on the ACL, as well as the accounting and settlement of short-term transactions on the SIN and differences referring to registered Bilateral Agreements.
4.1 Risk factors description Moreover, if the amount of energy contracted by the distribution company exceeds the real demand for electricity by over 3.0%, the lien or bonus that exceeds that limit in relation to the CCEE spot market fall upon the distribution company, i.e., it is not transferred to consumers. To summarize, new legislation and regulations in the electricity sector restrict the ability to transfer the cost of energy acquired by distribution companies to consumers if these costs exceed the Annual Reference Value19 established by Aneel.
Amendments to environmental and occupational safety laws and regulations may adversely affect the business of the electricity sector companies, including that of the Company. The Company is subject to rigorous environmental and occupational safety laws at the federal, state and city levels, governing such issues such as, atmospheric emissions and intervention in specially protected areas. The Company needs licenses and authorizations from governmental agencies in order to perform its activities. If the Company infringes or does not abide by these laws, regulations, licenses and authorizations, the Company it may be subject to administrative sanctions, such as fines, shutdown of activities, cancellation of licenses and revocations of authorizations, or even criminal sanctions (including Management). The Public Prosecution Office may file a civil investigation and/or file a public civil action seeking indemnities for eventual damages to the environment and third parties. Government agencies or other authorities may also issue new, stricter rules or seek restrictive interpretations of current law and regulations which may require the Company to make additional investments in environmental remedy or obtain environmental licenses for facilities and equipment that did not previously require these licenses.
19
This is an electricity acquisition cost weighted average resulting from A-5 and A-3 auctions, calculated for a
group of all distribution companies, which will be the maximum limit to transfer the energy acquisition costs deriving from projects existing in adjustment auctions, new energy auctions and to contract distributed generation.
4.1 Risk factors description Furthermore, governmental agencies or other authorities can also significantly delay the issue of licenses and authorizations required for the development of the Companys business, thus, resulting in delays in schedules for the implementation of projects, thus, causing adverse effects on the Companys business and results. Any action of this type on the part of governmental agencies adversely affects the electricity sector's business, as well as the Company's business and results. The delay or rejection by environmental licensing authorities to issue or renew licenses, as well as the Companys eventual inability to meet the requirements established by the same environmental authorities during the environmental licensing process, may impair or even prevent, where applicable, the installation and operation of projects, as well as the development of the Company's activities (mainly those related to generation activities), and may adversely affect its results of operations. Without prejudice to the previous paragraph, the non-compliance with environmental legislation or obligations assumed by the Company through the execution of consent decree or court settlements may adversely affect the Company's image, revenues and results of operations.
i.
risks to foreign countries where the issuer operates The Companys financial situation may be adversely affected if administrative and legal
measures adopted by the Company do not succeed upon the taxation of profits recorded by Subsidiaries abroad, among other related issues. In 1997 and 1998, Light SESA issued fixed rate notes abroad, which were acquired by its subsidiaries LOI20 and LIR21, aiming at raising part of funds necessary to the takeover of Eletropaulo Metropolitana Eletricidade de So Paulo S.A. (Eletropaulo). The loan raised with LOI was paid off on March 9, 2008, and on January 29, 2010, Light SESA paid off the loan raised with LIR at the amount of seven hundred, eighty-three million, seven hundred, sixty-nine thousand, ninety-seven U.S. dollars and twenty-two cents (US$783,769,097.22 ) (principal+interest). These operations with the subsidiaries LIR and LOI have been discussed in 6 administrative proceedings and 1 lawsuit and they deserve proper attention in view of the amount involved.
20 21
Light Overseas Investments Limited. LIR Energy Ltd.
4.1 Risk factors description In the administrative proceeding 18471.002113/2004-09, the Brazilian Internal Revenue Service levied the withholding income tax on the interest charged to LIR and LOI, at the historical amount of R$481.8 million, as the fixed rate notes were redeemed in advance in order to be eligible to the benefit of withholding income tax zero rate. This tax assessment was deemed with grounds in administrative trial court decision, and subsequently, the 4th Panel of the 1st Board of Tax Appeals granted relief to Light SESA's appeal. On March 31, 2010, the special appeal filed by the federal government is pending judgment at the Higher Chamber of Tax Appeals, which is exclusively discussing the principal, since the fine was definitively reduced by 75%. The amount involved on March 31, 2010 was five hundred and nine million reais (R$509,000,000.00), and a provision was not created for this amount, since Light SESA attorneys estimate the risk of loss as remote, under the allegation that irregular operations were not performed. In three administrative proceedings, the Brazilian Internal Revenue Service requires income tax and social contribution differences resulting from the misappropriation of financial expenses and offsets made in 2001 and 2002. On March 31, 2010, these three proceedings were pending judgment by the Board of Tax Appeals. Considering that the new tax assessments were based on the same arguments utilized in the first tax assessment and the fact that the Brazilian Central Bank and 4th Chamber of the 1st Board of Tax Appeals had already rendered decisions stating that the operations conducted by Light SESA did not involve any exchange or tax irregularities, Light SESA attorneys understand that the risk of loss is remote. The restated amount of debt on March 31, 2011 was one hundred, sixty-nine million, one hundred thousand reais (R$169,100,000.00), and no accounting provision was created. The fifth administrative proceeding is the result of the Company having received, on November 10, 2008, an order not ratifying withholding income tax credits offset on financial investments and withholding income tax related to the payment of electricity bills by public authorities; these credits derive from the corporate income tax outstanding balance recorded in 2002 base year. The nonratification was mainly based on the lack of liquidity and certainty of the credits, since the administrative proceeding 18471.001351/2006-51 is still pending judgment. The amount involved on March 31, 2011 was one hundred, ninety million and three hundred thousand reais (R$190,300,000.00), and no provisions were created based on Light SESA attorneys' opinion of possible risk of loss.
4.1 Risk factors description The 6th administrative proceeding is related to a discussion mentioned in the writ of mandamus n 2003.51.01.005514-8, where LIGHT discussed the assessment of income and social contribution taxes over income earned by LIR and LOI as of 1996, but not made available, as well as the requirement of including equity in the earnings of subsidiaries in the calculation of income and social contribution taxes for the base periods until 2002 and subsequent periods. LIGHT partially attempted to waive this writ of mandamus in order to include debts in the tax installment payment of Law n 11,941/09 and continuing discussing the application of the equity accounting method. Nevertheless, the Treasury Department did not agree with the partial waiver, which was corroborated by the judge of the case. Thus, LIGHT fully waived this writ of mandamus and changed the procedure it has been adopting to assess income and social contribution assessment, which previously was made through income, but with the waiver of the discussion, now tax is assessed through equity accounting. On November 25, 2010, the tax authorities disagreed with this procedure and issued a tax deficiency notice to LIGHT. The amount adjusted for this case on March 31, 2011was one hundred, thirty-three million and seven hundred thousand reais (R$133,700,000.00). There is no provision, since LIGHT deems the chances of losing this case are possible. LIGHT filed an objection against this tax assessment, which is pending judgment.
Final administrative or court decisions unfavorable to Light SESA may adversely and substantially affect the Companys financial situation.
4.2 Comments on future expectations of reducing or increasing the issuers exposure to these risks
4.2 In relation to each risk mentioned above, if relevant, comment on future expectations of reducing or increasing the issuers exposure to these risks.
The Company continuously monitors the risks of its business that could adversely affect its operations and results, including changes in the macroeconomic and sector scenario that may influence its activities, analyzing price indexes and economic activity, as well as electricity supply and demand. The Company manages its cash position and working capital in a conservative manner. Currently, the Company has identified no scenarios for the increase or reduction of the risks mentioned above.
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings

4.3. Outline legal, administrative or arbitration proceedings to which the issue or its subsidiaries are parties, separating them as labor, tax, civil claims and other:
(i) which are not confidential, (ii) which are relevant for the businesses of the issuer or its subsidiaries, indicating: a. b. c. d. e. f. g. Court Instance Filing Date Parties to the case Amounts, assets or rights involved Main facts If chances of loss are: i. ii. iii. h. i. probable possible remote
Analysis of effects in the event of losing the case Accrued amount, in case of provision
On February 28, 2011, Light S.A. and its subsidiaries were parties in approximately forty-one thousand, two hundred and fifteen (41,215) lawsuits and administrative proceedings related to civil, tax, labor, environmental and regulatory matters. The contingencies estimated on December 31, 2010 were R$4,036,100,000.00 (which does not include non-quantifiable proceedings or non-monetary pleadings). On this same date, an approximate amount of five hundred, sixty-five million, eight hundred and thirty thousand reais (R$565,830,000.00) was accrued in the balance sheet of Light S.A. in order to deal with probable losses. Thus, on December 31, 2010, the provision for contingencies deriving from administrative proceedings and tax, civil, labor, social security, environmental and regulatory lawsuits summed up five hundred, sixty-five million, eight hundred and thirty thousand reais structure may be briefly shown as follows: (R$565,830,000.00) and its
R$ million Labor PIS/COFINS* PIS/COFINS RGR and CCC* INSS* tax deficiency notice INSS* quarterly basis Law n. 8,200 ICMS* Social Contribution Civil Claims /Special Civil Court Contribution for Intervention in the Economic Domain - CIDE Other tax contingencies Other TOTAL
Short Term 0.6
Long Term 167.0 217.2 17.8 38.3 94.4 20.3 88.0 27.4 169.6 4.7 3.0 46.7 894.4
1.6 2.2
*PIS-Contribution to the Social Integration Program/COFINS Contribution to Social Security Financing *RGR Global Reversal Reserve/ CCC Fuel Consumption Account *INSS National Institute of Social Security * ICMS State Goods and Services Tax
Unfavorable decisions or settlements in relation to these lawsuits, controversies or administrative proceedings may result in relevant cash disbursements for the Company, which may significantly and negatively affect its financial condition. In addition, unfavorable court decisions or settlements in amount exceeding that one accrued by the Company may adversely affect its results, as shown below. Civil claims On February 28,2011, the Company was party in civil claims amounting to thirty-six thousand, eight hundred and ninety-three (36,893) lawsuits, of which eighteen thousand, two hundred and fortyeight (18,248) lawsuits were at the state and federal courts, with claims summing up three hundred, ten million and eight hundred thousand reais (R$310,800,000.00), eighteen thousand, six hundred and fortyfive (18,645) lawsuits at special civil courts, involving a total amount of quantified claims of two hundred, ninety-five million, five hundred, seventy-nine thousand, six hundred and forty-eight reais (R$295,579,648.00). On December 31, 2010, the Company had accrued the total amount of one hundred, sixty-nine million, five hundred and sixteen thousand reais (R$169,516,000.00) in relation to civil claims. Light S.A considers the following lawsuits as relevant in view of the dispute argued in lawsuits and their respective amounts.
Court: Instance: Filing Date: Parties to the case: Amounts, assets involved: Main facts: or
Action for Damages Proceeding No. 1995.001.124954-0 3rd Civil Court of the Judicial District of Rio de Janeiro. Higher courts. November 13, 1995. Companhia Siderrgica Nacional (CSN) against Light Servios de Eletricidade S.A. (Light SESA). rights No amount. This will occur upon calculation of the award.
Unfavorable court decision to Light SESA at trial court and at appellate court. Judgment on the appeal against the decision that rejected the Special Appeal lodged by Light SESA is pending. Probable. Chances of loss: Analysis of effects in the event Financial. of losing the case: Thirty-five million, five hundred, sixty-three thousand, four Accrued amount: hundred, forty-nine reais and fourteen centavos (R$35,563,449.14).
Writ of Prevention and Ordinary Action Discussions on the Transportation Agreement Proceeding n 2004.001.026382-9 and Proceeding n 2004.001.043039-4 12th Civil Court of the Judicial District of Rio de Janeiro. Court: Appellate court. Instance: May 12, 2004. Filing Date: Valesul Alumnio S.A. (Valesul) against Light Servios de Parties to the case: Eletricidade S.A. (Light SESA). Amounts, assets or rights This aims the collection of amounts based on the Electricity Transportation Agreement executed between the parties in 1991 and involved: not in the regulated Transportation Agreement, years later by the Brazilian Electricity Regulatory Agency(Aneel). Due to this discussion, Valesul has been monthly disallowing the payments made through judicial deposits. Injunction preventing Light SESA from cutting power supply, also Main facts: authorizing the judicial deposit of disallowed amounts. Trial court decision favorable to Light SESA, however, the release of deposits only may occur after a final and unappealable court decision. Both parties appealed and judgment of these appeals is pending. Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
Writ of Mandamus Illegal collection of charge Commercial Losses Proceeding n 2005.51.01.016053-6 3rd Federal Court of the Judiciary Section of Rio de Janeiro. Court: Appellate court. Instance: August 12, 2005. Filing Date: Siderrgica Barra Mansa S.A against CEO of Light Servios de Parties to the case: Eletricidade S.A (Light SESA) and Director of the Brazilian Electricity Regulatory Agency (Aneel). Amounts, assets or rights This aims at suspending on an injunction basis the effects of collecting the charge called commercial losses, as well as involved: excluding these charges in the future. Trial court decision dismissing the Writ of Mandamus, without trial Main facts: on the merits, due to insufficiency of the action chosen. The Plaintiff lodged an appeal, which is pending judgment. Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Collection suit Attorneys Fees Proceeding n 2007.001.195445-3 42nd Civil Court of the Judicial District of Rio de Janeiro Court: Appellate court Instance: November 9, 2007 Filing Date: Miguez de Mello Advogados against Light Servios de Eletricidade Parties to the case: S.A. (Light SESA). Amounts, assets or rights The law firm intends that Light SESA be sentenced to pay attorneys fees in the historical amount of ten million, seven involved: hundred, fifteen thousand, six hundred, forty-six reais and eightyfive centavos (R$10,715,646.85) in view of the decision that deemed groundless the action for relief from judgment n 98.02.05447-0, filed by federal government at the Regional Federal Court 2nd Region. The trial court decision partially granted relief to the plaintiffs Main facts: motion, sentencing Light SESA to pay the historical amount of five million, three hundred, fifty-seven thousand, eight hundred, twentythree reais and forty-two centavos (R$5,357,823.42). Light SESA and Miguez de Mello office lodged an appeal against such decision. LIGHTs appeal was granted partial relief, reversing the trial court decision and sentencing LIGHT to pay the historical amount of nine hundred, fifty-three thousand, eight hundred, ninety-one reais and fourteen centavos (R$953,891.14) and Miguez Mello offices appeal was rejected. Eventual lodging of appeal is awaited. Probable. Chances of loss: Analysis of effects in the event Financial. of losing the case: Eight million, six hundred, seven thousand, two hundred, seventyAccrued amount: six reais and eighty-two centavos (R$8,607,276.82).
Ordinary Action Postal Service Monopoly Proceeding No. 2001.5101002579-2 11th Federal Court of the Judiciary Section of Rio de Janeiro. Court: Appellate court. Instance: August 21, 2001. Filing Date: Empresa de Correios e Telgrafos (ECT) or Brazilian Postal Parties to the case: Company against Light Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights The amount involved in this case is incalculable. The Plaintiff seeks to prevent Light SESA from delivering electricity bills to involved: consumers, which according to its understanding infringes the exclusive public responsibility of ECT, by means of authorization of Federal Executive Branch. Trial court and appellate court decisions were unfavorable to Light Main facts: SESA. Light SESAs special appeal is pending judgment. Probable Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
Action for Accounting Proceeding n 2005.51.01.014194-3 21st Federal Court of the Judiciary Section of Rio de Janeiro. Court: Trial court. Instance: September 1, 2006. Filing Date: Comercializadora Brasileira de Energia Emergencial or Brazilian Parties to the case: Trader of Emergency Energy (CBEE) federal government against Light Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights CBEEs accounting under the allegation that Light SESA would not be transferring the amounts collected from its consumers as involved: Emergency Capacity Charge (ECE) estimated by the plaintiff at ninety-four million reais (R$94,000,000.00). The lawsuit is under phase of producing evidence (accounting Main facts: expert examination). Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
Ordinary Action One-Sided Termination of Agreement Proceeding N 2003.205. 001547-6 2nd Regional Civil Court of Campo Grande of the Judicial District of Court: Rio de Janeiro. Higher courts. Instance: January 18, 2000. Filing Date: Light Servios de Eletricidade S.A (Light SESA against Nel Parties to the case: Instalaes Eltricas Ltda. (Nel). Amounts, assets or rights Light pleads the termination of the turn-key agreement signed with NEL, since the latter failed to comply with several obligations involved: assumed in the agreement, mainly the failure to pay its employees salaries on due time. There is a balance of two million reais (R$2,000,000.00) referring to the services agreement. In the counterclaim (where defendant also files motion at court), Nel Instalaes intends to receive a significant indemnification for balance higher than retained, losses and damages, refund of labor and financial costs and personal injury, plus attorneys fees. The trial court decision granted partial relief to the lawsuit. Both Main facts: parties appealed to such decision, which was upheld. The agreement was terminated and Light SESA was sentenced to pay four hundred, fifteen thousand, ninety-seven reais and eleven centavos (R$ 415,097.11), adjusted from December 2000, plus 1% interest monthly as of March 15, 2004. The provisional execution phase of the case started. Lights special appeal is pending judgment. Probable. Chances of loss: Analysis of effects in the event Financial. of losing the case: One million, five hundred thousand reais (R$1,500,000.00). Accrued amount:
Writ of Mandamus (MS) Fine applied by Brazilian Electricity Regulatory Agency(Aneel) Proceeding n. 2007.34.00.028837-7 16th Federal Court of the Judiciary Section of the Federal District. Court: Appellate court. Instance: August 11, 2007. Filing Date: Light Servios de Eletricidade S.A (Light SESA) against Aneels Parties to the case: officer. Amounts, assets or rights A fine of one million, six hundred, seventeen thousand, three hundred, sixty-five reais and fourteen centavos was called into involved: question (R$1,617,365.14), which was upheld by General Director of Aneel through Aneel Order n 2.324, rendered in the records of the Aneel proceeding n 48500.003971/04-02 on July 31, 2007, due to alleged failure to comply with Fifth Sub-clause of Clause One of the Concession Agreement of Light SESA [Fifth Sub-clause The CONCESSIONAIREs purpose is the operation of electricity services in the areas referred in Clause One and others, which according to applicable laws is authorized to operate and forbidding any other corporate activity, except for those related to this purpose(...)], in view of the incorporation of subsidiaries LIR Energy Limited (LIR) and Light Overseas Investments Limited (LOI). Trial court decision was unfavorable to Light SESA. Light SESA Main facts: lodged an appeal, which is pending judgment. Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: Two million, three hundred, forty-six thousand, nine hundred, fiftyAccrued amount: seven reais and fourteen centavos (R$2,346,957.14).
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Ordinary Action Contractual Default Proceeding No. 2004.006.000952-1 2nd Civil Court of the Judicial District of Barra do Pira - RJ. Court: Trial court. Instance: February 27, 2004. Filing Date: City of Barra do Pira (City) against Light Servios de Parties to the case: Eletricidade S.A. (Light SESA). Amounts, assets or rights Indemnification due to difference for alleged contractual default charged in consumers monthly bills, since this is an essential public involved: entity; Indemnity for damage to property due to expenses related to lamps installed at public thoroughfares; recovery of unduly paid debt related to the collections of Tax on Operations Related to the State VAT and Interstate and Intercity Transportation Services (ICMS) and Seguro Apago or blackout insurance. Expenses may sum up over four million reais (R$4,000,000.00). The accounting expert examination started in 2007 and currently, Main facts: the lawsuit is under phase of electric engineering expert examination. Possible Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount: Action for Damages Accident but no decease Proceeding n. 0218425-40.2010.8.19.0001 15th Civil Court of the Judicial District of Rio de Janeiro. Trial court. July 6, 2010. Joel Gonalves dos Santos against Light Servios de Eletricidade S.A. (Light SESA). rights No amount. The amount will be determined during liquidation of the award. Indemnification for household accident and personal injury amounting to eight hundred thousand reais (R$800,000.00), aesthetic damages amounting to four hundred thousand reais (R$ 400,000.00) and life pension. Light SESA filed objection. Plaintiffs objection was conferred. Probable.
Court: Instance: Filing Date: Parties to the case: Amounts, involved: Main facts: assets or
Chances of loss:
Analysis of effects in the event Financial. of losing the case: Accrued amount: None.
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Ordinary Action Accident but no decease Proceeding n 0022206-70.2009.8.19.0007 3rd Civil Court- Barra Mansa Trial court November 17, 2009. Antnio Carlos de Almeida Alves against Light Servios de Eletricidade S.A. (Light SESA). or rights Property damage and personal injury indemnity due to fire in plaintiffs home and beauty parlor, which was supposedly triggered by a converter at Light SESAs street light. Parties will submit the evidence of their allegations. Possible.
Court: Instance: Filing Date: Parties to the case: Amounts, involved: assets
Main facts: Chances of loss:
Analysis of effects in the event Financial. of losing the case:
Accrued amount:
None.
Court: Instance: Filing Date: Parties to the case: Amounts, involved: assets or
Ordinary Action Accident but no decease Proceeding n 0220885-97.2010.8.19.0001 46th Civil Court of the Judicial District of Rio de Janeiro Trial court July 8, 2010. Spector Comrcio de Sucatas Ltda. ME against Light Servios de Eletricidade S.A. (Light SESA) and other. rights Property damage indemnity due to fire in plaintiffs premise (scrap trade) which was supposedly triggered by a converter at Light SESAs street light. The civil court of Rio de Janeiro transferred the case due to RIOLUZs inclusion as defendant. Possible.
Accrued amount:
None.
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Ordinary Action Accident but no decease Proceeding n 0252697-60.2010.8.19.0001 50th Civil Court of the Judicial District of Rio de Janeiro Trial court. August 6, 2010. Flash Rio Conexo LTDA ME against Light Servios de Eletricidade S.A. (Light SESA). or rights Property damage indemnity due to fire in plaintiffs premise (trade) which was supposedly triggered by an explosion of Light SESAs underground chamber. The parties will submit the evidence of their allegations. Possible.
Accrued amount:
None.
Ordinary Action Indemnity for Services Interrupted Proceeding n 0293098-04.2010.8.19.0001 24th Civil Court of the Judicial District of Rio de Janeiro Trial court. September 14, 2010 Traders Union of Uruguaiana flea market and surroundings against Light Servios de Eletricidade S.A. (Light SESA) or rights Property damage and personal injury indemnity in view of supposed losses incurred due to services interrupted in March 2010.
Term is awaited to submit Light SESAs defense. Possible.
Accrued amount:
None.
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Ordinary Action Opportrans Proceeeding n. 2007.51.01.001688-4 12th Federal Court of the Judiciary Section of Rio de Janeiro Trial court February 2, 2007 Opportrans Concesso Metroviria S. A. against Light Servios de Eletricidade S.A. (Light SESA), federal government and Brazilian Electricity Regulatory Agency (Aneel) rights Motion for disregard of variables referring to commercial losses or non-technical losses and Itaipu transportation Distribution System Usage Tariff (TSUD) and declaration of unconstitutionality and illegal Decree n 4,562/2002 and Aneel Resolutions n 152/2003 and 166/2005. After the parties production of evidence, case records were sent to the judge to be taken under advisement, then, rendering of judgment is awaited.
Court: Instance: Filing Date: Parties to the case:
Amounts, involved:
assets
or
Main facts:
Chances of loss:
Possible.
Analysis of effects in the event Financial. of losing the case: Accrued amount: Priceless.
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Writ of Prevention and Ordinary Action Litigation on Itaipu surplus energy Proceeding n 2001.34.00.028914-0 and Proceeding n 2001.34.00.031.985-5 16th Judiciary Section of the Federal District. Appellate court. November 23, 2001 Centrais Eltricas Brasileiras S.A. Eletrobrs (Eletrobrs) against Light Servios de Eletricidade S.A. (Light SESA), Brazilian Electricity Regulatory Agency (Aneel) and other. rights Lawsuit aims the declaration of Eletrobrs ownership over Itaipu surplus energy, as well as to authorize it as trading agent of such energy in the Electricity Wholesale Market, and also, that defendants are jointly sentenced to refund the Plaintiff for all the financial losses incurred due to the failure to account for and invoice this energy.
Court: Instance:
Filing Date: Parties to the case:
Amounts, involved:
assets
or
Main facts:
Court decision deemed Eletrobrs motions groundless. Plaintiff lodged an appeal, which was received as effect of review. Case records were sent to the Regional Federal Court 1st Region. The lawsuit was assigned to the 6th Panel of the Regional Federal Court (TRF). Appeals judgment is pending.
Chances of loss:
Possible.
Accrued amount:
None.
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Ordinary Action combined with motion for interlocutory relief Proceeding n. 2005.61.00.900182-6 26th Federal Court of So Paulo - SP Appellate court February 18, 2005 Light Servios de Eletricidade S.A. against Banco Santos S/A Intervenor and Brazilian Central Bank (BACEN) rights Financial investments, CDB and RDB offset with debts referring to the Swap Agreement n. 04c07730, amounting to thirty-one million, eight hundred, sixty-two thousand, four hundred, sixty-one reais and eighty-three centavos (R$31,862,461.83). On December 2, 2005, court decision dismissed the case, in view of parties settlement that made possible the compensation sought. On September 15, 2006, the Brazilian Central Bank (Bacen) lodged appeal against this decision, aiming at receiving attorney's fees of three million reais (R$3,000,000.00). On July 4, 2007, case records were sent to the Regional Federal Court 3rd Region So Paulo to judge Bacens appeal. The evaluation of the case is awaited. Remote.
Court: Instance:
Filing Date: Parties to the case: Amounts, involved: assets or
Main facts:
Chances of loss:
Analysis of effects in the event Financial. of losing the case: Accrued amount: None.
Public civil actions, class actions and citizen suits On March 29, 2011, there were fifty-two (52) public civil actions, class actions or citizen suits filed against Light Servios de Eletricidade S.A. (Light SESA) deemed as relevant by the company. These lawsuits are relevant since the public civil action is a procedural instrument, provided for by Brazils federal constitution and non-constitutional rules the Public Prosecutor Office may apply and other legal entities to defend diffuse interests (those pertaining to an indeterminable group, class or category of persons, who unite themselves in a same real situation), group interests (those that may only exercised as a community, as a result of a relationship joining everyone) and the homogenous individual interests (those pertaining to a determinable group, class or category of persons, with a common origin and with a divisible nature, i.e., they may be quantified and divided among group members).
Therefore, eventual unfavorable court decisions in these lawsuits would reach a high number of electricity service users. Due to their nature, it was not possible to estimate the total amount involved in these lawsuits.
Court:
Instance: Filing Date: Parties to the case:
Amounts, involved:
assets
or
Public Civil Action Portion A Neutrality Proceeding n 2009.51.01.028438-3 28th Federal Court of the Judiciary Section of Rio de Janeiro. The Federal Court of Rio de Janeiro transferred the case to the 3rd Federal Court of Minas Gerais. Trial court. December 16, 2009. Consumer Defense Commission of the State Legislature of the State of Rio de Janeiro against Light Servios de Eletricidade S.A. (Light SESA) and other. rights Annulment of clause that adjusts electricity tariff in the concession agreement (Portion A). Refund of amounts eventually charged from consumers in view of undue adjustment. Incalculable amount.
The federal court of Rio de Janeiro transferred the case to the 3rd Federal Court of Minas Gerais, in view of its prevention as to ACP no. 2009.38.00.027553-4-MG. Lapse of time is awaited in order to the parties lodge an appeal for subsequent remittance of the records to the Federal Court of Minas Gerais. Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount: Main facts:
Public Civil Action Indemnity for damage to property and personal injury Proceeding n 0378316-34.2009.8.19.0001 5th Corporate Court of the Judicial District of Rio de Janeiro. Court: Trial court. Instance: December 1, 2009. Filing Date: Consumer Brazilian Association (ABRACON) against Light Parties to the case: Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights Indemnity for damage to property and personal injury suffered by consumers affected by power outage occurred in several districts of involved: the city of Rio de Janeiro during 2009/2010 summer. Main facts: Light SESA filed its defense. The case was suspended, awaiting the conclusion of lawsuits filed by NUDECON, ADECON and Union of Hotels, Restaurants and Bars, which have similar subject-matter and hearing was held on February 22,2011 At this hearing held on February 22, 2011, an agreement was settled establishing that Light will adopt the measures necessary to restart services in case of outage within 6 hours, under the penalty of fine being reversed on its own behalf in order to invest in improvements. The judge of the case filed ABRACON will be notified about the terms of this agreement. Official communication and judge's decision are awaited. Possible. Chances of loss: Analysis of effects in the event Financial and precedent is created. of losing the case: Accrued amount: None.
Public Civil Action Power cut Proceeding n 2009.51.01.027226-5 16th Federal Court of the Judiciary Section of Rio de Janeiro. Court: Trial court Instance: December 1, 2009. Filing Date: Consumer Defense Commission of the State Legislature of the State Parties to the case: of Rio de Janeiro against Light Servios de Eletricidade S.A. (Light SESA) and other. Amounts, assets or rights Prevent the cut of power supply except for emergency cases or upon prior notice to consumers, under the penalty of fine due to noninvolved: compliance. The Brazilian Electricity Regulatory Agency was sentenced to punish the electricity concessionaires in view of continued power cuts. Remedy of damages to property and personal injury caused by these power cuts as of November 10, 2009. Plaintiffs answer on Light SESAs defense is awaited. Main facts: Possible. Chances of loss: Analysis of effects in the event Financial and precedent is created. of losing the case: None. Accrued amount:
Public Civil Action Indemnity for damage to property and personal injury Proceeding n 0373651-72.2009.8.19.0001 4th Corporate Court of the Judicial District of Rio de Janeiro. Court: Trial court. Instance: November 20, 2009. Filing Date: Consumer and Worker Defense Brazilian Association Parties to the case: (ABRADECONT) against Light Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights Indemnity for damage to property and personal injury suffered by consumers affected by power outage in the districts of Copacabana, involved: Ipanema, Leblon and Lagoa, in the city of Rio de Janeiro, occurred in November 2009. Light SESA filed its defense and contested the amount in dispute. Main facts: After Public Prosecutor Offices opinion, case records were sent to the Judge, to be taken under advisement. Possible. Chances of loss: Analysis of effects in the event Financial and precedent is created. of losing the case: None. Accrued amount:
Public Civil Action Return of minimum tariff Proceeding n 2009.001.319500-8 5th Corporate Court of the Judicial District of Rio de Janeiro. Court: Trial court. Instance: November 13, 2009. Filing Date: Consumer Defense Commission of the State Legislature of the State Parties to the case: of Rio de Janeiro against Light Servios de Eletricidade S.A. (Light SESA) and other. Amounts, assets or rights Request to refund the minimum tariff during the temporary power cut occurred on November 10,2009. Obligation to repair damaged involved: products when power resumed due to unbalanced voltage when power restarted. Case records were sent to the Public Prosecution Office render its Main facts: opinion on the parties allegations. Possible Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
Public Civil Action Power outage Proceeding n 2008.047.000695-4 Court of the Judicial District of Rio Claro - RJ. Court: Trial court. Instance: September 23, 2008. Filing Date: Public Prosecutor Office of the State of Rio de Janeiro against Light Parties to the case: Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights It is not possible to estimate the amount involved. The Public Prosecutor Officer requests the award of damages due to supposed involved: power outage in the district of Estao de Ldice, in the city of Rio Claro. The evidentiary phase is concluded. Court decision is awaited. Main facts: Possible Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Public Civil Action Illegal minimum tariff Proceeding n 2008.064.002960-1 1st Civil Court of the Judicial District of Valena - RJ. Court: The Civil Court of Valena transferred the case to the 1st Federal Court of Barra do Pira. Trial court Instance: June 26, 2008. Filing Date: Consumer and Taxpayer Brazilian Association (ANDECC) Parties to the case: against Light Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights Illegality of the minimum tariff charged as electricity service availability requesting the abstention of collection and refund of involved: amounts charged over the past five (5) years. The Public Prosecutor Officer issued an opinion rejecting the Main facts: request of injunction filed by ANDECC, pleading Light SESA to abstain from charging the minimum tariff. The Brazilian Electricity Regulatory Agency(Aneel) expressed the legality of the minimum tariff collection and requested to join the suit. The judge of the 1st Civil Court of the District of Valena RJ understood that it does not have competent jurisdiction to judge this case and transferred it to the Federal Court. On August 6, 2010, main records and objection records were assigned to the 1st Federal Court of Barra do Pira. A decision was rendered deeming the motions groundless and dismissing the case, with resolution on the merit. Light SESA filed motion for clarification of judgment on the objection to the amount in controversy. An order was issued determining ANEEL and Federal Public Prosecutor Office to render an opinion on the objection to the amount in controversy. Light SESA's motion for clarification is pending judgment. Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
Public Civil Action Electricity supply to public authorities Proceeding n 2002.51.01.016646-0 15th Federal Court of the Judiciary Section of Rio de Janeiro. Court: Appellate court. Instance: August 29, 2002. Filing Date: Federal Prosecution Office against Light Servios de Eletricidade Parties to the case: S.A. (Light SESA) and the Brazilian Electricity Regulatory Agency(Aneel). Amounts, assets or rights Prevent the cut of power supply to federal, state and local authorities and private companies which provide public utilities. involved: Trial court decision was unfavorable to Light SESA. Light SESAs Main facts: appeal is pending judgment. Probable. Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
Public Civil Action financial charges of the agreement Proceeding n 2007.001.217389-0 6th Corporate Court of the Judicial District of Rio de Janeiro -RJ. Court: Trial court. Instance: December 5, 2007. Filing Date: Consumer Defense Center (NUDECON) and Public Prosecutor Parties to the case: Office of the State of Rio de Janeiro against Light Servios de Eletricidade S.A. (Light SESA) and Telemar Norte Leste S.A. Amounts, assets or rights Legality of Light SESA collecting financial charges in the debt installment agreements. The plaintiffs request the abstention from involved: executing agreements or collections deriving from debt installment payment, acknowledgment of indebtedness or another title aiming the installment or prompt payment of the outstanding balance of late installments including financial compensatory or default charges exceeding prevailing interest rates. Expert is appointed to prepare the accounting evidence. Main facts: Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount: Public Civil Action Third party debt Proceeding n 2005.001.093700-4 1st Corporate Court of the Judicial District of Rio de Janeiro -RJ. Higher courts.
September 26, 2005. Public Prosecutor Office of the State of Rio de Janeiro against Light Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights Light SESAs abstention from imposing to third parties any obligation due to debts related to former occupants of the property involved: and payment of damage to property and personal injury caused by Light SESA, including the refund in double of collection unduly made. Favorable trial court decision. Light SESA lodged an appeal which Main facts: was rejected. Light SESA lodged new appeals. Probable. Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
Public Civil Action Collection of electric debt notice fee Proceeding n 2006.001.014710-0 Current no 0014574-16.2006.8.19.0001 5th Corporate Court of the Judicial District of Rio de Janeiro. Court: Trial court. Instance: June 6, 2006. Filing Date: Public Prosecutor Office of the State of Rio de Janeiro against Light Parties to the case: Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights Statement of illegal collection of electric debt notice fee; refund of these fees collected and payment of damage to property and involved: personal injury suffered by consumers who paid this fee. Unfavorable trial court decision to the Public Prosecutor Office Main facts: (favorable to Light SESA). The Public Prosecutor Officer lodged an appeal. The appeal was granted partial relief so that to determine that Light SESA abstain from collecting this debt notice, under the penalty of paying a daily fine of ten thousand reais (R$10,000.00) and refund in double the amounts charged as of the edition of Resolution 456/00 of the Brazilian Electricity Regulatory Agency(Aneel). A decision was rendered ordering its compliance. However, Light SESA did not collect the amounts subject-matter of the lawsuit. Therefore, there is no obligation to be complied with by Light. Probable Chances of loss: Analysis of effects in the event No effects, since Light SESA did not collect the amounts it was sentenced to refund. of losing the case: None. Accrued amount:
Court: Instance: Filing Date: Parties to the case: Amounts, assets involved: Main facts: or
Public Civil Action Customer service Proceeding n 2003.047.000765-0 Court of the Judicial District of Rio Claro - RJ. Higher Courts. May 22, 2003. Public Prosecutor Office of the State of Rio de Janeiro against Light Servios de Eletricidade S.A. (Light SESA). rights Request the re-opening of customer service in Rio Claro. Trial court decision was unfavorable to Light SESA. An appeal was lodged which was denied. A special appeal was lodged which is pending judgment.
Nevertheless, it is worth mentioning that after the effectiveness of ANEEL Resolution no. 414/2010, the distribution companies were required to open customer services units in all the cities located within its concession area. Thus, even if court decision were favorable to Light SESA, with these new laws in force, the concessionaire would be compelled to open a customer service unit in the city of Rio Claro. Probable. Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
Public Civil Action Power outage Proceeding n 2002.001.115855-7 3rd Corporate Court of the Judicial District of Rio de Janeiro -RJ Court: Higher courts Instance: September 17, 2002 Filing Date: Consumer Defense Commission of the State Legislature of the State Parties to the case: of Rio de Janeiro against Light Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights This lawsuit requested (i) the refund of amount corresponding to 1/30 of the basic tariff, multiplied by the number of days service involved: was interrupted; (ii) indemnity for all damages suffered by consumers supposedly resulting from failure to provide services and (iii) personal injury indemnity for consumers as a result of power failure during at most three (3) days, and both calculations to be verified during settlement due to temporary power failure resulting from windstorm. Trial court decision granted partial relief to the case, sentencing Main facts: Light SESA to refund the amount corresponding to 1/30 of the basic tariff and disclose the terms of the court decision in electricity bills. An appeal was lodged, which was granted partial relief, to remove the disclosure of court decision terms and to restrict the extension of court decision effects to the State of Rio de Janeiro. A special appeal was lodged which is pending judgment. Probable in relation to the refund of 1/30 to those who paid the Chances of loss: minimum tariff referring to the subject-matter of the action and possible in relation to other motions. Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
Public Civil Action Annulment of DNAEE Ordinances Proceeding n 2006.001.013471-2 3rd Corporate Court of the Judicial District of Rio de Janeiro. Trial court. January 31, 2008. Brazilian Association of Water and Electricity Consumers (ASSOBRAE) against Light Servios de Eletricidade S.A. (Light SESA). rights Declaration of annulment of DNAEE Ordinances 38/86 and 45/86; (Plano Cruzado), 20% refund of tax withheld in error related to all the amounts received between March/86 and November/86; submission of in-depth spreadsheet containing information about all consumers between March and November 1986. With the issue of the ordinances 38 and 45/86 by DNAEE (regulatory authority at that time), industrial consumers electricity bills were adjusted (only these consumers). This fact resulted in questioning at court by consumers as a whole, since the federal governments price freeze was effective at that time (Plano Cruzado), reason that the Ordinance DNAEE 153/86 was issued subsequently, reviewing the tariffs related to the amounts collected before the new ordinances. A notification was issued to the federal government express its interest in the case for subsequent prosecution. Possible.
Amounts, involved:
assets
or
Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
Public Civil Action Opening of customer service Proceeding n 2004.022.000572-0 Court of the Judicial District of Engenheiro Paulo de Frontin - RJ. Appellate court. November 24, 2004.
Consumer Brazilian Association (ABRACON) against Light Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights Request to open a customer service center in the city of Engenheiro Paulo de Frontin and collect the amount of four hundred thousand involved: reais (R$400,000.00) to the National Fund of Diffuse Rights (FNDD); and indemnity for damages to property and personal injury to consumers eventually injured. The trial court granted partial relief to the case. (i) the request of Main facts: indemnity for damages to property and personal injury was rejected, as well as the request to collect amount to the benefit of FNDD; (ii) the lawsuit was granted relief as to the opening of customer service unit. Light SESA lodged an appeal, which was rejected. Order was published determining the compliance with the decision. Light SESA informed that the decision has already been complied with, as a customer service unit was opened . Probable loss in relation to the maintenance of customer service Chances of loss: center in the city of Paulo de Frontin and remote loss in relation to the payment of indemnities. Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
Citizen Suit Irregularity in the acquisition of Lights equity interest Proceeding n. 0024.08.008.068-2 3rd Court of the State Public Treasury Judicial District of Belo Court: Horizonte. Trial court. Instance: May 7, 2008. Filing Date: Marco Aurlio Flores Canone against Light S.A. (Light S.A.); Parties to the case: Light Servios de Eletricidade S.A (Light SESA) and other. Amounts, assets or rights This suit aims at annulling the acquisition of equity interest in Light S.A. by Companhia Energtica de Minas Gerais (CEMIG) in a involved: consortium with Andrade Gutierrez Concesses S.A., JLA Participaes S.A. and Pactual Energia Participaes S.A which composed Grupo Rio Minas Energia Participaes S.A (RME). On interlocutory appeal, Marco Aurlio Flores Canones appeal was Main facts: rejected and no other appeal was lodged. After submission of defendants answer, the prosecution of the case is awaited. Remote. Chances of loss: Analysis of effects in the event Change in the ownership structure of Light S.A., affecting its image towards investors. of losing the case: None. Accrued amount: Public Civil Action Tariff review Proceeding n 2005.51.01.025307-1 7th Federal Court of the Judiciary Section of Rio de Janeiro. Court: Trial court. Instance: November 30, 2005. Filing Date: Federal Prosecutor Office against Light Servios de Eletricidade Parties to the case: S.A. (Light SESA) and other. Amounts, assets or rights The suit aims at requiring the Brazilian Electricity Regulatory Agency(Aneel) to correct the calculation of Light SESAs tariff involved: review in order to include the tax benefit effects deriving from distribution of interest on equity to shareholders and consider this tax benefit in any future tariff review of Light SESA. The suit also requests Light SESA to refund consumers of all the amounts collected as of November 2003, in view of the non-consideration of tax benefit in the tariff review. An appeal contested the amount of the dispute which was rejected. Main facts: Light SESA appealed against such decision. Trial court decision is pending. Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
Public Civil Action Tariff review Proceeding n 2004.51.01.010086-9 7th Federal Court of the Judiciary Section of Rio de Janeiro. Trial court. June 1, 2004.
Consumer and Worker Rio de Janeiro Association (AFCONT) and Brazilian Association of Consumer and Worker Assistance (ANACONT) against Light Servios de Eletricidade S.A (Light SESA) and other. Amounts, assets or rights This suit aims at suspending electricity bill increases deriving from the tariff review process approved by the Brazilian Electricity involved: Regulatory Agency(Aneel) in November 2003. A preliminary injunction was granted where the plaintiff requested Main facts: the abstention from cutting power supply to consumers of the State of Rio de Janeiro, or credit restriction, in the event of default. An appeal was lodged and the decision was revoked. Trial court decision is pending. Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Public Civil Action Social tariff for low income consumers Proceeding n. 2009.001.192039-3 1st Corporate Court of the Judicial District of Rio de Janeiro. Trial court. July 28, 2009. Consumer Defense Center (NUDECON) against Light Servios de Eletricidade S.A. (Light SESA). or rights Supposed illegality of Resolution 485/2002 and Decree 4,336/2002, establishing the criteria to be included in the Social Tariff program for low income consumers. Action was deemed groundless. Plaintiffs appeal is awaited or declaration of final and unappealable decision. Remote. in the event A precedent is created for those persons not included in the Bolsa Famlia Program (or family allowance) to join the Baixa Renda Program (low income consumers). Financial impact. None.
Court:
Instance: Filing Date: Parties to the case: Amounts, involved: Main facts: Chances of loss: Analysis of effects of losing the case: Accrued amount: assets
Public Civil Action Electric power meter bodies Proceeding No. 2007.001.066178-8 3rd Corporate Court of the Judicial District of Rio de Janeiro. Court: Trial court. Instance: July 17, 2007. Filing Date: Brazilian Association of Water and Electricity Consumers Parties to the case: (ASSOBRAEE) against Light Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights Priceless amount. The suit requests the withdrawal of all electric power meter bodies installed by Light SESA to measure the involved: electricity consumption, alleging that this type of measurement would not be approved by the National Institute of Metrology, Standardization and Industrial Quality (INMETRO). A preliminary injunction was granted to Light SESA replace all the Main facts: electric power meters, and a request for reconsideration of injunction was approved. Official letters were issued to INMETRO and to the Brazilian Electricity Regulatory Agency(Aneel) to render an opinion thereon INMETROs reply is awaited. Aneel already expressed its opinion reiterating procedure to be adopted by Light SESA. Decision is pending. Possible. Chances of loss: Analysis of effects in the event Procedural and financial effects. of losing the case: None. Accrued amount:
Amounts, involved: Main facts:
assets
or
Public Civil Action Law 4,901/2006 Proceeding n 0077918-34.2007.8.19.0001 2nd Corporate Court of the Judicial District of Rio de Janeiro. Appellate court. August 31, 2007. Brazilian Association of Water and Electricity Consumers (ASSOBRAEE) against Light Servios de Eletricidade S.A. (Light SESA). rights Requirement to install power meters at a visible place and of easy access to consumers, as well as refund of amounts collected in error of installed meters in disagreement with the aforementioned order.
The suit was deemed groundless by trial court. ASSOBRAEE appealed against such decision. This appeal is pending judgment, awaiting the judgment on the Direct Action of Unconstitutionality (ADIN 3,905) at the Superior Court of Justice which examined referred law. Remote. Chances of loss: Analysis of effects in the event Procedural and financial impact. of losing the case: None. Accrued amount: Class Action Irregular Electric Power Supply Proceeding n: 2008.001.157660-6 5th Corporate Court of the Judicial District of Rio de Janeiro. Court: Instance: Filing Date: Parties to the case: Trial court. June 24, 2008 Consumer and Worker Association of Rio de Janeiro (AFCONT) against Light Servios de Eletricidade S.A. (Light SESA). or rights Prevent the cut of electric power supply by Light SESA in view of irregularity verified at consuming units.
Amounts, involved:
assets
Possible Chances of loss Decision is awaited after Public Prosecutor Offices opinion. Main facts: Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Public Civil Action Irregular Electric Power Supply Proceeding n: 2009.001.109025-6 5th Corporate Court of the Judicial District of Rio de Janeiro. Court: Trial court. Instance: May 5, 2009. Filing Date: Consumer Defense Center (NUDECON) against Light Servios Parties to the case: de Eletricidade S.A. (Light SESA). Amounts, assets or rights This suit requests Light SESA to abstain from cutting the electric power supply for consumers with debts prior to three (3) months of involved: current liability, as well as those deriving from Statements of Irregularity, under the penalty of fine. Light SESA submitted its defense. Decision is awaited after Public Main facts: Prosecutor Offices opinion. Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
Court: Instance: Filing Date:
Public Civil Action DNAE Tariff adjustment (Cruzado Plan) Proceeding n 2000.001.144224-3 4th Corporate Court of the Judicial District of Rio de Janeiro. Trial court. August 26, 2006.
Consumer Defense Community (SDC) against Light Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights Illegality of tariff adjustment established by DNAEE Ordinances 38 and 45/86. Refund of overpaid amounts. involved: Trial court decision granted relief to the plaintiffs motion. Stage of Main facts: calculation of the award starts (accounting expert examination). The parties were summoned to render an opinion on the report. Probable. Chances of loss: Analysis of effects in the event Financial. of losing the case: Three million, three hundred, ninety-three thousand, seven hundred Accrued amount: and forty-four reais (R$3,393,744.00). Parties to the case:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Public Civil Action 2003 Tariff Review Proceeding n 2003.51.01.029588-3 28th Federal Court of the Judiciary Section of Rio de Janeiro. Appellate court. December 19, 2003.
Federal Prosecution Office against Light Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights The suit calls into question the percentage of Lights tariff review established by the Brazilian Electricity Regulatory Agency involved: (Aneel) through Aneel Resolution 591 of November 6, 2003. Trial court decision favorable to Light SESA. The Public Main facts: Prosecution Office lodged an appeal, which is pending judgment. Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
Public Civil Action 2003 Tariff review Proceeding n 2005.51.01.005444-0 28th Federal Court of the Judiciary Section of Rio de Janeiro. Court: Appellate court. Instance: March 2, 2005. Filing Date: Consumer Defense Commission of the State Legislature of Rio de Parties to the case: Janeiro against Light Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights The suit calls into question the percentage of Lights tariff review established by the Brazilian Electricity Regulatory Agency involved: (Aneel) through Aneel Resolution 591 of November 6, 2003. Trial court decision was favorable to Light SESA. The Public Main facts: Prosecution Office lodged an appeal, which is pending judgment. Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Public Civil Action 2003 Tariff Review Proceeding n 2004.51.01.021009-2 28th Federal Court of the Judiciary Section of Rio de Janeiro. Appellate court. October 28, 2004. Public Prosecution Office of the State of Rio de Janeiro against Light Servios de Eletricidade S.A. (Light SESA). rights The suit calls into question the percentage of Lights tariff review established by the Brazilian Electricity Regulatory Agency (Aneel) through Aneel Resolution 591 of November 6, 2003.
Court: Instance: Filing Date: Parties to the case: Amounts, involved: Main facts: assets or
Trial court decision was favorable to Light SESA. The Public Prosecution Office lodged an appeal which is pending judgment . Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount: Citizen Suit Annulment of auction Proceeding n 98.001.6582-7 26th Federal Court of the Judiciary Section of So Paulo. Court: Appellate court. Instance: April 28, 1998. Filing Date: Amarildo Bolito and others against the Brazilian Electricity Parties to the case: Regulatory Agency (Aneel), So Paulo State Government, Board Governors of the Privatization State Program, Energy State Secretary, ngelo Andrea Matarazzo, Light Servios de Eletricidade S.A. (Light SESA) and Lightgs Ltda. Amounts, assets or rights Definitive annulment of Eletropaulo Metropolitana Eletricidade auction/privatization. involved: The claim was deemed groundless. Plaintiffs lodged an appeal at the Main facts: Federal Regional Court 3rd Region, which is pending judgment. Remote Chances of loss: Analysis of effects in the event Annulment of Eletropaulo privatization auction. of losing the case: There is no economic value involved. Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Public Civil Action Reconnection Fee Proceeding n 0155681-43.2009.8.19.0001 7th Corporate Court of Rio de Janeiro Trial court. June 21, 2009. National Institute of Consumer Defense INDECCON against Light Servios de Eletricidade S.A. (Light SESA) and other. or rights Suspension of the Reconnection Fee collection for all users under Light SESAs concession area.
Main facts:
Chances of loss:
Light SESA was notified to answer the lawsuit on March 31,2010. The Company submitted its defense and recently the judge ordered INDECCON to proceed with the case under the penalty of dismissing the lawsuit. Possible.
Accrued amount:
None.
Public Civil Action Irregular Electric Power Supply Proceeding n 0005935-72.2010.8.19.0064 1st Civil Court of the Judicial District of Valena. Trial court. July 23, 2010. Trade and Industry Association of Valena against Light Servios de Eletricidade S.A. (Light SESA). or rights The association pleads refund to the municipality of Valena as it alleges that services rendered by Light SESA in this city are precarious in view of continued outages and electric network oscillation. Light SESA submitted its defense and term was established to the Association submit its reply. Possible
Accrued amount:
None.
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Public Civil Action Portion A Neutrality Proceeding n 2010.51.01.020848-6 28th Federal Court of the Judiciary Section of Rio de Janeiro Trial court. November 17, 2010. Federal Public Prosecutor Office against Light Servios de Eletricidade S.A. (Light SESA), Ampla and Brazilian Electricity Regulatory Agency (Aneel) rights Change in the formula that adjusts the Concession Agreement and refund the amounts overpaid by consumers.
Amounts, involved:
assets
or
Main facts:
Chances of loss:
Light SESA was notified to express an opinion on the injunction filed by the Public Prosecutor Office. The concessionaire made a statement and awaits the prosecution of the case. Possible.
Accrued amount:
None.
Public Civil Action Irregular Electric Power Supply Proceeding n 0446870-84.2010.8.19.0001 7th Corporate Court of Rio de Janeiro Trial court. December 21, 2010. ABRAAC Brazilian Association of Taxpayers and Consumers Defense against Light Servios de Eletricidade S.A. (Light SESA). rights Installation of generator at Gvea shopping center. ABRAAC alleges that services rendered by Light SESA are precarious in view of continued outages and oscillations. Injunction was rejected and an appeal was lodged. Defense is awaited. Possible.
Amounts, involved:
assets
or
Accrued amount:
None.
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Public Civil Action Personal injury, aesthetic damages indemnity and alimony Proceeding n 0306470-20.2010.8.19.0001 4th Corporate Court of the Judicial District of Rio de Janeiro. Court: Instance: Filing Date: Parties to the case: Trial court. September 24, 2010. Public Prosecutor Officer of the State of Rio de Janeiro against Light Servios de Eletricidade S.A. (Light SESA). or rights Provide customer service receipt; make available through electronic menu: contact with the operator, complaint and cancellation of agreements; customer service for at least, 60 seconds; 24-hour SAC (customer service line). Publication of Notice notifying any interested party to intervene in the case as co-defendant. Possible
Amounts, involved:
assets
Analysis of effects in the event Procedural. of losing the case:
Accrued amount:
None.
Public Civil Action COSIP Proceeding n 0073361-96.2010.8.19.0001 3rd Corporate Court of the Judicial District of Rio de Janeiro. Trial court. March 1, 2010. Public Prosecutor Office of the State of Rio de Janeiro against Light Servios de Eletricidade S.A. (Light SESA). or rights Abstention to collect electricity bills, amounts as public lightning contribution.
Amounts, involved:
assets
Main facts:
Chances of loss:
Denial of interlocutory relief pleaded so that Light SESA abstains from charging electricity bills from COSIP. Parties production of evidence is awaited. Possible
Analysis of effects in the event Procedural and financial. of losing the case:
Accrued amount:
None.
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Class Action ADIC Proceeding n. 2009.38.00.027553-0 3rd Court of the Judiciary Section of Minas Gerais Trial court October 20, 2009 Association of Collective Interest Defense (ADIC) against Light Servios de Eletricidade S.A. (Light SESA) and other 44 distribution companies rights Priceless (Plaintiff assigned the amount of R$6,000,000,000.00 to the case, which was the subject-matter of the Objection to the Amount in Controversy not yet examined by the judge) The adhesion of the Federal Public Prosecutor Officer (MPF) and Federal Office of the Public Defender (DPU) to the case was accepted as co-plaintiffs. The federal governments adhesion to the case was co-defendant was rejected. Objection was filed to the amount in controversy by Light SESA and other. Light SESA and other lodged interlocutory appeal calling into question the court jurisdiction and federal government acceptance in the case which was converted into interlocutory appeal postponed until the appeal from final judgment. Internal interlocutory appeal/request for reconsideration was filed. Light SESA filed writ of mandamus against decision that converted the interlocutory appeal into interlocutory appeal postponed until the appeal from final judgment. It is worth mentioning that although the chances of losses are possible against Light SESA, there are laws and court precedents referring to the Federal Court of Minas Gerais lack of jurisdiction. Possible.
Amounts, involved:
assets
or
Main facts:
Chances of loss:
Analysis of effects in the event Financial of losing the case: Accrued amount: Priceless
Civil Liability Suits Light Servios de Eletricidade S.A. (Light SESA) is defendant is lawsuits filed by victims and/or or successors of accident victims involving its electricity network and/or services, with several causes. Among current lawsuits, the Companys attorneys deem the following lawsuits as the most relevant ones:
Lawsuit Accident Street Light Fall Proceeding No. 2008.001.355546-1 16th Civil Court of the Judicial District of Rio de Janeiro. Trial court. October 29, 2008
Ana Lucia Ribeiro Alves and Wellington De Jesus Almeida against Light Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights Amount estimated at three million reais (R$3,000,000.00). Indemnity is pleaded due to Light SESA street light falling on involved: plaintiffs, causing burns and amputation of one leg of Ana Lucia Ribeiro Alves. Expert evidence is concluded. Main facts: Probable. Chances of loss: Analysis of effects in the event Financial. of losing the case: Three million reais (R$3,000,000.00). Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Lawsuit Accident & Decease Proceeding N 2000.001.038879-4 Current Number: 0040818-89.2000.8.19.0001 31st Civil Court of the Judicial District of Rio de Janeiro. Court: Trial court. Instance: April 3, 2000. Filing Date: Cristiani de Couto Costa against Light Servios de Eletricidade S.A Parties to the case: (Light SESA) Amounts, assets or rights Amount estimated at one million and one hundred thousand reais (R$1,100,000.00), comprising indemnity for damages to property involved: and personal injury, due to husbands decease caused by an accident, when he was diving inside the reservoir of Pereira Passos power plant, providing services to Light SESAs contractor. Trial court granted partial relief to the case. An appeal was lodged, Main facts: which was partially approved. The plaintiffs started the execution in relation to property damages. Light SESA deposited the full amount of this award. As Light SESA complied with decisions requirement, the judge ordered the shelving of records. Probable. Chances of loss: Analysis of effects in the event Financial. of losing the case: One million, one hundred thousand reais (R$1,100,000.00). Accrued amount: Amount paid: seven hundred, fourteen thousand, sixty-two reais and twenty-two centavos (R$714,062.22).
Lawsuit Accident at electricity network Proceeding N 1998.001.073710-7 26th Civil Court of the Judicial District of Rio de Janeiro. Court: Trial court. Instance: April 6, 1998. Filing Date: Wendel Nascimento de Souza against Light Servios de Eletricidade Parties to the case: S.A (Light SESA). Amounts, assets or rights Accident at the electricity network caused first, second and thirddegree burns to the victim, who requested health treatment and involved: surgery, personal injury and pension. Court decision deemed the lawsuit groundless with judgment on the Main facts: merits. Results favorable to Light SESA. There is no information if plaintiff lodged an appeal. Probable. Chances of loss: Analysis of effects in the event Financial. of losing the case: Two million, four hundred, seventy-three thousand and eight Accrued amount: hundred reais (R$2,473,800.00).
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Lawsuit Accident without decease Proceeding n 2004.008.007058-5 1st Civil Court of Belford Roxo - RJ. Court: Trial court. Instance: September 16, 2004. Filing Date: Givaldo dos Santos against Light Servios de Eletricidade S.A. Parties to the case: (Light SESA) Amounts, assets or rights Indemnity estimated at one million, four hundred, forty-five thousand and twenty reais (R$1,445,020.00) in view of accident involved: occurred when the plaintiff was working as bricklayer; when he leaned against 1-meter length metallic scale, he suffered a sudden discharge of electricity, which caused the amputation of his left arm, third-degree burns in 18% of his body, injury of his legs tibial nerves. Medical expert examination is conducted. Main facts: Probable Chances of loss: Analysis of effects in the event Financial. of losing the case: One million, five hundred, seventy-two thousand, two hundred and Accrued amount: eighty reais (R$1,572,280.00).
Lawsuit Accident & Decease Proceeding n. 0003302-03.2009.8.19.0039 Exclusive Court of the Judicial District of Paracambi Rio de Janeiro. Trial court November 26, 2009 Ruliane Aparecida de Paula Andrade, Raphaela Darc de Paula Andrade, Raphael Salvador de Andrade Filho against Light Servios de Eletricidade S.A. (Light SESA) rights Survivors pension in view of Mr. Raphaels decease, plaintiffs husband and father corresponding to 2.61 minimum wages, or also a sole indemnity of five hundred, ninety-three thousand, three hundred, eighteen reais and thirty-seven centavos (R$593,318.37), as well as personal injury indemnity corresponding to 600 minimum wages. Total amount: one million, forty-six thousand, seven hundred and eighty-two reais (R$1,046,782.00), including attorneys fees. Term is awaited for Light SESAs defense. Probable.
Amounts, involved:
assets
or
Analysis of effects in the event Financial. of losing the case: Nine hundred thousand reais (R$900,000.00). Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Action for Damages Accident without decease Proceeding n. 0428126-41.2010.8.19.0001 52nd Civil Court of the Judicial District of Rio de Janeiro. Trial court. December 16, 2010. Silas Belisrio Oliveira and Geovana Tenrio de Oliveira against Light Servios de Eletricidade S.A. rights Plaintiffs (husband and wife) allege that on February 17, 2010, when they were returning from a small farm located in the city of Pira, the 1st plaintiff who was driving the car had to stop, as few people were removing few tree branches that were blocking the road. When the 1st plaintiff was leaning on a branch that fell on the road, he was killed by electric shock due to high voltage wire which was tangled in the tree. They also allege that when they attempted to save the 1st plaintiff from the electric discharge, the 2nd plaintiff also suffered a strong shock that caused her several burns. The complaint describes that tree branches fell on the road in view of heavy rainfalls occurred few days that preceded the accident. Plaintiffs plead, on interlocutory relief, a survivors pension corresponding to 3.65 minimum wages related to the 1st plaintiffs salary loss, as well as the down payment to acquire a bionic hand prosthesis, which according to the budget mentioned in the records is worth approximately two hundred and fifty thousand reais (R$ 250,000.00). On the motion for final judgment of conviction, plaintiffs request: (i) the payment of a monthly survivors pension corresponding to 4.75 minimum wages, plus related severance pay; (ii) property damage indemnity corresponding to eight hundred, twenty reais and fifty-seven centavos (R$820.57) monthly, in amount to be calculated during liquidation of the award; (iii) indemnity for personal injury and aesthetic damages suffered by 1st plaintiff, in the amount of eight hundred thousand reais (R$800,000.00); (iv) indemnity for personal injury suffered by 2nd plaintiff, in the amount of one hundred thousand reais (R$100,000.00); (v) payment of costs related to bionic hand prosthesis, including the payment of training sessions for the use of said prosthesis; and (vi) defendants conviction to pay court costs and burden of defeat. Total amount of the claims (excluding the payment of survivors pension and considering ten-(10) month property damages): one million, three hundred, eighty-nine thousand, eight hundred, fortysix reais and eighty centavos (R$1,389,846.80), already including attorneys fees. Main facts: Chances of loss: Currently, we have been preparing the answer. Probable.
Court: Instance: Filing Date: Parties to the case: Amounts, involved: assets or
Lawsuits arguing the unconstitutionality of state laws Light Servios de Eletricidade S.A (Light SESA) deems as relevant those lawsuits discussing the federal governments authority to enact laws on electric power, except for the legitimacy of the Brazilian Electricity Regulatory Agency (Aneel) to issue technical resolutions and its own rules. No other state is authorized by the Constitution of the Federative Republic of Brazil of 1988 to enact laws on electric power. Below, a description of these lawsuits.
Lawsuit declaring the unconstitutionality of Law 5,340/2008 Proceeding n 2009.001.109314-2 9th Tax Court of the Judicial District of Rio de Janeiro Court: Trial court Instance: May 5, 2009 Filing Date: Light Servios de Eletricidade S.A (Light SESA) and others Parties to the case: against the State of Rio de Janeiro (Government State). Amounts, assets or rights Request of declaration of unconstitutionality of State Law 5,340/2008 (which requires the electricity and telecom involved: concessionaries to change the overhead installment of cables through underground facility) and determining the state government to abstain from applying any type of sanction against the failure to comply with the referred law. The litigation amount is incalculable. Court decision granted relief to the plaintiffs motion, among them, Main facts: Light SESA, declaring the unconstitutionality of Law 5,340/08. Remote Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Lawsuit Suspension of effects of Law 4,724/2006 Proceeding n 2006.001.075292-4 7th Tax Court of the Judicial District of Rio de Janeiro. Court: Trial court. Instance: June 8, 2006. Filing Date: Light Servios de Eletricidade S.A (Light SESA), Companhia de Parties to the case: Eletricidade do Estado do Rio de Janeiro (Ampla) and Companhia de Eletricidade de Nova Friburgo (CENF) against the State of Rio de Janeiro (Government State). Amounts, assets or rights This lawsuit aims at suspending the effects of the State Law 4,724/2006, thus, ensuring the validity of inspections made and involved: related inspection reports prepared by the plaintiffs, as well as holding them harmless from any sanction, burden, responsibility and penalties in view of consumption assessed. Trial court decision favorable to the plaintiffs. The state government Main facts: appealed to this decision. Currently, judgment on appeal is pending. Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
Proceeding n: 1995.001.027082-0 19th Civil Court of the Judicial District of Rio de Janeiro Court: Trial court. Instance: March 15, 1995. Filing Date: Valesul Alumnio S.A.(Valesul) against Light Servios de Parties to the case: Eletricidade S.A. (Light SESA). Amounts, assets or rights Amount involved of nineteen million, seven hundred, thirty-six thousand, five hundred, forty-eight reais (R$19,736,548,00). The involved: suit requests the refund of amounts collected in excess by Light SESA, in view of electricity bills increase implemented by DNAEE Ordinances 38 and 45/86 do DNAEE (concurrently with the implementation of Plano Cruzado March 1986), from the alleged undue payment until the effective refund of these amounts, plus interest rates and adjustment by inflation. Court decision granted partial relief to Valesul. A deposit of Main facts: nineteen million, seven hundred, thirty-six thousand, five hundred, eighty-four reais and fifty-two centavos (R$19,736,584.52) was made in court, aiming at contesting the execution. Court decision established a debt of twelve million, two hundred, eighty-nine thousand, fifty-one reais and eight centavos (R$12,289,051.08). Judgment is pending on the amount objected by Light SESA. Probable. Chances of loss: Analysis of effects in the event Financial. of losing the case: Twenty million, three hundred, forty-seven thousand, four hundred Accrued amount: and seventy-one reais (R$20,347,471.00).
Tax claims On February 28, 2011, Light S.A. and its subsidiaries were parties in approximately one thousand and seven (1,007) administrative proceedings and tax claims amounting to three billion, one hundred, ninety million, one hundred thousand reais (R$3,190,100,000.00), of which one hundred, eighty million, four hundred thousand reais (R$180,400,000.00) were accrued on December 31, 2010. Among the administrative proceedings and tax claims in which Light S.A. or its subsidiaries are defendants or plaintiffs, we point out below those most relevant suits for the business of Light S.A. or its subsidiaries, which are not confidential:
State Goods and Services Tax (ICMS) Fixed Assets Administrative Proceeding n E34/59213/2005 and Writ of Mandamus n 2000.001.012013-0). Administrative Proceeding: State Treasury Department of Rio de Court: Janeiro. Writ of Mandamus: 11th Tax Court of the Judicial District of Rio de Janeiro. Administrative Proceeding: appellate court. Instance: Writ of mandamus: Federal Supreme Court. Administrative Proceeding: November 25, 2005. Filing Date: Writ of Mandamus: January 27, 2000. Administrative Proceeding: State Treasury Department of Rio de Parties to the case: Janeiro against Light Servios de Eletricidade S.A. (Light SESA). Writ of Mandamus: Light Servios de Eletricidade S.A. (Light SESA) against the State Inspection Controller at the State Treasury Department. Amounts, assets or rights One hundred, eighty-four million and one hundred thousand reais (R$184,100,000.00). involved: Administrative Proceeding: This is an objection to the tax deficiency notice, notifying Light SESA due to appropriation of ICMS credits deriving from the acquisition of goods allocated to the fixed assets. Writ of Mandamus: Removal of restriction imposed by Law 3,188/99, which among other provisions, restricted in its Article 2 the ICMS taxpayers' right of using the credits generated in the acquisition of goods to compose the fixed assets. Administrative Proceeding: Court of appeals judgment is pending, Main facts: since the trial court declared that a loss occurred in Light SESA objections subject-matter, considering the concomitance of the administrative and judicial levels when filing a writ of mandamus. Writ of Mandamus: Court decision was favorable to Light SESA, granting the writ of mandamus. The State of Rio de Janeiro lodged an appeal, which was granted relief. Special (RESP) and Extraordinary (RE) Appeals were lodged by Light SESA, but only RE was accepted. RE is pending judgment. Possible. Chances of loss:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Analysis of effects in the event Financial. of losing the case: Ninety-four million, four hundred thousand reais Accrued amount: (R$94,400,000.00). The proceeding was partially accrued due to the effects deriving from conflict of laws over time, i.e., only the amounts corresponding to interest rates and fine were accrued, since the amount of principal had already been used (observing the limitation period for appropriation of credits imposed by Law 3,188/99).
State Goods and Services Tax (ICMS) Subsidy for Low Income Consumers Administrative Proceeding n. E-34/059.150/2004 State Treasury Department of Rio de Janeiro Court: Trial court Instance: October 19, 2004. Filing Date: State of Rio de Janeiro against Light Servios de Eletricidade S.A. Parties to the case: (Light SESA). Amounts, assets or rights Seventy-seven million and two hundred thousand reais (R$ 77,200,000.00). The suit discusses the ICMS levy on economic involved: subsidy addressed to low income consumers deriving from the Global Reversal Reserve Fund. Trial court decision was unfavorable to the Company. An appeal Main facts: was lodged to the Taxpayers Council, which remanded the case to the 1st administrative trial court for due diligence. Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount: State Goods and Services Tax (ICMS) Rheem Embalagens Ltda. Proceeding n E-04/892.090/99. State Treasury Department of Rio de Janeiro Court: Appellate court Instance: March 22, 1999 Filing Date: State Treasury Department of Rio de Janeiro against Light Servios Parties to the case: de Eletricidade S.A. (Light SESA). Amounts, assets or rights Forty-two million, one hundred thousand reais (R$42,100.000,00). This is a tax deficiency notice deriving from the utilization by Light involved: SESA of ICMS accumulated credits acquired from Rheem Embalagens Ltda. to be used in the purchase of raw materials and inputs inside the State of Rio de Janeiro. Light SESA objection was deemed groundless. Judgment on Main facts: voluntary appeal is pending. Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: No accrued amount. Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings State Goods and Services Tax (ICMS) Distribution System Usage Tariff (TUSD) and Transmission System Usage Tariff (TUST) Administrative Proceedings n E-34/059.119/2004 and E-34/059.121/2004 Court: Instance: Filing Date: State Treasury Department of Rio de Janeiro. Administrative trial and appellate courts. Proceeding E-34/059.119/2004: August 16, 2004. Proceeding E-34/059.121/2004: August 17, 2004. State of Rio de Janeiro against Light Servios de Eletricidade S.A. (Light SESA). million and seven hundred thousand reais rights Sixteen (R$16,700,000.00). The suit discusses the ICMS levied on charges paid to Light SESA by other electricity concessionaires by force of mandatory availability (legal provision) of its distribution and transmission network. Proceeding E-34/059.119/2004: court decision granted relief to Light SESAs appeal. Proceeding E-34/059.121/2004: This case is under experts examination phase.
Parties to the case: Amounts, involved: assets or
Main facts:
Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: No accrued amount. Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Social Security Contribution Occupational Accident Insurance (SAT) and Profit Sharing Tax Foreclosure n 2001.51.01.522696-9 8th Federal Court of Tax de Foreclosures of the Judicial District of Court: Rio de Janeiro. Trial court. Instance: April 10, 2001. Filing Date: National Institute of Social Security (INSS)/federal government Parties to the case: against Light Servios de Eletricidade S.A. (Light SESA) Amounts, assets or rights Twenty-nine million, eight hundred, ninety-five thousand, one hundred, seventy-two reais and fifty-one centavos (R$ involved: 29,895,172.51). This suit refers to the annulment of tax deficiency notice (NFLD) n. 35.065.291-0 social security contribution over SAT and payments made to employees as profit sharing. This present tax foreclosure is fully collateralized by bank Main facts: guarantee. Trial court's judgment on the motion to stay execution is pending. Remote. Chances of loss: Analysis of effects in the event Financial. of losing the case: Twenty-nine million, eight hundred, ninety-five thousand, one Accrued amount: hundred, seventy-two reais and fifty-one centavos (R$ 29,895,172.51)
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Social Security Contribution prepaid vacation, special bonus for meter readers and grocery coupon Writ of Mandamus n 2000.51.01.025943-9, Lawsuit no 2010.51.01.020480-8 and Tax Foreclosure no 2010.51.01.521307-1 Writ of Mandamus: 10th Federal Court of the Judiciary Section of Court: Rio de Janeiro. Lawsuit: 3rd Court of Tax Foreclosures of the Judiciary Section of Rio de Janeiro. Tax Foreclosure: 8th Court of Tax Foreclosures of the Judiciary Section of Rio de Janeiro. Writ of Mandamus: higher courts Instance: Lawsuit: Trial court. Tax Foreclosure: Trial court. Writ of Mandamus: October 3, 2000 Filing Date: Lawsuit: November 5, 2010 Tax Foreclosure: November 30,2010 Writ of Mandamus: Light Servios de Eletricidade S.A. (Light Parties to the case: SESA) against the National Institute of Social Security (INSS)/federal government. Lawsuit: Light Servios de Eletricidade S.A. (Light SESA) against the National Institute of Social Security (INSS)/federal government. Tax foreclosure: National Institute of Social Security (INSS)/federal government against Light Servios de Eletricidade S.A. (Light SESA). Amounts, involved: assets or million, seven hundred thousand reais rights Thirty-two (R$32,700,000.00). This suit refers to the annulment of tax deficiency notice (NFLD) n 35.065.293-7 social security contribution over prepaid vacation provided for in collective bargaining agreement, special bonus for meter readers and grocery coupons. Writ of mandamus: Trial court decision was favorable to Light SESA. The appellate court accepted INSS appeal. Light SESAs appeals lodged at higher courts are pending judgment. Lawsuit: letter of guarantee to suspend the credit enforceability was submitted. Tax foreclosure: the Company will file a motion to stay execution. Note: Considering the possibility of including new debts into federal REFIS (tax installment payment) issued by Joint Ordinance PGFN/RFB no 02 of February 3, 2011 and the negative scenario where this case is inserted, since the trial courts favorable decision was reversed by the court and the appeal with the Superior Court of Justice (STJ) already has an unfavorable vote of the Reporting Justice, Light SESA resolved to include this case in the Federal REFIS.
Main facts:
Remote. Chances of loss: Analysis of effects in the event Financial. of losing the case: No accrued amount. Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Contribution for the Employees Savings Program (PASEP) offset by Social Integration Program (PIS) Lawsuit n 95.0000938-2, Administrative Proceeding n 15374.002130/200618, Writ of Mandamus n 2007.51.01.015162-3 and Tax Foreclosure n 2007.51.01.519992-0. Lawsuit: 18th Federal Court of the Judiciary Section of Janeiro. Court: Administrative Proceeding: Federal Revenue Office. Writ of Mandamus: 8th Federal Court of the Judiciary Section of Rio de Janeiro. Tax Foreclosure: 7th Federal Court of Tax Foreclosures of the Judiciary Section of Rio de Janeiro. Lawsuit: appellate court. Instance: Administrative Proceeding: appellate court. Writ of Mandamus: Superior Court of Justice. Tax Foreclosure: trial court. Lawsuit: January 18, 1995 Filing Date: Administrative Proceeding: April 30, 2007. Writ of Mandamus: June 14, 2007. Tax Foreclosure: July 6, 2007. Lawsuit: Light Servios de Eletricidade S.A. (Light SESA) Parties to the case: against the federal government. Administrative Proceeding: Federal Revenue Office of Rio de Janeiro against Light Servios de Eletricidade S.A. (Light SESA). Writ of Mandamus: Light Servios de Eletricidade S.A. (Light SESA) against Federal Revenue Office of Rio de Janeiro. Tax Foreclosure: National Treasury against Light Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights Two hundred, fifty-one million and five hundred thousand reais (R$251,500,000.00). involved: Lawsuit: This suit aims at declaring the unconstitutionality of decree-laws ns 2,445/88 and 2,449/88 and, as a result, the recognition of Light SESAs right to offset the amounts unduly paid as PASEP. Administrative Proceeding: The offset made by Light SESA related to PASEP credits from August 1998 to September 1995 was reversed. Writ of Mandamus: It aims the statement of discontentment filed in the records of the administrative proceeding to be processed and judged. Tax Foreclosure: This was unduly filed by the National Treasury, since the administrative proceeding has still been in progress.
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Lawsuit: Trial court decision was favorable to Light SESA. The appellate court rejected the federal governments appeal. Thus, the court recognized Light SESAs eligibility to offsetting PASEP amounts with PIS debts, to the extent Light SESA no longer is PASEP taxpayer. Federal governments special appeal is pending judgment. Administrative Proceeding: Administrative trial court decision was unfavorable to Light SESA. Light SESAs appeal is pending judgment at the administrative appellate court. Writ of Mandamus: Court decision dismissed the case, since the claim is no longer useful. Tax Foreclosure: It is suspended awaiting the conclusion of the administrative proceeding. Remote. Chances of loss: Analysis of effects in the event Financial. of losing the case: No accrued amount. Accrued amount: Main facts:
Failure to Comply with Ancillary Obligation Normative Ruling n 86/01 -Administrative Proceeding n 10707.000751/2007-15 Internal Revenue Service. Court: Appellate court. Instance: June 13, 2007. Filing Date: Federal Revenue Office against Light Servios de Eletricidade S.A. Parties to the case: (Light SESA). Amounts, assets or rights Two hundred, sixty-one million, two hundred thousand reais (R$ 261,200,000.00). Tax deficiency notice issued to collect fine for involved: supposed failure to comply with ancillary obligation related to the delivery of electronic files, in the format provided for in the Normative Ruling n 86/2001, referring to the calendar years of 2003 to 2005. Unfavorable administrative trial court decision. Light SESA lodged Main facts: an appeal against the administrative appellate court decision which was rejected by casting vote. Light SESA lodged an appeal with the Higher Chamber, which is pending judgment. Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: No accrued amount. Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Reversal of the contribution to the social investment fund (FINSOCIAL) offset with the contribution to social security financing (COFINS) administrative proceeding n 12142.000286/2007-72, administrative proceeding n 12142.000185/2008-82 and writ of mandamus n 2008.51.01.022485-0. Administrative Proceeding: Federal Revenue Office. Court: Writ of Mandamus: 1st Federal Court of the Judiciary Section of Rio de Janeiro. Administrative Proceedings: appellate court. Instance: Writ of Mandamus: appellate court. Administrative Proceedings: November 18, 2008. Filing Date: Writ of Mandamus: November 24, 2008. Administrative Proceedings: Federal Revenue Office against Light Parties to the case: Servios de Eletricidade S.A. (Light SESA). Writ of Mandamus: Light Servios de Eletricidade S.A. (Light SESA) against the Federal Revenue Office of Rio de Janeiro. Amounts, assets or rights One hundred, fifty-six million and four hundred thousand reais (R$156,400,000.00). involved: Administrative Proceedings: Reversal of offset made by Light SESA, which utilized credits deriving from undue collection of FINSOCIAL (these credits were recognized by final and unappealable court decision in the case records for the purposes of settling COFINS debts). Writ of Mandamus: It only aims at processing and judging the statement of discontentment submitted in the administrative proceeding n 12142.000185/2008-82. In relation to Administrative Proceeding n 12142.000286/2007-72, the filing of a Writ of Mandamus was not necessary. Administrative Proceedings: The statements of discontentment Main facts: filed by Light SESA were deemed groundless. Light SESAs voluntary appeals are pending judgment. Writ of Mandamus: Court decision was favorable to Light SESA. The federal government lodged an appeal, which is pending judgment. Remote Chances of loss: Analysis of effects in the event Financial. of losing the case: No accrued amount. Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Reversal of the contribution to the contribution to social security financing (COFINS) offset with the Corporate Income Tax (IRPJ) Administrative Proceeding n. 10768.020294/99-72 and Writ of Mandamus n 2009.51.01.011196-8 Administrative Proceeding: Federal Revenue Office Court: Writ of Mandamus: 11th Federal Court of the Judicial Section of Rio de Janeiro. Administrative Proceeding: appellate court. Instance: Writ of Mandamus: appellate court. Administrative Proceeding: April 13, 2009. Filing Date: Writ of Mandamus: April 18, 2009. Writ of Mandamus: Light Servios de Eletricidade S.A. against the Parties to the case: Federal Revenue Office. Administrative Proceeding: Internal Revenue Service against Light Servios de Eletricidade S.A. (Light SESA). million, three hundred thousand reais Amounts, assets or rights Sixty-eight (R$68,300,000.00). involved: Administrative Proceeding: Reversal of offset made by Light SESA, in which it used IRPJ debt balance verified in 1998 calendar year for the purposes of paying-off COFINS debts. Writ of Mandamus: It aims the processing and judgment of statement of discontentment filed by Light SESA in the administrative proceeding. Administrative Proceeding: Light SESA's statement of Main facts: discontentment was rejected. Light SESAs voluntary appeal is pending judgment. Writ of Mandamus: trial court decision was favorable to Light SESA. Appellate court decision is pending. Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: No accrued amount. Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Reversal of the debt balance of the social contribution on net income (CSLL) offset with contribution to social security financing (COFINS) - Administrative Proceeding n. 10768.020295/99-35 and Writ of Mandamus n 2009.51.01.025500-0. Administrative Proceeding: Federal Revenue Office Court: Writ of Mandamus: 11th Federal Court of the Judiciary Section of Rio de Janeiro Administrative Proceeding: appellate court. Instance: Writ of Mandamus: appellate court Administrative Proceeding: October 27, 2009. Filing Date: Writ of Mandamus: November 5, 2009 Writ of Mandamus: Light Servios de Eletricidade S.A. (Light Parties to the case: SESA) against the Federal Revenue Office. Administrative Proceeding: Internal Revenue Service against Light Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights Twenty-eight million and eight hundred thousand reais (R$28,800,000.00). involved: Administrative Proceeding: reversal of offset made by Light SESA, in which it used a debt balance of CSLL verified in 1998 calendar year for the purposes of paying-off COFINS debts. Writ of Mandamus: It aims only the processing and judgment of statement of discontentment filed by Light SESA in the administrative proceeding. Administrative Proceeding: administrative trial court decision was Main facts: unfavorable to the Company. Light SESAs appeal is pending judgment. Writ of Mandamus: favorable decision to Light SESA. The federal government's appeal is pending judgment. Possible Chances of loss: Analysis of effects in the event Financial. of losing the case: No accrued amount. Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Special Installment Payment Program (PAES) Writ of Mandamus n 2005.51.01.009313-4 8th Federal Court of the Judiciary Section of Rio de Janeiro. Court: Trial court Instance: May 17,2005 Filing Date: Light Servios de Eletricidade S.A. (Light SESA) against the Parties to the case: federal government. Amounts, assets or rights The debt amount included by Light SESA in the installment payment was fifty-one million and four hundred thousand reais (R$ involved: 51,400,000.00) in one hundred and twenty (120) monthly installments. Nevertheless, the Internal Revenue Service consolidated the debt of three hundred, thirty-six million, two hundred, ten thousand, one hundred, thirty-one reais and ninety-five centavos (R$336,210,131.95). All the original installments of the installment payment program had already been paid. This is a Writ of Mandamus that aims at ensuring its right of not being excluded from PAES and obtain tax certificate of good standing, in view of the differences indicated by the Internal Revenue Service in relation to the consolidated outstanding balance. The court decision dismissed the case due to supervening loss of the Main facts: subject-matter of the action, as Light SESA, during the course of action obtained the result it has been sought. Federal governments appeal is pending judgment. Possible. Chances of loss: Analysis of effects in the event Eventual change in the amounts involved in the installment payment, subject to court decision and accordingly, the risk of of losing the case: disbursement by Light SESA. No accrued amount. Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings INCRA Contribution Action for Relief from Judgment n 2010.02.01.006714-1 Court: Instance: Filing Date: Parties to the case: Amounts, involved: assets or 2nd Section of the Federal Regional Court Appellate court June 29, 2010 Federal government against Light Servios de Eletricidade S.A. (Light SESA) rights Twenty million and one hundred thousand reais (R$20,100,000.00) in August 2009. The federal government filed an action for relief from judgment rendered in the writ of mandamus n 2002.51.01.012728-3, which declared the non-existence of legal relationship that enforced Light SESA to pay INCRA (National Institute of Colonization and Agrarian Reform) contribution, as well as declared the right to offset the amounts unduly paid. Light SESAs objection is pending judgment. Remote
Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
Withholding income tax (IRRF) interest sent abroad LIR ENERGY LTD. (LIR)/LIGHT OVERSEAS INVESTMENTS (LOI) - Administrative Proceeding n 18471.002113/2004-09 Internal Revenue Service Special court level. This is a higher chamber of tax appeals, a special level at the Administrative Board of Tax Appeals (CARF), an administrative appellate court that judges the special appeals lodged by taxpayers or Public Treasury. May 9, 2008 Filing Date: Federal Revenue Office of Tax Administration in Rio de Janeiro Parties to the case: against Light Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights Five hundred, seven million and six hundred thousand reais (R$507,600,000.00). Levy of IRRF on interest paid to its involved: subsidiaries LIR and LOI, as a result of bonds issued benefited by IRRF zero rate. Administrative trial court decision was unfavorable to Light SESA. Main facts: Light SESA lodged an appeal to the administrative appellate court, which was deemed with grounds. Federal governments special appeal is pending judgment. Remote. Chances of loss: Analysis of effects in the event Financial. of losing the case: No accrued amount. Accrued amount: Court: Instance:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Corporate Income Tax (IRPJ) and Social Contribution on Net Income (CSLL) reversal of financial expenses LIR ENERGY LTD. (LIR)/LIGHT OVERSEAS INVESTMENTS (LOI) - Administrative Proceeding n 18471.001351/2006-51 Internal Revenue Service Court: Appellate court Instance: December 22, 2006 Filing Date: Federal Revenue Office of the Tax Administration in Rio de Janeiro Parties to the case: against Light Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights Eighty-seven million and three hundred thousand reais (R$ 87,300,000.00). This notice aims at collecting IRPJ and CSLL involved: differences deriving from the undue appropriation of financial expenses between 2001 and 2002. Light SESAs objection was deemed with grounds. Federal Public Main facts: Treasurys mandatory review is pending judgment. Remote Chances of loss: Analysis of effects in the event Financial. of losing the case: No accrued amount. Accrued amount:
Corporate Income Tax (IRPJ) Offset Reversal LIR ENERGY LTD. (LIR)/LIGHT OVERSEAS INVESTMENTS (LOI) Administrative Proceedings ns 10768.100706/2003-11 and 10768-004.193/2003-19 Internal Revenue Service Court: Appellate court Instance: April 14, 2008 Filing Date: Federal Revenue Office of the Tax Administration in Rio de Janeiro Parties to the case: against Light Servios de Eletricidade S.A. (Light SESA) Amounts, assets or rights Eighty-one million and two hundred thousand reais (R$81,200,000.00). involved: No ratification of offsets made by Light SESA with IRPJ credits verified in 2001, according to the understanding that Light SESAs results during such period were not losses but profit, since the appropriated financial expenses are undeductible. Light SESAs objections were rejected. Light SESAs voluntary Main facts: appeals are pending judgment. Remote Chances of loss: Analysis of effects in the event Financial. of losing the case: No accrued amount. Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Withholding Income Tax (IRRF) Offset Reversal - Administrative Proceeding n 10768.002435/2004-11 Internal Revenue Service. Court: Appellate court. Instance: December 10, 2008. Filing Date: Federal Revenue Office of the Tax Administration in Rio de Janeiro Parties to the case: against Light Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights involved: One hundred, eighty-nine million and five hundred thousand reais (R$189,500,000.00). Non-ratification of offset related to IRRF credits over financial investments and IRRF over electricity bill payments made by public authorities, carryforwarded in view of outstanding balance of the corporate income tax in 2002 base year. Light SESA's statement of discontentment was rejected. Light SESA's voluntary appeal is pending judgment. Possible. Financial. No accrued amount.
Main facts: Chances of loss: Analysis of effects in the event of losing the case: Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Income Tax (IRPJ) and Social Contribution on Net Income (CSLL) -Income x Equity Accounting Administrative Proceeding n 16682.720216/2010-83 Court: Instance: Filing Date: Parties to the case: Amounts, assets or rights involved: Brazilian Federal Revenue Office . Trial court. November 25, 2010. Federal Revenue Office of Tax Administration in Rio de Janeiro against Light Servios de Eletricidade S.A. (Light SESA). One hundred, thirty-three million and one hundred thousand reais (R$133,100,000.00). Said administrative proceeding refers to a controversy in the writ of mandamus n 2003.51.01.005514-8, where Light SESA argued: I) the timing of availability of the profit generated by its subsidiaries LIR and LOI abroad, for the purposes of levying income tax and social contribution and II) the requirement of including the equity in the earnings of subsidiaries in the calculation of income tax and social contribution. Light SESA partially attempted to waive this writ of mandamus in order to include the debts related to the discussion of the aforementioned item I in the installment payment of Law n 11,941/09 and continuing discussing item II, i.e., the application of the equity accounting method. Nevertheless, the Treasury Department did not agree with the partial waiver, which was confirmed by the judge of the case. Thus, Light SESA fully waived this writ of mandamus and changed the procedure it has been adopting in the income tax and social contribution assessment, which previously was made through income, but with the waiver of controversy, now is made through equity accounting. The tax authorities disagreed with the adoption of this procedure and sent a tax deficiency notice to Light SESA. Light SESA opposed to this tax deficiency notice. Possible. Financial.
Main facts: Chances of loss: Analysis of effects in the event of losing the case: Accrued amount:
None.
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Non-Compliance with Ancillary Obligation Ruling Instruction n 86/01 Administrative Proceeding n 10707.001640/2006-37 Brazilian Federal Revenue Office. Higher Courts December 19, 2006. Brazilian Federal Revenue Office against Light Servios de Eletricidade S.A. (Light SESA). Seventy-four million and two hundred thousand reais (R$ 74,200,000.00). Tax deficiency notice was issued to collect a fine due to alleged failure to comply with ancillary obligation related to the delivery of electronic files in the format provided for in the Normative Ruling n 86/2001, referring to the 2001 calendar year. Administrative trial court decision was favorable to the Company. The Treasury Departments mandatory review was rejected. The Treasury Department lodged special appeal, which is pending judgment. Remote. Financial.
Court: Instance: Filing Date:
Parties to the case: Amounts, assets or rights involved:
Main facts:
Chances of loss: Analysis of effects in the event of losing the case:
Accrued amount:
None.
Labor claims Light S.A.s subsidiaries that have labor claims until February 28, 2011 are Light Servios de Eletricidade S.A. (Light SESA) and Light Energia S.A. (Light Energia), and thirteen (13) labor claims have been in progress against the latter. Until February 28,2011, there were approximately three thousand, three hundred and fifteen (3,315) labor claims in progress against Light Servios de Eletricidade S.A. (Light SESA), in amount quantified until December 31,2010 at five hundred, nineteen million, one hundred thousand reais (R$519,100,000.00). As a rule to accrue the amounts of these lawsuits, Light SESA employs the forecast of loss by claim, and those lawsuits classified as probable losses are considered to be accrued, which in the quantified amount until December 31,2010 was one hundred, sixty-seven million and nine hundred thousand reais (R$167,900,000.00).
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Light S.A. deems as relevant the following labor claims and due to the fact that the professional category union (SINTERGIA) acts as claimants substitute.
Hazardous Work Premium Proceeding n 00755-2004-061-01-00-0 61st Labor Court of Rio de Janeiro. Trial court. June 21, 2004. SINTERGIA acts as substitute of approximately seven hundred and sixty-four (764) employees and former employees against Light Servios de Eletricidade S.A. (Light SESA). or
rights The matter discussed in this proceeding is the difference of hazardous work premium, considering the compensation as basis of calculation, instead of base salary. Light SESA alleges that, despite the fact that the statement 191 of the Superior Labor Court (TST) had been reviewed, defining the compensation as basis of calculation instead of salary, in this specific case, this basis is provided for in the collective bargaining agreement. The amount involved is fifty-six million, seven hundred, forty-two thousand, seven hundred, ninety-four reais and ninety-five centavos (R$ 56,742,794.95). The trial court decision partially granted relief to this motion, Main facts: understanding that the hazardous work premium is due and that shall be included in all the installments. Light SESA lodged an appeal and for this reason, the lawsuit was sent to the original labor court so that to examine the preliminary allegations and the examination of merit is suspended. Motion for clarification of judgment was filed requesting the review of the term.Light SESAs ordinary appeal is pending judgment. Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount: Amounts, involved: assets
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Overtime Meal Break Proceeding n 01207-2008-008-01-00-2 8th Labor Court of Rio de Janeiro. Court: Trial court. Instance: September 18, 2008. Filing Date: SINTERGIA acts as substitute of approximately two hundred and Parties to the case: eight (208) employees and former employees against Light Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights This suit claims overtime referring to the non-existence of meal break for employees working on a rotation basis. The amount involved: involved is six million, three hundred, eighty-three thousand, four hundred, seventy-six reais and twenty-seven centavos (R$6,383,476.27). Fact finding phase starts. Light SESA proposed a settlement. Main facts: Probable. Chances of loss: Analysis of effects in the event Financial. of losing the case: Six million, three hundred, eighty-three thousand, four hundred, Accrued amount: seventy-six reais and twenty-seven centavos (R$6,383,476.27).
Hazardous Work Premium Difference Proceeding n 00383-2005-027-01-00-2 27th Labor Court of Rio de Janeiro. Court: Higher court. Instance: April 12, 2005. Filing Date: SINTERGIA acts as substitute of twenty-nine (29) employees and Parties to the case: former employees against Light Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights It refers to the hazardous work premium difference in view of basis of calculation. The amount involved is three million, two hundred, involved: fifty-four thousand reais and sixty-nine centavos (R$3,254,000.69). Trial court decision granted partial relief for the motion and Main facts: accepted the levy of hazardous work premium and differences over all the amounts, except for the weekly paid rest and rejected the attorneys fees. Light SESAs motion for clarification of the decision was rejected. The Company lodged ordinary appeal, which was rejected. Motion for clarification of the decision was rejected, and Light SESA lodged appeal to the higher courts, which was denied. Currently, Light SESAs interlocutory appeal is pending judgment. Probable. Chances of loss: Analysis of effects in the event Financial. of losing the case: Two million, seven hundred, ninety-one thousand, three hundred, Accrued amount: eighteen reais and ninety-two centavos (R$2,791,318.92).
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Hazardous Work Premium Proceeding n 02051-1988-002-01-00-4 2nd Labor Court of Rio de Janeiro. Court: Higher court. Instance: January 1, 1988. Filing Date: SINTERGIA acts as substitute of twelve (12) employees and former Parties to the case: employees against Light Servios Eletricidade S.A. (Light SESA). Amounts, assets or rights It refers to the payment of hazardous work premium, since they supposedly claim that they work under hazardous work conditions involved: and they would be entitled thereto. Trial court decision granted partial relief to the case. Light SESA Main facts: lodged an appeal, which was denied. The lawsuit is under phase of execution, and the checking account of Light SESA has been blocked in the amount of seven hundred, seventy thousand, eight hundred, eighteen reais and forty-one centavos (R$770,818.41). The amounts have been discussed and the accounting expert examination has been executed with the parties manifestation. Probable. Chances of loss: Analysis of effects in the event Financial. of losing the case: One million, three hundred, fifty-one thousand, two hundred, fiftyAccrued amount: nine reais and three centavos (R$1,351,259.03).
Unhealthy Work Premium Proceeding n 01714-1991-003-01-00-5 3rd Labor Court of Rio de Janeiro. Court: Higher court. Instance: December 5, 1994. Filing Date: SINTERGIA acts as substitute of nine (9) employees and former Parties to the case: employees against Light Servios de Eletricidade (Light SESA). Amounts, assets or rights The payment of unhealthy work premium is called into question, as they supposedly allege they work under unhealthy conditions. The involved: amount involved is eight hundred, seventy-seven thousand, three hundred, nine reais and ninety-three centavos (R$877,309.93). Trial court decision granted partial relief to the case. Light SESA Main facts: lodged appeals but it did not succeed, a final and unappealable court decision was rendered and the liquidation of the award started to be calculated. Probable. Chances of loss: Analysis of effects in the event Financial. of losing the case: Eight hundred, seventy-seven thousand, three hundred, nine reais Accrued amount: and ninety-three centavos (R$877,309.93).
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Proceeding n 00138-1994-006-01-00-0 Plano Bresser (Bresser Plan) 6th Labor Court of Rio de Janeiro. Court: Appellate court. Instance: January 26, 1994. Filing Date: SINTERGIA acts as substitute of four thousand, one hundred and Parties to the case: twenty-two (4,122) employees and former employees against Light Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights The salary increase of 26.06% related to IPC (consumer price index) of June 1987 and effects are called into question, referring to the involved: Plano Bresser. Trial court decision dismissed the case without trial on the merits. Main facts: The Workers Union lodged an appeal against such decision, however, unsuccessfully. The case was dismissed at the Regional Labor Court. Remote. Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
Below, the suits Light S.A. deems as relevant in view their subject-matter and the amounts involved.
Pay Parity, Hazardous Work Premium, Overtime Proceeding n 00764-1995-049-01-00-6. 49th Labor Court of Rio de Janeiro. Court: Higher court. Instance: May 23, 1995. Filing Date: Hudson Figueira da Silva against Light Servios de Eletricidade Parties to the case: S.A. (Light SESA). Amounts, assets or rights The Claimant pleads the payment of hazardous work premium and effects; overtime and night work premium; pay parity and attorneys involved: fees. The amount involved is one million, sixty-four thousand, six hundred, forty reais and twenty-eight centavos (R$1,064,640.28). Court decision granted partial relief to the case. Light SESA and Main facts: Claimant lodged an ordinary appeal. Light SESAs appeal was rejected and claimants appeal was granted partial relief in relation to attorneys fees. Light SESA lodged appeal to the higher courts in an attempt of reversing the decision, however, the appeal was rejected. The execution started. Light SESA deposited the amount of six hundred, seventy-one thousand, two hundred reais and fifty-nine centavos (R$671,200.59). Appeals judgment is pending. Probable. Chances of loss: Analysis of effects in the event Financial. of losing the case: One million, sixty-four thousand, six hundred, forty reais and Accrued amount: twenty-eight centavos (R$1,064,640.28).
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Hazardous Work Premium Proceeding n 01838-1996-029-01-00-8 29th Labor Court of Rio de Janeiro. Court: Higher court. Instance: October 16, 1996. Filing Date: Lieden Maria, Severiano Nazrio, Julio Cesar Cordeiro and Mariano Parties to the case: Oliveira Moreira against Light Servios de Eletricidade S.A. (Light SESA). Amounts, assets or rights The Claimants plead the payment of hazardous work premium and effects. The amount involved is nine hundred, sixty-three thousand, involved: seven hundred, sixteen reais and eighty-nine centavos (R$963,716.89). Trial court decision grated partial relief to the case. All Light Main facts: SESAs appeals were rejected and a final and unappealable court decision was rendered on May 28,2009. The claim is under phase of execution of judgment. Probable. Chances of loss: Analysis of effects in the event Financial. of losing the case: Nine hundred, sixty-three thousand, seven hundred, sixteen reais Accrued amount: and eighty-nine centavos (R$963,716.89).
Inclusion of Overtime Proceeding n 2120-1980-035-01-00-3 35th Labor Court of Rio de Janeiro. Court: Higher court. Instance: October 17, 1980. Filing Date: Ademir Ferreira and other (58 plaintiffs) against Light Servios de Parties to the case: Eletricidade S.A. (Light SESA). Amounts, assets or rights The claimants request the inclusion of overtime deleted in 1980. The amount involved is seven million, nine hundred, eighty-one involved: thousand, two hundred, two reais and fifty-nine centavos (R$ 7,981,202.59). Court decision granted partial relief to the case. The lawsuit is under Main facts: execution phase. Currently, social security amounts have been discussed. Banco Alfa issued a bank letter of guarantee in the amount of six million, six hundred, thirty-three thousand, six hundred, forty-six reais and eighty centavos (R$6,633,646.80) to post bond. Light SESA deposited the amount of two million, three hundred, seventy-one thousand, three hundred, forty reais and eighty-three centavos (R$2,371,340.83), as it understands this the correct amount to be paid to the claimants. Light SESAs interlocutory appeal was rejected. Probable. Chances of loss: Analysis of effects in the event Financial. of losing the case: Five million, three hundred, forty-one thousand, six hundred, Accrued amount: twenty-six reais and ninety-four centavos (R$5,341,626.94).
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Property Damage, Salary Difference Proceeding n 01312-2003-033-01-00-7 33rd Labor Court of Rio de Janeiro. Court: Higher court. Instance: September 3, 2003. Filing Date: Clemente Miceli against Light Servios de Eletricidade S.A. (Light Parties to the case: SESA). Amounts, assets or rights The plaintiff pleads indemnity for personal injury in the amount of 240 compensations, salary differences deriving from noninvolved: classification into the salary readjustment, misplaced job position, replacement salary, overtime. The amount involved is three million, six hundred, eighty-one thousand, six hundred, six reais and thirtyfive centavos (R$3,681,606.35). The court decision granted partial relief sentencing Light SESA to Main facts: pay salary differences deriving from salary readjustment, replacement salary; write-downs from Government Severance Indemnity Fund for Employees (FGTS) and personal injury. Light SESA filed an interlocutory appeal. The provisional liquidation was initiated and the accounting expert determined the amount of three million, six hundred, eighty-one thousand, six hundred, six reais and thirty-five centavos (R$3,681,606.35). Light SESA deposited the amounts it understood to be correct and submitted its objection to the amount submitted by the accounting expert, objection also submitted by plaintiff. Probable. Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Civil Liability for Occupational Accident Proceeding n 00180-2009-079-01-00-9 79th Labor Court of Rio de Janeiro. Court: Trial court. Instance: February 16, 2009. Filing Date: Juracy Antunes de Almeida Filho and Maria Ins Rodrigues de Parties to the case: Almeida (successors of Jackson Rodrigues de Almeida) against Light Servios de Eletricidade S.A. (Light SESA), Amell Assessoria de Modernizao de Elevadores Ltda. and Elevadores Ideal Ltda. Amounts, assets or rights Claim due to deadly occupational accident suffered by outsourced worker. His successors claim a monthly indemnity of one thousand involved: reais (R$1,000.00), personal injury indemnity in the amount of six hundred thousand reais (R$600,000.00), besides property damages of twenty-three thousand, four hundred reais (R$23,400.00). The amount involved is two million, two hundred, seven thousand, nine hundred, thirty-seven reais and ninety-eight centavos (R$2,207,937.98). Next hearing scheduled for August 10, 2011. Main facts: Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Deadly Occupational Accident labor claim n 01114-2007-343-01-00-9 attached to the action for court deposit 0081200-74.2007.5.01.0343 3rd Labor Court of Volta Redonda. Court: Higher court. Instance: July 13, 2007. Filing Date: Aline Cristina Dias, Anderson Felipe Dias and Antonio Manoel Parties to the case: Dias, against Light Energia S.A. (Light Energia). Amounts, assets or rights Labor claim pleading for overtime and effects, standby hours and effects, 20% fine of FGTS, hazardous work premium, indemnity for involved: claimants father decease, personal injury indemnity. The amount involved is seven hundred, sixty-seven thousand, three hundred, seventy-two reais and sixty-two centavos (R$767,372.62). The court decision granted partial relief, sentencing Light Energia to Main facts: pay overtime, standby pay and fine of Article 477 of the Consolidation of Labor Laws (CLT). Both parties lodged ordinary appeals. Decision was reversed sentencing Light Energia to pay indemnity for personal injury in the total amount of fifty thousand reais (R$50,000.00), and indemnity for damage to property in the amount of thirty-four thousand, two hundred, forty-six reais and fifty-six centavos (R$34,246.56), for each claimant. Appeal was rejected. Interlocutory appeal was denied. Currently, the case is under accounting expert examination phase. Probable. Chances of loss: Analysis of effects in the event Financial. of losing the case: Seven hundred, sixty-seven thousand, three hundred, seventy-two Accrued amount: reais and sixty-two centavos (R$767,372.62).
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Employment Relationship Proceeding n 01416-2008-082-01-00-6 82nd Labor Court of Rio de Janeiro. Court: Trial court. Instance: November 19, 2008. Filing Date: Alexsandre Mota Batista against Light Servios de Eletricidade S.A. Parties to the case: (Light SESA). Amounts, assets or rights The claimant pleads the acknowledgment of employment relationship with Light SESA, alleging the annulment of hiring as involved: legal entity, requesting labor amounts, differences from alleged salary reduction, overtime, standard benefits and profit sharing. The amount involved is one million, three hundred, sixteen thousand, one hundred, twenty-nine reais and sixty-three centavos (R$1,316,129.63). The court decision deemed the claims with grounds, acknowledging Main facts: the employment relationship between November 4, 1996 and January 30, 2008. Light SESA filed motion for clarification of the decision, where were rejected. Light SESA filed ordinary appeal. Probable. Chances of loss: Analysis of effects in the event Financial. of losing the case: One million, one hundred, twenty-six thousand, nine hundred, Accrued amount: nineteen reais and eighty-eight centavos (R$1,126,919.88).
Pay Parity Proceeding n 00701-1993-009-01-00-9 9th Labor Court of Rio de Janeiro. Court: Higher court. Instance: April 27, 1993. Filing Date: Fernando Brasileiro da Costa Filho and Jailton Ribeiro against Light Parties to the case: Servio de Eletricidade S.A. (Light SESA). Amounts, assets or rights The claimants plead salary differences and inclusions, effects deriving from pay parity and attorneys fees. The amount involved involved: is one million, two hundred, fifty thousand, ninety reais and sixteen centavos (R$1,250,090.16). Trial court decision rejected the claims. The claimant lodged Main facts: ordinary appeal, which was valid, sentencing Light SESA to pay salary differences and effects. Light SESA lodged appeal to the higher court in order to reverse the decision, however, it was rejected. The phase of execution started, as well as the accounting expert examination. Probable. Chances of loss: Analysis of effects in the event Financial. of losing the case: One million, two hundred, fifty thousand, ninety reais and sixteen Accrued amount: centavos (R$1,250,090.16)
Labor Public Civil Actions Currently, there are two (2) relevant public civil actions filed by Labor Prosecution Office against Light Servios de Eletricidade S.A. (Light SESA), as follows:
Temporary Worker Intermediation Public Civil Action n 00581-2001-024-01-00-3 24th Labor Court of Rio de Janeiro. Court: Trial court. Instance: April 5, 2001. Filing Date: Action filed by the Labor Prosecution Office against Light Servios Parties to the case: de Eletricidade S.A. (Light SESA) and Soluo Recursos Humanos Ltda. Amounts, assets or rights This action filed against Light SESA and Soluo Recursos Humanos Ltda. pleads: (a) on an injunction basis (i) that Light involved: SESA abstain from absorbing any suppliers and Soluo Recursos Humanos Ltda. to supply any and all contractors, temporary workers (Law 6,019/74), and daily fine of five hundred reais (R$500.00) due to default; (ii) neither allowing non-recurring or extraordinary work, nor temporary replacement of permanent staff, under the disguised allegation of temporary contracting; (iii) the immediate suspension of supply and the contracting of temporary workers; and (b) definitively, (iv) a statement that all subcontracting of temporary workers were illegal; (v) against Soluo Recursos Humanos Ltda. to not promote the intermediation of temporary workers; (vi) against Light SESA to not contract temporary workers. (vii) a decision to remedy damages caused to individual and collective interests. The estimated amount involved is sixteen million, two hundred, four thousand, nine hundred, twenty-three reais and sixty-three centavos (R$ 16,204,923.63) The trial court decision dismissed the case due to lack of standing to Main facts: sue from the Labor Prosecution Office. Through ordinary appeal, the Labor Prosecution Office managed to remove this preliminary arguments and records were sent to the court for trial on the merit. The case returned to the court of origin for processing and judgment. The fact finding phase started. Court decision granted partial relief to the case, declaring as illegal the outsourcing of casual labor through the company Soluo and defendants shall jointly answer, by defining collective personal injury indemnity amounting to two million reais (R$2,000,000.00) destined to the Worker Support Fund FAT. Light SESAs motion for clarification of judgment was rejected. Light awaits review of the term to lodge an ordinary appeal. Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: Five million, one hundred, sixty-eight thousand, seven hundred, Accrued amount: twenty reais and eight centavos (R$5,168,720.08)
Labor Supply-Public Civil Action n 01368-2007-035-01-00-8 Regional Labor Court 1st Region (Rio de Janeiro). Court: Higher court. Instance: October 31, 2007. Filing Date: Action filed by the Labor Prosecution Office against Light Servios Parties to the case: de Eletricidade S.A. (Light SESA). Amounts, assets or rights Main pleadings are: (i) request of interlocutory relief in order to prohibit the hiring of outsourcing companies, except for temporary involved: work, (ii) sentencing Light SESA to not hire outsourced workers only for the mere labor supply not related to the main activity or ancillary activity developed by Light SESA. In the event of default, a daily fine of ten thousand reais (R$10,000.00) is requested per worker found in irregular condition, reversible to the Worker Support Fund (FAT). Trial court decision granted relief to the case. Light SESA appealed Main facts: to this decision and succeeded as decision was reversed. The Labor Prosecution Office appealed against such decision. The court took cognizance on the merits of the Labor Prosecutor Offices appeal and by majority vote rejected it, which was a favorable result to Light SESA. Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case: None. Accrued amount:
Environmental Proceedings
Court: Instance: Filing Date: Parties to the case: Amounts, involved: assets Public Civil Action 2003.006.005951-0 2nd Court of the Judicial District of Barra do Pira Rio de Janeiro Trial court November 24, 2003 City of Barra do Pira (Municipality) against Light Servios de Eletricidade S.A. (Light SESA). or rights This action pleads the remedy and the recovery of supposed environmental damages caused by the construction of dams in Santa Ceclia and Santana, as part of the water transposition system from Paraba do Sul river basin to Guandu river, supplying the power plants of Fontes, Nilo Peanha and Pereira Passos. Consent Decree (TAC) is executed between the Public Prosecution Office of the State of Rio de Janeiro, the Municipality and Light SESA, referring to this action and a Collection Suit which aims the alleged failure to comply with obligations when Santa Ceclia and Santana power plants were built, by which Light SESA undertook to pay fourteen million, two hundred thousand reais (R$ 14,200,000.00) and the Municipality undertook to conduct the dredging at Pira river. This agreement is under phase of being complied with. Light Energia paid the last installment referring to TAC in June 2010, however, this action has not been shelved yet, as court costs have still been examined. Possible. in the event Financial. We point out that despite the action has been filed against Light SESA, effects will be seen in Light Energia S.A (Light Energia), since generation assets were transferred to Light Energia according to Authorizing Resolution of the Brazilian Electricity Regulatory Agency(Aneel) n 307/20050 (Deverticalization). Fourteen million, two hundred thousand reais (R$14,200,000.00)
Main facts:
Chances of loss: Analysis of effects of losing the case:
Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Court: Instance: Filing Date: Parties to the case: Amounts, involved: assets Public Civil Action n 042/00 Court of the Judicial District of Santa Branca So Paulo. Lower court. February 17, 2000. Public Prosecution Office of So Paulo (MP) against Light Servios de Eletricidade S.A. (Light SESA). or rights MP pleads: (i) the full execution of the Deteriorated Areas Recovery Plan (PRAD) referring to the areas that suffered deterioration during the construction of Santa Branca dam and (ii) negative covenant and abstain from giving another destination rather than the unequivocal environmental recovery. The decision was final and unappealable sentencing: (i) the full execution of PRAD as well as (ii) the negative covenant and abstain from any other destination rather than the unequivocal environmental recovery. For the purposes of abiding by such court decision, the So Paulo State Environmental Agency (CETESB) inspected the area and issued a report on the compliance with PRAD. In March 2010, Light SESA expressed its opinion on CETESBs report aiming at complementing PRAD, which will would worth one million, eight hundred, sixty-four thousand and five hundred reais (R$ 1,864,500.00). CETESB issued a report thereon, and in January 2011 submitted a new Action Plan complementing PRAD, with a 10-year compliance term which is pending CETESBs examination and approval. Probable. in the event Financial. We point out that despite the action has been filed against Light SESA, effects will be seen in Light Energia S.A (Light Energia), since generation assets were transferred to Light Energia according to Authorizing Resolution of the Brazilian Electricity Regulatory Agency(Aneel) n 307/20050 (Deverticalization). The actual financial impact only could be assessed after CETESB examining the Action Plan. None.
Main facts:
Chances of loss: Analysis of effects of losing the case:
Accrued amount:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Court: Instance: Filing Date: Parties to the case: Amounts, involved: assets or Public Civil Action n 0049782-22.1991.4.02.5101 (91.0049782-7) 1st Federal Court of the Judiciary Section of Rio de Janeiro Appellate court. August 26, 1991. Federal Public Prosecutor Office (MPF) against Light Servios de Eletricidade S.A. (Light SESA). rights It aims the replacement of all transformers that use askarel oil (PCB blend), incineration of all pieces of equipment that were stored/contaminated and lack of oil use.
Main facts:
Trial court granted relief to the case. Light lodged an appeal, which was denied. The Public Prosecutor Office did not start the execution proceeding, as already notified the court that equipment disposal program has been in progress. Currently, Lights extraordinary appeal is pending, which briefly requests a revision on the decision that was only based on the interpretation of the scope of the Joint Ministerial Ordinance n 19 and the application of Law, since equipment disposal was immediately ordered.
Chances of loss:
Probable.
Analysis of effects in the event Light SESA does not use isolated equipment with PCB in its electric system and former equipment has already been duly discarded as of losing the case: provided for by laws. Accrued amount: None.
Regulatory Administrative Proceedings
Deficiency Notice n 009/2005 - SFF National Electricity Agency (Aneel) Economic and Financial Oversight Board. Administrative. Instance: May 15, 2005. Filing Date: Aneel against Light Servios de Eletricidade S.A (Light SESA). Parties to the case: Amounts, assets or rights The deficiency notice was issued under the allegation that Light SESA: (i) would have incorporated the subsidiaries LIR Energy involved: Limited (LIR) and Light Overseas Investments (LOI) without Aneels previous consent; (ii) Light SESA carried out financial operations with these companies without Aneels consent; and (iii) Light SESA failed to comply with Aneels order of cancelling operations and shutting down these companies activities. The discussions referring to items (ii) and (iii) are concluded in view of the payment of fine applied to item (ii) and the cancellation of penalty applied to item (iii). Referring to item (i), Aneel imposed to Light SESA, a penalty of R$ Main facts: one million, one hundred, forty-four thousand reais (R$1,144,000.00). A Writ of Mandamus (MS) was filed against this penalty, with court deposit. Court decision was unfavorable to Light SESA due to groundless request to cancel part of the fine. Appeal was filed against such decision. Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case Two million, one hundred, sixty-three thousand, nine hundred, Accrued amount: eighty-three reais and seventy-six centavos (R$2,163,983.76). Court:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Deficiency Notice n 007/2010 SFE Brazilian Electricity Regulatory Agency (Aneel) Electricity Services Inspection Oversight Board. Administrative. Instance: February 17, 2010. Filing Date: Aneel against Light Servios de Eletricidade S.A. (Light SESA). Parties to the case: Amounts, assets or rights The deficiency notice was issued since non-conformities were verified during the inspection carried out by Aneel in December involved: 2009 to identify and assess the causes of interruptions in the underground distribution system of Light SESA. Light SESA submitted its defense to the deficiency notice on March 5, 2010, requesting the cancelation of non-conformities and subsidiarily, the reduction of fines. Alternatively to the imposition of fines, Light SESA requested to convert the fine into Consent Decree (TAC). Aneels executive board rejected the "TAC and the Company lodged interlocutory appeal against this decision. Aneels final decision is pending concerning the appeal and the request for "TAC", after adverse opinions of Aneel's Office of the Attorney General and SFE (Electricity Inspection Services), in view of failure to comply with previous TAC. Aneel imposed a fine of nine million, five hundred, forty-four Main facts: thousand, three hundred, forty-nine reais and eighty-six centavos (R$9,544,349.86). Light SESA lodged an appeal and requested the execution of TAC. Aneels decision is pending. Probable Chances of loss: Analysis of effects in the event Financial. of losing the case: Nine million, five hundred, forty-four thousand, three hundred, Accrued amount: forty-nine reais and eighty-six centavos (R$9,544,349.86). Court:
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Deficiency Notice n 061/2010 SFF Brazilian Electricity Regulatory Agency (Aneel) - Economic and Financial Oversight Board. Administrative. Instance: May 19, 2010 Filing Date: Aneel against Light Servios de Eletricidade S.A (Light SESA). Parties to the case: Amounts, assets or rights Deficiency notice was issued under the allegation that Aneel verified non-conformities during the commercial and technical involved: inspection carried out by Aneel in May 2009. The Company lodged an appeal against the deficiency notice on June 3,2010, requesting the cancelation of penalties and subsidiarily, their reduction. SFF upheld the decision. Light SESA presented its oral arguments at ANEEL's Board of Executive Officers meeting, where it resolved to reduce the penalty, however, this decision has not been published yet. Aneel imposed warning penalties and fine of five million, forty-nine Main facts: thousand, one hundred, thirty-six reais and ninety-two centavos (R$5,049,136.92) and reduced penalties by one million and seven hundred thousand reais (R$1,700,000.00), however, this decision is pending of publication. Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case Court: Accrued amount: Five million, forty-nine thousand, one hundred, thirty-six reais and ninety-two centavos (R$5,049,136.92).
4.3 Non-confidential and relevant legal, administrative or arbitration proceedings Deficiency Notice n 082/2010 SFF Brazilian Electricity Regulatory Agency (Aneel) - Economic and Financial Oversight Board. Administrative. Instance: June 18, 2010 Filing Date: Aneel against Light Servios de Eletricidade S.A (Light SESA). Parties to the case: Amounts, assets or rights Deficiency notice (AI) was issued under the allegation that Light SESA would have infringed DEC (duration) and FEC (frequency) involved: electricity quality indexes of 65 units in 2009, and blackout caused by Furnas hydroelectric power plant occurred on November 10, 2009 was included in the calculation of these indexes. Light SESA lodged appeal against the deficiency notice on July 8, 2010 requesting the reduction of penalty, so that the blackout occurred on November 10, 2009 is not considered for the purposes of calculating DEC and FEC indexes. Aneels decision on this issue is pending. Light SESA recorded a provision of four million, one hundred, ten thousand, six hundred, three reais and nine centavos (R$4,110,603.09), according to its legal counsels opinion that probably fine imposed by Aneel will be reduced, according to Light SESAs defense on the exclusion of hours related to the power outage in Furnas transmission lines, since this was an assumption or fortuitous event/force majeure or third party fact, in both cases, excluding Light SESA from responsibility. Aneel imposed fine of sixteen million, fifty-two thousand, nine Main facts: hundred, forty-nine reais and ninety-two centavos (R$16,052,949.92). Light SESA lodged appeal. Aneels decision is pending. Possible. Chances of loss: Analysis of effects in the event Financial. of losing the case Court: Accrued amount: Four million, one hundred, ten thousand, six hundred, three reais and nine centavos (R$4,110,603.09).
4.4. Lawsuits, administrative or arbitration proceedings which are not confidential whose adversary parties are managers or former managers, controlling shareholder or former controlling shareholders or investors
4.4. Describe the lawsuits, administrative or arbitration proceedings which are not confidential, in which the issuer or its subsidiaries are parties and whose adversary parties are managers or former managers, controlling shareholders or former controlling shareholders or investors of the issuer or its subsidiaries.
None.
4.5 Relevant confidential lawsuits

4.5. In relation to relevant confidential lawsuits in which the issuer or its subsidiaries are parties and not disclosed in items 4.3 and 4.4 above, analyze the loss effects and inform the amounts involved
None.
4.6 Non-confidential and jointly relevant recurring or related lawsuits, administrative or arbitration proceedings
4.6.
Describe the recurring or related lawsuits, administrative or arbitration proceedings, based on similar facts
and cause of action which are not confidential that jointly are relevant, in which the issuer or its subsidiaries are parties, detailing the labor, tax, civil claims among others, indicating:
Civil actions Light Servios de Eletricidade S.A (Light SESA) has lawsuits discussing the legality and enforceability of Extraordinary Tariff Review - RTE and Emergency Capacity Charge - ECE. The Extraordinary Tariff Review was an instrument destined to offset concessionaries revenue losses, imposed by the Power Rationing Emergency Program, accumulated from January 10 to October 25, 2001. The Emergency Capacity Charge was the charge collected between 2002 and 2005 with the purpose of balancing public finance against unforeseen expenses during the power rationing period.
Lawsuits Legality and enforceability of the Extraordinary Tariff Review RTE and Emergency Capacity Charge - ECE. No estimated amount. Amount involved: Practice of the issuer or its Collection of respective charges. subsidiary that caused this contingency No accrued amount. Accrued amount: Subject-matter:
Light Servios de Eletricidade S.A (Light SESA) has public civil actions questioning the legality of Public Lightning Contribution and lawsuits discussing the inclusion of its collection in electricity bills in several cities under its concession area, as per chart below:
Subject-matter: Amount involved: Practice of the issuer or its subsidiary that caused this contingency Accrued amount:
Public Civil Actions Legality of Public Lighting Contribution and forms of collecting said contribution (its inclusion in the electricity bills). No estimated amount. Agreements made with certain municipalities under its concession area aiming at collecting the public lighting contribution. No accrued amount.
4.6 Non-confidential and jointly relevant recurring or related lawsuits, administrative or arbitration proceedings Civil Liability Actions Light Servios de Eletricidade S.A (Light SESA) is defendant in lawsuits filed by victims and/or successors of accident victims involving its electricity grid and/or services due to several reasons. Light SESAs attorneys deemed forty-seven (47) as relevant lawsuits and twenty-one (21) lawsuits with chances of probable losses, and a total amount of thirteen million, three hundred, thirty-nine thousand, five hundred, ninety-five reais and sixty-nine centavos (R$13,339,595.69) was accrued for the lawsuits with chances of probable losses on December 31,2010.
Civil Liability Action Probable Chances of Loss Indemnity pleaded by victims who suffered accident at the Subject-matter: electricity network and/or in relation to services rendered, due to several reasons. Sixteen million, five hundred, thirty-eight thousand, seven hundred, Amount involved: twenty-five reais and ninety-four centavos (R$16,538,725.94). Practice of the issuer or its This action shall be analyzed individually, since accidents may subsidiary that caused this occur due to several reasons. The accidents are caused by third parties, in view of actions, such as constructions nearby electricity contingency transmission network, kite flying, steel and aluminum bars being conducted closest to the electricity network. Four million, eight hundred, seventy-six thousand, four hundred, Accrued amount: thirty-six reais and sixty-six centavos (R$4,876,436.66).
Among the civil liability actions, the lawsuits mentioned in item 4.3. of the reference form are relevant.
Lawsuits discussing the amount of power purchase agreement Light Servios de Eletricidade S.A (Light SESA) deems as relevant the lawsuits discussing the value of the Unit Variable Cost (CVU) which, according to generation companies, was depreciated by the Market Studies Oversight Board of the Brazilian Electricity Regulatory Agency (Aneel) which reviewed CVU values for the diesel oil thermal plants. There are five (5) lawsuits discussing the CVU value of power plants due to availability of the first new energy auction.
4.6 Non-confidential and jointly relevant recurring or related lawsuits, administrative or arbitration proceedings The attorneys in charge deemed the risk of loss as remote, since in the event any review is granted, the value will be transferred to the tariff. Below an illustrative chart.
Lawsuits Collection of Unit Variable Cost (CVU) different from that Subject-matter: established by the Brazilian Electricity Regulatory Agency(Aneel). No estimated amount. Amount involved: Practice of the issuer or its Light SESA charged the CVU according to Aneels order. subsidiary that caused this contingency No accrued amount. Accrued amount:
Plano Cruzado (Cruzado Plan) These are lawsuits filed against Light Servios de Eletricidade S.A. (Light SESA), related to electric power tariff increase approved by Ordinances n. 38 of February 27, 1986 and n. 45 of March 4, 1986, published by the extinguished DNAEE, which contradicted the Decree-law n. 2,283/86 (Cruzado Plan decree), which estimated that all prices would be frozen. Light SESA cannot determine the total amount of these lawsuits. The plaintiffs of these lawsuits are industrial, commercial and residential consumers, and according to Light SESA, the chances of losses are probable for the lawsuits filed by industrial consumers and chances of remote loss for other consumers lawsuits.
Plano Cruzado Lawsuits Refund of amounts supposedly overpaid in electricity bills when Subject-matter: Light SESA tariffs increased during the price freeze period. There were one hundred and forty-three (143) lawsuits in court against Light SESA, with this subject-matter. No estimated amount. Amount involved: Practice of the issuer or its Electric power tariff increase approved by Ordinances n. 38 of subsidiary that caused this February 27, 1986 and n. 45 of March 4, 1986, published by extinguished DNAEE, which contradicted the decree-law n. contingency 2,283/86 (Plano Cruzado decree), which estimated that all prices would be frozen. Ninety-eight million, eighteen thousand, two hundred, forty-two Accrued amount: reais and ninety centavos (R$98,018,242.90).
4.6 Non-confidential and jointly relevant recurring or related lawsuits, administrative or arbitration proceedings Small claims court On February 28, 2011, Light Servios de Eletricidade S.A. (Light SESA) had approximately eighteen thousand, six hundred and forty-five (18,645) lawsuits amounting to two hundred, ninety-five million, five hundred, seventy-nine thousand, six hundred and forty-eight reais (R$295,579,648.00), in progress at the small claims courts. The amounts of the disputes corresponded to forty (40) minimum wages and the amounts paid to claimants during 2010, summed up forty million, one hundred and fiftyfive thousand reais (R$40,155,000.00), and most of discussions referred to consumer relations. The Companys attorneys in order to calculate the chances of losses, they averaged the amount of awards of the last twelve (12) months multiplied by the total number of lawsuits. On December 31, 2010, the Company accrued approximately twenty-five million, one hundred, thirty-eight thousand reais (R$25,138,000.00) for these lawsuits. The following lawsuits which are pending at the small claims court are deemed as relevant:
Lawsuits discussing on the energy recovery Irregularity energy recovery (37.5% of total lawsuits at the small civil claims court). One hundred, twelve million, eight hundred, fifty-nine thousand, Amount involved: four hundred, ninety-four reais and ten centavos (R$ 112,859,494.10). Ten million, ninety-four thousand reais (R$ 10,094,000.00). Accrued amount: Practice of the issuer or its Light SESA fights against energy theft by endeavoring tremendous subsidiary that caused this efforts to prevent losses; these practices create reactions of consumers who do not agree with the collection of theft energy. contingency: Subject-matter:
Lawsuits discussing on undue power cuts Undue power cut (9.44% of total lawsuits at the small civil claims Subject-matter: court ). Twenty-eight million, four hundred, ten thousand, four hundred, Amount involved: ninety-six reais and sixty-five centavos (R$28,410,496.65). Two million, three hundred, seventy-three thousand and twentyAccrued amount: seven reais (R$2,373,027.00). Practice of the issuer or its Light SESA in order to prevent default suspends the power supply subsidiary that caused this of defaulting consumers and in certain cases, the consumer seeks legal process in order to maintain the supply and negotiate the debt. contingency:
4.6 Non-confidential and jointly relevant recurring or related lawsuits, administrative or arbitration proceedings Tax Claims
State Goods and Services Tax (ICMS) Contracted Demand and Selectivity State Treasury One hundred and eighty-one (181) Assessment Notes and seven (7) Tax Deficiency Notices It refers to assessment notes and deficiency notices issued by the Subject-matter: State of Rio de Janeiro to require the ICMS amount which has been discussed in lawsuits filed by clients of Light Servios de Eletricidade S.A. (Light SESA), questioning: (i) the levy of ICMS on the electricity bill amount related to the contracted demand and/or (ii) ICMS rate levied on electricity, due to alleged noncompliance with the tax selectivity principle. One hundred, twenty-nine million and two hundred thousand reais Amount involved: (R$129,200,000.00) Practice of the issuer or its In compliance with the court orders rendered in lawsuits filed by its subsidiary that caused this users, Light SESA did not collect the ICMS to the State of Rio de Janeiro and/or surtax destined to the State Fund Against Poverty contingency (FECP) on the electric power amount related to the contracted demand billed to users and/or the amount exceeding the rate of eighteen percent (18%) of the tax mentioned in bills issued. No accrued amount. Accrued amount:
State Goods and Services Tax (ICMS) Contracted Demand Consumers Sixty-three (63) Lawsuits. Light Servios de Eletricidade S.A. (Light SESA) is defendant in Subject-matter: several lawsuits, the subject-matter of which is the non-levy of ICMS over the contracted demand amount. It is not possible to quantify the amounts under dispute, as in the Amount involved: event lawsuits are valid, the amounts will be reached in phase of calculating the award. It is worth mentioning that Light SESA is a mere tax collecting agency and not the tax authority of the tax relationship. Practice of the issuer or its The ICMS collection and surtax destined to the State Fund Against subsidiary that caused this Poverty (FECP) over the electric power amount related to the contracted demand billed to its users. contingency No accrued amount. Accrued amount:
Lawsuits discussing on the transfer of the contribution to the social integration program (PIS) and the contribution to social security financing (COFINS) two hundred and forty-four (244) lawsuits. To sentence Light Servios de Eletricidade S.A. (Light SESA) to Subject-matter: no longer transfer PIS and COFINS contributions to the electricity bills, as well as refund those amounts supposedly already transferred. It is worth mentioning that on August 22, 2010, the Superior Court of Justice judged a leading case on the electricity sector, deeming as legal the PIS/COFINS passing through electricity bills. In view of court precedents favorable to distribution companies, the probability of loss, which was possible, now is remote. It is not possible to quantify the amounts under dispute, as in the Amount involved: event the lawsuits are valid, the amounts will be reached in the calculation of the award. Practice of the issuer or its Inclusion of costs referring to the PIS and COFINS contributions subsidiary that caused this into electricity bills. contingency No accrued amount. Accrued amount:
Lawsuits discussing on voluntary confession late payment fine four (4) lawsuits These are lawsuits in which Light Servios de Eletricidade S.A. Subject-matter: (Light SESA) discusses the unenforceability of late payment fine in additional payment or arrears of withholding income tax (IRPJ), Social Contribution on Net Income (CSLL), Contribution to the Social Security Financing (COFINS), Contribution to the Social Integration Program (PIS) and Contribution for the Employees Savings Program (PASEP) of several scopes. Fourteen million, three hundred thousand reais (R$14,300,000.00). Amount involved: Practice of the issuer or its Additional payment or untimely payment of tax excluding late subsidiary that caused this payment fine. contingency Four million, four hundred thousand reais (R$4.400,000.00) Accrued amount: referring to the single proceeding (2000.51.01.004149-5) with probable chances of losing the case. Note: Considering the eventual inclusion of new debts in Federal REFIS by Joint Ordinance PGFN/RFB no. 02 of February 3,2011 and the unfavorable scenario faced by this lawsuit, as favorable decisions in trial and appellate courts were reversed by Superior Court of Justice and there is a low expectation of success as to current appeal, Light SESA resolved to include this case in Federal REFIS.
Lawsuits discussing on urban real estate tax (IPTU) two hundred and thirty (230) lawsuits. Several administrative and legal discussions questioning the levy of IPTU on properties of Light Servios de Eletricidade S.A. (Light SESA) in the cities pertaining to is concession area. The total amount involved and accrued in lawsuits whose risk of Amount involved: loss is probable is seven million, three hundred, ninety-five thousand, five hundred, one real and eighty-three centavos (R$7,395,501.83). Practice of the issuer or its Non-acceptance of IPTU collection due to several reasons, such as, subsidiary that caused this collections over properties not owned by Light SESA, collections over expropriated areas of Light SESA, collections over properties contingency sold to the State of Rio de Janeiro, etc. Twenty-four million, three hundred, twelve thousand, nine hundred, Accrued amount: twenty-five reais and eighty-three centavos (R$24,312,925.83) Subject-matter: Note: as the Company obtained a final favorable decision in few lawsuits, whose risk of loss is probable, the debt amount of these cases significantly reduced, Light will partially reverse this provision, so that to only include only the remaining amount of these cases, i.e., seven million, three hundred, ninety-five thousand, five hundred, one real and eighty-three centavos (R$7,395,501.83) .
Lawsuits discussing on urban real estate tax (IPTU) and rural real estate tax (ITR) city of Rio Claro two (2) lawsuits. Collection of IPTU and ITR over concession areas of Light Servios de Eletricidade S.A. (Light SESA). It is worth mentioning that despite the lawsuit has been filed against Light SESA, effects will be seen in Light Energia S.A (Light Energia), since generation assets were transferred to Light Energia according to Authorizing Resolution of the Brazilian Electricity Regulatory Agency(Aneel) n 307/20050 (Deverticalization). Twenty-two million, twenty thousand, four hundred, forty-nine reais Amount involved: and ten centavos (R$ 22,020,449.10). Practice of the issuer or its Disagreement and failure to pay IPTU and ITR. It is worth subsidiary that caused this mentioning that Rio Claro registered again the properties owned by Light SESA within its territory and for this reason, it cancelled contingency IPTU collection over these areas. Light SESA and the Office of the Attorney General of Rio Claro filed petitions notifying this fact in administrative proceedings and lawsuits that discussed this matter, which were also ratified by the judge. Now, only the expenses paid by the losing party, including attorneys fees and court costs shall be discussed. Referring to ITR lawsuit, it had favorable decision to Light SESA. Only service of process related to this decision is pending. No accrued amount. Accrued amount: Subject-matter:
Lawsuits discussing the soil occupation rate six (6) lawsuits. Lawsuits discussing certain local governments that are collecting rate for the utilization of soil, subsoil and air space by Light Servios de Eletricidade S.A. (Light SESA), in view of the installation of street lights to support the electric network in these municipalities. Forty-six million, seven hundred thousand reais (R$46,700,000.00) Amount involved: historical amount. Practice of the issuer or its The collection of this rate is not accepted, in view of its subsidiary that caused this unconstitutionality and illegality. contingency No accrued amount. Accrued amount: Subject-matter:
Lawsuits discussing on services tax (ISS) regulated services two (2) lawsuits. These lawsuits are discussing the ISS collection by local governments of Nilpolis and Rio de Janeiro referring to services connected with electric power supply. Seventeen million, eight hundred thousand reais (R$17,800,000.00) Amount involved: Practice of the issuer or its Disagreement and failure to pay ISS (services tax) collected on subsidiary that caused this ancillary services related to electricity public utility services provided by Light Servios de Eletricidade S.A. (Light SESA). contingency No accrued amount. Accrued amount: Subject-matter:
Lawsuits discussing on social security contribution joint liability with contractors six (6) lawsuits. Light Servios de Eletricidade S.A. (Light SESA) was notified Subject-matter: several times by the National Institute of Social Security (INSS) for its joint liability with outsourced companies in relation to the social security contribution paid to these companies employees. Twenty-five million, five hundred thousand reais (R$ Amount involved: 25,500,000.00). Practice of the issuer or its Disagreement and failure to pay social security contribution to subsidiary that caused this employees of Light SESAs outsourced companies, since these payments are these companies responsibility. contingency Five million, nine hundred thousand reais (R$5,900,000.00). When Accrued amount: it was notified, Light SESA used the criterion of checking the documentation submitted by service providers related to the payment of social security contribution of these companies employees to compose the amount that would be accrued.
4.6 Non-confidential and jointly relevant recurring or related lawsuits, administrative or arbitration proceedings Labor claims: Main labor claims filed against Light Servios de Eletricidade S.A. (Light SESA) involve the following matters: hazardous work premium, pay parity, overtime, the indemnity provided for by Law 9,029/98, joint and subsidiary liability of outsourced companies employees and difference of 40% fine of the Government Severance Indemnity Fund for Employees (FGTS) resulting from understated inflation adjustments. It is worth pointing out, as already informed, that both the calculation and the estimate of loss in labor claims is made per motion, and accruals were made for the motions with chances of probable losses. Motion of pay parity and effects Referring to the motion of pay parity and effects, Light SESA has four hundred and twenty-six (426) labor claims filed against the company, involving among others, this motion, whose chances of losses are probable in one hundred and forty-three (143) cases.
Subject-matter: Amounts involved:
Request of pay parity and effects. Pay parity and effects.
Thirty-one million, six hundred, sixty-two thousand, five hundred, ninety-six reais and eighty-seven centavos (R$31,662,596.87). Eleven million, two hundred, nine thousand, one hundred, four reais Accrued amount: and eighty-nine centavos (R$11,209,104,89). Practice of the issuer or its In order to prepare the motion of pay parity, the claimants subsidiary that caused this understand that they perform or performed activities under equal conditions, at same location, with same productivity and technical contingency: excellence of another employee or former employee who received a higher salary than the claimants.
Motion of overtime and effects Referring to the motion of overtime and effects, Light SESA has seven hundred and forty-one (741) labor claims in progress against the company involving, among others, this motion, whose chances of losses are probable in three hundred and thirty-seven (337) cases.
Motion of overtime and effects Overtime and effects. Twenty-five million, ninety-one thousand, three hundred, fifty-eight reais and thirteen centavos (R$25,091,358.13). Five hundred, eight thousand, ninety-nine reais and twenty-seven Accrued amount: centavos (R$508,099.27). Practice of the issuer or its According to claimants allegations, they supposedly would have subsidiary that caused this performed their activities during extraordinary working hours, which were neither paid by company nor compensated. contingency: Subject-matter: Amounts involved:
Equal opportunity to expatriates In addition to the aforementioned lawsuits, there are seventeen (17) lawsuits where Brazilian former employees of Light SESA plead for pay parity and equal opportunity of benefits to expatriates, which in thesis, may result in high contingency amounts. Among them, five (5) lawsuits were concluded: two (2) of them were rejected and their decision was final and unappealable; in other two lawsuits a settlement was made in view of the risk involved in the personal injury, besides one (1) lawsuit in which the court accepted the statute of limitation as to the motion of equal opportunity to expatriates, thus, remaining twelve (12) lawsuits in progress.
Equal opportunity to expatriates Equal opportunity to expatriates. Thirty-four million, six hundred, four thousand, six hundred, sixtythree reais and fifty-one centavos (R$34,604,663.51). None. Accrued amount: Practice of the issuer or its According to claimants allegations, supposedly Light SESA would subsidiary that caused this have hired expatriates to perform same activities performed by Brazilian employees, but offering them special conditions, such as, contingency: paying them higher salaries. Subject-matter: Amounts involved:
Subsidiary Liability Light SESA is defendant in labor claims filed by outsourced companies, which claim subsidiary liability. There were one thousand, one hundred and thirty-two (1,132) labor claims with this motion involving the contractors. Said labor claims are deemed as relevant in view of the matter, since this is an issue settled by Precedent 331 of the Superior Labor Court, so that if the contractor does not fulfill its obligation, Light SESA will be sentenced to fulfill it.
Subsidiary Liability Lawsuits Subsidiary liability. Risk total calculation corresponds to one hundred, two million, four hundred, seventy-three thousand, one hundred, twenty-seven reais and eighty-one centavos (R$102,473,127.81). None. Accrued amount: Practice of the issuer or its The mere hiring of outsourced companies in any activity opens the subsidiary that caused this possibility of Light SESA being called in court as to this motion. contingency: Subject-matter: Amounts involved:
Employment relationship with Light SESA Light SESA is defendant in ninety-seven (97) labor claims involving the motion of employment relationship, among them forty-five (45) lawsuits have chances of probable losses. Since this is an incalculable motion, we deem the total calculation of lawsuit as a risk. Among the lawsuits mentioned above, we point out a group of approximately ten (10) labor claims from employees and former employees of ALTM S.A. Tecnologia e Servios de Manuteno, which is under reorganization proceedings, who plead employment relationship directly with Light SESA, under the allegation that they performed contracting partys main activity. They also claim pay parity to an active employee of Light SESA. The total risk calculated for this group of lawsuits is one million, six hundred, twenty thousand, six hundred, eighteen reais and eighty-five centavos (R$1,620,618.85), and most of claims are assessed as having possible chances of losses. We deem the claims mentioned above as relevant both in view of the matter and considering ALTMs current condition, which is going through reorganization proceedings.
Employment Relationship Employment relationship with Light SESA. Thirteen million, one hundred, twenty-four thousand, seven hundred, seventy-six reais and eighty-two centavos (R$13,124,776.82). None. Accrued amount: Practice of the issuer or its According to claimants allegations, their employment contract subsidiary that caused this directly with Light SESA shall be considered, since they perform companys main activity, reason that outsourcing would not be contingency: applicable in this case. Subject-matter: Amounts involved:
4.6 Non-confidential and jointly relevant recurring or related lawsuits, administrative or arbitration proceedings Partners of MDE Transportes Light SESA is defendant in four (4) labor claims filed by former partners of MDE Transportes Ltda., which provided driver services to executive officers of Light SESA through an outsourced company. They plead a single contract during the entire period they worked as drivers for the executive officers of Light SESA, as well as all the amount deriving from this employment contract, as well as that Light SESA be responsible for all past, current and future liabilities of the company, including the writeoff of its records. These claims are deemed as relevant due to their matter.
Single Contract Single contract, personal injury, payment of expenses and write-off Subject-matter: of MDE Transportes. Two million, three hundred, forty-four thousand, eight hundred, Amounts involved: twenty-six reais and thirty-three centavos (R$2,344,826.33). One million, six hundred, fifty-nine thousand, seven hundred, fortyAccrued amount: eight reais and forty-four centavos (R$1,659,748.44). Practice of the issuer or its According to claimants allegations, Light SESA would have taken subsidiary that caused this advantage of their services, sometimes as self-employed workers, sometimes as outsourced workers and finally, as employees. contingency:
Partners of Moderna Administrao de Bens Ltda Light SESA is defendant in four (4) labor claims filed Light SESAs former employees who after withdrawal they became partners of Moderna Administrao de Bens Ltda. which started to provide services to Light SESA. They plead single contract during the entire period they worked for Light SESA, including after the withdrawal period, as well as all the labor amounts deriving therefrom.
Single Contract Single contract and effects, overtime, unemployment insurance and metal ticket indemnities One million, two hundred, sixty-three thousand, sixty-nine reais and sixty-one centavos (R$1,263,069.61). These are new lawsuits and for this reason, no provision has been recorded.
Subject-matter: Amounts involved: Accrued amount:
Practice of the issuer or its According to plaintiffs allegations, they were discharged from subsidiary that caused this Light SESA and few days later Empresa Moderna Administrao de Bens Ltda., to which they were partners, was engaged to provide contingency: services, which in this case, would be the same activities they performed when they were Light SESAs employees.
4.7. Describe other relevant lawsuits not covered in previous items Tax claims On November 26, 2009, Light Servios de Eletricidade S.A. (Light SESA) adhered to the federal debt installment payment with the Internal Revenue Service and Office of the General Counsel to the National Treasury, enacted by Law n 11,941/2009, called Refis da crise. Light SESA chose to pay in one hundred and eighty (180) installments the tax debts summing up seven hundred, thirteen million reais (R$713,000,000.00), of which: (i) R$ one hundred, twenty-eight million reais (R$128,000,000.00) through the benefit of reducing fines and interest rates; (ii) two hundred, sixty-two million reais (R$262,000,000.00) by the utilization of tax losses; and, (iii) R$ three hundred, twenty-three million reais (R$323,000,000.00) through cash disbursement. Light SESAs gain for adhering to Refis resulted in one hundred, fifty-two million reais (R$152,000,000.00). It is worth mentioning that the adhesion to said installment payment was already accepted by the Internal Revenue Service, according to e-mail sent to Light SESA on December 12, 2009. The law that enacted said installment payment establishes as condition to adhere the waiver of administrative proceedings and lawsuits related to the debts that would be included in the installment payment. Thus, Light SESA chose for waiving administrative proceedings and lawsuits that would be interested in paying the outstanding balance by installments. We await the consolidation by the Internal Revenue Service as to the debts included in the installment payment.
Labor Administrative Proceedings On February 28, 2011, Light Servios de Eletricidade S.A. (Light SESA) was involved in four (4) civil investigations and six (6) preparatory proceedings filed by the Labor Prosecution Office (MPT), and main issues covered: (i) employee privacy protection; (ii) illegal intermediation of labor; (iii) request of personal life records; and (iv) misappropriation of documents and labor amounts. Light SESA was also notified in thirteen (13) deficiency notices issued by MPT, based on issues such as (i) lack of labor ergonomic report; (ii) irregularity in outsourced company employees records; and (iii) failure to report the technical report in electric facilities. On this same date, Light Energia S.A. (Light Energia) was involved in one (1) civil investigation and one (1) preparatory proceeding filed by MPT, which oversees the compliance with the quota of minor apprentices.
4.8 Rules of the country of origin and the country where securities are held under custody
4.8. In relation to the rules of the foreign issuers country of origin rules and those of the country where the foreign issuer's securities are held under custody, if different from the country of origin, identify: a. restrictions imposed to the performance of political and economic rights Not applicable.
b.
restrictions to the trading and transfer of securities Not applicable.
c.
deregistering assumptions Not applicable.
d.
other issues of investors interest Not applicable.
5.1 Description of the main market risks 5.1. Describe on a quantitative and qualitative basis, the main market risks to which the issuer is exposed, including in relation to exchange and interest rate risks During the regular course of its businesses, the Company and its subsidiaries are exposed to market risks related to exchange and interest rate variations, as it can be seen in the chart below and it is possible to identify the amount of the Companys total debt linked to each type of index:
USD BNDES currency basket Foreign currency (current and non-current) CDI TJLP Other Domestic currency (current and non-current) Overall total (current and non-current)
12/31/2008 R$ % 165,309 7.8% 2,388 0.1% 167,697 7.9% 1,495,000 70.5% 445,900 21.0% 10,803 0.5% 1,951,703 92.1% 2,119,400 100%
Light S.A. Consolidated 12/31/2009 R$ % 99,721 4.1% 444 0.0% 100,165 4.1% 1,763,892 72.7% 521,542 21.5% 39,079 1.6% 2,324,513 95.9% 2,424,678 100%
12/31/2010 R$ % 73,131 3.0% 0.0% 73,131 3.0% 1,618,316 66.8% 624,457 25.8% 107,680 4.4% 2,350,453 97.0% 2,423,584 100%
In addition to the risks presented above, there are other market risks that could interfere, in one way or another with the Companys results:
The Federal Government has traditionally exercised and continues to exercise significant influence on the Brazilian economy. Adverse political and economic conditions could result in an adverse effect on the Company and on the market value of its shares. The Brazilian government frequently intervenes in Brazils economy and, occasionally, imposes relevant changes in the monetary, credit and tax policies. Actions by the Brazilian government to control inflation and implement other policies have included, among other measures, increased interest rates, control of prices and salaries, devaluation of currency, control of capital remittance, import restrictions, electric power consumption control and the freezing of checking accounts.
The Company has no control over measures or policies that the federal government might come to adopt in the future, just as it has no way in which to foresee the government's actions. The
Companys business, financial conditions, operating results and cash flow may be adversely affected by governments interventions, as well as by other economic factors, such as: 5.1 Description of the main market risks - inflation rate increase; - foreign exchange policies; - domestic economic growth; - social instability; - decreased liquidity among domestic financial and capital markets; - environmental regulations pertaining to the Companys activities; - monetary policies; - interest rates; - tax policies and amendments to the tax law; - changes in labor standards; and - other political, diplomatic, social and economic issues in Brazil or that may affect the country.
Measures adopted by the federal government to maintain economic stability, as well as the speculation as its future actions, may generate uncertainties for the Brazilian economy and higher volatility on the domestic capital market, thereby generating adverse effects on the Companys business, financial condition and results.
An unstable exchange rate could harm the Companys financial situation, results of operations and securities. Over the last four decades, from time to time Brazilian currency has gone through periods of devaluation. During this period, the federal government implemented several economic plans and a series of foreign exchange policies, including exchange control, sudden devaluations, minidevaluations (during which the frequency of adjustments fluctuated between daily and monthly) and floating exchange rate systems.
In recent years, there was significant volatility in the Brazilian Real when compared to the U.S. Dollar and other currencies. The Real depreciated 31.9% against the U.S. Dollar in 2008, and 25.5% in 2009.
On December 31, 2010, the Real/U.S. Dollar exchange rate was R$1.6662 to each US$1.00, accumulating an appreciation of the Real against the U.S. Dollar in 2009 of 4.3%.
5.1 Description of the main market risks The Company cannot assure that the Real will not devaluate or appreciate against the U.S. Dollar in the future.
On December 31, 2010, the Companys outstanding total consolidated indebtedness was R$2,472.6 million, of which 97.0% was denominated in Brazilian Reais and 3.0% in foreign currency.
Out of this total, 67.9% was pegged to the Interbank Deposit rate (DI), 24.8% to the Long-Term Interest Rate (TJLP)22, and 4.3% to other indexes.
On December 31, 2010, the Company had outstanding derivative operations whose notional value was US$19.2 million, consisting of foreign currency-denominated liabilities swaps and Real-denominated liabilities and covering payments in foreign currency to mature within 24 months. In addition, an interest rate swap operation associated with Bradesco Credit Certificate (CCB) maturity for R$150 million, was carried out in October 2010.
Additionally, the devaluation of the Real against the U.S. Dollar increases the cost of purchasing electric power from the Itaipu Binacional power plant (the Companys largest supplier), which adjusts the electric power prices based U.S. dollar-denominated costs. This same risk also applies to the cost of purchasing electric power from the Norte Fluminese thermoelectric power plant, which has a formula of adjustment, which also includes the U.S. Dollar variation.
The occurrence of any of these circumstances may adversely affect the Companys business, its results of operations and finances, as well as the market value of the Company shares.
22
The Long-Term Interest Rate is set by the National Monetary Council and disclosed by the last business day of the quarter that is immediately prior to the current quarter.
The Company may be adversely affected by the federal governments monetary policy and/or higher interest rates.
5.1 Description of the main market risks The Brazilian Monetary Policy Committee (COPOM) is responsible for establishing basic interest rate targets for the Brazilian banking system. The basic interest rate remained high until June of 2003, when the COPOM began a downward trend of the basic interest rate. Over the years, COPOM decided to change the basic interest rate again, and on December 31, 2010, the basic interest rate stood at 10.75% p.a.. Should the federal government increase interest rates or adopt other measures related to monetary policy that result in a significant increase in interest rates, the Company's financial expenses may increase significantly, adversely affecting the Companys liquidity, financial situation and results of operations.
Inflation and measures adopted by the Brazilian government to fight against it may adversely affect Brazils economy, the stocks market and may significantly and negatively affect the Company, also the price of its stocks. Historically, Brazil has recorded extremely high inflation rates. Certain measures adopted by the federal government to fight against inflation have negatively affected Brazils economy. In the past, the measures adopted to fight against inflation, as well as speculation on these measures, have generated an environment of economic uncertainty in Brazil and increased the volatility of the Brazilian stock market. Annual inflation indexes were 9.81% , -1.72% and 11.32% in 2008, 2009 and 2010, respectively according to the IGP-M, and 5.90%, 4.31% and 5.79% in 2008, 2009 and 2010, respectively, according to the IPCA (Extended Consumer Price Index).
If Brazil were to experience significant inflation in the future, it is not possible to estimate if the Company will be able to offset its effects on its cost structure, by increasing the tariffs charged from clients in sufficient amounts and appropriate term to cover an increase in the Companys operating costs. If this does not occur, it may decrease net and operational margins of the Company. Inflationary pressures may result in federal governments intervention in the economy, which includes the implementation of governmental policies that may adversely affect the Company, and may also affect the Companys ability to access foreign financial markets.
Political, economic and social events and the perception of risk in other countries, especially developing economies, may adversely affect the Brazilian economy and the market value of Brazilian securities, including the Company shares.
5.1 Description of the main market risks The Brazilian stock market is influenced by Brazils economic and market conditions and at varying degrees, by the market conditions in other countries in Latin America and other countries, especially developing economies. Even if economic conditions may differ in each country, the investors reactions to events in other countries may negatively affect the market value of Brazilian companies stocks. Crises in other developing economies or economy policies in other countries may diminish the investors interest in Brazilian companies stocks, including the Company shares.
In the recent past, political, economic and social events in emerging economies, including Latin American countries, adversely affected the availability of credit to Brazilian companies in the foreign market, resulting in a significant outflow from the country, thereby reducing the amount of foreign currency invested in Brazil.
The occurrence of political, economic and social events in other developing economies that affect the country due to the reasons mentioned above may adversely affect the Company, the market value of its shares and may also hinder the Companys access to the capital market and finance its operations in the future under acceptable terms, or simply raising funds.
The international financial crisis may negatively affect the Brazilian economic growth, restrict the Company's access to the financial markets, thus, negatively affecting the Company's activities and financial condition.
The international financial crisis and subsequently an instable international financial system has been affecting and may continue negatively affecting Brazils economic growth and consequently, the economy of the State of Rio de Janeiro. The recent crisis has reduced the availability of liquidity and credit to finance the continuation and expansion of industrial activity
operations on a global scale. The lack of liquidity and credit, combined with substantial recent losses seen on the worlds stock markets, including Brazil may result in an extensive economic recession or global depression. A continued slowdown of Brazils economic activity may decrease demand for some services provided by the Company, fact of which would harm the Companys results of operations.
5.1 Description of the main market risks Furthermore, the Company may face significant liquidity problems if the financial markets conditions do not improve. The capacity to access the capital markets or the banking loan market could be severally restricted in occasions that the Company would like to, or would need to, access these markets, which may affect the Companys flexibility in responding to changes in economic and business conditions. The financial crisis may affect the Companys creditors in relation to its current debt, its clients and the capacity of its service providers to fulfill their obligations.
5.2 Description of the market risk management policy
5.2 Describe the market risk management policy adopted by the issuer, its objectives, strategies and instruments, indicating the following: a. risks to which the Company seeks protection The Company classifies the risks into five categories according to their original cause. Financial Risk: Financial risks are those associated with the organizations financial operations exposure. They are divided into three subcategories:
Market Risk: This is the risk arising from financial mismanagement. It may result in high indebtedness levels, causing losses in view of foreign exchange exposure or increased interest rates. This is the risk of being exposed to the market conditions.
Credit Risk:
This is the risk directly related to the likelihood of clients, suppliers or borrowers not fulfilling their debt commitments.
5.2 Description of the market risk management policy Liquidity Risk: This is the risk associated with the failure to manage cash flow as to maximize operating cash generation. It is related to the management of returns on financial operations, as well as to the funding and utilization of funds in accordance with the guidelines established.
Operational Risk: Operational risks are associated with the likely occurrence of losses in production, assets, clients, and revenues resulting from the flow of poorly-structured processes, people and systems, as well as external events. They are divided into two subcategories:
Technology Risk: This is the risk represented by failures or obsolescence of equipment and computer systems jeopardizing the continuity of the organizations regular activities.
Operational Process Risk: This is the risk resulting from failures or deficiency in the processes resulting in poorer results, reduction or discontinuance of the companys activities.
Sustainability: The business sustainability risks are associated with the management of the companys operation and its performance. The characteristics inherent to each sector are determining factors for the profile of risks that will be faced. These risks are divided into four subcategories:
Image Risk: This is the risk deriving from the companys conduct, which somehow influences the public opinion about Light. For example, the companys sponsorships and its media advertising campaigns.
Political Risk: This is the risk related to the companys relationship with government agencies and the stability of the political scenario.
5.2 Description of the market risk management policy Environmental Risk: This is the risk associated to mismanagement of environmental issues. The company can be prevented from operating or can receive notices and fines from the appropriate authorities, and also being prosecuted by third parties. Environmental risks do not only refer to environmental disasters or catastrophes, but also to potential effects deriving from environmental changes, which can even hinder new projects.
Business Management Risk: This is the risk associated with decisions made by the Companys Management that may result in substantial loss in the organizations economic value. For example, failure to foresee or respond to the actions of sector players, immateriality of the strategic positioning, etc.
Regulatory: Regulatory risks are associated with changes in the sector rules. This is the risk resulting from the companys inability to foresee and conform itself to the changes in the sector rules, in addition to uncertainties related to the governments commitment to comply with the rules, and to the practical application of certain standards and regulations.
Legal: Legal risks are related to changes in legislation. This is the risk associated with misinterpretations of the laws applicable to the companys activities.
b. hedge strategy The derivative instruments management aims at protecting the service of exchange debt maturing within the next 24 months, seeking to promote liquidity, profitability and security. The control policy consists of permanently overseeing the policy compliance in the utilization of derivatives, as well as to monitor the rates contracted against those prevailing on the market.
5.2 Description of the market risk management policy c. hedge instruments utilized Exchange rate risk Considering that a portion of Light SESAs loans and financing are denominated in foreign currency, the company uses derivative financial instruments (swap operations) to hedge these debts service (principal plus interest and commissions) to expire within 24 months. The table below summarizes derivative operations over the last 3 years:
Summary of Swap Operations* Notional value Description

2008 Long Position Currency Indexes Short Position Currency Indexes 22,995 US$ US$ Variation 40,424 R$ 100% CDI 2009 23,317 US$ US$ Variation 44,128 R$ 100% CDI 2010 19,191 US$ US$ Variation 34,592 R$ 100% CDI 2007 49,990 R$ US$ Variation 60,239 R$ 100% CDI 2008 56,354 R$ US$ Variation 45,270 R$ 100% CDI 2009 41,960 R$ US$ Variation 47,515 R$ 100% CDI 2010 32,776 R$ US$ Variation
Fair value
Accumulated Effect in Dec/2010

Value Value Receivable Payable
Swap Agreements
R$ R$
US$ US$ Variation Variation 5,295 R$ 100% CDI 5,295
38,070 R$ R$ 100% 100% CDI CDI Short Position
(*) Information as of 12/31/2010
On December 31, 2010, the interest rate swap operation associated with Bradesco Credit Certificate (CCB) maturity with notional value of R$150 million, recorded gains of R$211,000, considering the fair value, as shown in the table below.
Summary of Swap Operations (*) (**) Reference value (notional) Description

2008 Long Position Currency Indexes Short Position Currency 2009 2010 150,000 R$ CDI+0.85% 150,000 R$ 101.90% Indexes CDI+(TJLP6%) 2007 2008 2009 2010 153,434 R$
Fair value
Accumulated Effect in Dec/2010

Value Receivable 211 R$ Value Payable
Swap Agreements
R$ R$ R$ R$ R$ R$
CDI+0.85% CDI+0.85% CDI+0.85% 153,223 R$ 101.90%
R$
R$
R$
R$
R$
R$ 101.90%
R$ 101.90%
CDI+(TJLP- CDI+(TJLP CDI+(TJLP 6%) -6%) -6%)
Long Position
211
(*) Information as of 12/31/2010 (**) Operation in effect as of Oct/10
5.2 Description of the market risk management policy The table below shows a sensitivity analysis referring to exchange variation risk scenarios:
Reference for Financial Liabilities* 1.6662 1.24965 0.8331 Quote R$/US$ (end of fiscal year)
Operation R$ thousand Risk Rate Scenario (I) Probable -3,891 -1,612 -1,543 -336 -36 -7,418 -2,199
2.2263
2.6715
Par Bond USD 6.00% Discount Bond USD Libor + 13/16 C. Bond USD 8.00% Debt Agreement USD Libor + 7/8 Bib USD 6.00% Financial Liabilities USD Derivatives
Scenario Scenario (III) Scenario (IV) Scenario (V) (II) -50% +25% +50% -25% 3,137 10,165 -10,919 -17,947 3,100 7,811 -6,323 -11,035 3,489 8,521 -6,575 -11,608 2,025 4,386 -2,696 -5,057 119 274 -191 -346 11,869 31,157 -26,705 -45,993 -10,559 -18,919 6,161 14,521
* Information as of 31/12/2010
Interest rate risk This risk derives from the effect of interest rates fluctuation not only over financial expense associated with loans and financing of subsidiaries, but also over financial revenues deriving from financial investments. The policy for utilization of derivatives approved by the Board of Directors does not comprise the contracting of financial instruments against this risk. Nevertheless, the Company and its subsidiaries continuously monitor the interest rates so that to evaluate eventual need of contracting derivatives to hedge against interest rates volatility risk.
The table below shows the sensitivity analysis referring to interest rate variation risk scenarios:
5.2 Description of the market risk management policy

Reference for Financial Liabilities* 10.64% 7.98% CDI (% at end of fiscal year) 6.09% 4.94% TJLP (% at end of fiscal year) Scenario Scenario Operation Risk Rate (I) (II) R$ thousand Probable -25% 5th Debenture Issue CDI CDI + 1.50% -97,782 -76,318 Banco Bradesco Credit Certificate CDI CDI + 0.85% -52,171 -40,098 (CCB) Bco Santander CCB CDI CDI + 1.40% -9,751 -7,593 4th Debenture Issue TJLP TJLP + 4% -11 -9 BNDES Project Finance (FINEM) TJLP TJLP + 4.3% -33,187 -28,268 2006-2008 BNDES Project Finance (FINEM) TJLP TJLP + 2.58% -13,584 -11,191 2009-2010 BNDES Project TJLP + 1% + Finance (FINEM) TJLP -15,234 -12,817 2.58% 2009-2010 TJLP + 1 PROESCO TJLP TJLP + 2.5% -652 -531 6th Debenture Issue CDI 115% of CDI -36,991 -27,338 Financial Liabilities -259,363 -204,163 CDI Derivatives -2,199 -1,498 Currencies CDI Derivatives - Rates 1,139 1,183 TJLP 1,139 3,307 * Information as of 31/12/2010 5.32% 3.78% Scenario (III) -50% -54,853 -28,025 -5,436 -8 -23,349 13.30% 7.23% Scenario (IV) +25% -119,246 -64,244 -11,909 -13 -38,107 15.96% 8.37% Scenario (V) +50% -140,710 -76,317 -14,067 -14 -43,026
-8,797
-15,977
-18,371
-10,400 -410 -17,960 -149,238 -795 1,226 5,476
-17,651 -773 -46,928 -314,847 -2,896 1,093 -1,029
-20,068 -894 -57,157 -370,623 -3,591 1,045 -3,197
d. parameters utilized to manage these risks The Risk Management (GIR) model adopted by the Company is based on the methodology and activities recommended by the Committee of Sponsoring Organizations of the Treadway Commission (COSO II) for Enterprise Risk Management (ERM). The model serves as a decision making instrument to be used by top management, seeking to improve the organizations performance by identifying opportunities for gains and reducing the probability and/or impact of losses in the pursuit of an excellent balance between growth, return and associated risks. Strategic guidelines established by the Board of Directors and resulting actions are implemented by managers in order to promote with reasonable safety, the achievement of the organization's goals through aligning strategy to its risk appetite.
5.2 Description of the market risk management policy In order to identify, analyze and, most importantly, make decisions related to the prioritization and allocation of resources in accordance with risk management, events are categorized by nature and relevance," and are always associated with the Companys strategic objectives. After risks are identified and analyzed, a measurement is adopted that enables the relevance of each risk to be evaluated using information related to its level of exposure and corresponding sources of uncertainty. Six classifications are attributed to each risk listed, referring to the Effect, Probability, Risk Value, Category, Subcategory, Level of Control and Frequency. Classifications: Effect The risk effect can be understood as the financial losses due to materialization of risk. A scale of severity was defined for the effect of any given risk, varying from 1 to 5: 1. Insignificant 2. Low 3. Moderate 4. Significant 5. Very High The effect scale was prepared based on subjective criteria and may vary according to the perception of the executives interviewed. The statistics criterion used to elect the effect when there are different attributes is the Mode, which is a statistics measurement of the frequency indicating the most recurring value. Probability The probability of risk can be understood as the chance of the company incurring in the financial loss analyzed, meaning. i.e., the chance of the effect occurring. A scale was also defined for any given probability of risk, varying from 1 to 5: 1. Insignificant 2. Low 3. Average 4. Significant 5. Very High
The probability was made based on subjective criteria and may also vary according to the perception of the executives interviewed. The statistics criterion to elect the probability when there is different attributes is the same of effect. 5.2 Description of the market risk management policy Risk value The result of the analysis of effects on business weighted by the probability of occurring is the Risk Value. The scale varies from 1 to 25 and shows the grade of exposure to each risk according to Lights understanding. This classification is responsible for the organization of the Risk Map, which will be presented thereafter. Category There is no type of risks categorization that is consensual and applicable to all organizations. Classifications must be developed according to the characteristics of each organization, considering the particularities of its industry, market and sector where the company operates. Level of Control Level of Control is associated with the possibility or not of mitigating the risk. The treatment to be given depends on the related level of control. In practice, the total elimination of risks is impossible, so that the identification of the levels of control enables to prioritize efforts when minimizing the effects and/or probabilities. Three levels of control were identified and will be associated with each identified risk: Uncontrollable any risk that lacks any action the company might take to change its probability of occurring or impact. Partially controllable any risk the impact of which or probability of occurrence may be partially minimized. This risk is characterized by the existence of relevant residual risk, even after actions have been taken. Controllable any risk which most of its impact or probability can be mitigated through efforts. This type of risk is characterized by the existence of irrelevant residual risk after actions have been taken. Frequency Frequency is related to how often the effect occurs. Two different classifications have been defined:
Occasional a risk whose materialization of effect is eventual and treatment actions are required upon its occurrence. Continuous a risk whose materialization of effect may be continuous, thus, requiring a periodical monitoring.
5.2 Description of the market risk management policy e. if the issuer operates financial instruments with varying hedge objectives and which are these objectives The financial instruments operated by the Company have the sole purpose of hedging.
f. organizational structure of risk management control
Gesto Integrada de Riscos
Financeiro
Operacional
Sustentabilidade
Regulatrio
Legal
Translators note: Integrated Risk Management Financial Operational Sustainability Regulatory Legal
g. adequacy of operational structure and internal controls to verify the effectiveness of the policy adopted The hedge policy adopted by the Company was approved by the Board of Directors and is continuously monitored by the Board of Executive Officers and the Finance Committee.
5.3 Significant changes in the main market risks
5.3 Inform if, during the last fiscal year, there were significant changes in the main market risks to which the issuer is exposed, or changes in the risk management policy adopted by the issuer Referring to exchange and interest rate risks no significant changes were verified in the last fiscal year, which justifies to maintain the risk management policy adopted by the Company.
5.4 Other relevant information
5.4
Provide other information the issuer deems as relevant The Company uses financial instruments in order to obtain margins on its available cash balance.
The table below shows the risk sensitivity analysis over financial investments:
Investments R$ thousand* Scenarios (I): Probable 10.64% Average CDI 51,985 Yield * Investments as of 31/12/2010 (II): -25% 7.98% 38,988 (III): -50% 5.32% 25,992 (IV): 25% 13.30% 64,981 R$ 488,582 (V): 50% 15.96% 77,977
6.1/6.2/6.4 Incorporation of the issuer, duration, and date of registration at CVM
Date of Incorporation of the Issuer Form of Incorporation of the Issuer Country of Incorporation Duration Date of Registration at CVM
7/27/1999 Corporation Brazil Indeterminate 12/12/2005
6.3 Brief History
6.3 Brief History of the Company The Company was incorporated on July 27, 1999, under the name of Trial Participaes S.A., through the partial spin-off of ALTM S.A. Tecnologia e Servios de Manuteno. On September 15, 2005, the Companys name changed to Light S.A. and its corporate purpose is to hold interest in other companies, as partner or shareholder, and to directly or indirect explore, where applicable, electric power services, including electric power generation, transmission, trading and distribution systems, as well as other related systems. On January 14, 2006, the Deverticalization Project of energy distribution, generation and trading activities was implemented, according to the provisions of the Electricity Sector New Model Law. With the conclusion of the Deverticalization Project, the Company became a holding with the following subsidiaries: (i) Light Energia S.A., is the purpose of which is the generation and transmission of electric power; (ii) Light Servios de Eletricidade S.A. (Light SESA), the purpose of which is the distribution of electric power; (iii) Light Esco Prestao de Servios Ltda., the purpose of which is the trading of electric power; and (iv) other companies. On March 28, 2006, the Companys Management announced to shareholders and to the market in general through a Material Fact that EDF International S.A., i.e., EDFI, entered into a share purchase agreement with RME Rio Minas Energia Participaes S.A. (RME) by means of which agreed to transfer to RME 79.57% of the shares representing the Company's capital stock. The transfer effectively took place on August 10, 2006. RME, then became the controlling shareholder of the Company, which was a holding, the purpose of which was investing in companies operating in the electricity sector, and had the following shareholders: (i) Companhia Energtica de Minas Gerais CEMIG (CEMIG); (ii) Andrade Gutierrez Concesses S.A.; (iii) Pactual Energia Participaes S.A. (succeeded by Equatorial Energia S.A.); and (iv) Luce Brasil Fundo de Investimento em Participaes (Luce). In 2007, BNDES Participaes S.A. (BNDESPAR) became the Companys shareholder after exercising the right granted by most of the warrants issued by the Company and held thereby.
6.3 Brief History
In order to comply with the provisions of the RME Shareholders Agreement, on December 31, 2009, a disproportional partial spin-off of RME into three spun-off portions was approved, followed by the merger of the spun-off portions into CEMIG, Andrade Gutierrez Concesses S.A. and Luce Empreendimentos e Participaes S.A. (LEPSA). A new shareholders agreement was also signed between the Companys four controlling shareholders which reaffirms the rights and obligations provided for in the previous shareholders agreement. On March 31, 2010, a corporate operation was in progress that would imply to change the structure of the Companys control, at that time shared by Andrade Gutierrez Concesses S.A. (AGC), Equatorial Energia S.A. (Equatorial), Companhia Energtica de Minas Gerais CEMIG (CEMIG) and Luce Brasil Fundo de Investimento em Participaes (LUCE), former shareholders of RME Rio Minas Energia Participaes S.A., pursuant to the shareholders agreement entered into on December 30, 2009 (Agreement), available at the website of CVM Brazilian Securities and Exchange Commission. Said operation included two share purchase agreements referring to interests composing the controlling interest at Light S.A. The first agreement, entered into between CEMIG and AGC, aimed at selling the shares held by AGC, corresponding to approximately 13.03% of the capital stock of Light S.A. On March 25, 2010, a payment was made for the acquisition by CEMIG of twenty-five million, four hundred ninetyfour thousand and five hundred (25,494,500) common shares issued by the Company, held by AGC, representing 12.50% of the Companys total and voting capital. In addition, on November 17, 2010, one million, eighty-one thousand, six hundred and forty-nine (1,081,649) common shares issued by the Company held by AGC, accounting for 0.53% of the Companys total and voting capital, were paid and transferred to CEMIG, corresponding to the remaining amount of the acquisition. The second agreement, entered into between CEMIG and Fundo de Investimentos em Participaes PCP (FIP PCP), the controlling shareholder of Equatorial, regulates the sale of the indirect interest of FIP PCP in Light S.A. According to the agreement, Equatorial would would be split, through which its indirect assets in Light S.A. would be merged into a new
corporation, specifically incorporated for this purpose upon the Partial Spin-Off. After the completion of this spin-off, FIP PCP sold its shares representing the control over this entity to another entity from whose capital, CEMIG holds interest not less than 20%, so that at the end of the operation, this entity will indirectly hold the interest corresponding to approximately 13.03% of the capital stock of Light S.A. 6.3 Brief History On April 29, 2010, the annual and special shareholders meeting of Equatorial approved its partial spin-off, by transferring an amount of its net worth corresponding to its interest in the capital stock of RME to a new corporation named Redentor Energia S.A. (Redentor). On May 12, 2011, Parati S.A. Participaes em Ativos de Energia Eltrica (Parati), a corporation owned by CEMIG and by Redentor Fundo de Investimento em Participaes (FIP Redentor), acquired from FIP PCP, 58,671,565 common shares, representing 54.08% of the total capital stock of Redentor, the Companys indirect shareholder through its subsidiary RME Rio Minas Energia Participaes S.A., which holds 13.03% of the Companys capital stock. As a result, Parati now holds an indirect interest of 7.05% in Lights voting capital, and FIP Redentor holds an indirect interest of 5.29%.
After the RME spin-off (position on 12/31/2009):
Group of Control 52.13%
Free Float 47.87% RME Rio Minas Energia
CEMIG Companhia Energ ticade MG 13.03%
AGC Andrade Gutierrez Concesses 13.03%
LEPSA LUCE Empreendimentos Participaes S.A. 13.03%
BNDESPAR
MINORITY SHAREHOLDERSPAR 23.46 %
13.03%
24.41 %
LIGHT S.A (Holding)
Below is an organizational chart of the Company as of May 23, 2011:
Group of Control 52.13%
Free Float 47.87%
CEMIG Companhia Energtica de MG 26.06%
LEPSA LUCE Empreendimentos Participaes S.A. 13.30%
RME Rio Minas Energia
BNDESPAR
Minority shareholders EDFI
13.03%
15.02%
32.85%
LIGHT S.A LIGHT S.A (Holding) (Holding)
100%
LIGHT
100%
LIGHT
100%
LIGHT
51% LIGHTGER S.A.
100% ITAOCARA Energia Ltda
100%
LIGHTCOM
100% LIGHT SOLUES emEletricidade Ltda
51% AXXIOM Solues Tecnolgicas
Servios de Eletricidade S.A
Energia S.A.
ESCO Prestao de Servios S.A.
Comercializ . deEnergia S.A.
6.5 Major corporate events the issuer or any of its subsidiaries or associated companies have undergone
6.5 - Describe major corporate events, such as amalgamations, mergers, spin-offs, merger of shares, sale and acquisition of corporate control, acquisition and sale of relevant assets the issuer or any of its subsidiaries or associated companies have undergone, indicating the following23: a. event: Liquidation of LIR Energy Limited (LIR) b. main conditions of the transaction: Despite the fact that this operation was not an amalgamation, merger or spin-off, the liquidation of LIR Energy Limited (LIR) is an important corporate event for the Company. As authorized by the Brazilian Electricity Regulatory Agency, LIR could be liquidated until December 2010. However, according to Aneel order (administrative proceeding
48100.003409/1995-75) the process of shutting down LIR activities has initiated. On January 29, 2010, all the existing debt was paid off, and on the same date, the capital of LIR was reduced and dividends were distributed to Light Servios de Eletricidade S.A. Thus, as LIR no longer own any assets, a request was made on March 2, 2010 to cancel its registration at the Cayman Islands appropriate authorities, which was granted and the Company was dissolved on June 30, 2010. c. companies involved LIR d. the effects resulting from the operation on the ownership structure, and especially, on the controlling interest, of shareholders holding more than 5% of capital stock and the issuers Management
23
Upon the annual filing of the reference form, the information shall refer to the last 3 fiscal years. When filing the reference form due to request for the registration of securities tender offer, the information shall refer to the last 3 fiscal years and the current fiscal year.
There were no effects resulting from the operation on the ownership structure, and especially, on the controlling interest, of shareholders holding more than 5% of capital stock and the issuers Management.
6.5 Major corporate events the issuer or any of its subsidiaries or associated companies have undergone e. ownership structure before and after the operation
LIR Before June 30, 2010 Number of % quotas de 9,987 100.00 After June 30, 2010 Number of % quotas 0 0
Shareholders Light Servios Eletricidade S.A.
a. event: Acquisition of Axxiom Solues Tecnolgicas S.A. (Axxiom) b. main conditions of the transaction: On June 11, 2010, Light S.A. entered into a Private Instrument of Onerous Assignment of Shares and Other Covenants, through which it acquired from Nansen S.A. Instrumentos de Preciso; FIR Capital Partners Gesto de Investimentos S.A.; Leme Engenharia Ltda.; and Concert Technologies S.A. a total of three million, six hundred and seventy-two thousand (3,672,000) common shares issued by Axxiom Solues Tecnolgicas S.A. (Axxiom), a company headquartered in the city of Nova Lima, state of Minas Gerais, with the purpose of offering technology solutions and systems for the operational management of public utility concessionaires, including electric power companies. These shares acquired by the Company correspond to fifty-one percent (51%) of Axxioms total capital stock, and the acquisition price was three million, nine hundred seventy-five thousand, six hundred and thirty-six reais (R$3,975,636.00). c. companies involved: Light S.A., Axxiom Solues Tecnolgicas S.A. (Axxiom), Nansen S.A. Instrumentos de Preciso; FIR Capital Partners Gesto de Investimentos S.A.; Leme Engenharia Ltda.; and Concert Technologies S.A..
d. the effects resulting from the operation on the ownership structure, and especially, on the controlling interest, of shareholders holding more than 5% of capital stock and the issuers Management
6.5 Major corporate events the issuer or any of its subsidiaries or associated companies have undergone There were no effects resulting from the operation on the ownership structure, and especially, on the controlling interest, of shareholders holding more than 5% of capital stock and the issuers Management. e. ownership structure before and after the operation
Axxiom Before June 11, 2010 Number of % Common Shares 3,528,000 1,385,500 875,500 875,500 535,500 7,200,000 49.00 19.24 12.16 12.16 7.44 100.00 After June 11, 2010 Number of % Common Shares 3,528,000 49.00 3,672,000 7,200,000 51.00 100.00
Shareholders CEMIG Nansen S.A. FIR Capital Partners Leme Engenharia Ltda. Concert Technologies S.A. Light S.A. Total
a. event: Creation of Light Comercializadora de Energia S.A. (Lightcom) b. main conditions of the transaction: Despite the fact that this operation was not an amalgamation, merger or spin-off, the creation of Lightcom Comercializadora de Energia S.A. (Lightcom) is an important event for the Company. Lightcom was incorporated as a limited liability company on July 28, 2009, however, on December 10, 2009, Light S.A.'s special shareholders meeting approved the conversion of Lightcom into a publicly-held company, converting it into a wholly-owned subsidiary of Light S.A. after the acquisition of the single share held by Rio Minas Energia e Participaes S.A. (RME). On December 10, 2009 a shareholders meeting for the conversion of Lightcom was held in order to execute the acts necessary to make said conversion effective. On January 13, 2010, through Aneel Order 54/2010, Lightcom was authorized to act as a Trading
Agent of Electric Power within the scope of the Electricity Trading Board CCEE and was thereby authorized to develop activities to purchase, sell, import and export energy.
Lightcom, the duration of which is indeterminate, has the following purposes: (i) to purchase, sell, import and export energy; (ii) to provide general advisory services in the free and regulated energy market; and (iii) hold interest in other companies as partner or shareholder. Finally, it is worth pointing out that Lightcom started its activities on January 1, 2010.
c. companies involved: The corporations involved in the creation of Lightcom were Light S.A. and Rio Minas Energia Participaes S.A. (RME). After December 10, 2009, only Light S.A. was involved.
d. the effects resulting from the operation on the ownership structure, and especially, on the controlling interest, of shareholders holding more than 5% of capital stock and the issuers Management: There were no effects resulting from the operation on the ownership structure, and especially, on the controlling interest, of shareholders holding more than 5% of capital stock and the issuers Management. e. ownership structure before and after the operation:
LIGHTCOM From July 28, 2009 to December 10, 2009 Shareholders Light S.A. Rio Minas Energia Participaes S.A. RME Number of shares 999,999 1 % 99.9 0.1
After December 10, 2009. Number of % shares 1,000,000 100 0 0
a. event: Liquidation of Light Overseas Investments (LOI) b. main conditions of the transaction:
6.5 Major corporate events the issuer or any of its subsidiaries or associated companies have undergone Despite the fact that this operation was not an amalgamation, merger or spin-off,, the liquidation of Light Overseas Investments (LOI) is an important event for the Company. According to Aneels authorization, LOI could be liquidated until December 2008. However, according to Aneel order (administrative proceeding 48100.003409/1995-75) the process of shutting down LOIs activities was executed by paying off current debt, obligations and cash. 6.5 Major corporate events the issuer or any of its subsidiaries or associated companies have undergone Thus, as LOI no longer owns any assets, a request was made on September 11, 2008 to cancel its registration at the Cayman Islands appropriate authorities, which was granted and the company was dissolved on December 31, 2008.
c. companies involved: LOI d. the effects resulting from the operation on the ownership structure, and especially, on the controlling interest, of shareholders holding more than 5% of capital stock and the issuers Management: There were no effects resulting from the operation on the ownership structure, and especially, on the controlling shareholders interest, of shareholders holding more than 5% of capital stock and the issuers Management. e. ownership structure before and after the operation:
LOI Before December 31, 2008 Number of % quotas de 9,987 100.00 After December 31, 2008 Number of % quotas 0 0
Shareholders Light Servios Eletricidade S.A.
6.5 Major corporate events the issuer or any of its subsidiaries or associated companies have undergone a. event: Light sells Lightger shares to Cemig. b. main business conditions: Considering that Lightger S.A. (Lightger), a subsidiary of the Company, currently owns the authorization to operate the Project, pursuant to Resolution 63 of February 13, 2001 and Resolution 525 of December 3, 2001, issued by the Brazilian Electricity Regulatory Agency (ANEEL), aiming at jointly developing the Project, the Parties entered into, on this date, the Private Instrument of Purchase and Sale of Shares Issued by Lightger, through which the Company sells to CEMIG Gerao e Transmisso S.A., 25,939,013 common shares, accounting for 49% of Lightgers capital stock, for the total price of R$19,959,603.60, corresponding to R$0.769482 per share.
6.5 Major corporate events the issuer or any of its subsidiaries or associated companies have undergone c. companies involved: Lightger d. the operations resulting effects on the ownership structure, especially, on the controlling shareholders interest, shareholders holding more than 5% of the capital stock and the issuers Management: There were no effects resulting from the operation on the ownership structure, especially, on the controlling shareholders interest, shareholders holding more than 5% of the capital stock and the issuers Management. e. ownership structure before and after the operation:
Lightger Before August 18, 2010 Number of % common shares 52,936,763 100.00 After August 18, 2010 Number of % common shares 70,085,036 51.00
Shareholders Light S.A.
Finally, please refer to item 15.6 of this Reference Form for information about (i) the corporate restructuring of Lidil Comercial Ltda. and RME Rio Minas Energia Participaes S.A., (iii) the share purchase agreement of Light S.A., dated December 30, 2009, entered into by Companhia Energtica de Minas Gerais Cemig and Andrade Gutierrez Concesses S.A., (iv) the share purchase agreement of Light S.A., dated December 30, 2009, entered into between Cemig and Fundo de Investimento em Participaes PCP, former direct controlling shareholder of Redentor and indirect controlling shareholder of RME, and (v) the Option Agreement for the Sale of Quotas and Other Covenants, dated December 30, 2009, entered into by Cemig and Enlighted Partners Venture Capital LLC, indirect controlling shareholder of Luce Empreendimentos e Participaes S.A.
6.6 Information on filing for bankruptcy based on material amount or filing for courtsupervised or out-of-court reorganization proceedings
6.6 Indicate if issuer filed for bankruptcy, provided that this is based on material amounts, or filed for court-supervised or out-of-court reorganization proceedings, and the current status of these petitions Until the issue date of this Reference Form, the Company has neither filed for bankruptcy nor court-supervised or out-of-court reorganization proceedings.
6.7 Other relevant information: There is no other relevant information referring to this item.
7.1 Description of the activities of the issuer and its subsidiaries
7.1. Briefly describe the activities developed by the issuer and its subsidiaries: Light S.A. has an outstanding performance through its subsidiaries, in the segments of distribution, generation, transmission and trading of electric power in Brazil. In 2010, Light Servios de Eletricidade S.A. (Light SESA) was the fifth largest integrated electric power company in Brazil, based on its net operating revenues of R$6,508.6 million, and was classified as Brazils fifth largest distribution company, according to Energy Research Company (EPE) data, with a consumption volume of 22,384 GWh in the period and the sixth largest private company in terms of electric power generation company using hydraulic sources, with an installed capacity of 855 MW, according to data from ABRAGE the Brazilian Association of Large Energy Generation Companies. The distribution concession area of Light SESA is located in the state of Rio de Janeiro covering 10,970 km2 and a population of 10 million people. The State of Rio de Janeiro represents the 2nd largest GDP in Brazil according to the most recent data from IBGE (Brazilian Institute of Geography and Statistics) referring to 2006. In 2010, Light SESA served approximately 4.1 million consumers, corresponding to nearly 72% of the state's entire consumption, including the metropolitan area, according to EPE data, with the Company's Captive Market consumption totaling 19,459 GWh. Light Energia S.A.s Installed Capacity is 855 MW, with a generation complex based on hydraulic utilization of the Paraba do Sul and Ribero das Lajes rivers, made up of five power plants and two pumping stations, located in the States of Rio de Janeiro and So Paulo. The Companys Assured Energy is equal to average 537 MW, of which average 510 MW are currently contracted and average 27 MW are free to be traded on the free or spot markets. Light ESCO Prestao de Servios S.A. operates in the energy trading segment providing energy solutions to its clients, trading energy through the brokerage in energy purchase and sale operations and providing services to Free Consumers. Light Esco currently has 107 energy trading clients, 98 clients from trading activities and 9 clients from advisory and brokerage activities. Below is the Companys current organizational chart indicating its subsidiaries:
7.1 Description of the activities of the issuer and its subsidiaries

LIGHT S.A (Holding) (Holding)
LIGHT S.A
100%
LIGHT Servios de Eletricidade S.A
100%
LIGHT Energia S.A.
100%
LIGHT ESCO Prestao de Servios S.A.
51%
LIGHTGER S.A.
100%
ITAOCARA Energia Ltda
100%
LIGHTCOM Comercializ. de Energia S.A.
100%
LIGHT Solues em Eletricidade Ltda
51%
AXXIOM Solues Tecnolgicas
7.2 Operating segment information 7.2. In relation to each operating segment disclosed in the last financial statements for the fiscal year-end, or, where applicable, in the consolidated financial statements, point out the following information24: a- Products and services traded: The Companys revenues over the last three fiscal years mainly result from electric power distribution, transmission, generation and trading services through its subsidiaries Light Servios de Eletricidade (Light SESA), Light Energia S.A. and Light Esco S.A. (Trading and Services), respectively. b- Revenue deriving from the segment and its share in the issuer's net revenues:
Net Revenues (R$ Million) Distribution Generation Trading Other segments and intercompany eliminations Total 2010* 6,097.1 319.9 185.4 (93.8) 6,508.6 Share % 93.6 4.9 2.8 100.0 2009* 5,907.8 294.9 92.3 (88.1) 6,206.9 Share % 95.2 4.8 1.5 100.0 2008** 5,264.1 304.5 78.4 (97.4) 5,386.6 Share % 97.7 5.7 1.5 100.0
* IFRS accounting standard ** Accounting standards prior to the IFRS
Upon the annual filing of the reference form, information shall refer to the last 3 financial statements for the fiscal year-end. When filing the reference form due to request for the registration of securities tender offer, information shall refer to the last 3 financial statements for the fiscal year-end and to the last accounting information disclosed by the issuer.
24
7.2 Operating segment information c- Profit or loss resulting from the segment and its share in the issuers net income:
Net Income (R$ Million) Distribution Generation Trading Other segments and intercompany eliminations Total 2010 483.6 88.3 15.3 (12.0) 575.2 Share % 84.1 15.3 2.7 100.0 2009 541.6 84.3 14.1 (51.2) 588.8 Share % 92.0 14.3 2.4 100.0 2008 918.2 76.1 6.3 (26.1) 974.5 Share % 94.2 7.8 0.6 100.0
7.3 Information on products and services related to the operating segments
7.3. For products and services that correspond to the operating segments disclosed in item 7.2, describe: a. Characteristics of the production process (i) Production Process As far as energy distribution and trading are concerned, there is no production process. However, the process of generating electric power, purpose of Light Energia S.A. is based on utilizing the hydraulic power of the Paraba do Sul and Ribeiro das Lajes rivers, relying on power plants located in the States of Rio de Janeiro and So Paulo. The total maximum power of the Generation System is 855 MW. This system is composed of five (5) generation power plants and two (2) pumping stations, as follows: Generation Power Plants Fontes Nova three (3) units with total maximum power of 132 MW; Nilo Peanha six (6) units with total maximum power of 380 MW; Periera Passos two (2) units with total maximum power of 100 MW; Ilha dos Pombos - five (5) units with total maximum power of 187 MW; and Santa Branca - two (2) units with total maximum power of 56 MW.
7.3 Information on products and services related to the operating segments Pumping Stations Santa Ceclia - four (4) units with total maximum power of 35 MW; and Vigrio - four (4) units with total maximum power of 91 MW. In addition to these units, the Generation System of Light Energia S.A. is composed of other hydraulic structures, which given the size of their investments, including: reservoirs, dams, channels, dykes, spillways, tunnels, pressure tunnels and water intakes. (ii) Current concessions Referring to energy production activities, in addition to Light Energia S.A., the Company has two subsidiaries: Consrcio UHE Itaocara, which owns the concession for the construction and exploration of UHE Itaocara (195 MW) and Lightger S.A., which is authorized to build and explore PCH Paracambi (25 MW), both of them compose the ownership structure with Cemig Gerao e Transmisso S.A. It is worth mentioning that current Concession Agreement of Light Servios de Eletricidade S.A. covers the right to build and explore UHE Lages, an 18 MW power plant to be built at the location of the former UHE Fontes Velha, which was shut down in 1987. Concessions, permits and authorizations:
Concessions / Authorizations Generation and Distribution (Direct) PCH Paracambi (Indirect) UHE Itaocara (Indirect)
Date of the act Jul/96 Feb/01 Mar/01
Maturity Jun/26 Feb/31 Mar/36
(iii) Concessions for new energy generation projects. The Company has a concession to explore three (3) new hydroelectric energy generation projects, two (2) Small Hydroelectric Power Plants (PCHs) and one (1) Hydroelectric Power Plant (UHE). These projects include the concession for the construction of (i) the UHE Lajes, with an Installed Capacity of 18 MW and effective until 2026; (ii) the PCH Paracambi, with 25
MW of Installed Capacity and effective until 2031; and (iii) UHE Itaocara, which will have 195 MW of Installed Capacity and is effective until 2036.
The PCH Paracambi and UHE Itaocara projects are being developed in partnership with Cemig Gerao e Transmisso S.A. These projects amount to 238 MW of total Installed Capacity, and considering the Company's participation in the projects, they account for a 15.2% increase in the Company's current generation capacity.
Projects PCH Paracambi UHE Lajes UHE Itaocara
Installed Capacity (MW) 25 18 195
Assured Energy (average MW) 20.34 15 110
Estimated Investment (R$ million) 160 65 723
Startup Estimate 2011 2013 2014
The construction works at PCH Paracambi started in November 2009. The Operation License is expected to be received in August 2011, and commercial generation is expected for October 2011. The energy generated by PHC Paracambi has already been traded. The contracting of EPC to build UHE Itaocara is expected for this year. In relation to PCH Lajes, all of the required environmental licenses have already been obtained, while the power plant basic engineering project is currently pending approval by Aneel.
(iv) Annual Production x Installed Capacity The table below shows the generation and consumption of energy in the Companys pumping activities, separated by power plant in the fiscal years ended December 31, 2008, 2009 and 2010:

Generation Power Plants (MWh) Fontes Nova Pereira Passos Nilo Peanha Ilha dos Pombos Santa Branca Gross Generation 2008 1,028,282.958 415,164.005 2,746,711.099 888,636.231 141,236.412 5,220,030.70 2009 1,032,546.938 442,649.138 2,932,053.184 1,018,036.181 204,685.897 5,629,971.90 2010 957,428.689 415,681.565 2,789,340.799 1,036,618.038 405,664.164 5,604,733.255 Installed Power (MW) 35 91 Installed Power (MW) 132 100 380 187 56 Year of startup 1940 1962 1953 1924 1999 City Pira/RJ Pira/RJ Pira/RJ Carmo/Alm Paraba RJ/MG Sta. Branca /Jacare SP
Pumping Stations (MWh) Santa Ceclia Vigrio Pumps total consumption
2008 250,769.314 560,648.88 811,418.194
2009 264,083.049 589,840.380 853,923.429
2010 202,066.283 546,957.263 759,023.546
Year of startup 1952 1952
City Barra do Pira/RJ Pira/RJ
Internal Consumption Net Generation
61,171.793 4,341,440.718
69,739.487 4,706,309.022
68,790.081 4,776,919,629
Assured Energy The Company contracted 95% of its Assured Energy at existing energy auctions held in 2004, corresponding to average 510 MW. Yearly, Aneel authorizes distribution companies to return part of their agreements, so that these are adjusted to the market demand. With the return of agreements executed with Light Energia by few distribution companies, it was possible to contract this energy through the Companys trader. The remaining average 27 MW corresponding to 5% of Assured Energy, depending on current hydrological conditions, is free to be sold on the free or spot markets. The table below indicates the distribution of contracted Assured Energy, divided by contracting market, destination, term, quantity and price:

Market Regulated Contracting Market (ACR) Destination 1st Auction of existing energy (pool of distribution companies) 1st Auction of existing energy (pool of distribution companies) Light Esco 1 (Bilateral agreement) Light Esco 2 (Bilateral agreement) Effectiveness 2005-2012 2006-2013 2007-2011 2009 2011 2012 2013Jun/2026 Quantity of average MW 354.3 123.9 20 11.88 31.88 314.7 Price (*) R$/MWh 66.91 79.01 -
Free Contracting Market (ACL)
Light Esco 3 (Bilateral Determined PLD or spot 2009-2010 agreement) monthly price (*) Prices refer to January/2011. In the case of the regulated contracting market, average prices are charged to distribution companies.
Through its trader, the Company is prospecting to contract energy whose agreements expire in 2012 and 2013. This energy will be available, more specifically, on the ACL. (v) insurance:
Type of Insurance Operational Risk Insurance Coverage Amount Insured* (R$) Annual Premium 1.481.617,0 Effectiveness Date 10/31/10 to 10/31/11
Property damages caused to buildings, furniture and machinery as a result of fire, 3.664.648.622,27 explosion, rubbish, flooding, earthquake, loss of machinery and electric damages. *Maximum Indemnification Limit (LMI) is R$300,000,000.00
b. characteristics of the distribution process: (i) Concession Area The Companys concession distribution area corresponds to 25% of the State of Rio de Janeiro, including the City of Rio de Janeiro. The Companys energy sales accounted for 71.2% of all energy consumed in the state in 2010. On December 31, 2010, the Company provided services to 31 cities in the State of Rio de Janeiro, comprising an area of 10,970 km2 and a total of 4.1 million clients and 39 service branches, covered by a 52,091 km distribution network. (ii) Concession Agreement
7.3 Information on products and services related to the operating segments On June 4, 1996, the Company and the Granting Authority entered into a 30-year Concession Agreement, thus expiring on June 4, 2026, and this term may be extended at the sole discretion of Aneel. The enactment of the Electricity Sector New Model Law required the Concession Agreement to be broken down into a concession agreement for distribution public utilities, one generation agreement and one transmission agreement by means of addenda thereto. In accordance with the Concession Agreement, once terminated the concession, the related assets and prerogatives granted to the concessionaire will revert to Aneel, and only the portion of non-amortized assets will be compensated by the Granting Authority. As for the level of managerial freedom, the Concession Agreement establishes that the public utility concessionaire is free to manage its business, investments, personnel and technology. However, the Company must submit all the agreements executed with related parties to Aneels approval. The Concession Agreement was also signed by the Companys shareholders, in the capacity of consenting intervening parties: EDFI, Houston Industries Energy, Inc. (currently Reliant Energy), AEL Coral Reef LLC, CSN, BNDESPAR and INVESTLIGHT, and undertaking to introduce a provision in the Companys Bylaws to not transfer, assign or anyway sell, freely or on an onerous basis the shares that would imply the transfer of the Companys majority control, without Aneels prior consent. In the event the shares that represent the controlling interest were to be transferred, the Companys new direct controlling shareholder shall sign a statement of consent and submit it to the clauses of the Concession Agreement and to the legal and regulatory rules of the concession. The Concession Agreement also provides that the inspection to which the public utility concessionaire will be subject will comprise technical, accounting, commercial and economic and financial areas.
The Concession Agreement establishes that the Company will be subject to the application of penalties laid out by legal and regulatory standards or in the Concession Agreement (fine of up to 0.1% of sales in the 12 months prior to the infringement), applied through administrative proceedings that ensure the full right of defense, should the obligations provided for in the Concession Agreement be not complied with or laws and rules applicable to the business. Moreover, the Concession Agreement sets forth that if the public utility concessionaire does not abide by penalties, or fails to answer Aneel's notice to correct the services provided at appropriate terms, the concession may be ruled forfeited. As an alternative to the declaration of forfeiture, Aneel may expropriate the controlling group of the Company shares and put them up for public auction. The net amount of damages to be paid for the expropriated shares will be solely determined at the auction. Pursuant to the Concession Agreement, the Company will charge the tariffs defined in the Concession Agreement, adjusted and/or revised in accordance with the following rules: (i) annual tariff adjustment, approved by Aneel on November 6 of each year and becoming effective on November 7, in accordance with the terms of the Concession Contract. The annual adjustment is based on a formula that considers the allocation of costs between two categories: (a) costs that are beyond the Companys control; and (b) costs controlled by the Company; (ii) periodic tariff review every 5 years, considering alterations in the cost and market structure, the tariffs of similar companies and incentive to efficiency and reasonable tariffs. The last tariff review occurred on November 7, 2008 and the next review will take place in 2013; and (iii) extraordinary tariff review, seeking to maintain the economic and financial breakeven, which may take place at anytime, upon the Company's request if there are significant alterations in its costs.
On September 28, 2005, the Company signed an addendum to the Concession Agreement in order to, among others, alter the conditions used to determine tariffs applicable the services granted to the Company by force of Decree 5,163 of July 30, 2004. This decree, among other measures, provides for: (i) the application of the CVA mechanism for the variations resulting from the electric power acquisition costs not included in the last tariff adjustment of the distribution companies; and (ii) that in the tariff adjustments of these companies, the calculation of energy purchase average price, on the date of adjustment, considers the volume contracted for the coming 12 months. Regulations set forth that distribution companies can charge tariffs lower than those approved by Aneel, provided that the equal treatment between consumers of the same consumer class and subgroup of tariffs is maintained, without affecting the tariff levels of other classes and, finally, not resulting in suits to recover the concessions economic and financial breakeven.
7.3 Information on products and services related to the operating segments Aneel Ruling Resolution 153 of March 14, 2005, ruled how the Memorandum Account of Electric Power Acquisition Cost Variation is applied, so that differences of energy acquisition prices in relation to the average price considered in the last adjustment/revision are assessed and transferred to the distribution companys tariffs. Other relevant modifications resulting from the addendum to the Concession Agreement are as follows: (a) inclusion, as Portion A, and for the effects of tariff adjustments, of R&D expenses, energy efficiency, energy acquired from own generation and the Incentive Program to Alternative Sources (PROINFA); (b) the inclusion of the concept Distribution System Losses to be used in tariff reviews when calculating the purchase of energy; and (c) exclusion of PIS and COFINS from tariffs for the purposes of calculating the tariff adjustments. Now, these taxes are charged to consumers separately in their electricity bills and are no longer incorporated into the tariff. Given that Aneel agreed with the transfer of the Companys direct controlling interest to RME, as per Aneel Authorization Resolution 641 of July 25, 2006, the Concession Agreement shall be amended in order to reflect said transfer of the Companys direct controlling interest, in addition to separating electric power generation, transmission and distribution activities. On February 26, 2010, the Company signed the Second Addendum to the Concession Agreement, which aims at changing the calculation methodology of the annual tariff adjustment, so that to ensure the neutrality of the sector charges, thus, avoiding market variations to occur as of February 2010 to generate undue revenue for concessionaires or consumers. (iii) Distribution Network The electric power distribution consists of carrying energy from the border with the Basic Network to the point of delivery to final consumers. On December 31, 2010, the Company had one line at 230 kV and 290 lines at 138 kV. These lines distribute electric power to the point of connection to the Basic Network to energy substations. All clients who connect to these transmission lines, whether Free Consumers or Generation Companies shall pay a tariff for using the system.
The Company has a distribution network composed of 2,086 lines of 6kV, 13.8kV and 25kV, most of which are overhead power lines, even though the Company has one of the largest underground distribution systems in Brazil. Large industrial and commercial consumers receive high voltage electric power, while smallsized industrial and commercial consumers and households receive electricity at lower voltage. On December 31, 2010 the Company had 75,883 overhead distribution transformers, 6,491 underground distribution transformers and 200 fixed distribution sub-stations (9,060 MVA) with a total distribution network of approximately 53,180 km (47,460 in overhead wires and 5,720 underground), 22,665 km of which is average voltage and 30,515 low voltage. (iv) Customer Service 1) Commercial Branches Currently, Lights commercial branches provide clients and employees with a modern and standardized visual identity, easiness and ergonomics. All services can be found in one place. The branches also respect persons with special needs: access ramps, priority service, adapted restrooms, employees able to communicate with Brazilian Sign Language and other facilities. New branches and those already existing fully renovated have three indoor spaces: selfservice, services and an exclusive area for employees. Among various services offered are: ATMs, paid fee (free mailing of documents using the Brazilian Postal Company), self-service terminal, direct Disque-Light, Virtual Branches and informative brochures. Furthermore, the management model adopted allows a remote monitoring. Twenty units have already received the companys new visual standard - Barra da Tijuca, Copacabana, Ilha do Governador, Penha, Tijuca, Belford Roxo, Itagua, Nova Iguau, Paracambi, Santa Cruz, So Joo de Meriti, Carmo, Paty do Alferes, Pira, Rio das Flores, Vassouras and Volta Redonda, (Nilpilis, Mier and Primeiro de Maro).
7.3 Information on products and services related to the operating segments Addresses of Commercial Branches:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 OWN BRANCHES Bangu Barra do Pira Campo Grande Jacarepagu Mendes Miguel Pereira Paracambi Paulo de Frontin Quatis Queimados Rio Claro Rio das Flores Sapucaia Vassouras Volta Redonda OUTSOURCED BRANCHES Barra Mansa Barra da Tijuca Barra Mansa Belford Roxo Belford Roxo (Posto) Carmo Centro Copacabana Duque de Caxias Duque de Caxias Ilha do Governador Itagua Japeri Levy Gasparian Madureira Mier Nilpolis Nova Iguau Paty de Alferes Penha Pinheiral Pira Santa Cruz So Joao de Meriti Seropdica Tijuca Trs Rios Valena ADDRESS Rua Doze de Fevereiro n 571 - Trreo Rua Governador Portela n 202 - Centro Av. Cesrio de Melo n 3489 - Trreo Estrada do Tindiba n 110 Trreo Rua Maria Estela de Almeida Moura n 12 Centro Rua Luiz Pamplona n 247 - Centro Rua Presidente Joo Goulart n 108 - Centro Rua Dr. tila Portugal 593 - Centro Rua Faustino Pinheiro n 205 - Centro Rua Vereador Marinho Hemeterio de Oliveira, 642 Ruas Antonio Grij Filho n 300 Rua Eurico de Castro n 05 - Centro Rua Maurcio de Abreu n 184 Rua Velho Avelar n 151 Centro Av. Amaral Peixoto n 603 - Centro Rua Jos Cardoso G. Cotia n 62 (loja) Av. das Amricas n 500 - Bl.13-Ljs 107/108 (Downtown) Avenida Joaquim Leite n 577 - Espaos 2 a 5 Avenida Joaquim da Costa Lima n 2653 Estrada Miguel Couto, sn - Lote 1 - Quadra "A" Rua Dr. Italo F. Polvoleri n 27 Rua Primeiro de Maro ns. 9/11 - Centro - RJ Rua Baro de Ipanema n 32-loja A Avenida Nilo Peanha n 708 (loja B) Avenida Pres. Kennedy n 1243 - Duque de Caxias Av. Maestro Paulo e Silva n 400-Loja 144 - Ilha Plaza Avenida Dep. Otvio Luiz Cabral n 452 Praa Olavo Bilac s/n Rua Josefina Gasparian n 61 loja 10 Praa Armando Cruz n 120 (loja) Rua Lucdio Lago n 24 - Loja - Meier - RJ Praa Nilo Peanha n 22 (lojas) Rua Min. Edgard Costa n 24/32 - N.Iguau Rua Coronel Manoel Bernardes, n 115, Loja 2, Shopping Premier Av. Braz de Pina n 148-Lojas 235 a 238 - Leopoldina Shopping (Penha-RJ) Rua Domingos Mariano n 29 Rua Santos Dumont n 156 (rea de 13,50m2) Rua Felipe Cardoso n 540-Ljs 27/28 - S. Cruz Avenida Getlio de Moura n 28,30 e 32 - lojas Rua Maria Augusta Grij n 2 qd.2 lt.2 loja 1 Rua Soares da Costa n 10 - loja 225 Rua Baro de Entre-Rios n 337 (loja) Rua Padre Luna n 43 - Loja "A" - Valena - RJ
7.3 Information on products and services related to the operating segments The staff working at the Company's service branches comprises approximately 562 people (employees + outsourced workers). Mobile Service Branch: This new channel was implemented in 2008, and is a vehicle that has been adapted and equipped with an online operational system that runs via broadband Internet connection. At this branch, Light provides all the services of commercial branch. Moreover, it conducts awareness activities by exhibiting institutional and educational videos focused on the efficient use of electric power and also security in relation to the risks involving the electric network. The Mobile Service Branch follows an agenda and also travel to cities which do not yet have commercial branches. 2) Disque Light (Via Phone) Disque-Light Commercial (0800 282 0120) - everyday, 24 hours Disque-Light Emergency (0800 0210 196) - everyday, 24 hours Exclusive services for clients with hearing or speaking disabilities (0800 285 2453) everyday, 24 hours Disque-Light Commercial (0800 282 0120) provides information and commercial services, such as, contract termination, record updates, reconnection, copy of electricity bills, registration of automatic debit and information on debts, tariffs, services, consumption, accounts, etc. Disque-Light Emergency (0800 0210 196) deals with power outage, energy variation, downed wires, abnormalities in the electric network that involve the environment, information on scheduled disconnections and denunciations of irregular connections or frauds in the electric network. 3) Virtual Branch and Click Light (www.light.com.br) Virtual Branch, a 24-hour access to the Web site and Back Office Services (email responses) from Monday to Friday from 8(7) a.m. to 8(5) p.m. At the Virtual Branch, it is possible to request commercial services, such as, contract termination, record updates, reconnection, copy of electricity bills, registration of automatic debit (repayment requests) and information on debts, tariffs, services, consumption and bills etc.
7.3 Information on products and services related to the operating segments Click Light, from Monday to Friday 8 a.m. to 8 p.m. Click Light is an online service that provides information and receives service requests, seeking to facilitate client access. This service allows real-time service, using an exclusive dialogue box (chat) for each visit. 4) Ombudsman 1. Ombudsman (0800 284 0182) Lights Ombudsman receives, directs and deals with client suggestions and complaints. (v) Fleet Lights fleet is made up of: - Fleet of LIGHT S.E.S.A. (distribution company): a tool required for maintenance services of the Electric Network, Inspection, Consumer Services, etc., comprising 848 vehicles, 485 of which are leased. - Fleet of LIGHT Energia (generation and transmission): a tool required for operation and maintenance services of power plants, comprising 69 vehicles, 15 of which are leased and 54 are proprietary.
c.
characteristics of the market where the issuer operates, especially:
i. market share: The Company, through its subsidiaries, provides electric power distribution, generation and trading services. Out of the Companys sales net revenues and/or services in 2010, these segments have the following market share:
Operational Segments (R$ million, except for percentages) Distribution Generation Trading Eliminations Total
2010 6,097 319.9 185.4 (93.7) 6,508.6 93.7% 4.9% 2.8% 100.00%
7.3 Information on products and services related to the operating segments Distribution
Light Servios de Eletricidade S.A. operates in the energy distribution segment, serving nearly 4.1 million clients. It operates in a concession area that covers 31 cities in the State of Rio de Janeiro, corresponding to 93.7% of Light S.A.s total net revenues in 2010. The total area covered by the Company corresponds to 10,970 Km2 in the State of Rio de Janeiro, benefitting 10 million out of the states 15 million inhabitants. The Company serves the captive market by supplying electric power and to the free market, by carrying electricity through the distribution network. In 2010, the energy billed to the captive market reached 19,459 GWh. The breakdown of sales by group of consumers was: 42.4% came from the residential segment, 31.6% came from the commercial segment, 8.8% came from the industrial segment and 17.2 came from other consumers. The energy billed to the free market totaled 2,924 GWh in 2010, of which 76.2% came from the industrial segment, 17.9% came from the commercial segment and 5.9% from other consumers. Generation Light Energia operates in the energy generation segment. The generation company can sell its energy to two different market segments: the Regulated (ACR) and Free (ACL) markets. The ACR is the market segment where electric power is bought and sold between sellers and distribution companies, preceded by bidding process. In this market, the generation companies compete by delivering proposals in auctions for new concessions, where the winning proposal will obtain a concession agreement and an energy sales agreement with a 15 to 30 yearduration.
7.3 Information on products and services related to the operating segments On the ACL market, electric power purchase and sale operations are carried out through freely negotiated Bilateral Agreements in which prices and conditions are agreed upon by the parties. In this market, competition takes place between concessionaires and authorized generation companies, energy traders and electric power importers. Light Energy has average 537 MW assured energy and contracted 95% of this amount at energy auctions held in 2004, corresponding to average 510 MW. With the partial return of these agreements by distribution companies, an energy sales agreement was executed for the Company's trader. Out of the average 510 MW, average 478.2 MW are contracted on the ACR, while average 31.88 MW are contracted on the ACL. The remaining average 27 MW, corresponding to 5% of the Assured Energy, depending on current hydrological conditions, will be free to be traded on the free or spot markets. Trading The Companys wholly-owned subsidiary Light ESCO is a company that integrates energy solutions, working together with its clients to find the best alternatives to acquire and optimize the use of energy. Its activities are divided between two different segments: the energy trading on the free market and the alternative/ subsidized energy sources and infrastructure services. The Company received Aneel authorization to operate as a trader through Aneel Order 823 of April 25, 2006. The Company operates in the direct purchase and sale of energy (trader) and in the intermediation of energy purchase and sale negotiations (broker), representing and advising Free Consumers.
7.3 Information on products and services related to the operating segments Most energy trading consumers are located outside the Companys concession area, mainly in the State of So Paulo. In the energy and consulting services segment, most of the Companys clients are located within its concession area. The market where the Company operates includes: (i) consumers with demand exceeding 3 MW and voltage greater than 69 kV; (ii) consumers with demand exceeding 3 MW served in any voltage, as long as they are connected after July 7, 1995; and (iii) consumers responsible for Consumer Unit or a set of Consumer Units of Group A comprising the same sub-market at the National Interconnected Electric System, combined through community of interests, de jure or de facto, as long as they acquire energy from subsidized energy sources, the load of which is higher than or corresponds to 500 kW. The energy services area covers a great amount of services that can be offered to a large number of clients that may range from residential consumers to large industries that require large amounts of electricity. The Company focuses on medium and large industrial consumers. The Companys main activity, i.e., the distribution of electric power, can be characterized as a natural monopoly through which the operation of only one concessionaire in a certain region is more economically efficient than the existence of competition. This phenomenon can be seen among the socalled network industries, which include, in addition to electricity distribution, piped gas, basic sanitation, fixed telephone services and others. In other words, the physical existence of a fixed network is what leads to a natural monopoly. Therefore, there is no competition between distribution market agents, since each concessionaire owns a natural monopoly in its concession area.
7.3 Information on products and services related to the operating segments ii. market competition: Energy transport services are paid through the distribution system usage tariff (TUSD). Free Consumers located in the Companys concession area must use the Company's distribution in order to have access to electric power, therefore paying the Company through TUSD. The Decree 5,597 of November 26, 2005, authorized Free Consumers to no longer TUSD tariffs for distribution companies, if they have their own network allowing them to directly connect to the Basic Network. Although the Free Consumers migration can affect the Companys results of operations, the revenue reduction deriving from this migration generally does not cause a reduction in profit margins, as the payment for the use of the Basic Network derives from the TUSD continues to be received, even after the migration. The Electricity Sector New Model Law requires that all electric power purchase and sale operations to be conducted in two market segments, or contracting markets: the Regulated and the Free markets. The ACR is the market segment where the electric power is bought and sold between sellers and distribution companies, preceded by bidding process. In this market, the generation companies compete by delivering proposals in auctions for new concessions, where the winning proposal will obtain a concession agreement and an energy sales agreement with a 15 to 30-year duration. On the ACL market, electric power purchase and sale operations are carried out through freely negotiated Bilateral Agreements in which prices and conditions are agreed upon by the parties. In this market, competition takes place between concessionaires and authorized generation companies, energy traders and electric power importers.
The Company faces competition from other energy traders and electric power generation companies on the free consumer market. The tables below show the Companys main competitors in the electric power distribution, generation, trading segments.

Main competitors in the distribution Market Share (%)1 segment Eletropaulo Metropolitana Eletricidade 11.5 de So Paulo S.A. 7.5 CEMIG Distribuio S.A. 6.9 Copel Distribuio S.A. Companhia Paulista de Fora e Luz 6.7 CPFL 6.3 Light Servios de Eletricidade S.A. 4.9 Celesc Distribuio S.A. Companhia de Eletricidade do Estado da 4.7 Bahia - COELBA 3.8 Elektro Eletricidade e Servios S.A. CELPE - Companhia Energtica de 3.2 Pernambuco Source Aneel Technical Information Decision Support System Reports Consumption by ranking 1 MWh: 2010 Main competitors in the generation Market Share (%)1 segment Companhia Hidreltrica do So 9.2 Francisco/CHESF 8.2 Furnas Centrais Eltricas S.A. Furnas Centrais Eltricas do Norte do Brasil 8.1 S.A. Eletronorte Companhia Energtica de So Paulo/ 6.5 CESP 5.9 Itaipu Binacional 0.7 LIGHT Energia S.A. Source BIG - Generation Database. Aneel website. 1Data updated on: 5/25/2011. Main competitors in the trading segment CPFL Comercializao Brasil S.A. Tractebel Energia Comercializadora Ltda. Petrobrs Comercializadora de Energia Ltda. ENERTRADE Comercializao e Servios de Energia S.A. COOMEX Market Share (%)1 17.2 11.5 10.8 8.9 5.9 2.0
LIGHT Esco + Light Com Source CCEE Trading of Electric Power 1 MWh from January to December 2010
7.3 Information on products and services related to the operating segments d. eventual seasonality: The Companys operations are subject to seasonality variations. Historically, the consumption of energy in Light Servios de Eletricidade S.A.s concession area seems to be higher in the first and last quarters of the fiscal year, given the higher temperatures during these periods and end-of-year festivities. e. main inputs and raw materials, including: The Companys main input is electric power, deriving from various sources. The table below shows the main energy sources agreements of Light SESA:
2010 Source ITAIPU MCSD ITAIPU MCSD 4% MCSD 2008 AUCTION ADJUSMENT 2009 AUCTION ADJUSTMENT MEGA AUCTION 2005 MEGA AUCTION 2006 MEGA AUCTION 2007 MEGA AUCTION 2008 H-30 - 2008 ( 1st LEN ) H-30 - 2009 ( 1st LEN ) H-30 - 2009 (2nd LEN ) H-30 - 2010 (1st LEN ) Volume (GWh) 5,420 26 9 629 4,533 5,107 981 569 22 22 174 311 % 20.1 0.1 0.0 2.3 16.8 18.9 3.6 2.1 0.1 0.1 0.7 1.2 2009 Volume (GWh) 5,647 26 9 347 808 4,731 5,329 1,023 593 22 022 174 % 21.6% 0.1 0.0 1.3 0.0 3.1 18.1 20.4 3.9 2.3 0.1 0.10 0.70 2008 Volume (GWh) 5,731 28 11 341 264 4,744 5,344 1,026 595 23 % 22.9 0.1 0.0 1.4 1.1 19.0 21.4 4.1 2.4 0.1 -
HYDROELECTRIC POWER PLANT
Subtotal T-15 2008 (1st LEN) T-15 2009 (1st LEN) T-15 - 2009 (2nd LEN) THERMOELECTRIC POWER PLANT T-15 - 2010 (1st LEN) T-15 - 2010 (4th LEN) NORTE FLU
17,803 177 275 89 302 1,305 6,351
66.0 0.7 1.0 0.3 1.1 4.8 23.5
18,731 177 275 89 6,361
71.7 0.7 1.1 0.3 24.3
18,108 178 6,368
72.5 0.7 25.5
Subtotal
8,499
31.4
6,892
26.4
6,546
26.2

Incentive Program to Alternative Sources (PROINFA) ALTERNATIVE SOURCES T-15 2010 (1st LFA) T-30 2010 (1st LFA) Subtotal 532 2.0 481 1.8 341 1.4
114 37 683
0.4 0.1 2.5
481
1.8
341
1.4
i. Description of relations with suppliers, including those if they are subject to governmental control or regulation, indicating the bodies and respective applicable legislation In order to assure maximum transparency and security during the acquisition process, the Companys quotes and contracts are made through an e-commerce platform which is fully interactive and integrated to the Companys ERP-SAP. Moreover, nearly 95% of all contracted values are approved by the Purchase Board, where managers or representatives of the Procurement, Process, Controllership, Treasury and Legal Areas unanimously approve processes submitted by buyers before the representatives of management/requesting areas. In addition, 100% of the Companys purchases are monitored by the Purchase Area; even small acquisitions executed in a decentralized manner by requesting areas are executed using an ecommerce platform, the final stage of release falls on the Purchase manager. Relationship with the Companys suppliers is traditionally developed on several fronts: meetings, workshops, visits, training, participation in congresses and the continuation of extremely important campaigns, such as Occupational Safety. Since 2008, the Company has held the event Building Results Light Supplier Meeting, in order to further improve its supplier relations. On this occasion suppliers, contract managers, members of the purchase staff and the Board of Executive Officers share strategic objectives and processes involved in Lights business.
7.3 Information on products and services related to the operating segments This meeting was given two awards: (i) Supply Quality, which chooses suppliers based on criteria, such as quality, service period, level of service, commitment, service efficiency, creation of value, technological innovations, sustainability and pro-activity, and (ii) as of 2009, the Assured Quality Certificate, which awards companies that are able to have their production processes certified jointly with the Company, thereby exempting the supplier from inspection and monitoring of product quality for 2 years. Furthermore, the Company has a strategic agreement with several companies, seeking improvements in the supply chain by maintaining a strategic Light inventory with certain partners, thereby reducing the lead time of supplies and guaranteeing an inventory ready to be used by the concessionaire. The relationship the Company maintains with its suppliers, and vice-versa, is not subject to any governmental control or regulation.
ii. Eventual reliance on a small number of suppliers Competitions conducted by the Company rely on the participation of, at least, five suppliers. If this condition cannot be met, reasons must then be detailed and grounded in the approval process. Certain material and service categories rely on a small number of suppliers available on the market, such as shafts, valves and stoppers for materials and network services and the assembly of sub-stations.
iii. Eventual volatility in prices Material and equipment prices are influenced by major economic indexes. The supply area monitors their variation and foresees trends, also considering the composition of products using formulas with specific parameters. The price of services is strongly affected by collective bargaining agreements with Unions, in addition to major economic indexes.
7.4 Clients that account for more than 10% of total net revenues
7.4 Identify if there are clients that account for more than 10% of the issuers net revenues, informing25: a. total amount of revenue deriving from the client There are no material clients that account for more than 10% of the Companys total net revenues. b. operating segments affected by revenue deriving from the client There are no relevant clients that account for more than 10% of the Companys total net revenue.
7.5 Government regulations relevant effects on the issuers activities
7.5 Describe government regulations relevant effects on the issuers activities, commenting specifically on the following: a. the need for governmental authorizations to perform activities and a track record of the company relationship with the public administration to obtain said authorizations Concessions Any entity planning to build or operate facilities for the generation, transmission or distribution of electric power in Brazil shall request a concession to the Granting Authority. The concessions grant rights to generate, transmit or distribute electric power in a concession area for a certain period. Usually, duration is 35 years for new generation concessions and 30 years for new transmission or distribution concessions. Pursuant to the Law 9,074/95, the term of current concessions or those contracted before December 2002 may be extended, once, for a twenty-year period, by means of a prior request made by the concessionaire and consent of Aneel and the Ministry of Mines and Energy (MME).
25
Upon the annual filing of the reference form, information shall refer to the last financial statements for the fiscal year-end. When filing the reference form due to request for the registration of securities tender offer, the information shall refer to the last financial statements for the fiscal-year end and last accounting information disclosed by the issuer.
7.5 Government regulations relevant effects on the issuers activities The Law of Concessions sets forth, among other provisions, the conditions to be met by the concessionaire when providing electric power services, the rights of electric power consumers and the obligations of the concessionaire and the Granting Authority. Moreover, the concessionaire shall comply with effective regulations of the electricity sector. The main provisions of the Law of Concessions are summarized below: Adequate services. The concessionaire shall provide adequate services that meet parameters of regularity, continuity, efficiency, security, innovation, comprehensiveness, courtesy in services, reasonable tariffs and access to services. Easement. The Granting Authority may declare which assets are essential to execute the services or the public utility, naming them as utility easement, for the benefit of a concessionaire. In this case, the responsibility for reasonable indemnification falls on the concessionaire. Objective Responsibility. The concessionaire is directly responsible for all damages resulting from services provided, regardless of guilty. Changes in controlling interest. The Granting Authority shall approve any direct or indirect change in the concessionaires controlling interest. Intervention by the Granting Authority. The Granting Authority may intervene in the concession so that to ensure that proper services are provided, as well as the faithful compliance with contractual, regulatory and legal standards, if the concessionaire fails to fulfill its obligations. Within a 30-day period from the intervention, a representative of the Granting Authority shall start an administrative proceeding entitling the concessionaire to full defense. During the period of the administrative proceeding, an intervener nominated by decree of the Granting Authority will be responsible for providing concession services. If the administrative proceeding is not concluded within 180 days after the effectiveness of the referred decree, the intervention is ceased and the concession returns to the concessionaire. The administration of the concession will also return to the concessionaire if the intervener chooses not to terminate the agreement and its contractual terms have yet to expire.
7.5 Government regulations relevant effects on the issuers activities Termination before the Contractual Term. The termination of the Concession Agreement may occur through expropriation, forfeiture, rescission, annulment of the bidding process that led to the concession being granted, bankruptcy or liquidation of the concessionaire. Expropriation is the resumption of services by the Granting Authority during concession term in view of public interests, which shall be clearly stated by a specific authorizing law. Forfeiture may be declared by the Granting Authority if: (i) services have been improperly or deficiently provided based on standards, criteria, indicators and parameters used to define service quality; (ii) the concessionaire fails to comply with its obligations set out in the Concession Agreement or concession-related legal and regulatory provisions; (iii) the concessionaire interrupts services or causes this interruption, except for fortuitous events or force majeure; (iv) the concessionaire losses the technical, operational or economic capacity to provide services adequately; (v) the concessionaire does not comply with penalties imposed by the Granting Authority in their due terms; (vi) the concessionaire does not answer to the notification by the Granting Authority to regularize the services provided; or (vii) in final and unappealable court decision, the concessionaire was convicted for tax evasion, including social contributions. The concessionaire is entitled to legal defense in the administrative proceeding which declaring the forfeiture of the concession and may appeal to the court against such an act. The concessionaire is entitled to be compensated for investments made in reversible assets that have not been fully amortized or depreciated. In the event of forfeiture, contractual fines and damages caused thereby shall be deducted from compensation. Terms of the Agreement. Upon the maturity of the agreement, all assets, rights and privileges transferred to the concessionaire that are materially related to electric power services will reverse to the Granting Authority. After the maturity of the concession agreement, the concessionaire is entitled to be compensated for investments made in reversible assets that have not been fully amortized or depreciated.
7.5 Government regulations relevant effects on the issuers activities On June 4, 1996, Concession Agreement 001/1996 was signed between the federal government and Light Servios de Eletricidade S.A. LIGHT S.E.S.A., through the Brazilian Electricity Regulatory Agency Aneel, in order to the regulate the exploration of the public utility to distribute, transmit and generate electric power within the concession, which pertains to the concessionaire. The Companys Concession Agreement is effective for 30 years, thus ending on June 4, 2026. In order to comply with effective legislation, distribution, generation, transmission and trading activities were deverticalized in November 2005, resulting in the creation of Grupo Light composed of the following companies: Light S.A. (holding); Light Energia S.A. (generation/transmission); Light Servios de Eletricidade S.A. (distribution company) and Light Esco Ltda (trader). Pursuant to the Concession Agreement 001/1996, once terminated the concession, the assets linked to the concession and prerogatives granted to the concessionaire will be reversed to Aneel, and only the portion of non-amortized assets will be indemnified by the Granting Authority. As for the level of managerial freedom, the Concession Agreement establishes that the public utility concessionaire has extensive freedom to manage its business, investments, personnel and technology. However, the agreements executed between the concessionaire and related parties shall be approved by Aneel. The Concession Agreement 001/1996 also establishes the inspection to which the public utility concessionaire is subject, to include its technical, accounting, commercial and economic and financial areas.
7.5 Government regulations relevant effects on the issuers activities
The Concession Agreement 001/1996 establishes that the Company will be subject to the application of the penalties laid out by law and regulations or in the Concession Agreement (fine of up to 0.1% of sales within the 12 months prior to the breach), applied through administrative proceeding that ensure the Companys ample rights to defense, should the obligations provided for in the Concession Agreement or laws and standards applicable to the business be not fulfilled. Moreover, if the public utility concessionaire does not abide by penalties, or fails to answer Aneel's notification to regularize the services within due time, the concession may be ruled as forfeited. As an alternative to the declaration of forfeiture, Aneel may expropriate the Company's controlling interest of shares and put them up for public auction. The net amount of indemnification to be paid for the expropriated shares will be solely the amount determined in the auction. Pursuant to Concession Agreement 001/1996, the Company will charge tariffs defined by the Agreement, adjusted and/or revised in accordance with the following rules: Annual Tariff Adjustment. Approved by Aneel on November 6 of each year and becoming effective on November 7, in accordance with the terms of the Concession Agreement. It recovers the purchasing power of the concessionaires revenues, according to a formula provided for in the concession agreement. Periodic Tariff Review. This mechanism differs from the annual adjustment, since it is more comprehensive and takes into account all costs, investments and revenues in order to define a new tariff level fitted into the Companys structure and its market. Referring to the Company, this review takes place every 5 years. The Companys last tariff review occurred on November 7, 2008, and the next review will take place in 2013; and
7.5 Government regulations relevant effects on the issuers activities Extraordinary Tariff Review. It seeks to maintain an economic and financial breakeven, at any time, upon the Company's request, if costs are significantly changed. On September 28, 2005, the Company signed the first addendum to the Concession Agreement in order to, among others, alter the conditions that determine tariffs applied to the rendering of services granted to the Company, under Decree 5,163 of July 30, 2004. This decree provides for: (i) for the application of the CVA mechanism to variations resulting from electric power acquisition costs not included in the last tariff adjustment of distribution companies; and (ii) referring to these companies tariff adjustments, the calculation of energy purchase average price, on the date of the adjustment, considers the volume contracted for the following 12 months. Regulations set forth that distribution companies may collect tariffs below those approved by Aneel, provided that they maintain the equal treatment among consumers of the same class and sub-group of tariffs, without affecting the tariff levels of other classes and, finally, not implying in motions to recover the concessions economic and financial breakeven. Aneels Regulatory Resolution 153 of March 14, 2005, regulated how the Memorandum Account of Electric Power Acquisition Cost Variations will be applied, so that energy purchase price differences in relation to the average price considered in the last adjustment/review can be assessed and transferred to the distribution company's tariffs. Other relevant modifications resulting from the first addendum to the Concession Agreement are as follows: (i) inclusion, as Portion A, and for tariff adjustments effects, R&D expenses, energy efficiency, energy acquired from the Companys own generation activities, and the Incentive Program to Alternative Sources (PROINFA); (ii) the inclusion of the concept Distribution System Losses, to be used in tariff reviews for the purposes of calculating tariff adjustments; and (iii) exclusion of PIS and COFINS from tariffs for the purposes of calculating tariff adjustments. Currently, these taxes are charged to consumers separately in their electricity bills, and are no longer included in the tariff.
7.5 Government regulations relevant effects on the issuers activities On February 26, 2010, the Company signed the Second Addendum to the Concession Agreement, which aims at changing the methodology to calculate the annual tariff adjustment, so that to ensure the neutrality of sector charges, thus, avoiding market variations to occur in February 2010 from generating undue revenues for concessionaires or consumers.
b.
the issuers environmental policy and the costs incurred to abide by environmental
rules, and, if applicable, other environmental practices, including the adhesion to international environmental protection standards In their activities to generate, transmit, distribute and trade electric power, Grupo Light's companies strive to preserve and maintain the environment in their entire coverage area in Brazils southeast region, assuming a proactive role and contributing to raising environmental awareness. Grupo Lights Environmental policy establishes the following commitments: (i) to incorporate the environmental variable in all stages of planning, construction,
maintenance and operation of its projects; (ii) to seek new technologies and economically viable inputs and improve processes
that minimize impacts on the environment in order to prevent pollution; (iii) to utilize environmental resources in a rational manner, always adopting the
precepts of sustainable development; (iv) to guarantee compliance with environmental legislations and environmental
commitments assumed by the Group and other related requirements; (v) ensure that employees receive the training necessary to improve their
environmental performance; (vi) to support the development of environmental educational actions related to the
Organizations activities;
7.5 Government regulations relevant effects on the issuers activities (vii) to promote a dialogue among communities and stakeholders in order to exchange
information and participate in the development of solutions; (viii) to raise awareness among all employees and service providers as to the relevance of the individual responsibility to achieve the Organizations environmental objectives and goals; and (ix) to periodically monitor and evaluate its own environmental performance, so that
to ensure continuous improvement of its Environmental Management System. The Company is currently developing several projects and programs concerned with the preservation of the environment in its concession area, increasingly consolidating itself as an environmentally responsible company, so that every year, it increases the number of environmental actions in observance to the principles of sustainable development. Among these actions, we point out the following: (i) implementation of the Environmental Management System based on NBR ISO 14001, and the scope of the Company's activities is 80.2% covered; (ii) all the generation complex facilities are certified by NBR ISO 9001 (quality) and OHSAS 18001 (occupational health and safety) and NBR ISO 14001 standards; (iii) continuation of the Deteriorated Area Recovery Program (PRAD) or Reforestation Program, which began in 1992 with the Rio Eco Conference 92. Approximately 50,000 saplings are planted every year; (iv) implementation of programs that seek to improve environmental performance, such as the reduction of the Conflito Rede/rvore or Network/Tree Conflict. Greenhouse Gas Emission Inventory and measures to reduce emissions; The Projeto Desperdcio Zero or Zero Waste Project, based on Reverse Logistics, among other measures to prevent and control pollution; (v) replacement of over 1000 km of overhead distribution network wires to reduce network/tree conflict, by installing covered, pre-joined and multiplex cables; and
7.5 Government regulations relevant effects on the issuers activities (vi) partnerships with universities that enable R&D environmental projects to be carried out, benefiting not only the conservation of environmental resources available in the Company's concession area, but also the academic-scientific community and the society as a whole. The Company, although diligent in its activities related to the environment and aware of its responsibilities and the Brazilian environmental regulations, does not adopt any international environmental protection standards. It is worth mentioning that the Company observes NBR ISO 14001 (even though it is a Brazilian standard, it is based on the international ISO 14001 standard), adhered to the Global Pact for climate change" (the Company joins the Environmental Commission of the Brazilian Global Pact Commission) and has been a member of the BM&FBOVESPAs Corporate Sustainability Index ISE since 2007. The initiatives listed above reflect increasing investments in the environment. In 2010, nearly R$28 million were invested in environmental projects and compliance with environmental legislation.
c.
reliance on relevant patents, trademarks, licenses, concessions, franchises, royalty
agreements for the development of activities Grupo Lights registration of trademarks and patent applications are under the responsibility of Light Servios de Eletricidade S.A. (Light SESA). The Groups other companies until the end of 2010, did not have any registration of trademarks or patent deposits. Among the trademarks registered with the Brazilian Patent and Trademark Office (INPI") is the Light trademark, which is the Group's main trademark used to identify and distinguish services provided by Light Group to consumers. This trademark is duly registered with INPI in different forms of presentation, such as in the form of a nominative trademark and a mixed trademark and with no pending matters. As for patent applications, among those currently made by Light SESA, we point out: (i) an application was filed on June 8, 2005, referring to the invention of the Security Seal with Chemical Violation Indicator, which is essentially a security seal to secure meters equipped with a chemical sensor that enables visually detecting tampering or violation.
7.5 Government regulations relevant effects on the issuers activities The invention of this seal is highly relevant to Light SESA because the implementation thereof in its products will avoid several frauds. On March 31, 2010, the application was in progress with INPI; (ii) an application was filed on August 6, 2007, referring to the invention of the Zinc Coating over Steel Corrosion Detection Sensor and System, which is a sensor that detects corrosion in the steel center of CAAA cables (aluminum cables with steel centers). The invention of this sensor is highly relevant to Light SESA, since it detects the level of corrosion in the zinc layer in aluminum cables, thus, avoiding ruptures in cables and, accordingly, the cut of power supply. This application was filed in partnership with the Center for Telecommunication Research and Development CPqD. On March 31, 2010, this application was still in progress with INPI; and (iii) an application was filed on February 5, 2010, referring to the invention of the Electromechanical Connect to Cut Device, which is a piece that prevents fraudulent and/or defaulting clients from unduly restarting the energy supply. This invention is considered to be highly relevant to Light SESA, given its low production cost and high potential for trading. On March 31, 2010, this application was still in progress with INPI. Referring to relevant licenses, concessions, franchises and royalty agreements in the development of Light Groups activities, we point out SAP and Oracle licenses that support the operations of the Groups systems and are renewed yearly.
7.6 Relevant revenues deriving from other countries
7.6
26
In relation to countries from which the issuer obtains relevant revenues, identify26:
Upon the annual filing of the reference form, the information shall refer to the last financial statements for the fiscal year-end. Upon the filing of the reference form due to request of registration of securities tender offer, the information shall refer to the last financial statements for the fiscal year-end and to the last accounting information disclosed by the issuer.
a.
revenues from clients attributed to the issuers country of origin and their share in
the issuers total net revenues The Company does not receive revenues from other countries rather than Brazil. Lights activities are restricted to the domestic territory, and therefore, the net revenues deriving from its activities in its country of origin account for the issuers total net revenues.
b.
revenues from clients attributed to each foreign country and their share in the
issuers total net revenues The Company does not receive any revenue from other countries rather than Brazil. Its activities are restricted to the domestic territory.
c.
total revenues from foreign countries and their share in the issuer's total net revenues The Company does not receive any revenue from other countries rather than Brazil. Its
activities are restricted to the domestic territory.
7.7 Foreign regulations effects on the issuers activities
7.7. In relation to foreign countries disclosed in 7.6, inform the extension to which the issuer is subject to regulations of these countries and how this may affect the issuer's business Not applicable, as the Company only operates in the Brazilian territory.
7.8 Relevant long-term relationships
7.8. Describe the issuers relevant long-term relationships that have not been mentioned in other part of this form Social responsibility policy: Lights social responsibility policy is based on two pillars: (i) social responsibility agreement: signed with unions, it reinforces the involvement of the management and all employees in socially responsible actions, seeking to stimulate the improvement of social dialogue. This agreement is guided by the UN's most important principles and declarations. (ii) corporate social policy: it consolidates the Companys social actions guidelines, which include the alignment with the Global Pact, the exercise of citizenship and ethics, the support to the development of communities around the Companys facilities, the pursuit of solutions to city problems that interfere in the rendering of services and the support to government policies. Agreements with Communities The Department of Relationship with Communities was created in 2004, which aims excellent service and actions fitted into specific characteristics of clients with low purchasing power. Among the main projects and agreements maintained with the communities are: inclusion); Implementation of energy efficiency measures; Training of community agents in the Energy Efficiency issue; Educational actions at community events; Donation of efficient equipment; Adequacy of internal electric facilities The Efficient Community Project (income generation, energy saving, social
7.8 Relevant long-term relationships Instituto Light (Light Institute) Instituto Lights mission is to contribute to the improvement of economic and social conditions in Lights concession area. Established in 2007, the Institute develops programs in the institution's five operational segments: urban, social, environmental, cultural and institutional. Below, you will find a definition of these segments and major projects developed: Urban segment: it promotes urban policies, urban planning and the fight against informal work. Urban recovery and renewal project for Rua Larga; Madureira park urban project. Social segment: it stimulates science, history and literature. the Energy Museum; Alegria de Ler (Joy in Reading); Publications Program. Environmental segment: conservation of the environment and the rational use of energy. Ribeiro das Lajes Directive Plan; Creation of the So Joo Archeological and Environmental Complex; Light nas Escolas (Light at Schools) Project; Book: Guia Natural do Rio de Janeiro (Natural Guide of Rio de Janeiro). Cultural segment: appreciation of historic site, presentation of courses and publications. Light Musical Education Maestro Jos Siqueira Childrens Orchestra; Publication: Fotografias Series: Rua Larga e Imagens Oitocentistas Coleo Princesa Isabel; Publication: Imigrantes Series;
7.8 Relevant long-term relationships Publication: A Evoluo da Iluminao Pblica na Cidade do Rio de Janeiro, O Rio de Janeiro do Sculo XVII, guas do Rio, Antiqualhas, So Joo Marcos Patrimnio e Progresso. Publication: River of Januar Series: A Alma Encantadoras das Ruas Joo do Rio, O Triste Fim de Policarpo Quaresma Lima Barreto, Casa Velha Machado de Assis and Memrias de Um Sargento de Milcias Manuel Antnio de Almeida Natural Formation of Rio de Janeiro Courses: Rio de Janeiros Urban History; Rio de Janeiros Geology; Environmental Geography; Ecosystems; Climate; Oceanography; Rio de Janeiros Sky Inventory of Farms in Caf Fluminense valley Plan of Strategic Actions for Vale do Paraba valley
Institutional segment: Promotion of efficient public utilities Client Appreciation R&D Project Indicators of effects caused by Light Institutes social projects.
Sponsorships and cultural incentives Light has its own sponsorship policy. In 2010, the Company sponsored social, cultural, educational and sports projects amounting to R$28 million through Tax Incentive Laws of the state of Rio de Janeiro (ICMS), the Rouanet Law, the Sports Incentive Law, and the Child and Adolescent Statute, allocating approximately R$5.7 million of its own resources. Lights sponsorships in 2010 accounted for 1.78% of the Companys EBITDA. All projects submitted for sponsorship regardless of the area that originated the request they observe a routine of analysis and classification. Sponsorships must prioritize the use of resources from state and federal Tax Incentive laws, within the limits defined by current budget and the Board of Executive Officers.
7.8 Relevant long-term relationships Projects submitted to the Company are analyzed by a Sponsorship Commission that evaluates through a score system, the alignment of proposals with the general guidelines and the Company's Sponsorship Policy, in addition to its institutional relevance. The list of scored projects is submitted to the Board of Executive Officers for approval. Some projects may include actions that are taken for several years, given their relevance and contribution to keep Rio de Janeiro in the forefront of cultural, sports and social indicators, such as Bienal do Livro (Book Fair), the Rio de Janeiro Marathon, and the Brazilian Symphonic Orchestra, in addition to the traditional city festivals in the concession area, and several competitions and courses.
7.9. Other information the issuer deems as relevant There is no other information the issuer deems as relevant.
8.1 Description of the Economic Group 8.1. Describe the issuers economic group, indicating: a - direct and indirect controlling shareholders The Companys Direct Controlling Shareholders: Companhia Energtica de Minas Gerais S.A. - CEMIG, with 26.06% interest, Luce Empreendimentos e Participaes S.A. (LEPSA) and RME Rio Minas Energia Participaes S.A., each with 13.03% interest. The Companys Indirect Controlling Shareholders: (i) Luce do Brasil FIP: it holds 100% interest in LEPSA, and (ii) Redentor Energia S.A. (Redentor) owns 100% of RME shares. Parati S.A. - Participaes em Ativos de Energia Eltrica owns 54.08% interest in Redentor, with an indirect interest of 7.05%.
b - subsidiaries and associated companies Subsidiaries: Light S.A. controls and holds 100% interest in each of the following companies: Light Servios de Eletricidade S.A., Light Energia S.A., Light ESCO Prestao de Servios S.A, LIGHTCOM Comercializadora de Energia S.A, Itaocara Energia Ltda., Light Solues em Eletricidade Ltda. and Instituto Light. In addition to these companies, Light S.A. holds 51% interest in Axxiom Solues Tecnolgicas S.A. and 51% of Lightger S.A., while the remaining 49% is held by CEMIG, the Companys direct controlling shareholder.
c - issuers interest in the groups companies The Company does not hold any direct interest in other companies of the economic group, besides interest in subsidiaries, described in item (b) of item 8.1 of this Reference Form.
d - interest of group companies in the issuer Controlling shareholders interest in the Company is described in item (a) of item 8.1 of this Reference Form.
e - companies under common control There is no information provided in item (b) of item 8.1 of this Reference Form.
8.2 Organizational chart of Economic Group 8.2. If the issuer wishes to do so, insert an organizational chart of its economic group, as long as the chart is compatible with information presented in item 8.1. Below, current organizational chart of the Company:
8.3 - Restructuring operations

Date of Operation Corporate event Description of corporate event Other Description of operation 5/12/2011 Other Corporate Restructuring in the Group of Control On May 12, 2011, Parati S.A. - Participaes em Ativos de Energia Eltrica ("Parati"), company held by CEMIG and Redentor Fundo de Investimento em Participaes (FIP Redentor) bought from FIP PCP, 58,671,565 common shares, representing 54.08% of the total capital stock of Redentor, indirect shareholder of the Company, through its subsidiary RME Rio Minas Energia Participaes S.A., which holds 13.03% of the Company's capital. Thus, Parati now holds an indirect interest of 7.05% of Light's voting capital, and FIP Redentor now holds an indirect interest of 5.29%. 3/24/2010 Other Quota Put Option Agreement and Other Covenants On March 24, 2010, CEMIG entered into a Quota Put Option Agreement and other Covenants (Option) with Enlighted Partners Venture Capital LLC (ENLIGHTED), a limited liability company from Delaware, United States of America. The purpose of this operation was to grant a put option for in the quotas of Luce Investment Fund (LUCE Fund), with headquarters in Newark, DE, United States of America, which holds seventy-five percent (75%) of the quotas in Luce Brasil Fundo De Investimento Em Participaes (FIP Luce), which in turn indirectly holds, through LEPSA, twenty-six million, five hundred seventy-six thousand, one hundred and forty-nine (26,576,149) common shares issued by the Company, representing approximately 13.03% of its total and voting capital. In material fact released on October 7, 2010 through its shareholder CEMIG, ENLIGHTED exercised the put option of its quotas in LUCE Fund to Cemig or any third party appointed thereby, subject to the compliance with certain contractual requirements, as well as to the approval of Aneel, the Brazilian Antitrust Authority CADE, the Brazilian Development Bank BNDES and other financial agents and debenture holders of the Company and its subsidiaries, when necessary. 12/31/2009 Other Quota Put Option Agreement and Other Covenants On December 31, 2009, RME was spunoff into three parts, which were merged into Andrade Gutierrez Concesses S.A. (AGC), Companhia Energtica de Minas Gerais CEMIG (CEMIG), and Luce Empreendimentos e Participaes S.A. (LEPSA, a company incorporated and controlled by Luce Brasil Fundo de Investimento em Participaes. Equatorial Energia S.A. (Equatorial) remained as the sole shareholder of RME. The corporate restructuring of RME by its shareholders streamlined the ownership structure by extinguishing the holding RME. The four shareholders AGC, CEMIG, LEPSA and RME now hold each twenty-six million, five hundred, seventy-six thousand, one hundred forty-nine (26,576,149) common shares issued by the Company, corresponding to a direct interest of approximately 13.03% in the Company's capital stock. RME shareholders agreement was replaced with a new agreement among the Companys four shareholders, reproducing the rights and obligations established in the previous shareholders agreement. 12/30/2009 Other Liquidation of Light Overseas Investment (LOI)
Date of Operation Corporate event Description of corporate event Other Description of operation
Date of Operation Corporate event Description of event Other
corporate
8.3 - Restructuring operations

Description of operation On December 30, 2009, CEMIG and AGC entered into a Share Purchase Agreement (AGC Agreement) and on March 25, 2010 a payment was made for the acquisition by CEMIG of twenty-five million, four hundred ninety-four thousand and five hundred (25,494,500) common shares issued by the Company and held by AGC, accounting for 12.50% of the Company's total voting capital. In addition, on November 17, 2010, one million, eighty-one thousand, six hundred and forty-nine (1,081,649) common shares issued by the Company were paid and transferred to CEMIG, accounting for 0.53% of the Company's total voting capital, corresponding to the remaining amount of the acquisition announced through material fact published by the Company on March 26, 2010.
12/30/2009 Other Liquidation of LIR Energy Limited (LIR) On December 30, 2009, Fundo de Investimento em Participaes PCP ("FIP PCP"), indirect controlling shareholder of Equatorial and CEMIG, entered into a Share Purchase Agreement and Other Covenants (Equatorial Agreement), Equatorial is the intervening and consenting party, which aims at selling FIP PCPs indirect interest in the Company, corresponding to 55.41% of an amount of twenty-six million, five hundred, seventy-six thousand, one hundred and forty-nine (26,576,149) common shares issued by the Company or a company whose capital CEMIG holds interest not less than twenty percent (20%). On April 29, 2010, Equatorials Annual and Special Shareholders Meetings approved the partial spin-off, by transferring the amount of its shareholders' equity corresponding to its interest in the capital stock of RME to a new corporation named Redentor Energia S.A. (Redentor), which was created specifically for this purpose as of the partial spin-off. The closing of Equatorial agreement is subject to certain conditions provided for therein, Redentors registration at the Brazilian Securities and Exchange Commission (CVM) and other regulatory approvals and of government agencies, where applicable. 11/17/2009 Merger On November 17, 2009, RME - Rio Minas Energia Participaes S.A. ("RME"), merged Lidil Comercial Ltda. (Lidil")
Date of Operation Corporate event Description of operation
8.4 Other relevant information 8.4. Provide other information the issuer deems as relevant. There is no other relevant information about this item.
9.1 Relevant non-current assets - other 9.1. Describe relevant non-current assets for the development of the issuers activities, specifically indicating the following27: Light Servios de Eletricidade (Light SESA) Light SESAs (subsidiary responsible for the distribution of electric power) fixed assets are located in the State of Rio de Janeiro, within its concession area, which covers 31 cities in the State, including the capital city, serving nearly 4.0 million billed consumer units, corresponding to a population of nearly 10 million people. Fixed assets are recorded at the acquisition, formation or construction cost, monetarily adjusted until December 31, 1995, less accumulated depreciation. Other expenditures are capitalized only when there is an increase in the economic benefits from this property, plant and equipment item. Fixed Assets under Service AIS. These include assets and facilities in view of service granted, registered and controlled by means of the Registration Unit (UC) and Unit of Addition and Withdrawal (UAR), by Fixed Assets Order - ODI, book account and date of transfer (capitalization) for Fixed Assets under Service, as required by Aneel. Fixed Assets under Construction AIC. Refer to assets and facilities which have been built or created. Depreciation. Depreciation is calculated by the straight-line method, based on book balances recorded at the respective Registration Units. Annual rates are determined in the chart attached to Aneel Resolution 367 of June 2, 2009, based on estimates of assets useful life. The chart below lists Light SESA's most relevant assets.
27
Upon the annual filing of the reference form, the information shall refer to the last financial statements for the fiscal year-end. Upon the filing of the reference form due to request of registration of securities tender offer, the information shall refer to the last financial statements for the fiscal year-end and to the last accounting information disclosed by the issuer.
9.1 Relevant non-current assets - other

Item 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Type of Property Vassouras Branch and Substation Nova Igua Branch and Offices Barra Mansa Branch Belford Roxo Section and Branch Leblon Substation Ilha do Governador Branch Carmo Section Caixas Branch Caixas Section Santa Cruz Branch Maintenance Center Microwave Substations Electric power Substations Itagua Branch Taquara Substation Inmetro Substation Propertys Address Rua Velho Avelar, 151 Rua Ministro Edgard Costa, 24/32 Rua Jos C. Guimares Cotia, n 62
o
City - State Vassouras - RJ Barra do Pira - RJ Nova Igua - RJ Barra Mansa - RJ
Rented from Insurance Mortgage Third Party YES NO NO YES YES YES YES YES YES YES YES YES YES YES YES YES YES NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO YES YES YES NO YES YES YES NO YES NO NO NO YES NO YES NO NO NO YES NO NO YES YES NO NO NO NO YES
Barra do Pira Section and Branch Rua Governador Portela, n 202
Av. Joaquim da Costa Lima, n 2,653 Belford Roxo - RJ Rua Almirante Guilhem n 423 Rio de Janeiro - RJ Av. Maestro Paulo e Silva n 400 Rio de Janeiro - RJ Loja205 Rua Doutor talo Polvoleri, n 27 Carmo - RJ Duque de Caxias Av.Nilo Peanha, n 708, loja B RJ Duque de Caxias Av. Nilo Peanha, n 2660 RJ Rua Felipe Cardoso n 540 Lojas 27 Rio de Janeiro - RJ and 28 Sundry Sundry - RJ Sundry Sundry - RJ Sundry Av. Piranema n 452 Rua Jordo lote 1 DO PA-36.808 Av. Nossa Sra. Das Graas, 50 Sundry - RJ Itagua - RJ
Rio de Janeiro - RJ YES Duque de Caxias YES RJ Michel Pereira - RJ Mendes - RJ YES YES
Miguel Pereira Section and Rua Luiz Pamplona, 247 Centro Branch Mendes Branch and Substation Rua Cinco de Julho n 14 Vila de Cava Section Substation So Joo de Meriti Branch Offices Retiro Substation Nilpolis Branch Barra Branch Porta DAgua Substation Pati do Alferes Section Rua Antnio n 104 Av. Getlio de Moura n 28, 30 e 32 Rua Dr. Luiz Guimares, n 310 Rua Manuel Garani, 465
Nova Igua - RJ YES So Joo de Meriti YES RJ Nova Igua - RJ YES Volta Redonda - RJ YES YES YES YES YES YES YES YES
Praa Nilo Peanha n 22 Loja Nilpolis - RJ Av. das Amricas, 500 Bl. 13 Rio de Janeiro - RJ 107/108 Rua Tirol, n 1083 Rio de Janeiro - RJ Estr. Nova Mantiquira n 100 Pati do Alferes - RJ Paracambi - RJ Paraba do Sul - RJ Rio de Janeiro - RJ
Paracambi Branch and Substation Av. Presidente Joo Goulart n 108 Paraba do Sul Branch and Rua Visconde do Rio Novo n 305 Substation Gardenia Azul Service Station Rua Peroba, 327
31 32 33
Pira Branch Communication Laboratory Pira Section and Substation
Rua Santos Dumont, 156 Pira - RJ Rua Jornalista Moacir Padilha, n Pira - RJ 78 Rua Quinze de Novembro, n 370 Pira - RJ
YES YES YES
NO NO NO
NO NO NO

Av. Bras de Pina n 148 Lojas 235 e 238 Rua Avelino Batista Soares, n Quatis Branch and Substation 114 Queimados Section and Rua Vereador Marinho H. de Branch Oliveira, 642 Rio das Flores Branch and Rua Coronel Eurico de Castro n Offices 5 Rua Soares da Costa N 10, loja Tijuca Branch 225 Carmo Branch Rua Abreu Magalhes, 44 loja 1 Praa Armando Cruz, 20-Dept Madureira Branch 29 (parte) Penha Branch Storehouses and Workshops Carioca Branch Jacarepagua Service Station Service Sections Bang Section and Branch 1o de Maro Branch Santssimo Substation Copacabana Branch Outdoor Storehouse Bandeiras Section Construction Center Construction Center Paquet Section Recreation Center Rua Brgamo, 320 Estao Carioca, Metr, Loja A Mercado Popular Cidade de Deus Sundry Rua Doze de Fevereiro, n 571 Rua Primeiro de Maro ns 9 e 11 Rua Campina Grande Rua Baro de Ipanema n 32 Loja A Rua General Magalhes Barata 310 Av. Brasil, n 21887 Rua Itapir, 1362 Rua Itapir, 1415 Praia Jos Bonifcio, 187 Rua Jos do Patrocnio, 171 Rio de Janeiro YES RJ Quatis - RJ Queimados - RJ Rio das Flores RJ Rio de Janeiro RJ Carmo - RJ Rio de Janeiro RJ Rio de Janeiro RJ Rio de Janeiro RJ Rio de Janeiro RJ Rio de Janeiro RJ Rio de Janeiro RJ Rio de Janeiro RJ Rio de Janeiro RJ Rio de Janeiro RJ Rio de Janeiro RJ Rio de Janeiro RJ Rio de Janeiro RJ Rio de Janeiro RJ Rio de Janeiro RJ Rio de Janeiro RJ Rio de Janeiro RJ Rio de Janeiro RJ Pati do Alferes RJ YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES
34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57
NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO
YES NO NO NO YES YES YES NO YES YES NO NO YES NO YES NO NO NO NO NO NO NO NO YES
Rua Larga Branch and Offices Av. Marechal Floriano, 168 Copacabana Substation Paty do Alferes Branch Rua Joseph Block n30 Praa Pedro Chain, s/n

Rio de Janeiro RJ Valena - RJ Rio de Janeiro RJ Rio de Janeiro RJ Rio Claro - RJ Rio Claro - RJ S.J. de Meriti - RJ Sapucaia - RJ Sapucaia - RJ Trs Rios - RJ Trs Rios - RJ V. Redonda - RJ V. Redonda - RJ Valena - RJ Valena - RJ
58 59 60 61 62 63 64 65 66 67 68 69 70 71 72
Meier Branch Valena Branch Branch and Offices Mier Branch and Offices
Rua Lucidio Lago n 24 - Loja Rua Padre Luna, n 43 Estr.do Tindiba, 1608 Rua Venceslau, 192
YES YES YES YES YES YES YES YES YES YES YES YES YES YES YES
NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO
YES YES NO NO NO NO NO YES NO YES NO NO NO NO NO
Rio Claro Branch Rua Antnio Grij F, 280 Getulndia Section Estr. Rio So Paulo, km 12 Meriti Section Rua Hemogenes Fontes, 221 Sapucaia Branch Rua Dr. Joo Murta, 80-loja Sapucaia Section Rua Maurcio de Abreu, 184 Trs Rios Branch Rua Baro de Entre Rios, 337 Trs Rios Section Rua Quinze de Novembro, 116 Volta Redonda Section and Av. Amaral Peixoto, 600 Substation Branch and Offices Av. Amaral Peixoto, 603 Offices Rua Benjamim Miguel, 69 Praa Doutor Paulo de Frontin, Valena Section 322
Light Energia Light Energia has seven (7) power plants, five (5) of which are hydroelectric power plants: Fontes Nova, Nilo Peanha and Pereira Passos, which comprise the Lajes Complex (in the city of Pira in the mid-southern region of Rio de Janeiro), Ilha dos Pombos, in the city of Carmo (on the border with the state of Minas Gerais) and Santa Branca, in the city of Santa Branca, State of So Paulo. In addition to these power plants, the Company also has two pumping stations: Vigrio in Pira and Santa Ceclia in Barra do Pira, both in the State of Rio de Janeiro.
Pereira Passos power plant Fontes Nova power plant Nilo Peanha power plant Vigrio pumping station Santa Ceclia pumping station Ilha dos Pombos power plant Santa Branca power plant
Pira Rio de Janeiro Pira Rio de Janeiro Pira Rio de Janeiro Pira Rio de Janeiro Barra do Pira- Rio de Janeiro Carmo Rio de Janeiro Santa Branca - So Paulo
9.1 Relevant non-current assets other
Rented Properties Address Area (m2) Rua Bulhes de Carvalho, 2450 120,000.00 Rua Jornalista Moacir Padilha c/RJ 135.00 133 Area located in Fazenda Santana 135.00
City Pira Mendes Rio Claro
Type of Property Landfill Hydrological Station Hydrological Station
In addition to reservoirs and power plants, Light Energy also has an electric power transmission line named Lajes - Cubato, with an area of 788.93 hectares, covering the cities of Barra Mansa, Pinheiral, Pira, Quatis and Resende in the state of Rio de Janeiro.
9.1 Relevant non-current assets / 9.1.a Fixed assets Justification for not completing the chart: Light S.A. does not have relevant fixed assets. However, please find below information about Light Group.
Version : 4
9.1 Relevant non-current assets / 9.1.b - Patents, trademarks, licenses, concessions, franchises and technology transfer agreements
Type of asset Asset description Territory covered Duration Events that may result in losing rights related to these assets Not applicable Misuse or waiver Possible consequences of losing these rights for the issuer Not applicable Loss of right-of-way of transmission lines in that strip of land Loss of concession
Licenses Licenses
SAP CCS Software Transmission Networks Right-of-Way Concession Agreement for the Use of Public Property for electricity generation - Itaocara
Not applicable Not applicable
Undetermined Undetermined
Concessions
Cities of Itaocara and Aperib state of Rio de Janeiro
35 years (expiration of the agreement)
Failure to pay six monthly consecutive installments
Version : 4
9.1 Relevant non-current assets / 9.1.c Interest in companies

Company Name Corporate Taxpayer ID (CNPJ) Book Value - Change % 09.182.985/0001-98 CVM Code Type of Company Dividends Received (Reais) Subsidiary Brazil Country State City Details of Activities Performed Companys Interest (%)
Fiscal Year
Axxiom Solues Tenolgicas S.A.
Market Value Variation % -
Date
Amount (Reais) Nova Lima Offer technology solutions and systems for the operational management of public utility concessionaires, including electric power companies 51.000000
Minas Gerais
100.000000 0.000000 0.00 12/31/2010 0.000000 0.000000 0.00 12/31/2009 0.000000 0.000000 0.00 12/31/2008 Reasons for acquisition and maintenance of stake Interest is directly related to the Companys operational and strategic operations. INSTITUTO LIGHT 04.423.924/0001-51 Subsidiary PARA O DESENVOLVIMENTO URBANO E SOCIAL
Market value Book value 12/31/2010
2,304,000.00
Brazil
Rio de Janeiro
Rio de Janeiro
To work towards an interface with the consumers and society, to seek solutions to urban problems that interfere in the rendering of services
99.330000
0.000000 0.000000 0.00 12/31/2010 0.000000 0.000000 0.00 12/31/2009 0.000000 0.000000 0.00 12/31/2008 Reasons for acquisition and maintenance of stake Interest is directly related to the Companys operational and strategic operations.
0.00
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Company Name Corporate Taxpayer ID (CNPJ) Book Value - Change % 02.619.221/0001-78 CVM Code Type of Company Dividends Received (Reais) Subsidiary Country State City Details of Activities Performed Companys Interest (%)
Fiscal Year ITAOCARA ENERGIA LTDA.
Market Value Change % -
Date Brazil Rio de Janeiro
Amount (Reais) Rio de Janeiro
Execution of projects, construction, installation, operation and exploration of electric power plants; the trading of energy generated by these power plants
99.990000
45.000000 0.000000 0.00 12/31/2010 0.000000 0.000000 0.00 12/31/2009 0.000000 0.000000 0.00 12/31/2008 Reasons for acquisition and maintenance of stake Interest is directly related to the Companys operational and strategic operations. LIGHT ENERGIA 01.917.818/0001-36 Subsidiary S.A.
16,067,000.00
Brazil
Rio de Janeiro
Rio de Janeiro
Generation of electric power based on the utilization of hydraulic power of Paraba do Sul and Ribeiro das Lajes rivers
100.000000
9.000000 0.000000 26,833,000.00 12/31/2010 8.000000 0.000000 18,074,000.00 12/31/2009 443.000000 0.000000 54,449,000.00 12/31/2008 Reasons for acquisition and maintenance of stake in company Interest is directly related to the Companys operational and strategic operations.
815,593,000.00
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Fiscal Year LIGHT ESCO Prestao de Servios S.A.
Operation in energy trading and services and infrastructure areas
100.000000
36.000000 0.000000 3,358,000.00 12/31/2010 63.000000 0.000000 0.00 12/31/2009 50.000000 0.000000 0.00 12/31/2008 Reasons for acquisition and maintenance of stake Interest is directly related to the Companys operational and strategic operations Light Servios de 60.444.437/0001-46 803-6 Subsidiary Eletricidade S.A.
37,787,000.00
Brazil
Rio de Janeiro
Rio de Janeiro
Distribution of electric power operating in a concession area that covers 31 cities in the State of Rio de Janeiro
100.000000
-10.000000 0.000000 834,298,000.00 12/31/2010 -1.000000 0.000000 651,293,000.00 12/31/2009 8.000000 0.000000 541,167,000.00 12/31/2008 Reasons for acquisition and maintenance of stake Interest is directly related to the Companys operational and strategic operations
2,442,435,000.00
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Fiscal Year LIGHTCOM Comercializadora de Energia S.A.
Date Brazil So Paulo
Amount (Reais) So Paulo
The companys purpose is: (i) to purchase, sell, import and export energy; (ii) to provide general advisory services on the free and regulated energy market; and (iii) hold interest in other companies as partner or shareholder
100.000000
100.000000 0.000000 0.00 12/31/2010 0.000000 0.000000 0.00 12/31/2009 0.000000 0.000000 0.00 12/31/2008 Reasons for acquisition and maintenance of stake Interest is directly related to the Companys operational and strategic operations
2,733,000.00
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Fiscal Year LIGHTGER S.A.
Technical and economic feasibility analysis, preparation, implementation, operation, maintenance and commercial exploration of PCH Paracambi in accordance with the terms and terms defined by the Aneel Resolution
51.000000
36,767,000.00
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Fiscal Year LIGHTHIDRO LTDA
Representation of other domestic or foreign companies, either by LIGHTHIDRO or through third parties, and interest in other companies, entrepreneurs or not, as shareholder or partner.
99.990000
50,000.00
9.2. Provide other information the issuer deems as relevant Not applicable.
10.1 - Overall financial and equity conditions 10.1. Executive Officers shall comment on28 29: a. general financial and equity conditions
The Companys revenues represent proceeds from the following energy segments: distribution, generation, transmission, trading and services. The distribution segment accounts for 93.3% of consolidated revenue, while the generation and trading segments account for 3.6% and 3.1%, respectively. The Companys shareholders equity on December 31, 2010, totaled R$3.3 billion, down 6.3%, or R$(223.5) million, on December 31, 2009. This is due to the increase of R$266.1 million in the profit retention account in 2009, due to the increase in payment of dividends in 2010. On December 31, 2010, the Companys cash position was R$525.2 million. The Companys current working capital is sufficient to meet existing requirements and its cash resources, including loans from third parties; to finance its activities; and cover its need for resources. On the same date, the Companys net debt totaled R$1,947.4 billion. The net debt to shareholders equity ratio stood at 0.58x in 2010, versus 0.46 in 2009. Management believes that the Companys equity and financial conditions is sufficient to implement its business plan and meet its short and medium-term obligations.
a.
Capital structure and possibility of redemption of shares or interest, indicating:
The information included in the annual disclosure of the reference form must refer to the last 3 yearend financial statements. When the reference form is disclosed upon request of registration of public securities offering, the information must refer to the last 3 year-end financial statements and the last accounting information disclosed by the issuer. Whenever possible, Management must also use this field to comment on the main trends acknowledged, uncertainties, commitments or events that may have a material effect on the financial and equity conditions of the issuer, especially its results, revenue, profit, and conditions and availability of financing sources.
29
10.1 - Overall financial and equity conditions Management believes that the current capital structure, measured mainly by the net debt/shareholders equity ratio, presents conservative leverage ratios.
Capital Structure Net Debt/(Net Debt+Shareholders Equity) Shareholders Equity/(Net Debt+Shareholders Equity) 2009 31.5% 68.5% 2010 36.9% 63.1%
i. cases of redemption ii. formula used to calculate the redemption value There are no possibilities of redeeming shares issued by the Company in addition to those envisaged by law.
c. ability to pay financial obligations
The Company believes to have liquidity and capital resources sufficient to cover its indebtedness, cash flows and liquidity position, which can be complemented by resources borrowed from public and private financial institutions, to cover its investments, expenses, debt and other amounts to be paid in the coming years. However, it cannot ensure that this situation will remain the same.
d. sources used to finance working capital and investments in non-current assets: In addition to partially using its own cash generation, the main source of financing for the Companys investment projects is the BNDES, which usually offers lower interest rates than the private market, in addition to terms of payment compatible with the investment projects return period.
If the investment project is not eligible for BNDES financing, the Company usually raises funds through the capital market (debentures), multilateral development agencies or other sources from the banking market.
e. sources of financing for working capital and investments in non-current assets to be used to cover illiquidity
10.1 - Overall financial and equity conditions Currently, the Company has working capital lines worth R$400.0 million that have been contracted and/or approved by first-tier financial institutions. However, as of December 31, 2010, none of these credit lines had been withdrawn.
f. levels and characteristics of indebtedness, detailing:
i. ii. iii. iv.
relevant loan and financing agreements other long-term relationship with financial institutions level of subordination between debts eventual restrictions imposed on the issuer, especially those related to limits on
indebtedness and the contracting of new debt, distribution of dividends, disposal of assets, issue of new securities and sale of controlling interest On December 31, 2010, the Companys total outstanding consolidated indebtedness was R$2,472.6 million, of which 3.22% (R$79.7 million) was indexed in foreign currency. Excluding the Companys cash and cash equivalents of R$525.2 million, this amount totals R$1,947.4 million. Of the total indebtedness mentioned above, 22.1% (R$547.2 million) matures in the short term and 77.9% (R$1,925.4 million), in the long term. On December 31, 2010, the Company had swap operations denominated in foreign currency whose notional value was US$19.2 million, corresponding to 43.7% of the debt balance denominated in foreign currency (excluding charges). In addition to these currency derivatives, in August 2010 the Company contracted forward interest rate swap operations in the amount of R$150,000 from Banco HSBC, whose maturities were pegged to the amortization flow of the CCBs of Bradesco. The table below shows the Companys total consolidated outstanding indebtedness for the following reference periods:
10.1 - Overall financial and equity conditions

Debts (R$ million) Short Term Foreign Currency Local Currency Long Term Foreign Currency Local Currency Swap Overall total
2008 178.3 29.9 148.4 1,992.1 140.5 1,851.6 0.0 2,170.40
2009 293.8 15.9 277.9 2,171.8 84.2 2,085.9 1.7 2,465.50
2010 543.1 13.2 529.9 1,924.2 61.3 1,862.9 5.3 2,472.60
In addition to the indebtedness described above, the Company also has actuarial liabilities with Braslight (the Companys pension fund plan) which amounted to R$1,016.2 million on December 31, 2010.
Relevant Financing In 2008, 2009 and 2010, the Company contracted debt facilities, among which:
Credit Facility Agreement through onlending of resources from BNDES - FINEM, entered into between Light SESA and: Unibanco, Bradesco, CEF, Ita BBA, Banco Santander S.A., Banco Alfa de Investimentos S.A. and Banco Safra S.A., on November 5, 2007, worth R$522 million, of which R$438 million were disbursed until December 31, 2010. TJLP (long-term interest rate) plus annual spread of 4.3% on the principal amount. The final maturity date of the agreement is September 15, 2014; Credit Facility Agreement through onlending of resources from BNDES - FINEM, entered into between Light Energia and Unibanco, Ita BBA and Banco Santander S.A., on November 5, 2007, totaling R$28 million, of which R$15 million were disbursed until December 31, 2009. TJLP (long-term interest rate) plus annual spread of 4.3% on the principal amount. The final maturity date of the agreement is September 15, 2014. The grace period for amortization expired on March 31, 2009; Bank Credit Certificates (CCBs) to deposit with ABN Amro Real S.A., issued on August 27, 2008, totaling R$80 million. These CCBs matured in August 2010 and was renewed with Banco Santander (new controlling shareholder of Banco Real) in the same amount and at a cost of CDI + 1.4% p.a., maturing on September 3, 2014.
10.1 - Overall financial and equity conditions 6th debentures issue by Light SESA worth R$300 million on June 1, 2009. The debentures mature on June 1, 2011. The interest rate variation on the principal amount is 115% of the CDI. Credit Facility Agreement for Light SESAs and Light Energias investment programs for the two-year period 2009 and 2010, signed with the BNDES on November 30, 2009, under the FINEM direct finance modality, whose amounts financed, disbursed and the respective remunerations are detailed below: Light SESA: o FINEM TJLP + 2.58% p.a.: R$205 million maturity on April 15, 2017, of which R$146 million were disbursed by December 2010. o FINEM TJLP + 3.58% p.a.: R$205 million maturity on April 15, 2017, of which R$146 million were disbursed by December 2010. o FINEM PSI 4.5% p.a.: R$101 million maturity on September 15, 2019, of which R$101 million were disbursed by December 2010. Light Energia: o FINEM TJLP + 2.58% p.a.: R$7.4 million maturity on April 15, 2017, of which R$7 million were disbursed by December 2010. o FINEM TJLP + 3.58% p.a.: R$7.4 million maturity on April 15, 2017, of which R$7 million were disbursed by December 2010. o FINEM PSI 4.5% p.a.: R$16 million maturity on September 15, 2019, of which R$5 million were disbursed by December 2010.
The Company and its subsidiaries use several financial instruments that require, among other obligations, that the Company maintains specific financial ratios and/or compliance with several obligations to do and not restricted to its operations. These include: Total senior debt/EBITDA ratio, including: Bradescos CCB, 5th Debenture Issue, FINEM BNDES 2006-2008, Santander CCB: equal to or lower than 2.5x.
10.1 - Overall financial and equity conditions 6th debentures issue: equal to or lower than 3.1x, which can be higher than 2.6x, provided that the debt ratio that exceeds 2.6x corresponds exclusively to operations of financing of investments by the Issuer and/or Guarantor.
EBITDA/Adjusted and Consolidated Gross Interest Expenses ratio: higher than or equal to 2.5x. Payment of dividends: the Company may only pay dividends higher than the minimum mandatory amount if all contractual obligations are met.
Lastly, the financing mentioned contracted mentioned above aims at financing the Companys investment plans and increasing its working capital. g. limits on the use of loans contracted Specifically for Credit Facility Agreements to finance Light SESA and Light Energias investment programs in for the two-year period of 2009 and 2010, signed with BNDES as FINEM direct finance, the deadline to use the total volume made available from these two credit lines is March 31, 2011. h. material changes in each item of the financial statements

Annual Statement of Income Fiscal ye ar ended December 31 C han ge % of % of Net Ne t 2009 Revenue 2010 Revenue 2010/2009 In thousands of Reais, exce pt pe rcen tage s or when state d oth erwise OPERATING REVENUES Electric pow er provision Electric pow er supply Construction revenue Other revenues Total DEDUC TIO NS FRO M O PERATING REVENUES ICMS Consumer Charges PIS/COFINS Other Total
7,681,486 361,602 526,986 684,556 9,254,630
123.8% 5.8% 8.5% 11.0% 149.1%
7,919,155 513,704 552,831 851,301 9,836,991
121.7% 7.9% 8.5% 13.1% 151.1%
3.1% 42.1% 4.9% 24.4% 6.3%
(2,080,591) (515,464) (449,125) (2,553) (3,047,733) 6,206,897 (4,419,050) (3,322,637) (132,711) (21,239) (119,373) (285,980) (526,986) (10,124) 1,787,847 (742,006) (322,389) (427,904) 8,287 1,045,841
(33.5)% (8.3)% (7.2)% (0.0)% (49.1)% 100.0%
(2,219,444) (569,975) (535,303) (3,685) (3,328,407) 6,508,584 (4,633,841) (3,392,464) (168,302) (27,452) (156,965) (311,224) (552,831) (24,603) 1,874,743 (632,730) (285,066) (357,492) 9,828 1,242,013
(34.1)% (8.8)% (8.2)% (0.1)% (51.1)% 100.0% (71.2)% (52.1)% (2.6)% (0.4)% (2.4)% (4.8)% (8.5)% (0.4)% 28.8% (9.7)% (4.4)% (5.5)% 0.2% 19.1%
6.7% 10.6% 19.2% 44.3% 9.2% 4.9% 4.9% 2.1% 26.8% 29.3% 31.5% 8.8% 4.9% 143.0% 4.9% (14.7)% (11.6)% (16.5)% 18.6% 18.8%
NET REVENUES OPERATING COSTS

Electric pow er purchased for resale Personnel Supplies Outsourced services Depreciation and amortization Construction costs Other
(53.5)% (2.1)% (0.3)% (1.9)% (4.6)% (8.5)% (0.2)% 28.8% (12.0)% (5.2)% (6.9)% 0.1% 16.8%
GROSS PROFIT OPERATING EXPENSES

General and administrative expenses Selling expenses Other revenues/expenses
OPERATING INCOME
FINANCIAL RESULT
Revenues Expenses
(84,929) 186,745 (271,674)
(1.4)% 3.0% (4.4)%
(319,394) 173,223 (492,617)
(4.9)% 2.7% (7.6)%
276.1% (7.2)% 81.3%
INCOME BEFORE TAXES AND SOCIAL CONTRIBUTION

Current income tax and social contribution Deferred income tax and social contribution
960,912 (168,994) (203,114)
15.5% (2.7)% (3.3)%
922,619 (103,482) (243,987)
14.2% (1.6)% (3.7)%
(4.0)% (38.8)% 20.1%
INCOME BEFORE PROFIT SHARING Profit sharing

-
NET INCOME FOR THE YEAR
588,804
9.5%
575,150
8.8%
(2.3)%
Basic and diluted earnings per share
2.89090
2.82386
NUMBER OF SHARES AT END OF FISCAL YEAR
203,675,160
203,675,160
10.1 - Overall financial and equity conditions Analysis of the statement of income for the fiscal year ended December 31, 2010 compared with the fiscal year ended December 31, 2009
Net Operating Revenue Net operating revenue for the fiscal year ended December 31, 2010 totaled R$6,206.9 million, up 4.9% compared with R$6,508.6 million in 2009, due to the increases of 3.2%, 8.5% and 100.7% in the revenues of the distribution, generation and trading segments. The revenue increase in the distribution segment is due to the higher consumption in the concession area, which recorded growth of 2.0% and 21.5% in the free captive markets in the year. In the trading segment, the result was strongly impacted by the increase in energy purchase and sale. The increase in net revenue in the generation segment is mainly due to the adjustments in the energy purchase agreements of the Regulated Contracting Environment and the increase in energy sales in the Free Contracting Environment, combined with the 81.3% upturn in average prices in the spot market in 2010 compared with 2009. Electric Power Service Cost Electric Power Purchased for Resale: The cost of electric power purchased for resale in the fiscal year ended December 31, 2010 stood at R$3,392.5 million, up 2.1% compared with R$3,322.6 million in 2009. This is mainly due to charges and transmission costs, which grew 16.1%, mainly due to the System Services Charges (ESS), given the greater trading of energy by thermal power plants in 2010 compared with 2009. Energy purchase costs reduced 2.6% from 2009, impacted by the appreciation of 13.0% of the real in the period, which decreased the rates in reais of Itaipu and TPS Norte Fluminense, despite the 2.2% upturn in the volume of energy purchased from 27,456 GWh in 2009 to 28,054 GWh in 2010.
Operating Cost In the fiscal year ended December 31, 2010, the cost of goods and services sold by the Company totaled R$1,241.4 million, up 13.2% from R$1,096.4 million in 2009. This growth basically reflects the higher expenses with personnel and third-party services in the distribution segment.
10.1 - Overall financial and equity conditions Personnel: In the fiscal year ended December 31, 2010, personnel expenses amounted to R$168.3 million, up 26.8% from R$132.7 million in 2009, mainly due to the provisioning of R$23.1 million in 4Q10 for the voluntary resignation program for 146 employees, and the salary increase of 5.3% in May 2010. Material: In the fiscal year ended December 31, 2010, material costs totaled R$27.5 million, up 29.3% from R$21.2 million in 2009. This is due to the increase in emergency services activities and maintenance and quality improvement initiatives, which increased consumption of technical material. Third-party Services: In fiscal year ended December 31, 2010, expenses with third parties services totaled R$157.0 million, up 31.5% from R$119.4 million in 2009. This reflects the mainly the increase in maintenance and quality improvement costs, due to the problems observed in the summer, represented by services of emergency, hotlines, inspection of underground chambers and tree trimming in the amount of R$27.7 million. Depreciation and Amortization: In the fiscal year ended December 31, 2010, this line totaled R$311.2 million, up 8.8% from R$286.0 million in 2009. This result is mainly due to the investments, which increased 24.3%, from R$563.8 million in 2009 to R$700.6 million in 2010. Other: In the fiscal year ended December 31, 2010, other operating costs totaled R$24.6 million, up 143.0% from R$10.1 million in 2009.
Gross Operating Profit In the fiscal year ended December 31, 2010, the Companys gross operating profit stood at R$1,874.7 million, up 4.9% from R$1,787.8 million in 2009, mainly due to the 4.9% increase in net revenue.
Operating Expenses Selling Expenses: This item included allowance for doubtful accounts (PDD). In the fiscal year ended December 31, 2010, the Companys selling expenses totaled R$357.5 million, down 16.5% compared with R$427.9 million in 2009. Allowance for doubtful accounts totaled R$254.8 million in 2010, compared with R$246.1 million in 2009.
10.1 - Overall financial and equity conditions General and Administrative expenses: In the fiscal year ended December 31, 2010, the Companys general and administrative expenses totaled R$285.1 million, down 11.6% from R$322.4 million in 2009.
Financial Revenue (Expenses) The financial result in the fiscal year ended December 31, 2010 was a loss of R$319.4 million, versus a gain of R$84.9 million in 2009. Revenue: Financial revenue amounted to R$173.2 million in 2010, down 7.2% from 2009, when the result was positively impacted by the recognition of R$11.6 million related to a favorable ruling in a lawsuit. Expenses: Financial expenses amounted to R$492.6 million, up 81.3% from 2009, mainly due to: (i) the variation in expenses recorded by Braslight, which was mainly impacted by the R$49.3 million deficit and the monetary restatement and interests accrued on Lights liabilities with that foundation (IPCA + 6% p.a.) in the amount of R$109.6 million, totaling negative R$158.9 million, compared with a surplus of R$48.6 million and monetary restatement and interest of R$66.8 million in the past, totaling negative R$18.2 million. (ii) the increase of R$52.4 million in charges from the financing lines with BNDES in the year; (iii) the recording of a fine for breaching continuity indicators in the total amount of R$10.8 million in 2010; this fine was not charged in 2009.
Other Operating Revenues (Expenses) In the fiscal year ended December 31, 2010, the Companys balance of other operating revenues/expenses amounted to R$9.8 million, up 18.6% on 2009.
Operating Income/Loss In the fiscal year ended December 31, 2010, the Companys operating income stood at R$1,242.0 million, up 18.8% from R$1,045.8 million in 2009. This variation was impacted by the 4.9% increase in net revenue and the 14.7% reduction in operating expenses.
10.1 - Overall financial and equity conditions Income before Taxes and Minority Interest In the fiscal year ended December 31, 2010, the Companys income before taxes and minority interest stood at R$922.6 million, down 4.0% from R$960.9 million in 2009. This was due to the increase of 81.3%, or R$220.9 million, in financial expenses between the periods.
Income Tax and Social Contribution In the fiscal year ended December 31, 2010, the Company recorded income tax and social contribution expenses of R$347.5 million, versus an expense of R$372.1 million in 2009. Net Income for the Period Light recorded net income of R$575.2 million in 2010, down 2.3% from R$588.8 million in 2009.This is chiefly due to the 276.1% upturn in the financial result, which amounted to a net financial expense of R$319.4 million in 2010. The financial expense was mainly impacted by the actuarial deficit and monetary restatement of Braslights liabilities, which amount to R$158.9 million. Excluding the non-recurring effect from Braslights actuarial deficit of R$49.3 million, net income would have amounted to R$607.7 million in 2010, up 3.2% on 2009.
10.1 - Overall financial and equity conditions ANALYSIS OF MAIN BALANCE SHEET ACCOUNTS
Balance Sheet Assets Fiscal year ended Decem ber 31 % of total 2009 assets 2010 Change % of total assets
2010/2009
Current Assets Cash and cash equivalents Marketable securities Consumers, concessionaires and permissionaires Taxes and contributions Inventory Services provided Sw ap income receivable Prepaid expenses Other receivables Total current assets
760,313 68,059 1,355,854 442,668 14,369 46,015 4 2,381 97,250 2,786,913
7.7% 0.7% 13.8% 4.5% 0.1% 0.5% 0.0% 0.0% 1.0% 28.3%
514,109 11,122 1,338,704 278,885 20,537 59,724 2,114 152,973 2,378,168
5.4% 0.1% 14.0% 2.9% 0.2% 0.6% 0.0% 0.0% 1.6% 24.8%
(32.4)% (83.7)% (1.3)% (37.0)% 42.9% 29.8% (100.0)% (11.2)% 57.3% (14.7)%
Non-current assets Consumers, concessionaires and permissionaires Taxes and contributions Deferred taxes Financial concession asset Sw ap income receivable Judicial deposits Prepaid expenses Other receivables Capital expenditures Fixed assets Intangible assets Total non-current assets
297,798 40,767 1,115,546 354,784 200,520 1,658 8,725 20,388 1,600,568 3,422,980 7,063,734
3.0% 0.4% 11.3% 3.6% 0.0% 2.0% 0.0% 0.1% 0.2% 16.2% 34.7% 71.7%
296,261 57,908 899,265 469,030 211 225,251 714 7,865 17,586 1,628,893 3,613,772 7,216,756
3.1% 0.6% 9.4% 4.9% 0.0% 2.3% 0.0% 0.1% 0.2% 17.0% 37.7% 75.2%
(0.5)% 42.0% (19.4)% 32.2% 0.0% 12.3% (56.9)% (9.9)% (13.7)% 1.8% 5.6% 2.2%
Total assets
9,850,647 -
100.0%
9,594,924 -
100.0%
(2.6)%
10.1 - Overall financial and equity conditions

Balance She et Liabilities Year ended Decem ber 31 % of total liabilities 2010 Change % of total liabilities
2009
2010/2009
Current liabilities Suppliers Taxes and contributions Loans, financing and financial charges Debentures and financial charges Dividends payable Estimated liabilities Regulatory charges - consumer contributions Contingencies Post-employment benefits Other debts Total current liabilitie s Non-curre nt liabilitie s Loans, financing and financial charges Debentures and financial charges Taxes and contributions Deferred taxes Contingencies Post-employment benefits Other debts Total non-current liabilities Shareholders' equity Capital stock Capital reserves Equity valuation adjustment Profit reserves Additional dividends proposed Treasury shares Retained earnings/accumulated losses - IFRS Total Shareholders ' Equity Total liabilitie s
564,181 285,180 197,150 96,412 143,647 52,374 110,791 95,044 236,028 1,780,807
5.7% 2.9% 2.0% 1.0% 1.5% 0.5% 1.1% 0.0% 1.0% 2.4% 18.1%
658,421 350,169 165,878 381,332 136,596 45,266 117,218 95,555 236,318 2,186,753
6.9% 3.6% 1.7% 4.0% 1.4% 0.5% 1.2% 0.0% 1.0% 2.5% 22.8%
16.7% 22.8% (15.9)% 295.5% (4.9)% (13.6)% 5.8% 0.0% 0.5% 0.1% 22.8%
1,006,204 1,165,759 303,585 301,230 669,353 861,386 208,695 4,516,212
10.2% 11.8% 3.1% 3.1% 6.8% 8.7% 2.1% 45.8%
1,197,500 727,891 177,699 275,755 551,897 920,630 226,655 4,078,027
12.5% 7.6% 1.9% 2.9% 5.8% 9.6% 2.4% 42.5%
19.0% (37.6)% (41.5)% (8.5)% (17.5)% 6.9% 8.6% (9.7)%
2,225,822 34,406 518,761 633,187 288,693 (6,361) (140,880) 3,553,628 9,850,647
22.6% 0.3% 5.3% 6.4% 2.9% -0.1% -1.4% 36.1% 100.0%
2,225,822 494,102 395,839 214,381 3,330,144 9,594,924
23.2% 0.0% 5.1% 4.1% 2.2% 0.0% 0.0% 34.7% 100.0%
0.0% (100.0)% (4.8)% (37.5)% (25.7)% (100.0)% 0.0% (6.7)% (2.6)%
Comparative Analysis of the Balance Sheets as of December 31, 2010 and December 31, 2009
The main changes seen in assets accounts were as follows:
Cash and cash equivalents: On December 31, 2010, cash and cash equivalents amounted to R$514.1 million, down 32.4% from R$760.3 million recorded on December 31, 2009, chiefly reflecting investments in fixed assets and payment of dividends, which were partially offset by the cash from the Companys operations.
10.1 - Overall financial and equity conditions Securities: On December 31, 2010, this figure amounted to R$11.1 million, down 83.7% from the R$68.0 million recorded on December 31, 2009, chiefly due to the guarantees related to the agreement with BNDES effective in 2009 which were replaced by bank guarantees in 2010, and the resources from the sale of assets, which can only be invested in the electricity network, which were significantly higher in 2009 compared with 2010.
Consumers, concessionaires and permissionaires (current and non-current): On December 31, 2010, the balance of consumers, concessionaires and permissionaires stood at R$1,635.0 million, down 1.1% from R$1,653.7 million on December 31, 2009. This variation is due to the increase in billed energy in relation to the previous year, which was offset by the higher provision for bad debt in the same period.
(Current and non-current) taxes and contributions: On December 31, 2010, taxes and contributions amounted to R$336.8 million, down 30.3% from R$483.4 million on December 31, 2009. This reduction was mainly due to the income tax/social contribution credit carryforward in the period, the lower recoverable ICMS tax due to the renegotiation of the debt with CEDAE in 2006 and the reduced need to prepay income tax/social contribution in the period.
Deferred taxes: On December 31, 2010, deferred taxes totaled R$899.3 million, down 19.4% compared with R$1,115.5 million recorded on December 31, 2009. This reduction was mainly due to the tax loss carryforward deriving from the re-calculation of profit abroad by the company LIR (liquidated in January 2010) by the equity accounting method from 2002 to 2007 (REFIS or tax installment payment period) by the accrual method.
10.1 - Overall financial and equity conditions Financial assets from concessions: On December 31, 2010, financial assets from concessions totaled R$469.0 million, a 32.2% increase from R$354.8 million recorded on December 31, 2009. This increase was due to the net book value of the fixed assets acquired in 2010. According to ICPC 01, fixed assets of electricity distributors must be divided into financial assets, which corresponds to the indemnification (net book value of electricity assets) to be received in the end of the concession, and an intangible asset, which reflects the right to explore the infrastructure (estimated depreciation of electricity assets until the maturity of the concession) and is received via the long-term concession rate.
Other receivables (current and non-current): On December 31, 2010, other receivables amounted to R$160.8 million, up 51.7% on the R$106.0 million recorded on December 31, 2009, mainly due to the registration of accounts receivable related to the sale of a property and an increase in the balance receivable from the contribution of public lighting and advances to suppliers. The main changes seen in liabilities accounts were as follows:
Suppliers: On December 31, 2010, the total balance of suppliers was R$658.4 million, up 16.7% on the R$564.2 million recorded on December 31, 2009, mainly due to the increase in the purchase of electricity. In addition, there was a significant increase in the purchase of material and in services in the end of 2010 due to investments in the network.
Loans, Financing and Debentures (current and non-current): On December 31, 2010, loans, financing and debentures (including financial charges) totaled R$2,472.6 million, in line with the R$2,465.5 million registered on December 31, 2009. Note that the Company raised R$1,094.8 million and amortized R$1,086.5 million in the year.
10.1 - Overall financial and equity conditions Contingencies: On December 31, 2010, provisions for contingencies totaled R$551.9 million, a 17.5% decrease compared with R$669.4 million on December 31, 2009. The reduction is mainly due to the reversal of two lawsuits with favorable ruling for the Company in the amounts of R$61.7 million and R$53.4 million related to the lawsuit filed by CSN and the administrative proceeding within the scope of ANEEL related to the classification of lowincome consumers.
Post-employment benefits: On December 31, 2010, this line totaled R$1,016.2 million, up 6.3% on the R$956.4 million recorded on December 31, 2009, reflecting mainly the change in the indicator of restatement of the debt with Braslight, which was previously restated by the General Price Index - Internal Availability (IGP-DI) and actuarial interests of 6% p.a. and was replaced by the Consumer Price Index (IPCA) plus interest of 6% p.a. in May 2010. Additionally, the Foundation recorded a gain in 2009 and a loss in 2010, which directly affects the Companys debt via the agreement to balance the deficit/surplus ratio.
Other debts (current and non-current): On December 31, 2010, other debts amounted to R$463.0 million, up 4.1% on the R$444.7 million recorded on December 31, 2009, chiefly due to the recording of a provision of R$23.3 million for the voluntary layoff plan at the end of 2010 by the Company. Cash Flows The Company has recorded significant cash generation across its distribution and generation operations, though the cash flow may vary according to tariff adjustments in relation to cost variations. On December 31, 2010, the Companys cash and cash equivalents totaled R$525.2 million, compared with R$828.4 million on December 31, 2009. This reduction reflects the cash used in financing and investment activities, which exceeded the cash generated by the Companys operating activities.
10.1 - Overall financial and equity conditions The table below shows certain components of the Companys cash flows on December 31, 2010 and 2009:
On December 31 2009 Cash at start of the Period (1) Cash from Operations (2) Financing (3) Investments (4) Cash in the end of the Period (1+2+3+4) Variation in cash 549.0 1,054.5 (242.8) (600.4) 760.3 211.3 2010 760.3 1,232.5 (787.0) (691.7) 514.1 (246.2)
Cash Flows from Operations
Cash from operating activities increased by 4.0%, from R$1,054.5 million on December 31, 2009, to R$1,232.5 million on December 31, 2010. This variation is mainly due to the higher revenue in 2010 compared with 2009, which was partially offset by the increase in operating expense in 2010.
Cash Flows from Investments
Cash flow used in investments increased 15.2%, from R$600.4 million on December 31, 2009 to R$691.7 million on December 31, 2010, mainly due to higher investments in the Companys electricity network.
Cash Flows used in Financing Activities
Cash flow used in financing activities increased 224%, from R$242.8 million on December 31, 2009 to R$787.0 million on December 31, 2010. This variation was mainly due to the increase in the payment of dividends in 2010 compared with 2009, as well as the higher loans and financing net of amortizations in 2009.
10.2. Operating and financial results 10.2. Executive Officers must comment on a) results of the issuers operations, especially: i. any important components of revenue The Companys revenues are generated mainly from the distribution of energy in its concession area. To a lesser degree, the Companys revenues are also generated from the generation, transmission, trading and services segments. We present below net revenue for the last 3 years:
Net Revenue (R$ million) Distribution and Transmission Generation Trading and Services
2010 2009 2008 6,097.1 5,907.8 5,101.1 319.9 294.9 304.5 185.4 92.3 78.4
ii.
Factors with material impact on the operating results
Electric Power Supply The table below shows the electric power supplied by the Company to each class of clients, i.e., residential, industrial, commercial and other clients, as well as their consumption and sales trends since 2008 and their share in total sales:
2008 % of Electric Power Supply Consumption (GWh) 2009 % of Electric Power Supply Consumption (GWh) 2010 % of Electric Power Supply 42.4 8.8 31.6 17.2 100.0 Consumption (GWh)
R$ million
R$ million
Residential Industrial Commercial Other ICMS Unbilled Supply Total
7,388.0 1,875.0 5,852.0 3,177.0 18,292.0
2,399.5 405.7 1,803.8 682.8 1,935.3 -12.8 7,214.3 -
40.4 10.3 32.0 17.4
7,880.0 1,857.0 6,074.0 3,274.0 19,084.0
2,569.7 405.6 1,853.0 749.0 2,069.1 25.8 7,681.5 -
41.3 9.7 31.8 17.2
8,243.0 1,717.3 6,156.7 3,342.3 19,459.3
2,746.0 335.3 1,866.8 775.8 2,194.0 -8.8 7,919.2
100.0
100.0
R$ million
Class of Client
10.2. Operating and financial results Migration of Free Consumers The number of Potentially Free Consumers is relatively small. However, these consumers represent a relevant percentage of the Companys revenues and the amount of electric power supplied. In 2010, nearly 12.1% (2,300 GWh) of the electric power supplied by the Company to the Captive Market was allocated to Potentially Free Consumers. Even if consumers decide to migrate to the regulated tariff system in order to become Free Consumers, the Company will still be entitled to receive TUSD for the use of its distribution system (which does not materially affect the Companys profitability), and it can also return energy to Generators that sold the energy.
Delinquency Historically, a significant percentage of the Companys energy distribution billing is not paid on the due date, which requires an allowance for doubtful accounts, in compliance with the sectors regulatory accounting practices. The Company entered into agreements with the government which in 2007 accounted for 16.8% (3,072 GWh) of the consumption of energy sold and 10.8% of gross revenues from electric power supply. As a result of these agreements, the Company was able to reverse allowances for doubtful accounts in the amount of R$86.9 million in 2007, which, among other efforts to reduce delinquency, led allowance for doubtful accounts in 2007 to represent 2.8% of energy supply revenue. In 2008, allowance for doubtful accounts accounted for 3.3% of the energy distribution revenue, partially due to the increase of R$42.1 million, or 0.3%, from non-recurring adjustments during the year on the provisions over overdue installment payments. In 2009 and 2010, allowance for doubtful accounts remained stable, representing 3.2% of the energy distribution revenue. Light SESAs default ratio, however, is still higher than 0.9% of gross revenues recognized in the reference company of Distributors in the 2nd cycle of Tariff Reviews. This level was adopted by Aneel through a method that grouped energy distribution companies from the entire country in clusters, which were defined according to a social complexity index developed by the regulatory agency.
10.2. Operating and financial results Energy Losses The Company is subject to two types of energy loss: technical and commercial losses. Technical losses occur in the normal course of electric power distribution, while commercial losses result from energy theft, in addition to fraud, incorrect measurement and errors when issuing bills. Energy losses mean that the Company will have to acquire more energy in order to meet its distribution needs, thereby increasing the cost of energy purchased for resale. The conclusion of Public Hearing 052/2007 on November 25, 2008, led Aneel to modify the methodology used to calculate regulatory energy loss rate, which is then passed through to consumers. The new methodology adopted by Aneel considers the social complexity index, which enables the differentiation of social and economic aspects in the concession areas. Based on this new methodology, non-technical losses, which were previously calculated by wire charge, are now calculated on the low voltage market, considering a downward trend until the end of the tariff cycle. The starting point for non-technical losses now is 38.98% and for the ending point, 31.82% of the low voltage market. In the fiscal year ended December 31, 2010, non-technical losses, which amounted to 5,278 GWh and accounted for 15.00% of wire charge, totaled 41.8% of the low voltage market. Non-technical losses represented 42.4% of the low voltage market in fiscal year ended December 31, 2009 and 41.7% in fiscal year ended December 31, 2008.
Deferred Tax Credits In the fiscal year ended December 31, 2007, since the Company cumulatively met all the conditions required by said Instruction, it recorded non-recurring revenues from deferred income and social contribution tax credits of R$851.2 million, which represent 79.0% of the net income for the year. In order to support these deferred tax credits, feasibility studies were conducted which were approved by the Board of Directors and analyzed by the Fiscal Council. This registration represents one of the factors affecting the comparison of the Companys results in the periods under analysis.
10.2. Operating and financial results In fiscal year ended December 31, 2008, the Company updated said studies to include the transactions of the fiscal year, which indicated that the Company would recover the credits within 11 years. As defined also by CVM Rule 371/02, the tax credits includes the amount recoverable in up to 10 years, in case the regulations of the corporate income tax does is not time-barred, so that the Company maintained the allowance for doubtful accounts in the amount of R$118.5 million. In the fiscal year ended December 31, 2009, the provision of R$118.5 million was reversed, due to the transactions in the period, which generated higher utilization of tax credits.
Reversal of PIS/COFINS Provisions One of the lawsuits involving Light SESA which contested the levying of PIS/COFINS contributions as provided for by Law 9,718/98 called into question the amendments imposed by this Law regarding (i) the broadening of the calculation basis for said taxes; and (ii) the increase in the COFINS rate from 2% to 3%. Regarding the Companys contesting of the broadening of the calculation basis, Brazils Federal Supreme Court (STF) ruled a final and unappealable decision favorable to the Company, declaring Article 3, Paragraph 1 of Law 9,718/98 unconstitutional. In view of STFs decision and considering the reiteration of the existing precedents, in the second quarter of 2008 the Company reversed the provisioned amount of R$432.3 million against financial expenses.
Results from the Sale of Non-Operating Assets The Company has sold non-operating assets recently (basically properties). The result recorded under other operating revenues/costs totaled R$9.8 million in the fiscal year ended December 31, 2010 (representing 1.0% of income before taxes/profit sharing), R$13.3 million in the fiscal year ended December 31, 2009 (representing 1.4% of income before taxes/profit sharing). As from the enactment of Law 11,638/07, the amounts recorded under NonOperating Results, which was excluded by said Law, are now classified under Other Operating Revenues (Expenses). This reclassification was implemented as of 2008.
10.2. Operating and financial results New Refis (Tax Installment Payment Program) On November 6, 2009, the Companys Board of Directors approved its adhesion to the tax reduction and installment payment program, pursuant to Law 11,941/09. The gross amount of provisions, before the benefits of the new Law, totaled approximately R$713 million, representing net R$323 million, to be paid in 180 monthly installments. The main claims included in the program are: (i) increase in the COFINS rate from 2% to 3%; and (ii) income tax and social contribution on income earned abroad. The effects on the net income for the fiscal year ended December 31, 2009 was approximately R$152.1 million, through an incentive of reducing fines and interest rates.
b) variations in revenue attributed to changes in prices, foreign exchange rates, inflation, volume and launching of new products and services The Companys operating revenue in fiscal year ended December 31, 2010 was R$6,508.6 million, up 4.9% from R$6,206.9 million on December 31, 2009, mainly due to increase in revenue in the energy distribution segment. The 4.2% upturn in the volume of energy sold to the concession area market was the main factor in the variation of revenues. Another important factor that led to an increase in consolidated revenue was the 100.7% growth in revenue in energy sale and services segment. This increase was mainly due to the 62.4% growth in revenue from trading activities.
c) impact from inflation, price variation of main inputs and products, exchange and interest rates on operating and financial results of the issuer The main indexes used in the Companys business plan are the IGP-M (General Market Price Index), IPCA (Extended Consumer Price Index), CDI (Interbank Deposit Certificate) and exchange rate (U.S. dollar): IGP-M: part of Light Servios de Eletricidade S/As energy distribution tariff is pegged to the IGP-M index. IPCA: most of energy generation agreements of Light Energia S/A is pegged to the IPCA index.
10.2. Operating and financial results CDI: all the Companys financial investments and approximately 66.8% of its total indebtedness are pegged to the CDI rate. Foreign exchange rates: Approximately 3.2% of the Companys indebtedness with third parties is indexed in U.S. dollars. However, the policy of use of foreign exchange derivative instruments approved by the Board of Directors determines the debt service protection (principal plus interest rates and commissions) denominated in foreign currency to mature within 24 months. Thus, excluding the value of exchange derivatives position contracted on December 31, 2010 (US$19.2 million) from the percentage of foreign currencydenominated debt, the effective exchange rate exposure is 1.7%. In addition, the energy purchase tariff of Itaipu is also pegged to the U.S. dollar, but variations are transferred to the tariff through the CVA mechanism. 10.3. Events with material effects caused or expected on the financial statements 10.3. Executive officers shall comment on material effects caused or expected on the issuers financial statements and results from the events mentioned below: a) introduction or sale of an operating segment Currently, we do not expect any introduction or future sale of an operating segment. b) creation, acquisition or sale of equity interest or unusual operations In accordance with item 9.1 of its Shareholders Agreement signed on March 23, 2006, Rio Minas Energia Participaes S.A. (RME) merged Lidil Comercial Ltda. (Lidil) on November 17, 2009, and on December 31, 2009 it was spun off into three parts, which were merged by Andrade Gutierrez Concesses S.A. (AGC), Companhia Energtica de Minas Gerais (Cemig), and Luce Empreendimentos e Participaes S.A. (LEPSA), a company created and controlled by Luce Brasil Fundo de Investimento em Participaes. Equatorial Energia S.A. (Equatorial) remained the single shareholder of RME. The corporate restructuring of RME by its shareholders streamlined its corporate structure by excluding the holding company RME, resulting in a direct interest of approximately 13.03% in the capital stock of the Company, or 26,576,149 common shares issued by the Company, for each of the four shareholders AGC, CEMIG, LEPSA and RME. RMEs shareholders agreement was replaced by a
10.3. Events with material effects caused or expected on the financial statements new agreement between the four shareholders of the Company, which included the same rights and obligations provided for in RMEs shareholders agreement.
On December 30, 2009, CEMIG and AGC signed a Share Purchase Agreeement (AGC Agreement) and on March 25, 2010, CEMIG paid for the acquisition of twenty-five million, four hundred, ninety-four thousand and five hundred (25,494,500) common shares issued by the Company and held by AGC, representing 12.50% of the Company's total and voting capital. In addition, on November 17, 2010, one million, eighty-one thousand, six hundred and forty-nine (1,081,649) common shares issued by the Company, representing 0.53% of its total and voting capital, held by AGC, were paid in and transferred to CEMIG, which corresponds to the remaining share of the acquisition.
On December 30, 2009, Fundo de Investimento em Participaes PCP (FIP PCP), an indirect controlling shareholder of Equatorial, and CEMIG signed a Share Purchase Agreement and Other Covenants (Equatorial Agreement), in which Equatorial was a consenting intervening party, aiming at selling the indirect interest of FIP PCP in the Company representing 55.41% of a total of twenty-six million, five hundred, seventy-six thousand, one hundred and forty-nine (26,576,149) common shares issued by the Company or a company in which CEMIG holds interest not less than twenty percent (20%). On April 29, 2010, Equatorials annual and special shareholders meetings approved its partial spin-off through the transfer of a portion of its shareholders' equity corresponding to its interest in the capital stock of RME to a new corporation named Redentor Energia S.A. (Redentor), which was created specifically for this purpose as of the partial spin-off. The signing of the Equatorial Agreement is subject to certain conditions provided for therein, to Redentors registration at the CVM and other regulatory and governmental approvals, where applicable.
10.3. Events with material effects caused or expected on the financial statements On March 24, 2010, CEMIG entered into a Quota Put Option Agreement and other Covenants (Option) with Enlighted Partners Venture Capital LLC (ENLIGHTED), a limited liability company from Delaware, United States of America. The purpose of this operation was to grant a put option of Luce Investment Fund quotas (LUCE Fund), headquartered in Newark, Delaware, United States of America, which holds seventy-five percent (75%) of the quotas of Luce Brasil Fundo De Investimento Em Participaes (FIP Luce), which in turn holds indirectly through LEPSA twenty-six million, five hundred, seventy-six thousand, one hundred and forty-nine (26,576,149) common shares issued by the Company, representing approximately 13.03% of its total and voting capital. On October 6, 2010, ENLIGHTED exercised the put option of its quotas in LUCE Fund to Cemig or a third party appointed by Cemig, subject to compliance with certain requirements provided for in the agreement and approval of Aneel, the Brazilian Antitrust Authority (CADE), the Brazilian Development Bank (BNDES) and other financial agents and debenture holders of the Company and its subsidiaries, when necessary.
On October 28, 2010, the Company received a letter from its shareholder BNDES Participaes S.A. BNDESPAR informing that it had sold 10,347,200 common shares issued by the Company on trading sessions at the BM&FBOVESPA between March 19, 2010 and October 27, 2010, thus, reducing its interest in the Companys capital stock by 5.07%. Now, BNDESPARs remaining interest is 39,429,583 common shares, or 19.33% of the Companys capital stock. On December 31, 2010, BNDESPAR held 30,631,782 common shares, representing 15.02% of the Companys capital stock. Up to date, no material effect on the Companys financial statements or results deriving from the operations mentioned above was observed. c) Unusual events or operations.
Not applicable
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis
10.4. Executive Officers must comment on a) Significant changes in the accounting practices The accounting policies described in details below have been applied consistently to all periods presented in these financial statements and in the preparation of the opening balance sheet in January 1, 2009, for transition purposes to the IFRS and CPC standards.
a. Financial instruments: All financial instruments were recorded in the financial statements of the Company, both in assets and liabilities, and are initially measured at fair value when applicable and after initial recognition, according to their classification.
Non derivative financial assets Include financial investments, cash and cash equivalents, securities, concessionaires and permissionaires, financial concession assets and other receivables. Receivables and financial concession assets are measured at amortized cost using the effective interest rate method, reduced by eventual impairment, where applicable, plus directly attributable transaction costs. Financial investments are measured at fair value through the income statement.
The Company ceases to recognize a financial asset when the contractual rights to cash flows of the asset expire, or when the Company transfers the rights to receive contractual cash flows over a financial asset in a transaction in which essentially all risks and benefits inherent to the ownership of the financial asset are transferred. Eventual interest created or held by the Company in financial assets is recorded as individual assets or liabilities.
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis Financial assets recorded at fair value through income statement A financial asset is classified at fair value through income statement if it is classified as held for trading or is designated as such upon initial recording. Financial instruments are designated at fair value through income statement if the Company manages these investments and make purchase and sale decisions based on their fair values, according to its risk management and investment strategy. Transaction costs are recognized in the income statement as incurred. Financial instruments recorded at fair value through income statement are measured at fair value and changes in the fair value of these assets are recognized in the statement of income.
Loans and receivables These are financial assets with fixed or calculated payments which are not rated in the active market. These assets are initially recorded at fair value plus any attributable transaction costs. After initial recognition, loans and receivables are measured by amortized cost through the effective interest rate method, less any impairment loss.
Cash and cash equivalents Include cash, bank deposits and immediate liquidity financial investments, due until 3 months from the investment date and subject to nonsignificant value risks.
Non-derivative financial liabilities The Company initially recognizes liabilities on the date of origin. The Company writes-off a financial liability when its contractual obligations are withdrawn, cancelled or expired.
Financial assets and liabilities are offset and the net balance is presented in the balance sheet when, and only when, the Company has the legal right to offset the amounts and intends to settle in an offset basis or to realize the asset and settle the liability simultaneously.
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis The Company has the following non-derivative financial liabilities: loans, debt, debentures and suppliers. Such liabilities are initially recorded at fair value plus any attributable transaction costs. After initial recording, these financial liabilities are measured by amortized cost through the effective interest rate method.
Derivative financial instruments The Company operates with derivative financial instruments to hedge from foreign exchange risks.
Derivatives are initially recorded at fair value and attributable transaction costs are recognized in the income statement as incurred. After initial recording, derivatives are measured at fair value and changes are accounted for in the income statement.
ii.
Concessionaries and permissionaires (Clients) Include electricity supply, invoiced and to be invoiced, default charges, interest due to late payment and electricity traded with other concessionaries for electricity supply, according to the amounts available in the Electricity Trade Chamber (CCEE).
iii.
Inventories (including fixed assets) Supplies in inventories, classified into Current Assets (maintenance and administration warehouse) and those destined to investments, classified into Non-Current Assets Fixed Assets (warehouse), are recorded at average acquisition cost and do not exceed their replacement costs or realizable values, less allowances for losses, where applicable.
iv.
Financial Concession Assets Subsidiary Light SESA recorded a financial asset receivable from the Granting Authority due to the unconditional right to receive cash at the end of the concession, as provided for in the agreement, as an indemnification for construction services performed and not received through services rendered related to the concession. These financial assets are accounted for at present value of the right and are calculated based on the value of the assets in services inherent to the concession, measured at historical cost, which shall be reversible at the end of the concession. These assets are held at amortized cost and are remunerated through tariff by the investment remuneration average rate, represented by the cost of capital (regulatory WACC), established by ANEEL, and this amount is monthly recognized as financial revenue, under operating revenues, in line with OCPC 05.
v.
Investments The financial statements of subsidiaries and jointly-owned subsidiaries are included in the consolidated financial statements as of the date when control starts until the date when control no longer exists. Accounting policies of subsidiaries and jointly-owned subsidiaries are in line with the Companys policies.
In the parent companys individual financial statements, the financial information of subsidiaries and jointly-owned subsidiaries are recognized through the equity accounting method.
Business Combination
Acquisitions made in January 1, 2009, or as of this date
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis For acquisitions made on January 1, 2009 or after this date, the Company measures goodwill as the fair value of the transferred consideration, including the recognized amount of any non-controlling interest in the acquired company, less the net recognized amount (usually the fair value) of identifiable assets and liabilities, all measured on the acquisition date. When the exceeding amount is negative, a gain resulting from the purchase deal is immediately recognized in the income statement.
For each business combination the Company decides if it will measure the noncontrolling interest by its fair value, or by the proportional amount of non-controlling interest on identifiable net assets, verified on the acquisition date.
Transaction costs rather than those associated with the issue of debt instruments or equity interest the Company incurs in relation to a business combination are recognized as expenses as they are incurred.
Acquisitions prior to January 1, 2008
During transition period to IFRS and CPCs, the Company decided not to restate business combinations prior to January 1, 2008. Regarding acquisitions prior to January 1, 2009, the goodwill represents the amount recognized under the previously adopted accounting standards.
vi.
Fixed assets
Only tangible assets not linked to the concession infrastructure are recorded in this accounting item.
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis Recognition and measurement measured at acquisition, formation or construction cost, monetarily restated until 1995, less accumulated depreciation. Interest and other financial charges and inflationary effects resulting from funds raised with third parties, effectively used in construction in progress, are recorded as cost of respective fixed assets. Average annual depreciation rates are stated in Note 14. According to guidelines provided for in CPC 27 which refers to fixed assets, and the interpretation ICPC10, the subsidiary Light Energia adopted the fair value as deemed cost of power plants fixed assets that record book value substantially lower than their fair value. Other fixed assets were held at historical cost, either for being under construction or for being in compliance with fixed assets requirements provided for in CPC 27 and according to the Management's opinion are in line with their fair values.
Depreciation It is calculated by the straight-line method, based on annual rates established by ANEEL, which are practiced by the industry and accepted by the market as adequate.
vii.
Intangible assets Research and Development Research activities expenses made with a possibility of gaining knowledge and scientific or technological understanding are recognized in the income statement as these are incurred. Development activities involve a plan or project aiming at producing new or substantially improved products. Development expenditures are capitalized only if development costs can be reasonably measured, if the product or process is technically and commercially viable, if future economic benefits are probable, and if the Company and its subsidiaries have the intention and enough resources to conclude the development and use or sell the asset. Capitalized expenditures include cost of supplies, direct labor, manufacturing costs directly attributable to the elaboration of asset for its
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis intended use and borrowing costs in qualifiable assets to which the start date of capitalization is January 1, 2009 or later. Other development expenditures are
recognized in the income statement as these are incurred. Capitalized development expenditures are measured at cost, less accumulated amortization and impairment losses.
Infrastructure assets linked to the concession Subsidiary Light SESA recognizes an intangible asset resulting from the services concession agreement when it is entitled to charge for the use of the concession infrastructure, measured at fair value, on the date of initial recognition. After initial recognition, the intangible asset is measured at cost, which includes capitalized borrowing costs, less accumulated amortization and impairment losses, where applicable.
Other intangible assets Other intangible assets with definite useful lives are measured at cost, less accumulated amortization and impairment losses, where applicable.
Subsequent expenditures Subsequent expenditures are capitalized only when they increase future economic benefits incorporated into specific asset to which they are related. All other expenditures, including expenditures with goodwill generated internally and trademarks are recognized in the income statement as incurred.
Amortization Calculated on the cost of an asset, or another value replacing cost, less residual value. The amortization is recognized in the income statement based on the straight-line method related to estimated useful lives of intangible assets, rather than goodwill, as of the date when these are available for use, given that this method is the one that better reflects the consumption standard of future economic benefits incorporated into the asset. The useful life of an intangible asset in a service concession agreement is the period as of which the Company is able of collecting from consumers
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis for the use of infrastructure, until the end of the concession period. Methods of amortization, useful lives and residual values are reviewed at the end of each financial year and are adjusted, where applicable. viii. Impairment
Financial assets (including receivables) A financial asset not measured by fair value through the income statement is evaluated on each reporting date to assess if there is an objective evidence of impairment. An asset is impaired if an objective evidence indicates that a loss event occurred after the initial recording of the asset, and that loss event had a negative effect on future projected cash flows, which can be reasonably estimated. The objective evidence that financial assets (including equity securities) are impaired may include the failure to pay or late payment by debtor, restructuring the amount due to the Company under conditions the Company usually would not consider in other transactions, indications that the debtor or issuer will file for bankruptcy, or an active market for a security no longer exists. Additionally, referring to an equity instrument, a significant or long-lasting decline in its fair value below its cost is an objective evidence of impairment. The Company considers evidence of impairment for receivables either individually and collectively. All individually significant receivables are tested for impairment. All individually significant receivables identified as not having suffered individual impairment are then collectively evaluated as to any impairment that has occurred but not yet identified. Receivables that are not individually relevant are collectively tested for impairment, by jointly grouping these securities with similar risk characteristics.
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis When collectively testing impairment, the Company uses historical trends of probability of default, recovery term and loss amounts incurred, adjusted to reflect the Managements judgment as to assumptions. In view of current economic and credit conditions, actual losses will be probably higher or lower than those suggested by historical trends. The impairment in relation to a financial asset measured by amortized cost is calculated as the difference between the book value and the present value of estimated future cash flows discounted at the original effective interest rate of the asset. Losses are recognized in the income statement and reflected in an account of allowance for receivables. Interest rates on impaired assets are still recognized by reversing the discount. When a subsequent event indicates reversal of the impairment, a decrease in impairment is reversed and recorded in the income statement. Management did not identify any evidence that justifies the need to reduce the financial assets to their recoverable value on December 31, 2010 and 2009, except for the allowance for doubtful accounts. Non-financial assets Assets with indefinite useful lives, such as goodwill, are not subject to amortization and are yearly tested for impairment. Assets subject to amortization are reviewed to test for impairment whenever events or changes in circumstances indicate that the book value cannot be recoverable. An impairment loss is recognized by the value at which the book value of assets exceeds its recoverable value. The latter is the highest amount between the fair value of an asset less sales costs and its value in use. For the purposes of impairment test, assets are grouped in lower levels to which there is separate identifiable cash generation (Cash Generating Units UGC). Non-financial assets, except for goodwill, which were impaired, are subsequently reviewed, to analyze eventual reversal of impairment on the reporting date.
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis For the purposes of testing the goodwill recoverable value, the amount of goodwill verified in a business combination is allocated to the UGC or group of UGCs to which the benefits from business combination synergies are expected. This allocation reflects the lowest level in which goodwill is monitored for in-house purposes and is not higher than certain operating segment determined according to IFRS 8 and CPC 22.
ix.
Employee benefits
Defined contribution plans A defined contribution plan is a post-retirement benefit plan under which an entity pays fixed contributions to a separate entity (Pension Fund) and shall not have any legal or constructive obligation to pay for additional amounts. Liabilities for contributions to defined contribution pension plans are recognized as employee benefit expenses in the income statement in the periods during which services are rendered by employees. Contributions paid in advance are recognized as assets under the condition that there is a cash reimbursement or reduction in future payments is available.
Defined benefit plans The net liability of the Company regarding defined benefit pension plans is individually calculated for each plan, by estimating the value of the future benefit earned by the employees in return of services rendered in current and previous periods; the benefit is discounted to its present value. Any past service costs not recognized and the fair values of any plan assets are deducted. The discount rate is the earning stated on the reporting date of the financial statements for prime debt instruments whose maturity dates are close to the conditions of the Companys liabilities and that are denominated in the same currency to which benefits are expected to be paid. The calculation is made annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit for the
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis Company, the asset to be recognized is restricted to the total amount of any past service costs not recognized and the present value of economic benefits available as future reimbursements of the plan or reduction in future contributions to the plan. To calculate the present value of economic benefits, any minimum cost requirement applicable to any plan is considered. An economic benefit is available if it is realizable throughout the duration of the plan, or in the settlement of plan liabilities.
Sponsorship costs of the pension plan and eventual plan deficits are recognized by the accrual method and in compliance with CVM Deliberation 600/09, based on the actuarial calculation prepared by independent actuary.
Actuarial gains and losses generated from adjustments and changes in actuarial premises of pension and retirement benefit plans are recognized in the income statement.
Short-term employee benefit liabilities these are measured on a non-discounted basis and are incurred as expenses to the extent related service is rendered. The liability is recognized by the amount expected to be paid under the cash bonus or short-term profit share plans if the Company and its subsidiaries have a legal or constructive obligation to pay this amount due to past services rendered by the employee and the liability can be reasonably estimated.
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis Benefits from termination of employment relationship Benefits deriving from the termination of employment relationship are recognized as expenses when the Company is provenly committed, with no realistic possibility of retrocession, with a detailed formal plan to terminate the employment contract before the regular retirement date or to provide severance pay benefits due to an offer made to encourage voluntary resignation. The benefits deriving from termination of employment relationship with voluntary resignations are recognized as expenses when the Company offered a voluntary resignation, it is probable that the offer will be accepted, and the number of employees adhering to the program can be reasonably estimated.
Profit Sharing The Company recognizes liability and profit sharing expenses based on a formula that considers profits attributable to the Companys shareholders after certain adjustments. The Company recognizes a provision when it is contractually bound or when there was a practice in the past that created a liability not recorded.
Share-based compensation
The fair value of share-based compensation is
recognized on the granting date as personnel expenses, with a corresponding increase in shareholders equity, for the period when employees are
unconditionally vested with these benefits. The amount recognized as expense is adjusted to reflect the number of shares to which there is an expectation that service conditions and vesting conditions rather than market will be met, so that the amount finally recognized as expense is based on the number of shares that really meet service conditions and non-market vesting conditions on the vesting date. For non-vesting share-based payment, the fair value on the grant date of share-based payment is measured to reflect these conditions and there are no changes for differences between expected and actual benefits.
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis The fair value of the amount payable to employees related to rights over share appreciation, payable in cash, is recognized as expense with the corresponding increase in liabilities for the period when employees are unconditionally vested. The liability is measured again every reporting date of the financial statements and on the settlement date. Any changes in the fair value of the liability are recognized as personnel expenses in the income statement.
x.
Income tax and social contribution Current and deferred income tax and social contribution for the year are calculated based on 15% rates, plus 10% surcharge over the taxable income exceeding R$240 for income tax and 9% over the taxable income for social contribution on net income.
Current tax is the expected tax payable or receivable on the taxable profit or loss for the year, at tax rates enacted or substantially enacted on the reporting date of the financial statements and any adjustments to taxes payable related to previous years.
Deferred tax is recognized in relation to temporary differences between the book value of assets and liabilities for accounting purposes and the corresponding values for taxation purposes.
Deferred tax assets and liabilities are offset if there is a legal right to carryforward current tax assets and liabilities, and they are related to income taxes levied by same tax authority on the same entity subject to taxation.
A deferred income tax and social contribution asset is recognized by tax losses, tax credits and deductible temporary differences, not used when it is probable that future profits subject to taxation will be available and against which they shall be used.
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis Deferred income tax and social contribution assets are reviewed on each closing date and are reduced as their realization is no longer probable. As provided for in Law 11,941/09, the Company applies the Transition Tax Regime (RTT) to calculate taxable income, so that changes in criteria to recognize revenues, costs and expenses verified in the calculation of the net income for the year do not have effects for the purposes of calculating the taxable income of the legal entity subject to RTT, and the accounting methods and criteria in force on December 31, 2007 shall be considered for tax purposes.
xi. Suppliers Accounts payable to suppliers are liabilities payable for goods or services acquired from suppliers in the regular course of business, classified as current liabilities if payment is due within one-year period. They are initially recorded at fair value and, subsequently, measured at amortized cost, using the effective interest rate method. In practice, they are usually recognized at the corresponding invoice amount.
xii. Loans Loans are recorded, initially, at fair value, net of costs incurred in operation and are, subsequently, stated at amortized cost. Any difference between the amounts raised (net of transaction costs) and the settlement amount is recognized in the income statement during the period loans are outstanding, using the effective interest rate method.
All fees paid for loan are recognized as transaction costs of the loan, as it is probable that part of or the entire loan is withdrawn. In this case, the fee is deferred until the withdrawal takes place. When there is no evidence of probability of withdrawal for partial or full loan amount, the fee is capitalized as advance payment of liquidity services and amortized during the period to which the loan is related.
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis xiii. Provisions A provision is recognized in the balance sheet when the Company and its subsidiaries have a legal or constituted liability resulting from a past event, and it is probable that an economic resource will be required to settle the liability. Provisions are recorded based on the best estimates of the risk involved. A provision for contingencies is recorded upon valuation and quantification of lawsuits, whose probability of loss is deemed probable according to the Managements opinion and its legal counsels.
xiv. Accounting for energy purchase and sale operations at the Electricity Trade Chamber - CCEE - The cost of energy purchased and supply revenues are recognized by accrual method, based on information disclosed by CCEE, which is in charge of calculating the values and amounts of purchases and sales made within this scope, or based on the Managements estimate, when this information is not available.
xv. Capital Stock Common Shares These are classified as shareholders equity. Additional costs directly attributable to the issue of shares are recognized as deduction of shareholders equity, net of any tax effects.
xvi. Revenue recognition Revenues are measured by fair value of the consideration received or receivable, less taxes and eventual discounts incurred thereon.
Energy sales revenues these are recognized when it is probable that the economic benefits associated to operations will flow to the Company and revenues can be reasonably measured. Traded energy sales is monthly invoiced based on the electricity supply, according to amounts made available within the scope of the Electricity Trade Chamber (CCEE).
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis Service Revenues Revenues from services rendered are recognized in the income statement based on the stage of completion of services on the reporting date of the financial statements. The stage of completion is assessed by reference to researches made.
Construction Revenues ICPC 01 establishes that the electricity concessionaire must register and measure revenues from services rendered according to the Technical Pronouncements CPC 17 Construction Agreements (construction or services or improvement) and CPC 30 Revenues (operation services electricity supply), even when ruled by a single concession agreement. Subsidiary Light SESA records revenues and costs related to construction services or infrastructure improvement used to render electricity distribution services. The construction margin adopted is established as being equal to zero, considering that: (i) the main activity of the subsidiary is electric energy distribution; (ii) every construction revenue is related to the construction of infrastructure to reach its main activity; and (iii) the subsidiary outsources the construction of infrastructure with non-related parties. Total additions to intangible assets in progress are monthly recorded in the income statement, as construction cost.
xvii. Financial revenues and expenses Include interest, monetary and exchange changes on rights and obligations, subject to monetary restatement until the balance sheet date. Foreign currency assets and liabilities are converted to reais according to the exchange rate disclosed by Brazilian Central Bank, on the balance sheet date.
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis xviii. Earnings per share - Basic earnings per share are calculated through the income for the period attributable to controlling and non-controlling shareholders of the Company and weighted average of outstanding shares in the respective period. Diluted earnings per share are calculated through the referred average outstanding shares, adjusted by instruments potentially convertible into shares, with a diluting effect, in the reported periods.
xix. Value-added statement The Company prepared value-added statements (DVA) pursuant to the technical pronouncement CPC 09 Value-Added Statement, which are stated as an integral part of the financial statements under BRGAAP applicable to publicly-held companies, while for IFRS, they represent additional financial information.
xx. Foreign currency Foreign currency-denominated transactions are translated into the functional currency of the Company at the exchange rates on the transaction dates. Monetary assets and liabilities denominated and calculated in foreign currencies are translated into the functional currency by the exchange rate as of the closing date. Gains and losses resulting from the adjustment of these assets and liabilities verified between the exchange rate in force on the transition date and year-end dates are recognized as financial revenues or expenses in the income statement.
xxi. Segment information An operating segment is a component of the Company that develops business activities from which it can obtain revenues and incur in expenses, including revenues and expenses related to transactions with other components of the Company. All operating segments results are usually reviewed by the Management, in order to make decisions regarding the resources to be allocated to the segment and to assess their performance and for this purpose, individual financial information is available.
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis The segment results reported to the Management include items directly attributable to the segment, as well as those that may be allocated on a reasonable basis.
xxii. Distribution of dividends Distribution of dividends to the Companys shareholders is recognized as a liability in the year-end financial statements, based on the Companys Bylaws. Any amount above the minimum mandatory dividend is only accrued on the date these are approved by the shareholders at the
shareholdersmeeting.
xxiii. Rules and interpretations not yet adopted Several IFRS rules, amendments to rules and interpretations issued by IASB are not effective yet for the year ended December 31, 2010, such as:
Improvements to IFRS 2010. IFRS 9 Financial Instruments. Prepayment of a minimum fund requirement (Amendment to IFRIC 14). Amendments to IAS 32 Classification of rights issues.
CPC has not issued yet pronouncements corresponding to the IFRS mentioned above, but there are expectations that this will be done before the date required to be effective. The anticipated adoption of IFRS pronouncements is subject to the previous approval in a normative ruling by CVM Brazilian Securities and Exchange Commission. As these standards have not been adopted in advance, the Company has not assessed yet their potential effects on its financial statements.
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis b) Significant effects from changes in the accounting practices The enactment of Laws 11,638/07 and 11,941/09 set up the process of convergence into the international accounting standards for publicly-held companies, with the issue of several pronouncements, interpretations and guidance by the Brazilian Accounting Pronouncements Committee (CPC) and approval by regulatory Brazilian accounting regulatory entities, which was implemented in two phases: the first phase was developed and applied in 2008 with the adoption of technical pronouncements CPCs 00 to 14 (the latter was revoked as of 2010), and the second phase with the issue in 2009 of technical pronouncements CPCs 15 to 43 (except for CPC 34), whose adoption was mandatory in 2010 retroactively to 2009 for comparison purposes. The financial statements for the fiscal year ended December 31, 2010, will be the first ones to be reported in accordance with these accounting pronouncements and the IFRS. The Company prepared its transitional opening balance sheet on January 1, 2009. (i) Exemptions adopted The Company opted for applying the following exemptions in relation to the retroactive application of the pronouncements: Exemption of fair value as deemed cost: Light Energia opted to report fixed assets at fair value on January 1, 2009. Exemption of business combinations: the Company did not restate the business combinations occurring before the transition date - January 1, 2009.
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis Exemptions related to the retroactive application of ICPC 01: the Company deemed it unfeasible to remeasure each asset that composes the infrastructure used in the concession of public utilities on their respective acquisition dates. Instead, it opted to use the residual value method to measure: (i) intangible assets, corresponding to the estimated share of the investments made which will be amortized until the end of the concession; and (ii) financial assets, corresponding to the unconditional contractual right to receive cash or another financial asset from the granting authority for the construction services concluded and not yet amortized until the end of the concession. (ii) Reconciliation of the adoption of CPCs issued in 2009 and 2010 on the transition date and reclassifications made: Opening balance sheet dated January 1, 2009:
Consolidated INITIAL ADOPTION IFRS Reclassifications Adjustments
Published on 12/31/2008
New presentation 01/01/2009
CURRENT ASSETS Cash and cash equivalents Securities Cash and Cash Equivalents Consumers, concessionaires and permissionaires Recoverable Taxes Taxes and contributions Inventories Receivables from swap transactions Dividends receivable Services provided Prepaid Expenses Other receivables TOTAL CURRENT NON-CURRENT Consumers, concessionaires and permissionaires Recoverable Taxes Taxes and contributions Deferred Taxes Financial assets from concessions Receivables Escrow deposits Prepaid Expenses Other receivables Investments Property, Plant and Equipment Intangible assets TOTAL NON-CURRENT TOTAL ASSETS
590,126 1,350,832 836,504 18,603 6,671 57,500 383,291 107,879 3,351,406
548,983 41,143 (590,126) (836,504) 566,011 (52,888) (1,210) (324,591)
(67,977) 13,010 (381,624) (436,591)
548,983 41,143 1,282,855 566,011 18,603 6,671 17,622 1,667 106,669 2,590,224
292,594 1,109,566 4,413 194,200 129,435 26,420 13,615 4,059,358 280,958 6,110,559 9,461,965
(1,109,566) 72,807 1,307,252 304,229 (3,290,903) 2,986,674 270,493 (54,098)
313,852 (125,071) 821,324 1,010,105 573,514
292,594 72,807 1,621,104 304,229 4,413 194,200 4,364 26,420 13,615 1,589,779 3,267,632 7,391,157 9,981,381
Published on 12/31/2008
Consolidated IFRS FIRST-TIME ADOPTION Reclassifications Adjustments
Restated 1/1/2009
CURRENT LIABILITIES Suppliers Payroll Taxes Taxes and contributions Loans, financing and charges Debentures and charges Dividends payable Estimated liabilities Regulatory charges Contingencies Post-employment benefits Other liabilities TOTAL CURRENT
486,204 2,791 230,461 116,799 61,523 499,638 55,052 126,733 2,237 87,744 519,757 2,188,939
(230,461) 230,461 (54,098) (54,098)
(268,205) (160,661) (428,866)
486,204 2,791 230,461 116,799 61,523 231,433 55,052 126,733 2,237 87,744 304,998 1,705,975
NON-CURRENT Loans, financing and charges Debentures and charges Taxes Taxes and contributions Deferred taxes Contingencies Post-employment benefits Other liabilities TOTAL NON-CURRENT SHAREHOLDERS' EQUITY Capital stock Capital reserves Recognized granted options Profit reserve Legal reserve Profit retention Asset valuation adjustments Retained Earnings/Accumulated Losses TOTAL SHAREHOLDERS' EQUITY TOTAL LIABILITIES
1,046,550 945,549 324,743 998,460 944,417 209,603 4,469,322
(324,743) 324,743 -
341,113 (4,577) 3,731 340,267
1,046,550 945,549 324,743 341,113 993,883 944,417 213,334 4,809,589
2,225,819 22,459 103,757 451,669 2,803,704 9,461,965
(54,098)
546,978 115,135 662,113 573,514
2,225,819 22,459 103,757 451,669 546,978 115,135 3,465,817 9,981,381
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis Balance sheet dated December 31, 2009:
Published in 2009
Restated 2009
CURRENT ASSETS Cash and cash equivalents Securities Cash and Cash Equivalents Consumers, concessionaires and permissionaires Recoverable taxes Taxes and contributions Inventories Receivables from swap transactions Dividends receivable Services provided Prepaid expenses Other receivables TOTAL CURRENT NON-CURRENT Consumers, concessionaires and permissionaires Recoverable taxes Taxes and contributions Deferred taxes Financial assets from concessions Escrow deposits Prepaid expenses Other receivables Investments Property, Plant and Equipment Intangible assets TOTAL NON-CURRENT TOTAL ASSETS
828,372 1,362,365 675,881 14,369 4 131,902 260,502 100,016 3,373,411
760,313 68,059 (828,372) (675,881) 442,668 (98,897) (2,766) (334,876)
(6,511) 13,010 (258,121) (251,622)
760,313 68,059 1,355,854 442,668 14,369 4 46,015 2,381 97,250 2,786,913
297,798 820,843 200,520 37,779 8,725 20,388 4,319,087 281,608 5,986,748 9,360,159
(820,843) 40,767 1,013,289 354,784 (3,496,156) 3,141,372 233,213 (101,663)
102,257 (36,121) 777,637 843,773 592,151
297,798 40,767 1,115,546 354,784 200,520 1,658 8,725 20,388 1,600,568 3,422,980 7,063,734 9,850,647
Published in 2009
Restated 2009
CURRENT LIABILITIES Suppliers Payroll Taxes Taxes and contributions Loans, financing and charges Debentures and charges Dividends payable Estimated liabilities Regulatory charges Contingencies Post-employment benefits Other liabilities TOTAL CURRENT
564,181 3,338 285,180 197,150 96,412 432,340 49,036 110,791 95,044 377,471 2,210,943
(285,180) 285,180 (101,663) (101,663)
(288,693) (39,780) (328,473)
564,181 3,338 285,180 197,150 96,412 143,647 49,036 110,791 95,044 236,028 1,780,807
NON-CURRENT Loans, financing and charges Debentures and charges Taxes Taxes and contributions Deferred taxes Dividends payable Contingencies Post-employment benefits Other liabilities TOTAL NON-CURRENT SHAREHOLDERS' EQUITY Capital stock Capital reserves Recognized granted options Treasury shares Profits reserve Legal reserve Profit retention Asset valuation adjustments Retained Earnings/Accumulated Losses TOTAL SHAREHOLDERS' EQUITY TOTAL LIABILITIES
1,006,204 1,165,759 303,585 673,930 861,386 251,298 4,262,162
(303,585) 303,585 -
301,230 (4,577) (42,603) 254,050
1,006,204 1,165,759 303,585 301,230 669,353 861,386 208,695 4,516,212
2,225,822 34,406 (6,361) 133,999 499,188 2,887,054 9,360,159
(101,663)
518,761 147,813 666,574 592,151
2,225,822 34,406 (6,361) 133,999 499,188 518,761 147,813 3,553,628 9,850,647
Results for the fiscal year ended December 31, 2009:
Consolidated Published 2009 REVENUES COST OF OPERATIONS NET REVENUE COST OF OPERATIONS 8,641,045 (3,208,739) 5,432,306 (3,819,422) IFRS FIRST-TIME ADOPTION Reclassification Adjustments 613,585 161,006 774,591 (599,628) Restated 2009 9,254,630 (3,047,733) 6,206,897 (4,419,050)
GROSS PROFIT OPERATING EXPENSES General and administrative expenses Selling expenses Other operating income Other operating expenses
1,612,884 (736,994) (427,904) (322,389) 38,144 (24,845) -
174,963 (5,012) (5,012)
1,787,847 (742,006) (427,904) (322,389) 38,144 (29,857) 1,045,841 (84,929) 186,745 (271,674) -
OPERATING INCOME FINANCIAL RESULT Revenues Expenses EQUITY IN THE EARNINGS OF SUBSIDIARIES
875,890 (70,663) 201,864 (272,527) -
169,951 (14,266) (15,119) 853
NET INCOME BEFORE INCOME TAX AND SOCIAL CONTRIBUTION Current income and social contribution taxes Deferred income and social contribution taxes NET INCOME IN FISCAL YEAR 805,227 (168,994) (31,402) 604,831 155,685 (171,712) (16,027) 960,912 (168,994) (203,114) 588,804
Table with the effects on shareholders equity of January 1, 2009 and December 31, 2009 and net income of 2009 from adjustments from the adoption of CPCs issued, with their respective notes:
Parent Company 12/31/2009 Shareholders' Equity Balance before the adoption of the new practices Investments (*) Equity accounting (*) Dividends above minimum mandatory dividend (6) Regulatory assets and liabilities (1) Fair value as deemed cost (4) Pre-operating expenses (9) Other (9) Deferred income and social contribution taxes (5) Total of adjustments Balance after the adoption of the new practices 2,887,054 666,574 666,574 3,553,628 Net Income 604,831 (16,027) (16,027) 588,804 Consolidated 12/31/2009 Shareholders' Equity 2,887,054 288,693 (205,095) 786,000 (8,364) 4,312 (198,972) 666,574 3,553,628 Net Income 604,831 199,512 (42,754) (934) (140) (171,711) (16,027) 588,804
1/1/2009
1/1/2009 Shareholders' Equity 2,803,704
Shareholders' Equity 2,803,704 662,113 662,113 3,465,817
268,205 (404,607) 828,754 (7,430) 4,452 (27,261) 662,113 3,465,817
(*) subsidiaries effect on parent company
Description of the main adjustments from new accounting pronouncements that impacted the Companys financial statements: (1) Conceptual structure for preparation and presentation of financial statements (CPC Conceptual Issues): This pronouncement establishes, among other concepts, the bases for recognition of assets, liabilities, revenues and expenses. According to this pronouncement, differences between the estimated amounts included in the calculation of the electric power tariffs and the amounts actually incurred by the Company recognized before the application of the new CPCs as regulatory assets and liabilities are not recognized in the balance sheet, as they are not fitted into the definition of assets and/or liabilities. As a result, balances of regulatory assets and liabilities before the date of first-time adoption of the new CPCs were recognized against retained earnings and in the income statement of fiscal years 2009 and 2010 under the accrual method.
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis (2) CPC 25 - Provisions, Contingent Liabilities and Contingent Assets: The objective of this pronouncement is to establish the application of adequate criteria of recognition and measurement basis for the provisions, liabilities, contingent assets, as well as the disclosure of material information in the notes to the financial statements. According to the pronouncement, the highest estimate for the disbursement required to settle the obligations existing on the date of preparation of the balance sheet must be recognized as provision. The highest estimate for the disbursement required to settle the existing obligation is the amount the Company would reasonably use to settle the liability on the balance sheet date or transfer it to third parties at that moment. Considering that the amounts recognized under Services Provided related to the expenses incurred from the Research and Development (R&D) and Energy Efficiency (PEE) Programs represent the actual amounts disbursed by the Company, which therefore results in a lower amount to be disbursed by the Company with expenses of this nature, these amounts were written off against the liabilities provision account and now represent only the total remaining amount to be disbursed with PEE and R&D. (3) CPC 26 - Presentation of the Financial Statements: This Pronouncement aims at defining the basis for presenting the financial statements and ensure comparability with previous financial statements of the same entity and those of other entities. Within this scenario, this Pronouncement establishes general requirements for the presentation of the financial statements, guidelines for its structure and minimum requirements of its content.
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis Deferred income and social contribution taxes expected to be realized in the twelve months following the presentation of the financial statements were recorded under current assets, as provided for in CVM Rule 371/2002. Pursuant to CPC 26 these deferred taxes now are fully recognized in non-current assets/liabilities. (4) CPC 27 - Property, Plant and Equipment: The objective of this Pronouncement is to establish the accounting treatment for fixed assets, so that users of the financial statements are able to distinguish information on investments made by the company it its fixed assets, as well as changes. The key points to be considered when accounting for fixed assets are the recognition of assets, definition of their book value, depreciation amounts and impairment losses to be recognized. In accordance with the guideline provided for in the pronouncements related to the matter, the subsidiary Light Energia has adopted the fair value as deemed cost of fixed assets of the plants with book value significantly lower than their fair value. This procedure was encouraged by CPC through ICPC 10 (Clarifications on CPC 27 and CPC 28) and by the CVM, and the Company believes that it represents the adoption of the best corporate governance practices in the preparation of the financial statements. The adjustment to fair value of assets in the amount of R$828,754 was recorded against the shareholders equity account Assets valuation adjustments, net of deferred income and social contribution taxes of R$281,776. The depreciation accrued on said adjustment will not impact the basis for calculation for income and social contribution taxes or the basis for distribution of dividends. The Company maintained the useful life of its assets, since they are estimated and defined by ANEEL, practiced by the industry and considered adequate by the market. This procedure is supported by OCPC 05 (Guideline on Concession Agreements).
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis (5) CPC 32 Income taxes: The objective of the pronouncement is to establish the accounting treatment for income taxes. It addresses current and deferred income assets and liabilities related to the income tax assessment. It requires the recognition of deferred tax liabilities for all taxable temporary differences between the tax basis and the accounting basis in the balance sheet, except in specific cases. According to the pronouncement, to recognize deductible temporary differences between the tax basis and the accounting basis in the balance sheet or to recognize tax losses and tax credits recoverable, this recognition is subject to the probable existence of taxable income against which the deductible temporary difference and/or loss recoverable can be realized. As the international standards adjustments cause effects on shareholders equity and results previously used as the basis for the calculation of income taxes, the deferred income tax (assets or liabilities) must be recognized at the rate of 34% on the IFRS/CPCs adjustments. In accordance with the accounting practices adopted by the Company (BR GAAP), a provision for non-recovery of deferred income tax assets was recognized and reversed in the fiscal year ended December 31, 2009. However, said adjustment should have been recognized in previous fiscal years, reason that revenue against retained earnings was reversed in the fiscal year ended December 31, 2009. (6) ICPC 08 Accounting for the Dividend Payment Proposal: This Pronouncement provides that a proposal of payment of dividends above the minimum mandatory established by Law not yet approved by a shareholders meeting must be presented and highlighted in shareholders equity. In accordance with the previous accounting practice, additional dividends were deducted from shareholders equity and recognized in liabilities.
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis (7) ICPC 01 Concession Agreements: This Interpretation provides that once it is considered that the concessionaire does not control the underlying assets, the concession infrastructure (including electricity) cannot be recognized as fixed asset. Instead, it must be recognized in accordance with the accounting models provided for in the Interpretation, depending on the type of compensation commitment the concessionaire undertook in the agreement entered into with the granting authority, which are the model of financial assets, intangible assets and financial and intangible assets. In electricity distribution, the financial and intangible assets model is applied, since the remuneration of the companies of the segment is made (i) by the granting authority, when related to the residual value of the infrastructure at the end of the concession agreement (financial concession asset); and (ii) by users, related to their share of the construction services and energy supply services (intangible assets). (8) CPCs 38, 39 and 40 - Financial instruments All rules and interpretations in effect and applicable to the Company were adopted in 2010, as provided below: Amendment to IFRS 7 Financial Instruments: The objective of this amendment is basically to improve disclosure requirements, which makes it stricter the requirements for the disclosure of calculation of fair value, liquidity risk, market risk, credit risk and any other significant risk.Amendment to IFRS 7 related to the fair value hierarchy: This amendment establishes the division of fair value hierarchy related to financial instruments. The hierarchy prioritizes prices quoted not adjusted in an active market related to financial assets or liabilities, which is classified as Tier 1. There are three levels of classification of financial assets at fair value, as presented below:
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis Tier 1 Data from active market (unadjusted quoted price) so that access is possible on a daily basis, including on the date of calculation of fair value. Tier 2 Data different from those from the active market (unadjusted quoted price) included in Tier 1 taken from a pricing model based on observable market data. Tier 3 - Data from a pricing model based on non-observable market data. In addition to the points highlighted above, the Company adjusted its Financial Statements for disclosure purposes, presenting the following information: Earnings per share, as required by CPC 41 and IAS 33 (Earnings per share), presented in Note 28; Segment information, as required by CPC 22 and IFRS 8 (Operating Segments), presented in Note 39. (9) Additionally, in order to adjust the financial statements on the transition date and on December 31, 2009, the Company reclassified cash and cash equivalents as cash and cash equivalents and securities, and recognized the adjustments from the effect of reversal of provision on deferred taxes in the opening balance for a better presentation. c) Independent auditor's qualified opinion:
2010: Qualified Opinion: None. Emphasis of matter:
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis As described in Note 2, the individual financial statements were prepared in accordance with the accounting practices adopted in Brazil. In the case of Light S.A., these practices differ from the IFRS, applicable to the separate financial statements, only regarding the valuation of investments in subsidiaries, associated companies and jointly-controlled companies through the equity method, while IFRS require the cost or fair value method. 2009: Qualified Opinion: None. Emphasis of matter: Fundao de Seguridade Social Braslight's financial statements for the fiscal year ended December 31, 2009, were audited by other independent auditors who issued a report dated January 21, 2010, with a paragraph pointing out the existence of a balance of R$137,317,000 related to tax credits deriving from the Entitys tax immunity proceeding, which was given a final and unappealable court decision. According to the Managements projections, the tax credits may be offset within approximately nine years using taxes to be collected in subsequent years. The future realization of assets is subject to the continuity of the offset process with the Federal Revenue Service, which was suspended in September, 2005. The maintenance of the above-mentioned suspension may lead the Entity to accrue the asset eventually. This asset guaranteeing the Entitys actuarial reserves was deducted in the calculation of the sponsoring subsidiaries actuarial deficit, pursuant to CVM Resolution 371/00. As a result, if this amount is accrued, the Companys liabilities may be adjusted proportionally. 2008: Qualified Opinion: None. Emphasis of matter:
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis Fundao de Seguridade Social Braslight's financial statements for the fiscal year ended December 31, 2008, were audited by other independent auditors who issued a report dated January 29, 2009, with a paragraph of emphasis on the existence of a balance of R$130,941,000 related to tax credits deriving from the Entitys tax immunity proceeding, which was given a final and unappealable court decision. According to the Managements projections, the tax credits may be offset within approximately nine years using taxes to be collected in subsequent years. The future realization of assets is conditioned to the continuity of the offset process with the Federal Revenue Service, which was suspended in September, 2005. The maintenance of the above-mentioned suspension may lead the Entity to accrue the asset eventually. This asset guaranteeing the Entitys actuarial reserves was deducted in the calculation of the sponsoring subsidiaries actuarial deficit, pursuant to CVM Resolution 371/00 requirements. As a result, if this amount is accrued, the Companys liabilities may be adjusted proportionally. As mentioned in Note 37, as a result of the second periodic tariff review of the subsidiary Light Servios de Eletricidade S.A. provided for in the concession agreement, the Brazilian Electricity Regulatory Agency (ANEEL) provisionally ratified a 1.96% increase in the subsidiarys tariff, effective as of November 7, 2008. Considering additional financial charges of 2.30%, the effect on the tariff totaled 4.27%. Potential effects from the final review, if any, will be reflected in the equity and financial conditions of the Company and its subsidiary in subsequent periods. The Companys financial statements and the consolidated financial statements of both the Company and its subsidiaries for the period ended December 31, 2007, including the balance sheet, the statements of income, the statements of changes in shareholders equity and statements of changes in financial position of that fiscal year, in addition to additional information covering the statements of cash flows, were analyzed by other independent auditors, who issued an unqualified opinion dated February 13, 2008. As mentioned in Note 3, the accounting practices adopted in Brazil were amended as of January 1, 2008. The financial statements for the fiscal year ended December 31, 2007, presented jointly with the 2008 financial statements, were prepared
10.4 - Significant changes in the accounting practices auditor's qualified opinion and matter of emphasis in accordance with the accounting practices adopted in Brazil effective until December 31, 2007 and, as allowed by CPC Technical Pronouncement 13 - First-Time Adoption of Law 11,638/07 and Provisional Measure 449/08, have not been restated including the adjustments for comparison of fiscal years. 10.5 Critical accounting policies 10.5. Executive Officers must point out and comment on critical accounting policies adopted by the issuer, discussing in particular the Managements accounting estimates for issues that are uncertain and material to describe financial situation and results, and that require subjective or complex explanations, such as: provisions, contingencies, revenue recognition, tax credits, long-lived assets, useful life of non-current assets, pension plans, adjustments due to translation of figures into foreign currency, environmental recovery costs, criteria for impairment test and financial instruments In order to prepare the financial statements in accordance with the IFRS and CPC standards, Management must make judgments, prepare estimates and assumptions that affect the application of accounting policies and the reported value of assets, liabilities, revenues and expenses. The actual results may differ from such estimates. Estimates and assumptions are revised continuously. Revisions related to accounting estimates are booked in the period the revision is made and in any future periods affected. The information on assumptions and estimates that may result in adjustments in the following fiscal year will be included in the following Notes to the Financial Statements: Note 10 - Deferred income and social contribution taxes Note 20 Contingencies
10.5 Critical accounting policies Note 21 - Post-Employment Benefits Note 28 Breakdown of net operating revenue (unbilled revenue) 10.6. Internal controls related to the preparation of the financial statements level of efficiency and deficiency and auditors report recommendations 10.6. Executive officers shall comment on internal controls adopted to ensure the preparation of reliable financial statements: a) Efficiency level of these controls, indicating eventual inadequacies and measures adopted to correct them The Company complies with the Novo Mercado" (New Market) corporate governance standards and considers its internal controls to be sufficient, given its type of activity and the volume of transactions. Moreover, given the complexity of activities and technological innovations, the Management endeavors its efforts to probe, review and continuously improve its processes and to implement new review and internal controls tools. b) deficiencies and recommendations about internal controls included in the independent auditors report The independent auditors report on accounting procedures and internal controls for the 2010 fiscal year did not record any deficiencies or recommendations that could significantly affect the Companys Financial Statements. 10.7 Allocation of proceeds obtained from public tender offers and eventual bias 10.7. If the issuer has conducted a public tender offer, the executive officers shall comment on30: a. how the proceeds from the offering were allocated
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The information included in the annual disclosure of the reference form must refer to the last 3 fiscal years. When the reference form is disclosed upon request of registration of public securities offering, the information must refer to the last 3 fiscal years and the current fiscal year.
10.7 Allocation of proceeds obtained from public tender offers and eventual bias
Three debentures issues were carried out in the last three fiscal years: the sixth debenture issue in June 2009 and the seventh debentures issue in May 2010 by Light SESA and the first debentures issue in May 2011 by Light Energia. In addition to debentures, the
Company also issued promissory notes in May 2009 and a secondary tender offer was conducted in July 2009 by minority shareholders, BNDES Participaes and EDF Internacional. 6th debentures issue: R$300.0 million. The proceeds derived from this operation were used to (i) pay for the mandatory early redemption of Promissory Notes of the 1st Issue, amounting to R$100 million; and (ii) to increase the Companys working capital. 7th debentures issue: R$650.0 million. The proceeds from the issue were allocated to (i) fully settle the debt from the 6th debentures issue; and (ii) finance Light SESAs investment program. 1st debentures issue: R$170.0 million. The proceeds from the issue were used to (i) finance Light Energias investment program; and (ii) finance its working capital. 1st issue of promissory notes: R$100.0 million. The proceeds from this operation were used to increase the Companys working capital. Secondary Tender Offer: R$772.1 million. The proceeds were raised by the shareholders who carried out the offering, and therefore the Company is not entitled thereto.
b. if any relevant bias occurred between the effective use of funds and the proposals disclosed in the respective offering There was no relevant bias of these purposes.
c. in the event of bias, justify its reasons There was no relevant bias of these purposes.
10.8 Relevant items not covered by the financial statements
10.8. Executive officers shall describe relevant items which not covered by the issuer's financial statements, indicating31:
a. assets and liabilities directly or indirectly held by the issuer, off-balance sheet items, such as:
i. operating lease, assets and liabilities ii. portfolios of receivables written off to which the entity maintains risks and responsibilities, indicating their respective liabilities iii. forward contracts of products or services iv. construction agreements not concluded v. agreements on financing receivables
The Company does not have any assets or liabilities that are not reflected in this Reference Form and in its financial statements and notes.
b. other items not covered by the financial statements None.
10.9 - Comments on relevant items not covered by the financial statements 10.9. In relation to each one of the items not included in the financial statements and indicated in item 10.8, the executive officers shall comment on:
a. How these items change or may in the future change revenues, expenses, operating income, financial expenses or other items of the issuers financial statements
The information included in the annual disclosure of the reference form must refer to the last yearend financial statements. When the reference form is disclosed upon request of registration of public securities offering, the information must refer to the last year-end financial statements and the last accounting information disclosed by the issuer.
31
10.9 - Comments on relevant items not covered by the financial statements
As mentioned in item 10.8 above, there are no items not covered by the financial statements.
b. nature and purpose of the operation As mentioned in item 10.8 above, there are no items not covered by the financial statements. c. nature and amount of the obligations assumed and the ensuing issuers rights from the transaction As mentioned in item 10.8 above, there are no items not covered by the financial statements.
10.10 Business plan 10.10. Executive officers shall indicate and comment on the main elements of the issuers business plan, specifically the following topics: a) investments, including: i. quantitative and qualitative description of investments in progress and estimated investments The main investments in previous years have been allocated to the maintenance and improvement of the Companys distribution network and its generation projects. The table below shows the Companys investments in the fiscal years ended December 31, 2008, 2009 and 2010:
Period Investment (R$ million) Fiscal year ended in Fiscal year ended in Fiscal year ended in December 2008 546.7 December 2009 563.8 December 2010 700.6
10.10 Business plan
In 2010, R$700.6 million were allocated to Capex projects, of which we highlight R$169.8 million in the development of distribution networks (new connections, capacity expansion and corrective maintenance); R$82.8 million in the improvement of quality and preventive maintenance; and R$134.9 million in network shielding, electronic measurement system and fraud regularization. Investments in generation amounted to R$121.8 million, of which R$93.1 million were allocated mainly to the development of new projects to expand the generating facilities. The Company plans to invest approximately R$960.5 million in 2011. Of the total investments budgeted for this period, R$706.0 million will be allocated to the distribution segment, R$163.6 million to the generation segment and R$90.9 million to other segments. ii. sources of financing for investments The Company finances its investment projects partially through its own cash generation and partly through BNDES lines of credit (when eligible) and/or other funding instruments, i.e., on the capital markets or banks. iii. Material divestments in progress and estimated divestments From 2008 to 2010, the Company made several divestments, of which the most relevant were: (i) sale of a site located in Botafogo for R$16.3 million in March 2008 and sale of the Via Light allotment for R$0.4 million also in 2008;(ii) sale of the part of the property located in Copacabana and of a site located in Todos os Santos amounting to R$17.6 million and R$3.4 million, respectively, in November 2009, and sale of a property in Cascadura amounting to R$2.3 million in the same year; (iii) sale of Barra Mansa Building and Lajes property for R$0.7 million and R$1.2 million, respectively, in the first quarter of 2009; (iv) sale of a property located in Bonsucesso for R$0.7 million, of the buildings and sites located in Triagem for R$12 million and in Ilha do Governador for R$3.5 million in 2010. All these assets are not operational.
10.10 Business plan b) Previously announced acquisitions of plants, equipment, patents or other assets that may materially affect the issuer's production capacity The Companys Board of Directors approved the acquisition of two wind power projects, located in the city of Aracati, state of Cear, with total installed capacity of 34 MW, since this clean energy source complies with the sustainability criteria practiced by the company. The acquisition process was concluded in 2010. c) New products and services, including: i. Description of research in progress already announced Our Research & Development program (R&D) is prepared in accordance with Law 9,991 of July 24, 2000, which establishes that public utility distribution concessionaires must invest 0.2% of their net operating revenue in R&D projects, with Aneel Resolution 271 of July 19, 2000 and with the guide approved by Aneel Resolution 316, of May 13, 2008. In 2010, under the rules of the Aneels new regulation, twelve (12) new projects were contracted and until December 2010 eighty-nine (89) R&D projects were in progress, seventy-seven (77) of which by Light Servios de Eletricidade S.A. and twelve (12) by Light Energia S.A. ii. total amounts invested by the issuer on researches for the development of new products and services In 2010, a total of R$24.7 million were invested in research projects to develop new products or services. iii. projects under development that have already been announced Giving continuity to the research projects and in compliance with the same guidelines applied to these projects, twelve (12) new projects were developed in 2010.
10.10 Business plan The main projects, products and services under industrial development phase include the Smart Grid Program Smart Distribution network, which comprises 5 projects. iv. services The projects implemented in 2010 which are in progress are in the end of the innovation phase. total amounts invested by the issuer in the development of new products and
10.11 Other factors with relevant influence 10.11 Comment on other factors that materially influenced the operating performance and neither identified nor commented in others items of this section.
All the relevant information referring to this topic was disclosed in the items above.
11.1 - Disclosed projections and assumptions
11.1. Projections shall identify: a. objective of the projection Not applicable, as the disclosure of projections and estimates is optional. b. projection's period and term of validity of the projection Not applicable, as the disclosure of projections and estimates is optional. c. projections assumptions, indicating which of them may be influenced by the issuers management and which are beyond its control Not applicable, as the disclosure of projections and estimates is optional. d. amounts of indicators which are purpose of the projection32 Not applicable, as the disclosure of projections and estimates is optional.
11.2 - Monitoring of and amendments to the projections disclosed
11.2. If the issuer has disclosed projections for the development of its indicators during the last 3 fiscal years:
a. indicate which projections have been replaced by new projections included in the form and which of them have been repeated in the form Not applicable, as the disclosure of projections and estimates is optional.
b. as to projections related to past periods, compare the projected information with the effective performance of indicators, clearly indicating the reasons that led to bias in projections Not applicable, as the disclosure of projections and estimates is optional.
c. as to projections related to periods in progress, inform whether the projections remain valid on the date the form is filed, and where applicable, explain why the projections were abandoned or replaced. Not applicable, as the disclosure of projections and estimates is optional.
32
The information included in the annual disclosure of the reference form must refer to the last 3 fiscal years. When the reference form is disclosed upon request of registration of public securities offering, the information must refer to the last 3 fiscal years and current fiscal year.
12.1 - Description of the administrative structure 12.1. Describe the issuer's administrative structure, as established in its Bylaws and internal regulations, identifying: a. duties of each body and committee The Company is managed by a Board of Directors and by a Board of Executive Officers. In accordance with its Bylaws, the Company also has a non-permanent Fiscal Council which is currently installed at the Company. The Board of Directors consists of, at least, 5 and, at most, 13 sitting members and their respective alternates with a 2-year combined term of office and reelection are allowed. The Board of Executive Officers consists of up to 8 officers, as follows: one Chief Executive Officer; one Chief Financial Officer and Investor Relations Officer; one Chief People Officer; one Business Management Officer; one Energy Officer; one Distribution Officer; one New Business and Institutional Officer; and one Legal Officer, all of them shall have a 3year term of office and are eligible for reelection. The Bylaws allow for the creation, by the Board of Directors, of committees responsible for the creation of proposals or recommendations to be presented to the Board of Directors. Currently, the Company has the following committees: Audit Committee, Finance Committee, Management Committee, Governance and Sustainability Committee and Human Resources Committee. Board of Directors It shall be incumbent upon the Board of Directors, pursuant to the Companys Bylaws and without prejudice of other duties attributed by laws: I to guide in general the Companys businesses; II to call for the Shareholders Meeting; III to elect and dismiss the Chief Executive Officer; IV to elect and dismiss other members of the Board of Executive Officers; V to render an opinion on the Management report, the Board of Executive Officers accounts and the consolidated balance sheets, which shall be submitted for its examination; VI to inspect the executive officers management, examining, at any time, the Companys records and documents, requesting information on agreements entered into or to be entered into, and any other acts;
12.1 - Description of the administrative structure VII to establish the distribution of the Company's executive officers compensation, if globally set out by the shareholders meeting and approve the general rules for the Companys payroll policy; VIII - in compliance with the legal provisions and after hearing the Fiscal Council, if this is operating, to approve the Companys dividends policy and declare, during the fiscal year in progress and until the shareholders meeting, interim dividends, including as a partial or total anticipation of the mandatory minimum dividend to the profit account verified in halfyearly, quarterly balance sheet or of a shorter period or retained earnings or profit reserves existing in the last balance sheet, as well as to resolve on the approval and the payment of interest on equity; IX to render an opinion on the creation of any capital reserve for contingencies and/or any profit reserve, as well as any operation or mechanism that may result in the reduction of profits to be distributed to shareholders by the Company or, indirectly, by its subsidiaries; X to approve any of the Companys business, annual or multi-year budget plans and their reviews. XI to resolve on the creation of any lien on the Companys assets and property, or the pledge or assignment of revenues or receivables to collateralize financial operations or not to be entered into by the Company, whenever the total amount of the assets purpose of the guarantee exceeds five percent (5%) of the Companys total shareholders equity, or any lower percentage set forth by the Board of Directors, determined based on the Companys most recent audited financial statements; XII to resolve on the sale of any assets comprising the Companys permanent assets whose amount exceeds five percent (5%) of the Companys total permanent assets, determined based on the Companys most recent audited financial statements; XIII to resolve on the acquisition of any assets comprising the Companys permanent assets whose amount exceeds five percent (5%) of the Companys total shareholders equity, or any lower percentage to be set forth by the Board of Directors, determined based on the Companys most recent audited financial statements; XIV to resolve on any legal business the purpose of which is the acquisition or sale, or also, the creation of encumbrances of any nature by the Company over equity interests, securities, subscription or acquisition rights;
12.1 - Description of the administrative structure XV to resolve on the Company and any of its subsidiaries contracting liabilities in a single operation or in a series of binding operations, in an amount which exceeds five million reais (R$5,000,000.00), not estimated in the Companys annual budget; XVI to approve the Companys association, under any circumstance, with third parties, including a joint venture, a consortium, or the Companys interest in other entities, observing the limits of Article 256 of the Brazilian Corporation Law; XVII to approve investments (rather than those provided for in item XVI above of Article 11 of the Companys Bylaws and except for the cases mentioned in Article 256 of the Brazilian Corporation Law) in a single operation or in a series of related operations involving amounts exceeding five million reais (R$5,000,000.00), and this amount shall be reviewed every two (2) years at the shareholders meeting; XVIII to approve the interest of the Company or subsidiary in any business which involves the Companys shareholders, or their related parties, or any individual or legal entity in which the Companys shareholders or their related parties have a direct or indirect economic interest, in compliance with the provisions in Paragraph 1 of Article 11 of the Company's Bylaws; XIX to authorize the practice of any extraordinary management act not covered by laws or these Bylaws, under the responsibility of other corporate bodies; XX to approve the policy that restricts Companys loan granting; XXI to render an opinion on the redemption, amortization or acquisition by the Company of its shares to be held in treasury for subsequent cancellation and/or sale pursuant to the applicable legislation; XXII to resolve on the appointment of attorneys-in-fact for the execution of the acts listed in Article 11 of the Companys Bylaws; XXIII to resolve on the issuance of shares within the authorized limit of capital solely for the purposes of meeting the exercise of right granted by the warrants, and the issuance of shares shall strictly observe the conditions set forth in the warrants; XXIV to resolve on the issuance of commercial papers and/or other similar credit instruments intended for distribution on the capital markets; XXV to select and dismiss independent auditors, as well as amend the Companys accounting and tax policies; XXVI to render an opinion on Lights deregistering as a publicly-held company;
12.1 - Description of the administrative structure XXVII to render an opinion on the dissolution and liquidation, or also authorize the Companys management to file for in-court or out-of-court reorganization proceedings, or acknowledge the bankruptcy of the Company or of its subsidiaries; XXVIII to create Committees that shall be responsible for preparing proposals or making recommendations to the Board of Directors, and define their respective duties, compensation and operational rules; XXIX to establish the Companys ethical and behavioral standards, ensuring compliance with current legislation, under the Companys institutional responsibility, monitoring the Companys financial management and ensuring total transparency about the Companys main risks; XXX to prepare and amend the Board of Directors Internal Regulations; XXXI to approve the voting to be cast by the Companys executive officers during the exercise of the Companys rights in the capacity of shareholder or quotaholder of another company; and XXXII to approve stock option or subscription programs for the Companys managers and employees or of other companies controlled by the Company. Board of Executive Officers It shall be incumbent upon the Board of Executive Officers, as a joint committee, in compliance with the restrictions of the prevailing laws to practice all the acts necessary to ensure the Companys regular operations, specifically: I. to establish specific policies and guidelines deriving from the general business guidance set by the Board of Directors; II. to approve and alter the Companys organic structure, defining the duties and scope of administrative units and staff, as well as the in-house rules and procedures, observing the scope of authority of the Board of Directors and the provisions of the Companys Bylaws; III. to examine and forward the strategic planning, as well its reviews, including schedules, investment amount and allocation provided for therein for the Board of Directors approval; IV. to prepare and forward the Annual Budget for approval of the Board of Directors, which shall reflect the strategic planning in effect, as well as its reviews; V. to approve the names appointed by the executive officers to fill the positions directly subordinated to them, as well as to dismiss them;
12.1 - Description of the administrative structure VI. to grant authority to the executive officers to severally decide upon matters included in the Board of Executive Officers duties; VII. to grant powers to the Executive Officers and employees to authorize expenses, setting limits and conditions; VIII. to resolve on the sale and acquisition of any asset composing the Companys permanent assets, the amount of which is equal to or lower than five per cent (5%) of the total amount of the Companys shareholders equity, established based on the Companys most recent audited financial statements, which shall be approved by the Board of Directors in the cases provided for in Article 11, item XVII of the Companys Bylaws; IX. to approve the granting of Powers of Attorneys by the Company; X. to approve the scope of authority for the operations included in the Companys regular businesses and not relying on the approval of the Board of Directors; and Xl. to submit the Companys Policies and Strategies for the approval of the Board of Directors, as well as other matters under the responsibility of the Board of Directors. For the specific duties of each member of the Companys Board of Executive Officers, see item 12.1 (d) below. Fiscal Council The Company has a non-permanent Fiscal Council that performs the following duties, pursuant to the Brazilian Corporation Law: I any member can oversee the Managements acts and check the compliance with its legal and statutory duties; II render an opinion on the annual Management report and include additional information in its report deemed necessary or useful in resolutions of the shareholders meeting; III render an opinion on Management bodies proposals to be submitted to the shareholders meeting, related to the change in the capital stock, issue of debentures or warrants, investment plans or capital budgets, distribution of dividends, transformation, consolidation, merger or spin-off; IV- any member may denounce any errors, frauds or crimes they discover to the Managements bodies, and if Management does not take the measures necessary to protect the Companys interests, this member shall submit them to the shareholders meeting, and suggest useful measures to the Company;
12.1 - Description of the administrative structure V call for annual shareholders meeting, if Managements bodies delay the call for more than one (1) month, and special shareholders meetings whenever they have serious or urgent motives, including the matters deemed necessary in the meetings agenda; VI analyze, at least quarterly, the balance sheet and other financial statements periodically prepared by the Company; VII - examine financial statements for the fiscal year and render an option thereon; and VIII - exercise these duties, during liquidation period, in view of special provisions regulating it. Audit Committee The Companys Audit Committee is made up of 4 members, elected by the Board of Directors among the members of the Company's board. This body's duties are as follows: I - to analyze and approve the terms of the quarterly financial information (ITR) and the standardized financial statements (DFP) prior to their publication. II - to monitor and assure the quality and integrity of the Companys financial information; III - to analyze adequacy, effectiveness and risks in the internal control processes; IV - to monitor recommendations and evaluations by independent auditors and the performance of internal auditors; V - to check for irregularities in the audit reports and to apply corrective measures; VI - to support the Management; VII - to monitor internal control processes and guide the implementation of corrective mechanisms in the case of errors, frauds or crimes; VIII - to monitor the work of internal and external auditors and to check on the procedures to correct noted errors; IX - to review and recommend the accounting principles used and their eventual changes; X - to establish the processes (frequency and extent) for reviewing the financial information; XI - to compare the Companys financial statements reporting practices with market players. XII - to check if the Company is observing the Novo Mercado listing segment of the So Paulo Stock Exchange; XIII - to meet periodically with internal and external auditors in order to understand the controls implemented and to delve deeper into relevant questions;
12.1 - Description of the administrative structure XVI - to review and assess the effectiveness of control processes, especially at highrisk departments; XV - to set action plans to correct processes and minimize identified risks; XVI - to formally monitor any current or potential disagreements relevant for the Company; XVII - to establish the objectives and main activities, both for the accounting department (external auditors) and for the internal audit department; XVIII - to assist the Board of Directors to establish quality standards for financial reporting and internal controls; XIX - to ensure the independence and objectivity of external and internal auditors; XX - to assess the quality of financial reports and the risks involved in the accounting principles used and propose changes; XXI - to propose the processes (periodicity and extent) to review the financial information; XXII - to assess the adequacy of the Internal Auditing Plan and the effectiveness of internal controls and propose any changes; XXIII - to ensure that the risk management policy and strategy reflect the visions of the Board of Directors; XIV - to monitor identified problems; and XV to inform the Board of Directors and monitor the solution of identified problems. Finance Committee The Companys Finance Committee is made up of 4 members, elected by the Board of Directors among the members of the Company's board. The body's duties are as follows: I - to identify financial needs and to propose mechanisms to meet said needs; II - to monitor the Companys financial ratios, including: (i) cash flows, (ii) investments, (iii) loans/refinancing of long-term debts, (iv) risk analysis in exchange exposure, guarantees in operations and leverage level, (v) dividend policy, (vi) issuance of shares, and (vii) issuance of debt instruments; III - to verify investments, profit sharing, pensions and benefits; IV - to interact with the Board of Executive Officers to understand the needs of priority financing; V - to identify opportunities to improve the cost of capital; and
12.1 - Description of the administrative structure VI - to analyze the company's financial structure and to recommend corrective actions, if necessary. Management Committee The Companys Management Committee is made up of 4 members, elected by the Board of Directors among the members of the Company's board. The body's duties are as follows: I - to assist in the definition of the companys performance strategies, interacting with executives to develop the Strategic Plan, supported by strategic and budgetary guidelines, general and specific targets, indicators, prospects and metrics; II - to monitor the Company's operational performance, analyzing and summarizing technical and operational issues; III - to check compliance with targets, besides suggesting corrections; IV - to monitor market risks and to propose initiatives to minimize those risks; V - to monitor the business' long-term trends; VI - to assist in defining general targets; VII - to assist in the definition of long-term specific targets, including (i) focus on business/sector; (ii) growth strategies; and (iii) expected return; VIII - to discuss specific annual targets; IX - to discuss short-term and long-term economic indicators; X - to assist in the definition of metrics and guidelines for the Companys budget; XI - to discuss technical issues with executives or external specialists and report the main points to the Board of Directors; and XII - to discuss with the Board of Executive Officers, the feasibility of meeting the established targets and to suggest corrective measures for any deviations to the Board of Directors. Governance and Sustainability Committee The Companys Governance and Sustainability Committee is made up of 4 members, elected by the Board of Directors among the members of the Company's board. The body's duties are as follows: I - to propose governance and sustainability practices and rules that ensure the proper operation of the Board of Directors; II - to evaluate the Companys corporate governance and sustainability;
12.1 - Description of the administrative structure III - to propose the compensation policy and to formally evaluate the CEO and Vice CFO; IV - to participate in the recruiting of independent board members, developing and managing the respective selection process; V to monitor the operation of the Board of Directors so that to ensure its capability, independence and diversity; VI - to develop and periodically review the job description of the Board of Directors; VII - to propose the division of responsibilities among Committees and to regularly reevaluate the structure of the Committees. VIII - to evaluate the need of new members for the Committees and appoint the nominees; IX - to lead the process of evaluating the Board of Directors, reviewing, distributing and consolidating questionnaires, besides proposing changes in the operation of the Board of Directors; X - to lead the process of evaluating the Chief Executive Officer and the Vice Chief Financial Officer, reviewing, distributing and consolidating questionnaires, besides discussing conclusions and determining actions to be taken; XI - to study and suggest to the Board of Directors for the compensation of the Chief Executive Officer and Vice Chief Financial Officer based on its evaluations; XII - to supervise the Board of Directors operations, including (i) the meeting schedule, (ii) the agenda, (iii) the flow of information, and (iv) the establishment of meetings and other communications with shareholders, Board of Executive Officers and other stakeholders; and XIII - to evaluate the Companys career and succession planning process, conducted by the Chief Executive Officer; XIV - to assist the Board of Directors in the dissemination of the strategic concept of sustainability, so that to ensure its adhesion to Companys long-term strategy; XV - to suggest to the Board of Directors, the Companys general guidelines when applying the principles of sustainability; and XVI - to monitor the Companys initiatives concerning the sustainable development.
12.1 - Description of the administrative structure
Human Resources Committee The Companys Human Resources Committee is made up of 4 members, elected by the Board of Directors among the members of the Company's board. The body's duties are as follows: I - to examine and to express an opinion on the compensation policies and to monitor the application of the fixed and variable compensation policy; II - to manage and recommend changes in the executives compensation criteria; III to revise the compensation package and recommend it to the Board of Directors; IV to revise and propose the executives annual bonus to the Board of Directors; V - to revise and recommend executives evaluation criteria; VI - to revise and recommend executives formal evaluation; VII - to assist the Company's Chief Executive Officer to identify and nominate executives for key positions; VIII - to revise the management development and succession plan of key executives; and IX - to revise and recommend the executives development plans.
b. of committees
installation date of the Fiscal Council, if not permanent and of creation
The Fiscal Council was installed at the Annual and Special Shareholders meetings held on April 28, 2011. Committees were created at the Board of Directors Meeting held on December 18, 2006. c. mechanisms to assess the performance of each body or committee The evaluation, an instrument approved by the Board of Directors, analyzes the performance and operation of the Board of Directors, as well as interactions between the Boards members, the Secretary General, the Committees and the Chief Executive Officer. The following topics are analyzed: The flow of information between the Board of Executive Officers and the Board
of Directors; How meetings will be conducted and focused; Agility and quality of decisions; Level of responsibility;
12.1 - Description of the administrative structure Internal consonance between board members; Board members individual conduct.
The Chief Executive Officer is evaluated under the aspects, such as vision, strategic planning, leadership, the Companys results, external relationship and with the Board of Directors, development of key executives and creation of opportunities for Light.
d.
concerning the members of the Board of Executive Officers, their duties and
individual powers The Officers duties in view of their position held are the following: I - Chief Executive Officer: a) preside over and lead the Companys works; b) represent the Company in court, as plaintiff or defendant; c) sign, together with one of the Executive Officers, documents under the Companys responsibility; d) submit an annual report on the Companys business to the Board of Directors and the Annual Shareholders meeting; e) propose managerial positions at the Company for the Board of Executive Officers approval, together with the Executive Officer to whom the employee is subordinated; f) conduct internal audit, legal, secretary, social communication activities and those related to Instituto Light; g) propose managerial positions and for the fiscal councils of the Companys whollyowned subsidiaries, subsidiaries and associated companies, as well as Pension Plans and Health; h) coordinate the preparation and consolidation of the Companys Strategic Planning with the participation of all of the Companys Executive Officers; i) coordinate the regulations and tariffs-related issues; j) coordinate the Companys risk management in all its actions and propose risk policies. II Chief Financial and Investor Relations Officer: a) substitute the Chief Executive Officer during his absences and impediments; b) control the financial resources required in the operation and expansion of the Company, in accordance with the Annual Budget, conducting loans and financing processes, as well as all related services;
12.1 - Description of the administrative structure c) account for and control the Companys economic and financial operations; d) detail the financial schedule in the short, medium and long terms, as provided for in the Companys Multi-Year and Strategic Plan and Annual Budget; e) control the Companys capital stock, propose the shareholding policy, as well as suggest the dividend policy; f) assume the responsibility for providing information to investors, the Brazilian Securities and Exchange Commission - CVM and domestic and international stock markets or over-the-counter markets, as well as to corresponding regulatory or oversight entities, and maintain the Companys records with said institutions up to date; g) represent the Company before the CVM, stock markets and other capital markets entities; h) promote the financial management of the Companys interest in wholly-owned subsidiaries, subsidiaries and associated companies within the criteria of good corporate governance and ensuring the compliance with its business plan, observing the Companys Bylaws; i) propose to the Board of Executive Officers, for approval or forwarding to the Board of Directors or the Shareholders Meeting and in accordance with the scope of authority defined in the Bylaws, investment of capital, the exercise of preemptive rights and the signing of voting agreements in wholly-owned subsidiaries, subsidiaries and associated companies, as well as in consortium in which the Company participates; j) coordinate the preparation and consolidation of the Annual Budget with the participation of all of the Companys Executive Officers; k) determine service costs and establish an insurance policy, as outlined in the Companys Multi-Year and Strategic Plan; l) coordinate the Companys financial risk management in all its actions and propose risk policies; m) monitor the execution of investment projects, according to goals and results approved by the Board of Executive Officers and Board of Directors; n) conduct the economic and financial evaluation of the Companys investment projects, excluding those under the responsibility of the New Business and Institutional Officer; o) conduct capital markets and investor relations-related activities. III Chief People Officer:
12.1 - Description of the administrative structure a) provide the Company with adequate personnel; b) define the Companys human resources policy (including benefits), guide and promote its application; c) guide and conduct activities related to organizational studies and their documentation; d) conduct the negotiation of collective bargaining agreements, in accordance with guidelines and limits approved by the Board of Directors, forwarding the negotiated proposals for the Board of Executive Officers approval; e) submit to the Board of Executive Officers the evaluations of the leadership succession development program, implemented by the Company, aiming at assisting the development of leadership succession implemented by the Company and assist the executive officers in the resolutions related to the nomination of employees for managerial positions; f) promote improved social responsibility and sustainability policies; g) coordinate the Companys performance strategy in relation to social responsibility; h) propose to the Chief Executive Officer, to be forwarded to the Board of Executive Officers for approval, the nominations of employees to integrate the Union Negotiation Committee among the Companys employees and other companies involved in these negotiations, as well as the designation of its coordinator; i) manage and promote the Companys occupational safety policy; j) coordinate policies, processes and means of property security, occupational safety and surveillance approved by the Company; k) manage industrial safety in generation and transmission facilities; l) propose policies and guidelines that seek to assure the integrity of distribution installations and manage the security of these facilities; m) define policies and standards for support services, such as transportation, administrative communication, surveillance and adequacy of the staffs workplaces; n) provide the Company with infrastructure and administrative support resources and services. IV - Business Management Officer: a) define, conduct and oversee the Companys telecommunications and information technology policy; b) project, implement and preserve the Companys telecommunications and information technology systems;
12.1 - Description of the administrative structure c) manage the process of contracting works and services and acquisition and sale of materials and properties; d) control the quality of material acquired and the qualification of contracted service providers; e) manage and control the Companys inventories, select and recover used material, as well as dispose of surplus, useless or waste material; f) promote and implement programs that increment, develop and continuously improve material suppliers and service providers of the Companys interest, severally or in cooperation with other executive officers or development agencies and professional associations; g) coordinate the implementation and maintenance of the Companys quality systems; h) define policies and guidelines for technological development and technical standardization; i) coordinate the Companys performance strategy in relation to technological process and strategic management of technology; j) promote the implementation of programs focused on the Companys technological development. V Energy Officer: a) prepare the generation and transmission planning; b) operate and maintain generation systems and related monitoring and telecontrol systems, as well as transmission systems and related monitoring and telecontrol systems; c) develop and conduct hydrometeorological actions of the Companys interest; d) represent the Company at the Electric System National Operator ONS, the Brazilian Association of Electric Power Generation Companies Abragee, the Electric Power Trading Chamber - CCEE and other entities representing the electric power generation, transmission and trading sectors; e) manage the Company's laboratories and central workshops; f) coordinate and implement renovation projects, modernization, improvement, restart and shutting down of generation and transmission facilities; g) propose and implement policies and guidelines to ensure the integrity of generation and transmission facilities;
12.1 - Description of the administrative structure h) manage the implementation of generation and co-generation expansion projects, promoting the project, its construction and assembly and ensure the physical and financial execution of these projects; i) provide technical support to negotiations that will implement transmission, generation and co-generation expansion projects and participate in the negotiation of documents related to consortia and special purpose entities; j) ensure the quality of energy supplied to consumers directly related to the transmission system; k) manage operations resulting from the interconnection of the Companys transmission electric system with other companies, as well as the connection of agents to the Companys basic network; l) propose and implement measures seeking to ensure the connection of several electricity sector agents who are connected to the Company's transmission system; m) manage the implementation of transmission expansion projects, promoting the project, its construction and assembly and ensure the physical and financial execution of the projects; o) define environmental policies and guidelines; p) coordinate the Companys performance strategy in relation to the environment; q) monitor the conduction of plans in order to meet environmental guidelines; r) prepare market researches, studies, analyses and projections of the Companys interest; s) coordinate the planning and execution of energy purchase in order to serve the Companys market and sell the electricity derived from its own generation sources; t) coordinate the purchase and sale of electricity in its various forms and modes, including imports, exports and the participation in all electricity specialized market segments; u) coordinate the rendering of brokerage services related to the trading of energy with any authorized agent; v) coordinate the definition of purchase and sale prices for electricity and propose them to the Board of Executive Officers approval; w) establish commercial relationships and coordinate the sale of electricity and services to consumers, individually or groups of consumers, at voltages higher than or equal to 230 kV; x) identify, measure and manage risks related to the trading of energy;
12.1 - Description of the administrative structure y) negotiate and manage the trading of transportation and connection of any person or entity to have access to the distribution system; z) negotiate and manage the Transmission System Usage Agreements with the Electric System National Operator ONS and connection of the Distribution System with transmission units; aa) manage the trading, together with the New Business Development and Institutional Officer, of the Companys carbon credits. VI Distribution Officer: a) seek the continuous improvement of the operational processes, utilizing new technologies and methods, in order to improve the quality and reduce the cost of these activities; b) operate the distribution electric system and related monitoring and telecontrol systems; c) seek the continuous improvement of maintenance processes, utilizing new technologies and methods, in order to improve the quality and reduce the cost of these activities; d) maintain the distribution electric system and related monitoring and telecontrol systems; e) ensure the quality of energy supplied to consumers directly connected to the Companys distribution system; f) prepare the planning of the Companys distribution system; g) manage the implementation of distribution facilities, including the preparation and execution of the project, construction and assembly; h) propose and implement the customer service policies under this executive boards responsibility; i) develop programs and actions for consumers with demand up to 138Kv, in order to better utilize the electric power; j) establish commercial and marketing relationships and coordinate the sale of electric power and services for consumers of up to 138Kv; k) conduct environmental programs and actions within the scope of the Board of Executive Officers authority; l) represent the Company at the Brazilian Association of Electric Power Distribution Companies Abradee and other entities in the distribution sector;
12.1 - Description of the administrative structure m) coordinate the Companys performance strategy in relation to energy efficiency; n) prepare market researches, studies, analyses and projections for the Companys concession area. VII - New Business and Institutional Officer: a) promote the prospecting, analysis and development of the Companys new business in the electric power generation, transmission and distribution segments, as well as in other activities directly or indirectly related to its corporate purpose; b) promote technical feasibility, economic and financial and environmental analyses of new business for the Company, together with the executive boards related to the referred businesses; c) coordinate negotiations and implement partnerships, consortia, special purpose entities and other forms of association with public and private entities necessary to develop new business, as well as the negotiation of the projects contracts and corporate documents, together with the Chief Financial and Investor Relations Officer; d) coordinate the Companys participation in bidding processes to obtain the granting of concessions in its performance areas; e) prospect, coordinate, evaluate and structure opportunities to acquire new assets in the electric power sector; f) coordinate the Companys participation in new business auctions held by the Brazilian Electricity Regulatory Agency Aneel; g) promote the prospecting and analysis, within the Companys scope of business opportunities related to the utilization of carbon credits; h) carry on the economic and financial evaluation of the Companys investment projects, except for those under the responsibility of the Chief Financial and Investor Relations Officer; i) define alternative energy policies and guidelines; j) conduct institutional relationship activities; k) promote the management of the Companys interests in wholly-owned subsidiaries, subsidiaries and associated companies within the good corporate governance criteria and ensuring the compliance with its business plan, observing the Companys Bylaws; l) render opinions on the execution or amendment to agreements or also the terms of any instrument, whenever these agreements or instruments are related to equity interests;
12.1 - Description of the administrative structure m) coordinate the processes to sell equity interest held by the Company, its whollyowned subsidiaries, subsidiaries and associated companies, upon approval of the Board of Directors; n) propose corporate governance policy; o) conduct ombudsman activities. VII Legal Officer a) coordinate, execute and control legal departments issues; b) support other departments of the Company, including, when requested, whollyowned subsidiaries, associated companies and subsidiaries, in relation to legal aspects; c) manage all the administrative and legal proceedings to which the Company is
party and, periodically, or when requested, notify the board of executive officers and the board of directors on the procedural and legal strategy adopted, as well as the progress of these proceedings.
e.
mechanisms to evaluate the performance of the members of the board
of directors, committees and board of executive officers The evaluation, an instrument approved by the Board of Directors, analyzes the operation and performance of the Board of Directors, as well as interactions among the Boards members, the Secretary General, Committees and the Chief Executive Officer. The following topics are analyzed: Flow of information between Board of Executive Officers and Board of Directors; How meetings are conducted and focused; Agility of and quality of decisions; Level of responsibility; Internal consonance between board members; Board members individual conduct.
The Chief Executive Officer is evaluated under the aspects, such as vision, strategic planning, leadership, the Companys results, external relationship and with the Board of Directors, development of key executives and creation of opportunities for Light.
12.2 Rules, policies and practices related to the shareholders meetings 12.2. Describe rules, policies and practices related to the shareholders meetings, including: a. call notice terms The Companys shareholders meetings are called for, at least, 15 days in advance, in a first call, and 8 days in advance in the second call.
b.
duties The shareholders meeting is responsible for resolving on the following matters,
pursuant to the Companys Bylaws and the Brazilian Corporation Law: I - restating the Companys Bylaws; II - electing or dismissing, at any time, the Companys management or fiscal council members, except for the provisions of item II of Article 142 of the Brazilian Corporation Law; III yearly examining the Managements accounts and resolve on the financial statements submitted thereby; IV - authorizing the issue of debentures, except for the provisions of Paragraph 1, Article 59 of the Brazilian Corporation Law; V - suspending the exercise of shareholders rights; VI - resolving on the assets valuation to which the shareholder is tendering to compose the capital stock; VII - authorize the issue of profit-sharing bonds; VIII - resolve on the transformation, merger, consolidation and spin-off of the Company, its dissolution and liquidation, election and removal of liquidators and examine the accounts; IX - authorize the Management to adjudicate bankruptcy and file for reorganization proceedings; X - to resolve on the Companys delisting from the Novo Mercado of the So Paulo Stock Exchange - BOVESPA; and, XI - to elect, among those appointed in a three-name list by the Board of Directors, the specialized company responsible for the preparation of the appraisal report of the Company shares, in the event of deregistering as a publicly-held company or delisting from the Novo Mercado.
12.2 Rules, policies and practices related to the shareholders meetings c. addresses (physical or electronic) where documents related to the
shareholders meeting will be available for shareholders analysis Documents will be available to shareholders at the Companys headquarters, in the City and State of Rio de Janeiro, at Avenida Marechal Floriano n 168, parte, 2 andar, Corredor A, Centro, and on the Companys website (www.light.com.br) and at the Brazilian Securities and Exchange Commission website (www.cvm.gov.br).
d.
identification and management of conflicts of interest The Company informs that it does not have any mechanism or policy to identify and
solve conflicts of interest besides those required by law. The Company will solve any future conflicts of interests on an individual basis, as required.
e.
request of proxies by the Management to exercise the voting right The Company accepts the exercise of voting right by proxy, as long as the
representative is validly empowered and the power of attorney contains the vote to be cast.
f.
formalities necessary to accept proxies granted by shareholders, indicating if
the issuer accepts proxies granted by shareholders electronically Shareholders attorneys-in-fact, pursuant to Article 21, Paragraph 2 of the Companys Bylaws, shall file their respective proxies duly regularized pursuant to the law (notarized and proof of authority of signatories) at the Companys address, at least, seventy-two (72) hours before the meeting. Shareholders or their legal representative shall refer to the shareholders meeting with (i) their identity documents; and (ii) a document issued by the depositary financial institution evidencing their ownership of the book-entry shares or held under custody, pursuant to Article 126 of Law 6,404/76. The Company does not accept proxies granted electronically.
g.
maintenance of forums and Web pages to receive and share comments
posted by shareholders on the agendas of meetings The Company does not maintain of forums and Web pages to receive and share comments posted by shareholders on the agendas of meetings.
h.
live broadcast of the video and/or audio of meetings The Company does not conduct live broadcasts of the video and/or audio of meetings.
12.2 Rules, policies and practices related to the shareholders meetings i. mechanisms to enable the inclusion of shareholders proposals in the agenda The Company has not adopt yet a policy or mechanisms to enable the inclusion of shareholders proposals in the agenda of its shareholders meetings. However, the Company is able to answer these requests, if they are submitted and pursuant to all legal and regulatory terms, on a case-by-case basis.
12.3 - Dates and newspapers that publish the information required by Law 6,404/76
Fiscal year
12/31/2010
Publication
Financial Statements
Newspaper Brazilian State

Official Gazette of the State of Rio de Janeiro - ED Jornal do Commercio do Brasil RJ
Dates
3/31/2011 3/31/2011
Notice to shareholders announcing the availability of the financial statements
Official Gazette of the State of Rio de Janeiro - ED Official Gazette of the State of Rio de Janeiro RJ
3/30/2011 3/28/2011 3/29/2011
Jornal do Commercio do Brasil ED
3/28/2011 3/29/2011
Jornal do Commercio do Brasil - RJ Call notice for the annual shareholders meeting to analyze the financial statements
3/30/2011
Official Gazette of the State of Rio de Janeiro - ED Official Gazette of the State of Rio de Janeiro - RJ
4/15/2011 4/13/2011 4/14/2011
Jornal do Commercio do Brasil - ED
4/13/2011 4/14/2011
Jornal do Commercio do Brasil - RJ Minutes of the annual shareholders meeting that analyzed the financial statements Official Gazette of the State of Rio de Janeiro - ED Jornal do Commercio do Brasil - RJ 12/31/2009 Financial Statements Official Gazette of the State of Rio de Janeiro - ED Jornal do Commercio do Brasil - RJ Notice to shareholders announcing the availability of the financial statements Official Gazette of the State of Rio de Janeiro - ED Official Gazette of the State of Rio de Janeiro - RJ
4/15/2011 4/28/2011 4/28/2011 2/11/2010 2/11/2010 2/23/2010 2/19/2010 2/22/2010
Jornal do Commercio do Brasil - ED
2/19/2010 2/22/2010
Jornal do Commercio do Brasil - RJ Call notice for the annual shareholders meeting to analyze the financial statements Official Gazette of the State of Rio de Janeiro - ED
2/23/2010 3/5/2010 3/9/2010
Official Gazette of the State of Rio de Janeiro - RJ
3/8/2010 3/9/2010
Jornal do Commercio do Brasil - ED Jornal do Commercio do Brasil - RJ Minutes of the annual shareholders meeting that analyzed the financial statements Jornal do Commercio do Brasil - ED Jornal do Commercio do Brasil - RJ 12/31/2008 Financial Statements Official Gazette of the State of Rio de Janeiro - ED Jornal do Commercio do Brasil - RJ Notice to shareholders announcing the availability of the financial statements Jornal do Commercio do Brasil - ED Official Gazette of the State of Rio de Janeiro - RJ
3/8/2010 3/5/2010 3/26/2010 3/26/2010 3/3/2009 3/3/2009 2/17/2009 2/18/2009 2/16/2009 2/17/2009 2/18/2009
Jornal do Commercio do Brasil - RJ
2/16/2009
12.3 - Dates and newspapers that publish the information required by Law 6,404/76
Fiscal year
12/31/2008
Publication
Call notice for the annual shareholders meeting to analyze the financial statements
Newspaper Brazilian State

Official Gazette of the State of Rio de Janeiro - ED Jornal do Commercio do Brasil - RJ
Dates
3/3/2009 3/3/2009 4/2/2009 4/2/2009
Minutes of the annual shareholders meeting that analyzed the financial statements
Jornal do Commercio do Brasil - ED Jornal do Commercio do Brasil - RJ
12.4 Rules, policies and practices related to the Board of Directors 12.4. Describe rules, policies and practices related to the Board of Directors, indicating the following: a. frequency of meetings The Board of Directors shall meet, ordinarily, once a month, and extraordinarily, whenever a meeting is called by any of its members, or by the Chief Executive Officer, at least, five (5) days in advance. Meetings may be held by conference call, videoconference, mail or by any other means of communication. The meetings of the Board of Directors only shall be deemed as validly called to order if they are attended by the majority of sitting members or acting deputies. The decisions of the Board of Directors shall be made by the vote of the majority of the attendees. Any ordinary meeting of the Board of Directors may not be held in the lack of any issue to be decided by it.
b.
if any, provisions of the shareholders agreement that restrict or bind
the exercise of voting right of the members of the Board of Directors Pursuant to the Companys Shareholders Agreement entered into on December 30, 2009, between Companhia Energtica de Minas Gerais CEMIG, Andrade Gutierrez Concesses S.A., Luce Empreendimentos e Participaes S.A. and RME Rio Minas Energia Participaes S.A., the Management appointed by the Parties shall exercise their voting right according to the common voting established in previous meetings, which shall be held before any shareholders meeting or Board of Directors Meeting. As a rule, the matters will be approved in a previous meeting that contains affirmative votes representing more than half of all shares. However, there are certain issues, provided for in the Shareholders Agreement, that require a qualified quorum, as indicated in item 15.5 (d) below of this Reference Form.
c.
rules to identify and manage conflict of interests Pursuant to Article 11, Paragraph 1 of the Companys Bylaws, in the resolutions on
the performance of business by the Company or its subsidiaries with shareholders or related parties, the board member appointed by shareholder who intends to conduct said business shall not attend the meeting when this topic is discussed and voted, in resolution to be taken by the majority of other board members.
12.5 Description of the arbitration clause to solve conflicts by means of arbitration 12.5. If any, describe the arbitration clause in the Companys Bylaws to solve conflicts between shareholders and the between shareholders and the issuer by means of arbitration Article 33 - The Company, its Shareholders, Management and the members of the Fiscal Council undertake to resolve, through arbitration, all and any disputes or controversies that may arise among them, related to or resulting from, especially, the application, validity, efficiency, construal, violation and their effects, of the provisions contained in the Brazilian Corporation Law, in the Companys Bylaws, and in the rules issued by the Brazilian Monetary Council, the Brazilian Central Bank and the Brazilian Securities and Exchange Commission, besides those rules applicable to the operation of the capital markets in general, in addition to those in the Novo Mercado Listing Rules, in the Novo Mercado Listing Agreement and in the Market Arbitration Panel Rules.
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12.6 / 8 Structure and professional experience of the Management and Fiscal Council
Name CPF (individual taxpayers register) Other positions held at the Issuer Ana Silvia Corso Matte 263.636.150-20 Not applicable Evandro Leite Vasconcelos 251 .704.146-68 Jerson Kelman 155.082.937-87 Not applicable Jos Humberto de Castro 160.463.316-68 Not applicable Paulo Carvalho Filho 221.396.217-00 Not applicable Paulo Roberto Ribeiro Pinto 126.023.707-97 Not applicable Joo Batista Zolini Carneiro 485.662.926-34 Chief Financial Officer Aldo Floris 038.816.107-82 Not applicable Almir Jos dos Santos 059.406.807-04 Ana Marta Horta Veloso 76 Economist 42 Only refers to the board of directors 23 - Board of directors (Deputy member) Only refers to the board of directors 3/24/2010 3/24/2010 3/24/2010 2 years Yes 2 years 62 Economist Only refers to the Board of Directors 21 Vice chairman of the board of directors 3/24/2010 3/24/2010 2 years Yes 52 Economist Only refers to the executive board 12 Investors Relations Officer 3/24/2010 3/24/2010 2 years Yes 60 Accountant Only refers to the executive board Executive Officer 3/2/2010 3/2/2010 3 years Yes 66 Engineer Only refers to the executive board Executive Officer 3/2/2010 3/2/2010 3 years Yes 59 Electrical Engineer Only refers to the executive board Executive Officer 3/2/2010 3/2/2010 3 years Yes 55 Engineer 63 Civil Engineer Only refers to the executive board Executive Officer Only refers to the executive board 10 - CEO / Managing Officer 3/2/2010 3/2/2010 3/2/2010 3/2/2010 3 years Yes 3 years Yes 51 Attorney Only refers to the executive board Executive Officer 3/2/2010 3/2/2010 3 years Yes Age Profession Management body Title Date of election Date of investiture Term of office Appointed by controlling shareholder
Version : 4
Name CPF (individual taxpayers register) Other positions held at the Issuer 804.818.416-87 Economist 22 - Board of directors (Sitting member) 3/24/2010 Yes Age Profession Management body Title Date of election Date of investiture Term of office Appointed by controlling shareholder
Member of the Audit, Finance, Management and Human Resources Committees Carlos Alberto da Cruz 374.729.257-72 60 Electrical Engineer Only refers to the board of directors 22 - Board of directors (Sitting member) 3/24/2010 3/24/2010 2 years Yes
Field Senior Engineer of Project Management and Substation Construction Carlos Augusto Leone Piani 025.323.737-84 Member of the Governance and Sustainability Committee Carlos Roberto Teixeira Junger 378.051.267-04 Member of the Audit and Management Committees Carmen Lcia Claussen Kanter 256.191.107-10 Not applicable Djalma Bastos de Morais 006.633.526-49 Member of the Governance and Sustainability Committee Elvio Lima Gaspar 626.107.917-04 Not applicable Fernando Henrique Schuffener 320.008.396-49 Not applicable Firmino Ferreira Sampaio Neto 037.101.225-20 Not applicable Joaquim Dias de Castro 909.933.140-15 32 Economist Only refers to the board of directors 23 - Board of directors (Deputy member) 3/24/2010 3/24/2010 2 years Yes 64 Businessman Only refers to the board of directors 22 - Board of directors (Sitting member) 3/24/2010 3/24/2010 2 years Yes 51 Engineer Only refers to the board of directors 23 - Board of directors (Deputy member) 3/24/2010 3/24/2010 2 years Yes 48 Engineer Only refers to the board of directors 22 - Board of directors (Sitting member) 3/24/2010 3/24/2010 2 years Yes 74 Engineer Only refers to the board of directors 22 - Board of directors (Sitting member) 3/24/2010 3/24/2010 2 years Yes 60 Architect Only refers to the board of directors 23 - Board of directors (Deputy member) 3/24/2010 3/24/2010 2 years Yes 55 Economist Only refers to the board of directors 22 - Board of directors (Sitting member) 3/24/2010 3/24/2010 2 years Yes 37 Administrator Only refers to the board of directors 23 - Board of directors (deputy member) 3/24/2010 3/24/2010 2 years Yes
Version : 4
Name CPF (individual taxpayers register) Other positions held at the Issuer Not applicable Lauro Alberto de Luca 130.016.637-15 Member of the Finance and Human Resources Committees Luiz Carlos Costeira Urquiza 591 .838.457-04 Not applicable Luiz Fernando Rolla 195.805.686-34 Not applicable Maria Silvia Bastos Marques 459.884.477-91 Not applicable Paulo Roberto Reckziegel Guedes 400.540.200-34 49 Engineer Only refers to the board of directors 23 - Board of directors (Deputy member) 3/24/2010 3/24/2010 2 years Yes 54 Business administrator Only refers to the board of directors 22 - Board of directors (Sitting member) 3/24/2010 3/24/2010 2 years Yes 62 Engineer Only refers to the board of directors 23 - Board of directors (Deputy member) 3/24/2010 3/24/2010 2 years Yes 49 Businessman Only refers to the board of directors 22 - Board of directors (Sitting member) 3/24/2010 3/24/2010 2 years Yes 62 Economist Only refers to the board of directors 23 - Board of directors (Deputy member) 3/24/2010 3/24/2010 2 years Yes Age Profession Management body Title Date of election Date of investiture Term of office Appointed by controlling shareholder
Member of the Audit, Finance, Management and Human Resources Committees Ricardo Simonsen 733.322.167-91 Member of the Governance and Sustainability Committee Sergio Alair Barroso 609.555.898-00 Member of the Governance and Sustainability Committee Raul Belens Jungmann Pinto 244.449.284-68 Not applicable Cesar Vaz de Melo Fernandes 299.529.806-04 53 Electrical Engineer Only refers to the board of directors 23 - Board of directors (Deputy member) 4/28/2011 4/28/2011 1 year Yes 59 Business consultant Only refers to the board of directors 22 - Board of directors (Sitting member) 4/28/2011 4/28/2011 1 year Yes 61 Economist Only refers to the board of directors 20 Chairman of the board of directors 3/24/2010 3/24/2010 2 years Yes 48 Mechanical Engineer Only refers to the board of directors 23 - Board of directors (Deputy member) 3/24/2010 3/24/2010 2 years Yes
Version : 4
Name CPF (individual taxpayers register) Other positions held at the Issuer Wilson Borrajo Cid 012.340.996-91 Not applicable Ari Barcelos da Silva 006.124.137-72 Not applicable Aristteles Luiz Menezes Vasconcellos Drummond 026.939.257-20 Not applicable Eduardo Gomes Santos 091 .245.197-15 Not applicable Eduardo Grande Bittencourt 003.702.400-06 Not applicable Isabel da Silva Ramos Kemmelmeier 016.751.727-90 Ricardo Genton Peixoto 028.797.707-26 Not applicable Ronald Gasto Andrade Reis 007.237.036-04 Not applicable Marcelo Lignani Siqueira 003.753.146-87 Victor Adler 75 Engineer 64 Fiscal Council 43 - F.C.(Sitting member)Elected by controlling shareholder Fiscal Council 4/28/2011 4/28/2011 1 year Yes 1 year 67 Business administrator Fiscal Council 46 - F.C. (Deputy member) Elected by controlling shareholder 3/22/2010 3/22/2010 1 year Yes 37 Engineer 38 Economist Fiscal Council 43 - F.C.(Sitting member)Elected by controlling shareholder Fiscal Council 3/22/2010 3/22/2010 3/22/2010 1 year Yes 1 year Yes 73 Accountant Fiscal Council 43 - F.C.(Sitting member)Elected by controlling shareholder 3/22/2010 3/22/2010 1 year Yes 67 Accountant Fiscal Council 46 - F.C.(Deputy member) elected by controlling shareholder 3/22/2010 3/22/2010 1 year Yes 66 Journalist Fiscal Council 43 - F.C.(Sitting member) elected by controlling shareholder 3/22/2010 3/22/2010 1 year Yes Age Profession Management body Title Date of election Date of investiture 4/28/2011 4/28/2011 Term of office Appointed by controlling shareholder 1 year Yes
70 Electrical Engineer
Only refers to the board of directors 23 Board of directors (Deputy member) Fiscal Council
68 Administrator
3/22/2010
1 year Yes
43 F.C.(Sitting member) elected by controlling shareholder 3/22/2010
46 - F.C. (Deputy member) Elected by controlling shareholder 3/22/2010
4/28/2011
Name CPF (individual taxpayers register) Other positions held at the Issuer Victor Adler - 203.840.097-00 Lawyer 45 - F.C. ( Sitting member) Elected by minority common 4/28/2011 shareholder Fiscal Council 48 - F.C. (Deputy member) Elected by common shareholder 4/28/2011 4/28/2011 Yes Age Profession Management body Title Date of election Date of investiture Term of office Appointed by controlling shareholder
Gabriel Agostini - 193.032.897-49
64 Civil Engineer
1 year Yes
Professional experience/ Statement of eventual convictions Ana Silvia Corso Matte 263.636.150-20 Born on May 30, 1958. Mrs. Matte currently serves as the Companys People Management Officer and Legal Officer. From November 2003 to August 2006, she served at Telsul Telecomunicaes S.A. as the Human Resources Officer for Telsul Group. From June 2000 to May 2003, she served at Sendas S.A. as Organizational Development and Human Resources Officer. Between September 1997 and May 2000, Mrs. Matte also served at CSN as Human Resources Officer, and served at BELCOSA Distribuidora de Cosmticos WELLA (German company) as Human Resources manager, at the Sistema Jornal do Brasil as Human Resources division manager and Labor and Employee Relations Manager and served at Companhia Brasileira de Alimentos (COBAL) as a junior attorney and chief legal counsel. Mrs. Matte holds degree in law from the Federal University of Rio Grande do Sul and a graduate certificate in human resources from the Institute of Business Administration of the Pontifical Catholic University of Rio de Janeiro (PUC-IAG-Rio de Janeiro). She also holds an MBA from PDG/EXEC (currently, Brazilian Capital Markets Institute of Rio de Janeiro). She joined the Advanced Management Program PGA 2010, INSEAD/France and Dom Cabral Foundation. She is the vice chairwoman of the ABRH/RJ (Brazilian Association of Human Resources) Council. Evandro Leite Vasconcelos 251.704.146-68 Born on November 15, 1956. Currently, Mr. Vasconcelos serves as the Companys Energy Officer, cumulating the positions of Transmission and Environment Officer of Light Servios de Eletricidade S.A. He was physics teacher for Sistema Pitgoras de Ensino and hydrology teacher in the civil engineering program at the Polytechnic Institute of the Pontifical Catholic University of Minas Gerais (PUC-Minas). At Cemig, when he started working in 1983, he was manager of the Operational Hydrometeorology division and of the Energy Planning department, Generation and Transmission Coordination Controller, He served as General Officer and chief executive officer of Rosal Energia S.A., subsidiary of CEMIG. Mr. Vasconcelos holds a bachelors degree in civil engineering from the Federal University of Minas Gerais (1980), a masters degree in water resources engineering from the Graduate School of Research and Engineering at the Federal University of Rio de Janeiro (COPPE/UFRJ) (1989) and an MBA in business management from the Getlio Vargas Foundation (1999). Jerson Kelman 155.082.937-87 Dr. Kelman is civil engineer (1971), master in hydraulics (1973) from the Federal University of Rio de Janeiro (UFRJ) and Ph.D. in hydrology and water resources from Colorado State University in 1976. He has been a professor of water resources at the COPPE-UFRJ since 1973 and has held the rank of full professor since 1985. He has directed theses and dissertations and has served on the review boards for dozens of masters and Ph.D. candidates. In 2003, Dr. Kelman received the King Hassan II Great World Water Prize during the III World Water Forum in Kyoto. He serves as curator of the Brazilian Sustainability Foundation (FBDS). He is a commander of the Order of Rio Branco and in the Scientific Merit Order. In February, 2009, he was a resident at the Rockefeller Foundations Study Center in Bellagio, Italy. Since October, 2009, he has been president of the Regulated Industries Business Council of the Trade Association of Rio de Janeiro (ACRJ). Between 1976 and 1991 he served as researcher at the Electricity Research Center (CEPEL) and from 1991 to 1996, as director of Studies and Projects of Rio de Janeiro State Rivers and Lakes Oversight Foundation (SERLA-RJ). From 1996 to 1999 he worked as a consultant for the World Bank in several projects in Brazils Semi-Arid region. He participated in the preparation of Law 9,433/97 (Water Law) and in the creation of the Brazilian Water Agency (ANA) as of 1999. He served as the chief executive officer of ANA from its inception in December 2000 through January 2005. He also served as managing officer of the Brazilian Electricity Regulatory Agency (ANEEL) from January 2005 to January 2009. Since March 2010, he has been the chief executive officer of Light S.A Group.
Dr. Kelman served as a member of the National Energy Policy Council (CNPE) and of the National Environmental Council (CONAMA) from 2003 to 2005; as a member of the oversight board of the Delft Hydraulic Institute (Holland), from 2003 to 2005; and members of the Electricity Monitoring Committee (CMSE), from 2005 to 2009. He also served as coordinator of the Hydrothermal Electricity System Analysis Committee that diagnosed the causes of power rationing in 2001. He was president of the Brazilian Association of Water Resources (1987-1988), editor of Revista Brasileira de Recursos Hdricos (Brazilian Water Resources journal) (1996-2005), editor of the Water International journal (1984-1988 and since 1998), and editor of the Stochastic Hydrology and Hydraulics journal (1987-1998). He is a member of the editorial committee of the magazine Justia e Cidadania (Justice and Citizenship) and member of the editorial committee of the Issues in Water Resource Policy book series. He is the author of the book Cheias e Aproveitamentos Hidroeltricos (Floods and Hydroelectric Utilization) and Desafios do Regulador (The Regulatory Authoritys Challenges), as well as more than 100 technical papers, several chapters in specialized books and dozens of articles published in the general press. Jos Humberto de Castro 160.463.316-68 Born on July 8, 1951. Mr. Castro currently serves as the Companys Distribution Officer. At Companhia Energtica de Minas Gerais (Cemig), he served as distribution regional superintendent and as consultant for Applied Energy Services (AES). He also provided services to the Regional Architecture, Engineering and Agronomy Council of the State of Minas Gerais (CREA-MG) and coordinated a project in Paran State on behalf of the LEME-Cemig consortium. Mr. Castro was also a consultant focusing on business opportunities for the sale of management software applied to energy, gas and water/sanitation companies (EPR, CRM, WMS, OMS, etc.). At Empresa Construtel Projetos e Construes Ltda., he was the head the Mining and Energy State Department Office of the State of Minas Gerais, providing advisory services in the Planning and Management, Project Management and Company Valuation areas, by supporting acquisition or sale decisions. He was the chief executive officer of Companhia Energtica de Pernambuco since August, 2009 he has been providing consulting services for companies and large-sized electricity consumers. Mr. Castro holds a bachelors degree in electrical engineering from the Federal University of Minas Gerais in 1975. He took a graduate certificate in electric power systems from 1976 to 1977, and in 2004 he earned an MBA in business management from the Federal University of Minas Gerais. He completed a professional development course at EDF in France and has made several technical visits to United States, Canada and Mexico. Paulo Carvalho Filho 221.396.217-00 Born on December 6, 1944. Currently, Mr. Carvalho serves as the Companys Business Management Officer. He was president of the Rio de Janeiro Municipal Urban Cleaning Company (COMLURB S.A.) for 16 years. He was production engineering professor at the Pontifical Catholic University of Rio de Janeiro (PUC-RJ) for 17 years. He also worked at Sperry Remington, Embratel and Telerj, where he specialized in industrial quality. He started his professional career in industries, including Sagem (Rouen, France) and Olivetti (Ivrea, Italy). He holds a bachelors degree in engineering from the Federal University of Rio de Janeiro in 1970. Paulo Roberto Ribeiro Pinto 126.023.707-97 Born on June 29, 1950. Currently, Mr. Pinto is the Companys New Business and Institutional Affairs Officer. He served as chief financial officer of Furnas, Corporate and Finance Management Officer at Eletrobrs; chief financial officer of CHESF, vice chief financial officer of division of the Ministry of Mining and Energys National Department of Water and Electricity (DNAEE), and chief financial and investor relations officer at Light S.A. Mr. Pinto holds a bachelors degree in accounting from the Rio de Janeiro School of Economics and Finance. He also completed a specialization course in economic engineering and industrial management at the Federal University of Rio de Janeiro (UFRJ). He served as member of the Board of Directors of several companies in the electricity sector. Joo Batista Zolini Carneiro 485.662.926-34 Born on May 4, 1958, Mr. Carneiro is economist. Currently, he serves as the Companys chief financial and investor relations officer. He served as superintendent of holdings at CEMIG and as administrativefinancial officer at Rosal Energia S.A. He served as board member of several companies of CEMIG Group, including Cemig Telecomunicaes S.A. and Madeira Energia S.A. and is member of the fiscal council of Companhia de Gs de Minas Gerais (Gasmig). Since 2006, Mr. Carneiro has been served as deputy member on the boards of directors of Light S.A. and Light SESA. He was finance teacher at the Brazilian Capital Markets Institute of Minas Gerais (IBMEC-MG) and is certified by Brazilian Institute of Corporate Governance (IBGC) as board member. He holds a bachelors degree in economics from the Pontifical Catholic University of Minas Gerais, an MBA in finance from IBMEC, and a graduate certificate in finance from the University of Texas. Aldo Floris 038.816.107-82 Born on February, 14, 1949. Mr. Floris started working in the financial market as consultant for private investors in 1967. In 1973, he joined Liberal CCVM Ltda. as partner. In 1984, he became controlling shareholder. From 1983 to 1985, Mr. Floris served as a member of the board of directors of Companhia Tcnica Monteiro Aranha S.A. He served as a member of the board of directors of the Rio de Janeiro Stock Exchange from 1982 to 1990. He was chief executive officer of Bank of America Liberal S.A. from 1989 to 2001. He served as a member of the board of directors of VALEPAR and Companhia Vale do Rio Doce from 1997 to 2003. He served on the board of Conservation International, an international non-governmental organization for the sustainable development. He served on the oversight board of the Getlio Vargas Foundation. Mr. Floris holds bachelors degree in economics from the Federal University of Rio de Janeiro (UFRJ) in 1971.
Almir Jos dos Santos 059.406.807-04 Born on June 29, 1934. Chief financial officer of Eletronorte, president of Companhia Auxiliar de Empresas Eltricas Brasileiras (Caeeb), assistant to the chief executive officer of Eletrobrs, senior consultant for privatized companies, chief financial officer of Nativa Engenharia, administrative and financial officer of the Medical Assistance Electronuclear Foundation and former fiscal council member of Light SESA and Excelsa. Mr. Santos holds a bachelors degree in economics from the Rio de Janeiro School of Economics and Finance. Ana Marta Horta Veloso 804.818.416-87 Born on July 29, 1968. Mrs. Veloso joined Equatorial Energia in 2008 as an officer and since 2006, she has been serving as sitting member on the boards of directors of Light S.A. and Light SESA. Previously, she worked (2006-2008) for UBS Pactual, managing Pactuals former partners assets, focusing on long-term investments. Before that, Mrs. Veloso worked for 12 years at the Brazilian National Development Bank (BNDES), where she held several executive positions, mainly in the capital markets area, performing equities operations and monitoring BNDESPAR portfolio positions. She also served on the board of directors of several companies, including: Klabin S.A. (sitting member, 2003-04), CVRD (deputy member, 2003-04), Acesita S.A. (sitting member, 2003-04), Valepar S.A. (sitting member, 2003), Net Servios de Comunicao S.A. (sitting member, 1999). From August 2000 to August 2001 she was senior analyst in the electricity and sanitation sectors and at Banco Pactuals equities research area. She is currently a board member at CEMAR. Mrs. Veloso received a degree in economics from the Federal University of Minas Gerais (UFMG) and a masters in industrial economics from the Federal University of Rio de Janeiro (UFRJ). Carlos Alberto da Cruz 374.729.257-72 Mr. Cruz holds a bachelors degree in electrical engineering from the University of Coimbra/University Veiga de Almeida. He has held various positions at Light Energia and Light Servios de Eletricidade. He worked in the electrical engineering area, where he was in charge of monitoring several substation projects, as well as projects pertaining to the Project Management, Substation Construction and Transmission Lines areas. He was environmental head auditor during the certification process of Light (SGA) sites. He is Lights representative at the Ministry of Mining and Energys work group focused on the regulation of the law that establishes the limits of electrical and magnetic fields sent by electric power systems. He was also a representative for the Rio de Janeiro State Union of Engineers during the preparation of Lights social responsibility program. Carlos Augusto Leone Piani 025.323.737-84 Born on April 24, 1973. Mr. Piani has been chief executive officer of Equatorial Energia and Cemar since March, 2007 and member of the board of directors of Cemar and Equatorial Energia since March, 2006. Since 2008, he has been served on the boards of directors of Light S.A. and Light SESA. At Cemar, he also served as administrative and financial vice chief executive officer between May, 2004 and March, 2006. Previously, he worked for six years at Banco Pactual. From 2000 to 2004, he coordinated the risk capital funds managed by the banks Investments area. During this period, he served as a member of the board of directors of Proteus Solues em Tecnologia da Informao S.A., Visionnaire S.A., Extracta Molculas S.A., Padtec S.A., Pini S.A, Automatos International Ltd. and Spring Wireless Ltd. and as deputy of the fiscal council of Eletropaulo Metropolitana Energia Eltrica de So Paulo S.A. From 1998 to 2000, he worked at the Corporate Finance department in operations concerned with infrastructure sectors. Previously to Banco Pactual, he worked for Ernst & Young in 1997 as analyst in the Business Valuation department. Mr. Piani holds a bachelors degree in information technology from the Pontifical Catholic University of Rio de Janeiro (PUC-RJ) and business administration from the Brazilian Institute of Capital Markets (IBMEC). He also obtained the CFA Charterholder certificate from the CFA Institute in 2003 and completed the Harvard Business School Owners and President Management (OPM) Program in 2008. Carlos Roberto Teixeira Junger 378.051.267-04 Born on May 30, 1955. Mr. Junger served as deputy board member and since 2008 has been a sitting member of the boards of directors of Light S.A. and Light SESA. He was auditor at the Federal Revenue Office (SRF), an auditor at the Private Insurance Superintendence (Susep), an advisor for the Furnas Costs Department, and participated in a special group that worked an agreement to avoid double taxation by the U.S. Internal Revenue Service (IRS). He holds a bachelors degree in accounting from the State University of Rio de Janeiro and a graduate certificate in tax management from the University of So Paulo USP (1981). Carmen Lcia Claussen Kanter 256.191.107-10 Born on July 5, 1950. She was assistant institutional officer at the Brazilian Capital Markets Analysts Association of Rio de Janeiro (APIMEC-Rio). Ms. Kanter was assistant institutional director of APIMEC-RJ. She served as the Companys Investor Relations Manager, as Funding Manager of Nuclebrs and as Housing Loan Analysis manager at BANERJ. Ms. Kanter served as a member of the oversight board of Braslight, a board member of the Brazilian Investor Relations Institute (IBRI), as an APIMEC-Rio board member and as the former director and president of IBRI-Rio. She holds a bachelors degree in architecture from the Federal University of Rio de Janeiros School of Architecture and Urban Planning and in financial management from the PLANFAP/MME. In 2001, she earned an MBA in marketing from the COPPEAD Graduate School of Business.
Djalma Bastos de Morais 006.633.526-49 Born on March 16, 1937. Mr. Morais holds a bachelors degree in engineering from the Military Institute of Engineering and received a graduate certificate in telecommunications and information technology from the same institute. From 1995 to 1998, he was vice chief executive officer of Petrobras Distribuidora S.A. From 1993 to 1994, he served as Brazils Minister of Communications. He also held several other positions, such as chief executive officer of Telecomunicaes de Minas Gerais S.A. (Telemig); manager of Telecomunicaes Brasileiras S.A. (Telebrs), Chief Operations Officer of Telecomunicaes de Mato Grosso (Telemat), Chief Operations Officer of Telecomunicaes do Amazonas (Telemazon), and manager of Telefnica Municipal S.A. (Telemusa). Since January, 1999, he has been serving as chief executive officer and vice chairman of the board of directors of Companhia Energtica de Minas Gerais S.A. (Cemig). Since September 2004, he has been serving as chief executive officer of Cemig Gerao e Transmisso S.A. and of Cemig Distribuio S.A.. Since December 2004, he has been serving as vice chairman of the board of directors of Cemig Distribuio S.A. and Cemig Gerao e Transmisso S.A. Since August 2006, he has been a member of the board of directors of Light S.A. and served as a board member at Transmissora do Atlntico de Energia Eltrica S.A. (TAESA) from November 2009 to December 2009. Since November 2009, Mr. Morais has served as chairman of the board of directors of Transmissora Aliana de Energia Eltrica S.A. Elvio Lima Gaspar 626.107.917-04 Born on June 17, 1962. Mr. Gaspar served as Rio de Janeiro State Subsecretary of Planning from January of 1999 to April of 2000; as Rio de Janeiro State secretary of Planning, Economic Development and Tourism, from April to December of 2002; as deputy executive secretary of Planning, from January 30, 2003, to December of 2004; as secretary of Federal Government Assets (SPU), from September 9, to December of 2003; as cabinet chief of the presidency of the Brazilian Development Bank (BNDES), from December 20, 2004 to April 26, 2006; and as officer of BNDESs Credit and Social Inclusion areas, since April, 27, 2006. He holds a bachelors degree in mechanical engineering from the State University of Rio de Janeiro in 1983 and an executive MBA from the COPPEAD Graduate School of Business at the Federal University of Rio de Janeiro. Fernando Henrique Schuffner Neto 320.008.396-49 Born on January 3, 1960. Mr. Schuffner is an employee of Companhia Energtica de Minas Gerais (Cemig), where he held the following positions; regional manager of Tefilo Otoni, superintendent of Coordination, Planning and Distribution Management; superintendent of Coordination, Planning and Distribution Expansion; and superintendent of Distribution and Market Expansion Planning. He has been an officer of Distribution and Trading at Companhia Energtica de Minas Gerais (Cemig) and Cemig Distribuio S.A.. since 2007 and officer of Cemig Gerao e Transmisso S.A. since 2007. From 2002 to 2004, and since 2007, Mr. Schuffner served as a member of the board of directors of Cemig and he has also been served on the boards of directors of Cemig Telecomunicaes S.A. since 2005 and of Companhia de Gs de Minas Gerais (Gasmig) since 2007. He holds a bachelors degree in electrical engineering from the Pontifical Catholic University of Minas Gerais in 1982 (PUC-MG). Firmino Ferreira Sampaio Neto 037.101.225-20 Born on May 14, 1946. Mr. Sampaio Neto became chief executive officer of Equatorial Energia S.A. in April of 2010. Currently a member of the board of directors of Equatorial, he served as its chairman from March, 2006 to April, 2010 and has been a member of the board at CEMAR since May, 2004. He served as chief executive officer of Eletrobrs from 1996 to 2001 and as chief executive officer of Eletrobrs Termonuclear from 2000 to 2001. He was chief executive officer and chief financial officer of COELBA for 14 years. He has also been a member of the boards of directors of Furnas - Centrais Eltricas S.A., Itaipu Binacional, Companhia Hidro Eltrica do So Francisco (CHESF), Eletrosul Centrais Eltricas S.A., Centrais Geradoras do Sul do Brasil S.A. (Gerasul), Cemig, Empresa Energtica de Mato Grosso do Sul S.A. (Enersul), Centrais Eltricas Matogrossenses S.A. (Cemat) and Light. He holds a bachelors degree in economics from the Federal University of Bahia (UFBA) and a graduate certificate in industrial planning through a program offered by the Superintendence for the Development of Northeastern Brazil (SUDENE), the Economic and Applied Research Institute (IPEA) and the Getlio Vargas Foundation (FGV). Joaquim Dias de Castro 909.933.140-15 Born in 1978. Mr. Castro manages the Capital Markets desk at the Brazilian Development Bank (BNDES), where he has been working since January, 2004. Since April, 2008, he has been serving as deputy member of the boards of directors of Telemar Participaes S.A. and Tele Norte Leste Participaes S.A. and as sitting member of the boards of CTX Participaes S.A. and Rede Energia S.A. From July to December 2003, Mr. Castro was deputy member of the board of directors of Telemig Celular and an investment analyst for the Embratel Social Security Foundation (Telos) from April to December 2003. He holds a bachelors degree in economics from the Federal University of Rio Grande do Sul and earned a masters degree in economics from the Getlio Vargas Foundations Graduate School of Economic in Rio de Janeiro (EPGE/FGV-RJ). Lauro Alberto de Luca 130.016.637-15 Born on April 20, 1948. Mr. Luca is officer of Banco Liberal S.A. He completed development and specialization training in Brazil and abroad, having worked at the following institutions: Merrill Lynch Corporation, The First Boston Corporation, Goldman Sachs & Co., Mabon, Nugent & Co., Salomon Brothers, E. F. Hutton & Company Inc., Dean Witter & Co. Inc., and Discount Corporation. Mr. Luca has also participated in a
number of conferences and seminars on economics, monetary policy, futures and commodities markets. He started his career at the Getlio Vargas Foundation (FGV) in 1969. He has held positions at several financial institutions. He was an officer at Open S.A. CCVM, Investcorp S.A. DTVM and Ativa S.A. CTV. In February, 1986, he was elected as a member of the board of directors of the Brazilian Futures Exchange. In November, 1989, Mr. Lucas assumed the position of chief operations officer at Banco Liberal S.A., which subsequently became Bank of America. He is currently manager of FLB Consultoria e Participaes Ltda. He holds a degree in economics from the Rio de Janeiro College of Political Science and Economics. Luiz Carlos Costeira Urquiza 591.838.457-04 Born on February 21, 1962. Mr. Urquiza holds a bachelors degree in mechanical engineering from the Federal University of Rio de Janeiro (UFRJ), an MBA from the COPPEAD Graduate School of Business and completed the Advanced Management Program at Dom Cabral/INSEAD. Since 2006, Mr. Urquiza has been partner, chief executive officer and chairman of the board of directors of A! Body Tech Participaes S.A. Between 2000 and 2004 he was partner and chief executive officer of Banco 1.net, a joint venture between Unibanco, Portugal Telecom and Companhia Bozano. From 1995 to 2000, Mr. Urquiza was partner, managing officer and a board member at Quatro/A Participaes S.A., a leader in the call center segment. He was officer of Unibanco from 1994 to 1995, having previously served as officer of Banco Nacional (1989-1994) and base chief of Shell Brasil S.A. (1984-1989). Luiz Fernando Rolla 195.805.686-34 Born on February 17, 1949. Mr. Rolla received a degree in electrical engineering from the Federal University of Minas Gerais. He started his career at Cemig in 1974 and held the following positions: superintendent of Programming and Financial Control, in charge of coordinating long-term financial planning, budgetary control, cost analysis and project finance; Cemigs superintendent of Investor Relations, responsible for implementing the Level I and II ADR programs on the New York Stock Exchange and listing the Companys shares on Level I of the Bovespa corporate governance. Since January 9, 2007, Mr. Rolla has served as the Chief Financial and Investor Relations Officer and Control of Holdings for Cemig, Cemig Distribuio S.A. and Cemig Gerao e Transmisso S.A. He has several times been voted Best Investor Relations Officer by the Association of Analysts and by the Brazilian Capital Markets Analysts Association (APIMEC), and in 2006 he received the same honor in a ranking by IR Magazine. He holds a bachelors degree in electrical engineering from the Federal University of Minas Gerais. Maria Silvia Bastos Marques 459.884.477-91 Dr. Marques received a bachelors degree in public administration and a masters and doctorate in economics from the Getlio Vargas Foundation. She has worked at the Monetary Studies Center and the Getlio Vargas Foundations Brazilian Institute of International Economics and was a professor of economics at the Pontifical Catholic University of Rio de Janeiro. She served in the Finance Ministry and was a special advisor to the president of the Brazilian Development Bank (BNDES) on matters of privatization, taking charge of the banks financial, international, planning and budgeting boards. Dr. Marques served as the Rio de Janeiro municipal Finance secretary and as superintendent director of the corporate center of Companhia Siderrgica Nacional, also assuming the presidency of the company from 1999 to 2002. She served on the boards of directors of Companhia Souza Cruz S.A. (1997 to 2006), of Embratel S.A. (2004 to 2006), of Arcelor Brasil (2005 to 2007) and of Companhia Brasileira de Distribuio (CDB) (Grupo Po de Acar) (2003 to 2009). She is currently chief executive officer of Grupo Icatu Hartford, and chairwoman of the board of directors of Globex Utilidades (Ponto Frio). Since May 7, 2004, she has been the curator of the Brazilian Foundation for Sustainable Development (FBDS), and since June 14, 2007, she has been officer of the Trade Association of Rio de Janeiro (ACRJ). Paulo Roberto Reckziegel Guedes 400.540.200-54 Born on October 25, 1961. Since 1999, Mr. Guedes has been working at Grupo Andrade Gutierrez, AG Concesses as Business Development officer. He also worked as Project Manager in the New Business unit of Construtora Andrade Gutierrez S.A. (1993-1999). Prior to that, he worked at Construtora Sultepa S.A. (1983-1993) as Superintendent of Operations (1991-1993), and at Consrcio Conesul Ltda. and Construtora Sultepa S.A. as Supervisor of Engineering (1987-1991), Chief Construction Engineer (1986-1987) and Assistant Engineer (1983-1986). Mr. Guedes holds a bachelors degree in civil engineering from the School of Engineering at the Federal University of Rio Grande do Sul in Porto Alegre (UFRGS) and an MBA from the Dom Cabral Foundation of Minas Gerais (1997). He has also taken courses in architecture at the Federal University of Rio Grande do Sul (UFRGS) and in law at the Pontifical Catholic University of Minas Gerais. Ricardo Simonsen 733.322.167-91 Born on July 10, 1961. Between 1990 and 1998 Mr. Simonsen worked in the financial market: (i) at Banco Liberal, providing technical support to the banks treasury and later supporting its economics area; (ii) at Banco Graphus, in charge of the banks economics area; (iii) at Bankers Trust, structuring operations on the Brazilian capital market and providing economic analysis pertaining to the strategic allocation of resources; and (iv) at Banco Pactual, in the corporate area, participating in several merger, acquisition, sales and corporate restructuring operations, as well as in the structuring of investment products. In 1999, he joined the Getlio Vargas Foundation (FGV) as head of the Brazilian Institute of Economics Finance Studies Center, in charge of the development of projects and studies related to that field. Between 2002 and 2006, he was a professor of corporate finance in the FGVs Graduate School of Economics masters in finance and corporate economics program and gave other courses supporting MBA programs. In 2003, he became technical director of FGV Projects (a position he still holds), which is a unit within the FGV consulting business, with offices in Rio de Janeiro and in So Paulo. At FGV Projects, which works with public and private companies in the fields of management, economics and finance, Mr. Simonsen is responsible for all of the technical content of the institutions consulting firms and for supervising all projects. Since
2003, he has also been a member of Vales Corporate Governance and Sustainability committee. Since 2008, he has been a member of the boards of directors of Light S.A. and Light SESA. He holds a bachelors degree in mechanical engineering from the Pontifical Catholic University of Rio de Janeiro and a masters and doctorate in economics from the FGVs Graduate School of Economics (EPGE/FGV). Srgio Alair Barroso 609.555.898-00 Born on September 9, 1949. Mr. Barroso has been an economist, World Cup Extraordinary State Secretary, Minas Gerais State Government secretary, Minas Gerais State former secretary of Economic Development, former chairman of the boards of directors of Companhia Energtica de Minas Gerais, Cemig Distribuio S.A. and Cemig Gerao e Transmisso S.A., since 2009 and former chairman of the boards of directors of Fosfertil, Ultrafertil and Fertifos. He is also a consultant and business partner in the agribusiness, social responsibility and environmental investment areas. From 1998 to 2007, he was chief executive officer of Cargil. He holds a bachelors degree in economics from the University of So Lucas So Paulo and a masters in international economics from the University of Boston, USA. Raul Belens Jungmann Pinto 244.449.284-68 Born on April 3, 1952. He is business consultant, member of the Board of Directors of CET and PRODAM, So Paulo. He served as chairman of the board of directors of BNDES from 1993 to 1994 and vice chairman of the board of directors of Banco do Brasil S.A., also from 1993 to 1994. He also worked, from 2008 to 2010, as president of the Legislative Front of National Defense. Mr. Pinto was vice chairman of the Foreign Relations Committee from 2009 to 2010. Between 2003 and 2010, he was federal deputy in Pernambuco state. He served as president of the Public Security and Organized Crime Prevention Committee, from February 2008 to February 2009. He was the General Secretary of Frente Brasil sem Armas a referendum about trade of weapons and ammunitions. Cesar Vaz de Melo Fernandes 299.529.806-04 Born on November 5, 1957. Mr. Cesar has an MBA on Finance and Business Management, both from IBMEC 2010 and 2000, respectively. Mr. Fernandes holds a bachelors degree in Electric Engineering from the Federal University of Minas Gerais (UFMG) - 1981. Currently, he serves as Business Development Superintendent at Companhia Energtica de Minas Gerais - Cemig. From 2005 to 2007, he served as Construction Officer in Furnas. From 2003 to 2005 served at Companhia Energtica de Minas Gerais Cemig as Distribution Superintendent in the metropolitan region of Belo Horizonte. Mr. Cesar coordinates several projects and events related to Cemig distribution, as well as in the implementation of new technologies. Wilson Borrajo Cid 012.340.996-91 Born on August 8, 1940. Mr. Cid is journalist, he worked for Organizao Panorama de Comunicao, from 2003 to 2010, as writer, political columnist and chief editor. At Rdio Panorama, he was producer and presenter. He worked in the Communication Regional System, as writer and political editor (Dirio Regional) and as participant of debates program in Tiradentes and Educativa televisions. He was branch officer and writer of Estado de Minas, Hoje em Dia and O Tempo newspapers. He has worked for 19 years at O Globo newspaper as a correspondent in Zona da Mata. He promotion officer of the Tourism Department of Juiz de Fora, general secretary of Mariano Procpio Museum Association in Juiz de Fora, president of the Historical and Geographic Institute of Juiz de Fora, president of the Santo Toms de Aquino Cultural Institute of Juiz de Fora and member of the city council of Historical Heritage Preservation. Ari Barcelos da Silva 006.124.137-72 Born on March 3, 1942. External auditor at Arthur Andersen & Co., internal auditor at Empreendimentos e Estudos Econmicos S.A., general accountant at Companhia Guanabara de Crdito, Financiamento e Investimento, assistant to the chief financial officer at Companhia Hidro Eltrica do So Francisco (Chesf), president of the Fundao Eletrobrs de Seguridade Social (Eletros), head of accounting department at ELETROBRS, Tax Officer at the Fundao de Seguridade Social (Geasp), chief financial officer at Centrais Eltricas do Maranho S.A. (Cemar) and head auditor and head of CEO office at Eletrobrs Termonuclear (Eletronuclear). Officer of Investimentos Canadenses em Energia Ltda. (Incae) and Companhia Canadense de Investimentos em Energia (Coince) (Brascan Group). Mr. Silva has served on the fiscal and decision-making councils of the following companies: Eletrosul, Chesf, Caeeb, Furnas, Cemar and Fundao Eletrobrs de Seguridade Social. He holds bachelors degree in business administration (CRA/RJ No. 2027107-7) and in accounting (CRC/RJ No. 11627-6). Currently, he serves as board member of Light and Cemig. Aristteles Luiz Menezes Vasconcellos Drummond 026.939.257-20 Born on November 22, 1944. High school education. Has professional experience in the areas of journalism, public relations and business management. He is certified to act as a member of fiscal councils and boards of directors by the Brazilian Corporate Governance Institute (IBGC). He worked in the private sector as an advisor to the board of executive officers of Banco Nacional (1963-1970) and in 1973 he became managing officer of Irad Assessoria e Consultoria Ltda. In the Guanabara state government (during the Negro de Lima administration) he held the positions of president and officer of COHAB-GB, was an advisor to the Guanabara State Secretary of the Government and division head in the Guanabara State Department of Public Works. At the federal government level, Mr. Drummond served as an advisor to the state Mining and Energy Ministry office chief (1980-1984). He was administrative officer at Light S.A. in 1985 and from November 1987 to June 1996. He served on the boards of directors of the Rio de Janeiro Subway System (1985), Centrais Eltricas do Norte S.A. (1996-2002) and Manaus Energia S.A. and Boa Vista Energia S.A. (1997-2002). He was a member and chairman of the Vale fiscal council from 1986 to
1989 and a member of the Petrofertil S.A. fiscal council. He also served as employer advocate at the Regional Labor Court of Rio de Janeiro (TRT-RJ) from 1994 to 1997. He has been the chairman of Cemigs fiscal council since 1999 and is currently a member of Cemats board of directors. Eduardo Gomes Santos 091.245.197-15 Born on May 6, 1944. Positions include: senior auditor at Arthur Andersen & Co, accountant with Grupo Moreira Salles, division chief at Centrais Eltrica Brasileiras S.A. (ELETROBRAS), manager of Financial Information at S.A. White Martins, chief financial officer and controller at BACARDI Martin do Brasil Indstria e Comrcio Ltda., sitting member of Companhia Prada de Embalagens, Investments manager for the Fundao Eletrobrs de Seguridade Social (Eletros), independent consultant for small and mid-sized companies, assistant to the chief executive officer and head of Internal Auditing at Eletrobrs Termonuclear S.A. (Eletronuclear). Mr. Santos holds a bachelors degree in accounting from the Moraes Jnior School of Accounting and Management in Rio de Janeiro. Eduardo Grande Bittencourt 003.702.400-06 Born on March 3, 1938. Former managing partner of Handel, Bittencourt & Cia. Auditores Independentes, founded in 1979, where he was active through December 2008. He was chief financial officer of Adubos Pampa S.A. and an auditor with Treuhand Auditores Associados Ltda. (currently, KPMG PEAT MARWICK), from 1972 to 1974. He also served as a member of the boards of directors of C.P. Eletrnica S.A. and TRAFO Equipamentos Eltricos S.A. (WEG Group). He has served as litigation expert (company dissolutions, asset appraisal, restatement of debts, liquidation of the award and other), and worked in the areas of economic-financial analysis, auditing and the technical advisory services of private organizations. Mr. Bittencourt is currently a member of the fiscal councils of Light S.A., Bematech S.A., Santos Brasil S.A, Santos Brasil Participaes S.A. and WEG S.A. He holds a bachelors degree in accounting from the Federal University of Rio Grande do Suls School of Economics and specialization course in business administration from the same university. Isabel da Silva Ramos Kemmelmeier 016.751.727-90 Born on December 3, 1974. Former head of the Company Analysis department at Opportunity and former investment analyst at Opportunity Asset Management (1996-2006). She has served on fiscal councils and boards of directors at the following companies: Eletropaulo, Usiminas, Comgas, CRT Celular, Eletrobras, Bahia Sul Celulose, Telefonica, Iochpe Maxion, AES Tiete, Metalurgica Gerdau, and Telemig Celular. Ms. Kemmelmeier currently serves on the fiscal council of Lojas Renner and on the board of directors of CESP. She holds a bachelors degree in civil engineering (production) from the Pontifical Catholic University of Rio de Janeiro (PUC-RJ) and earned a graduate certificate in finance from the Brazilian Capital Markets Institute (IBMEC-Rio). Ricardo Genton Peixoto 028.797.707-26 Born on July 18, 1972. Auditor at Price Waterhouse, responsible for the Investment Analysis department at Agenda Corretora, Senior Manager with Santander/Bozano, Simonsen Private Equity and Managing Partner at Voga Capital S.A. Mr. Peixoto is currently the officer of Grupo SGC de Portugal, in charge of its Real Estate, Shopping Centers and Telecommunications areas. He holds a bachelors degree in economics from Candido Mendes University in Rio de Janeiro, an MBA in finance from the Brazilian Capital Markets Institute (IBMEC) and an MBA in business law from the Getlio Vargas Foundation. Ronald Gasto Andrade Reis 007.237.036-04 Born on November 17, 1943. Mr. Reis holds a bachelors degree in business administration from the Pontifical Catholic University of Minas Gerais (PUC-Minas), with specialization course in economic-financial planning in Toronto, Canada. He started his career at Cemig in 1967, where he served as superintendent of Programming and Financial Control until November 1997. He was in charge of structuring the financial management of the Electric System National Operator (ONS), where he served as manager until 2002. Currently, he is consultant for ONS in the Project Management and Finance areas. He is a member of the fiscal councils of Cemig Telecomunicaes S.A. and Transmissora Aliana de Energia Eltrica S.A. He was a member of the fiscal councils of Companhia Energtica de Minas Gerais (Cemig), Cemig Gerao e Transmisso S.A. and of Cemig Distribuio S.A. Marcelo Lignani Siqueira 003.753.146-87 Born on May 25, 1938. Since 2007, Mr. Siqueira has been the Management and Finance Officer of CODEMIG Companhia de Desenvolvimento de Minas Gerais (Minas Gerais Development Company). Currently, he teaches at Colgio Euclides da Cunha; he represents his class at the Students Union of the School of Engineering of UFJF and president of the Student Union representatives council. He was federal deputy in Minas Gerais from 2003 to 2007; chief executive officer of COPASA Companhia de Saneamento de Minas Gerais between 1999 and 2002. Victor Adler 203.840.097-00
Born on November 7, 1946. Attorney, he holds a bachelors degree from Federal University of Rio de Janeiro (1968). Since 1986, he has been serving as chief executive officer of VIC DTVM S/A. He worked for 35 years as head of the legal department and was member of the Board of Directors of Forjas Brasileiras S/A Indstria Metalrgica. He was a member of the Board of Directors of Zivi Hercules and Eberle. During 8 years, he was officer of ADLER S/A Participaes Societrias. He worked as independent agent of investment at the brokerage houses Mandarino Fiana and Tamoio Investimentos S.A. Gabriel Agostini 193.032.897-49 Born on June 22, 1946. Civil Engineer, he holds a bachelors degree from the Federal University of Santa Maria (1969). Founder of AMW Comrcio e Participaes Ltda., an agency company with 96% of quotas. Since 2011, he has been deputy member of the fiscal council of Klabin S/A. From 2002 to 2008, he served as member of Board of Directors of Forjas Brasileiras S/A. From 2008 to 2011, he served as member of the Board of Directors of Unipar Unio de Indstrias Petroqumicas S/A.
12.7 Structure of the statutory, audit, finance and compensation committees

Name CPF (individual taxpayers register) Other positions held in the Issuer Ana Marta Horta Veloso Audit Committee Member of the committee (Sitting member) Economist 42 4/9/2010 4/9/2010 2 years Type of Committee Description of other committees Position held Description of other positions held Profession Age Date of Election Date of Investiture Term of office
804.818.416-87 Member of the Board of Directors and member of the Management, Finance and Human Resources Committees Carlos Roberto Teixeira Junger Audit Committee 378.051.267-04 Member of the Board of Directors and member of the Management Committee Member of the committee (Sitting member)
Accountant 55
4/9/2010 4/9/2010
2 years
Paulo Roberto Reckziegel Guedes Audit Committee Member of the committee (Sitting member) 400.540.200-34 Member of the Board of Directors and member of the Finance, Management and Human Resources Committees Ana Marta Horta Veloso Finance Committee Member of the committee (Sitting member) 804.818.416-87 Member of the Board of Directors and member of the Audit, Management and Human Resources Committees Lauro Alberto de Luca Finance Committee 130.016.637-15 Member of the Board of Directors and member of the Human Resources Committee Member of the committee (Sitting member)
Engineer 49
4/9/2010 4/9/2010
2 years
Economist 42
4/9/2010 4/9/2010
2 years
Economist 61
4/9/2010 4/9/2010
2 years
Paulo Roberto Reckziegel Guedes Finance Committee Member of the committee (Sitting member) 400.540.200-34 Member of the Board of Directors and member of the Audit, Management and Human Resources Committees Ana Marta Horta Veloso Other Committees Member of the committee (Sitting member) 804.818.416-87 Management Committee Member of the Board of Directors and member of the Audit, Finance and Human Resources Committees Ana Marta Horta Veloso Other Committees Member of the committee (Sitting member) 804.818.416-87 Human Resources Committee Member of the Board of Directors and member of the Audit, Finance and Management Committees Carlos Roberto Teixeira Junger Other Committees Member of the committee (Sitting member)
Engineer 49
4/9/2010 4/9/2010
2 years
Economist 42
4/9/2010 4/9/2010 4/9/2010 4/9/2010
2 years
Economist 42
2 years
Accountant
4/9/2010
2 years

Name CPF (individual taxpayers register) Type of committee Description of other committees Position held Description of other positions held Profession Age Date of election Date of Investiture Term of office
Other positions/functions held in the Issuer 378.051.267-04 Management Committee Member of the Board of Directors and member of the Audit Committee Djalma Bastos de Morais 006.633.526-49 Member of the Board of Directors Other Committees Member of the committee (Sitting member) Governance and Sustainability Committees 55 4/9/2010
Engineer 74
4/9/2010 4/9/2010
2 years
Fernando Henrique Schuffne Other Committees 328.909.826-53 Management Committee Member of the Board of Directors and member of the Management Committee Firmino Ferreira Sampaio Neto 037.101.225-20 Not applicable
Member of the committee (Sitting member)
Electric Engineer 49
4/9/2010 4/9/2010
2 years
Other Committees Member of the committee (Sitting member) Governance and Sustainability Committees
Businessman 64
4/9/2010 4/9/2010
2 years
Lauro Alberto de Luca Other Committees 130.016.637-15 Human Resources Committee Member of the Board of Directors and member of the Finance Committee
Economist 61
4/9/2010 4/9/2010
2 years
Paulo Roberto Reckziegel Guedes Other Committees Member of the committee (Sitting member) 400.540.200-34 Management Committee Member of the Board of Directors and member of the Audit, Finance, Management and Human Resources Committees Paulo Roberto Reckziegel Guedes Other Committees Member of the committee (Sitting member) 400.540.200-34 Human Resources Committee Member of the Board of Directors and member of the Audit, Finance, Management and Human Resources Committees Ricardo Simonsen 733.322.167-91 Member of the Board of Directors Srgio Alair Barroso 609.555.898-00 Other Committees Governance and Sustainability Committee Member of the committee (Sitting member)
Engineer 49
4/9/2010 4/9/2010
2 years
Engineer 49
4/9/2010 4/9/2010
2 years
Mechanical Engineer 48
4/9/2010 4/9/2010
2 years
Other Committees Governance and Sustainability Committee
Economist 61
4/9/2010 4/9/2010
2 years
PGINA: 328 de 459

Name CPF (individual taxpayers register) Other positions held in the Issuer Member of the Board of Directors Type of committee Description of other committees Position held Description of other positions held Profession Age Date of election Date of Investiture Term of office
12.9 Existence of marital or stable relationship, or kinship up to second degree related to issuers Management, subsidiaries and controlling shareholders Justification for not completing the chart: There is no marital or stable relationship, or kinship up to second degree between: a. issuers Management b. (i) issuers Management and (ii) members of the management of direct or indirect subsidiaries of the issuer c. (i) management of the issuer or its direct or indirect subsidiaries, and (ii) issuers direct or indirect controlling shareholders d. (i) issuers management and (ii) management of issuers direct and indirect parent companies
12.10 Subordination relationship, rendering of services or control among Management and subsidiaries, controlling shareholders and others
CPF/CNPJ (individual taxpayers register/corporate taxpayer ID) Type of relationship between Manager and related person Type of related person
Identification Title
Fiscal Year 12/31/2010

Issuers Manager
Aldo Floris Member of the Board of Directors

Related Person
038.816.107-82
Control
Direct Subsidiary
Light Servios de Eletricidade S.A Member of the Board of Directors

Note
60.444.437/0001-46
Issuers Manager
Ana Marta Horta Veloso Member of the Board of Directors

Related Person
804.818.416-87
Control
Direct Subsidiary

Note
60.444.437/0001-46
Issuers Manager
Carlos Roberto Teixeira Junger Member of the Board of Directors

Related Person
378.051.267-04
Control
Direct Subsidiary

Note Issuers Manager
60.444.437/0001-46
PGINA: 331 de 459
CPF/CNPJ (individual taxpayers register/corporate taxpayer ID
Type of relationship between Manager and related person Type of related person
Djalma Bastos de Morais Member of the Board of Directors

Related Person
006.633.526-49
Control
Direct Subsidiary

Note
60.444.437/0001-46
Issuers Manager
Firmino Ferreira Sampaio Neto Member of the Board of Directors

Related Person
037.101.225-20
Control
Direct Subsidiary

Note
60.444.437/0001-46
Issuers Manager
Srgio Alair Barroso Member of the Board of Directors

Related Person
609.555.898-00
Control
Direct Subsidiary

Note
60.444.437/0001-46
Issuers Manager
Ricardo Simonsen Member of the Board of Directors

Related Person
733.322.167-91
Control
Direct Subsidiary
PGINA: 332 de 459
CPF/CNPJ (individual taxpayers register/corporate taxpayer ID)
Type of relationship between Management and related person Type of related person

Note
60.444.437/0001-46
Issuers Manager
Carlos Augusto Leone Piani Member of the Board of Directors

Related Person
025.323.737-84
Control
Direct Subsidiary

Note
60.444.437/0001-46
Issuers Manager
Paulo Roberto Reckziegel Guedes Member of the Board of Directors

Related Person
400.540.200-34
Control
Direct Subsidiary

Note
60.444.437/0001-46
Issuers Manager
Luiz Fernando Rolla Member of the Board of Directors

Related Person
195.805.686-34
Control
Direct Subsidiary

Note
60.444.437/0001-46
CPF/CNPJ (individual taxpayers register)/corporate taxpayer ID) Type of relationship between Manager and related person Type of related person
Issuers Manager
Joo Batista Zolini Carneiro Chief Financial and Investors Relations Officer
Related Person
485.662.926-34
Control
Direct Subsidiary
Light Servios de Eletricidade S.A Chief Financial and Investors Relations Officer
Note
60.444.437/0001-46
Joo Batista Zolini Carneiro is executive officer of other Companys subsidiaries. In the positions of chief financial and investor relations officer, the type of relationship between manager and related person is the subordination.
Issuers Manager
Aldo Floris Member of the Board of Directors

Related Person
038.816.107-82
Control
Direct Controlling Shareholder
Luce Empreedimentos e Participaes S.A. Executive Officer

Note
11.429.117/0001-01
Issuers Manager

Related Person
804.818.416-87
Control
RME Rio Minas Energia Participaes S.A. Executive Officer

07.925.628/0001-47
CPF/CNPJ (individual taxpayer's register/corporate taxpayer ID)

Related Person
804.818.416-87
Control
Indirect Controlling Shareholder
Equatorial Energia S.A. Executive Officer

Note
03.220.438/0001-73
Issuers Manager
Carlos Roberto Teixeira Junger Member of the Board of Directors

Related Person
378.051.267-04
Control
Luce Empreedimentos e Participaes S.A. Contractor

Note
11.429.117/0001-01
Issuers Manager
Djalma Bastos de Morais Member of the Board of Directors

Related Person
006.633.526-49
Control
Companhia Energtica de Minas Gerais Cemig Chief Executive Officer and Member of the Board of Directors
Note
17.155.730/0001-64
Issuers Manager
Firmino Ferreira Sampaio Neto Member of the Board of Directors

Related Person
037.101.225-20
Control
CPF/CNPJ (individual taxpayer's register/corporate taxpayer ID)
Equatorial Energia S.A. Member of the Board of Directors

Note
03.220.438/0001-73
Issuers Manager
Srgio Alair Barroso Member of the Board of Directors

Related Person
609.555.898-00
Control
Companhia Energtica de Minas Gerais Cemig Member of the Board of Directors

Note
17.155.730/0001-64
Issuers Manager
Lauro Alberto de Luca Member of the Board of Directors

Related Person
130.016.637-15
Control
Luce Empreedimentos e Participaes S.A. Executive Officer

Note
11.429.117/0001-01
Issuers Manager
Fernando Henrique Schuffner Member of the Board of Directors

Related Person
320.008.396-49
Control
Companhia Energtica de Minas Gerais Cemig Executive Officer and Member of the Board of Directors
Note
17.155.730/0001-64
PGINA: 336 de 459
CPF/CNPJ (individual taxpayer's register/corporate taxpayer ID) Type of relationship between Manager and related person Type of related person
Issuers Manager

Related Person
025.323.737-84
Control
RME Rio Minas Energia Participaes S.A. Executive Officer

Note
07.925.628/0001-47
Issuers Manager

Related Person
025.323.737-84
Control
Equatorial Energia S.A. Executive Officer

Note
03.220.438/0001-73
Issuers Manager
Paulo Roberto Reckziegel Guedes Member of the Board of Directors

Related Person
400.540.200-34
Control
Andrade Concesses S.A. Executive Officer

03.601.314/0001-38
Luiz Fernando Rolla
195.805.686-34
Control
CPF/CNPJ (individual taxpayer's register/corporate taxpayer ID) Type of relationship between Manager and related person Type of related person
Member of the Board of Directors

Related person
Companhia Energtica de Minas Gerais Cemig Executive Officer

17.155.730/0001-64
Ari Barcelos da Silva Member of the Fiscal Council

Related Person
006.124.137-72
Control
Companhia Energtica de Minas Gerais Cemig Member of the Fiscal Council

17.155.730/0001-64
Aristteles Luiz Menezes Vasconcellos Drummond Member of the Fiscal Council

Related Person
026.939.257-20
Control
Companhia Energtica de Minas Gerais Cemig Member of the Fiscal Council

17.155.730/0001-64
Ronald Gasto Andrade Reis Member of the Fiscal Council

Related Person
007.237.036-04
Control
Companhia Energtica de Minas Gerais Cemig
17.155.730/0001-64
CPF/CNPJ (individual Type of relationship between Manager and related taxpayer's person register/corporate taxpayer ID)
Type of related person
Member of the Fiscal Council Note

Issuers Manager
Ricardo Simonsen Member of the Board of Directors

Related Person
733.322.167-91
Rendering of Services
Supplier
Getlio Vargas Foundation - FGV Executive Officer

33.641.663/0001-44
Raul Belens Jungmann Pinto Member of the Board of Directors

Related Person
244.449.284-68
Control
Direct Subsidiary
Light - Servios de Eletricidade S.A. Member of the Board of Directors

60.444.437/0001-46
Wilson Borrajo Cid Member of the Board of Directors

Related Person
012.340.996-91
Control
Direct Subsidiary
Light - Servios de Eletricidade S.A. Member of the Board of Directors

Note
60.444.437/0001-46
12.10 - Subordination relationship, rendering of services or control among Management and subsidiaries, controlling shareholders and others
C P F CPF/CNPJ (individual taxpayer's register/corporate taxpayer ID)
Issuers Manager
Cesar Vaz de Melo Fernandes Member of the Board of Directors

Related person
299.529.806-04
Control
Direct Subsidiary
Light - Servios de Eletricidade S.A Member of the Board of Directors

60.444.437/0001-46
Cesar Vaz de Melo Fernandes Member of the Board of Directors

Related person
299.529.806-04
Control
Companhia Energtica de Minas Gerais - Cemig Business Development Superintendent

Note
17.155.730/0001-64
12.11- Agreements, including insurance policies to pay or refund expenses supported by Management 12.11. Describe the provisions of any agreement, including insurance policies, contemplating payment or refunding of expenses supported by any of the issuers managers, on account of compensation for damages to third parties or the issuer, or due to penalty exacted by government agents, or of agreements with the purpose of concluding administrative proceedings or lawsuits, by virtue of the performance of their duties The Companys management is covered by Directors and Officers Insurance - D&O. This insurance covers claims from third parties against the policyholders related to the management acts carried out in the performance of duties as manager of the Company.
342
13.1 Description of the policy or practice of compensation, including the nonstatutory board of executive officers. 13.1 Describe the policy or practice of compensation of the board of directors, statutory and non-statutory board of executive officers, fiscal council, statutory committees, and audit, risk, financial and compensation committees, addressing the following aspects33: a. objectives of the compensation policy or practice Based on market research, the Companys compensation policy complies with the best corporate governance practices and aims to attract and retain qualified and competent professionals. The Companys strategy is to maintain a transparent and sustainable policy geared toward a results-oriented culture. In this context, the variable compensation plays an important role, since shareholders share success and value generation with the executive officers, creating a long-term vision and sustainability, in addition to aligning all their interests. The Human Resources Committee, within the Companys organizational structure, is responsible for addressing matters related to the compensation of the statutory management. This Committee is instated on a permanent basis and aims to review and propose to the Board of Directors policies and guidelines of compensation of the Company's statutory executive officers, as well as of the members of the Board of Directors and Fiscal Council, based on the performance targets established by the Board of Directors. The Board of Directors examines the Human Resources Committees proposals and approves the fixed and variable compensation amounts, respecting the limits established at the Annual Shareholders Meeting.
b. i.
breakdown of the compensation, indicating: description of the compensation components and the objectives of each one of
them: The Company adopts a compensation model composed of monthly fixed compensation and variable compensation, depending on the result of individual and corporate performance indicators, in addition to benefits.
33
The information on the compensation policy must cover audit, risk, financial and compensation committees, as well as related organizational structures, even if such committees or structures are not statutory, as long as these committees or structures participate in the decision-making process of the management bodies or of management of the issuer as consultant or controller. 343
13.1 Description of the policy or practice of compensation, including the non-statutory board of executive officers.
1 Board of Directors The members of the Board of Directors are entitled only to fixed compensation. All members receive the same compensation based on the position they hold: sitting member or alternate.
2 Board of Executive Officers The members of the Board of Executive Officers are entitled to fixed and variable compensation, including long-term incentives. It is worth pointing out that since March 2010 the Company no longer has a non-statutory board of executive officers. The amounts paid as fixed compensation are based on the markets average, including a more substantial portion in the variable compensation, based on individual performance, as well as the Companys global indicators, which allows the risks and results to be shared, aligning the interests of the Company with those of the executive officers. It is worth noting that the Company has a Human Resources Committee that examines the compensation strategy to be adopted, as well as its beneficiaries, which is subsequently submitted to the Board of Directors for approval.
3 Fiscal Council The compensation of the Fiscal Council is fixed at the shareholders meeting in which the members are elected and may not be inferior to 10% of the average compensation assigned to each executive officer, excluding benefits, procuration fees and long-term incentives. The members of this group are entitled only to fixed compensation, in addition to legal reimbursements for transportation and lodging expenses necessary for the performance of their duties.
4 Committees All members of the Committees are administrators and do not receive any extra compensation for participating in these committees. ii. share of each compensation component in the total compensation
344
In the case of the Board of Directors and Fiscal Council, the fixed compensation represents 100% of their total compensation.
In the case of the Board of Executive Officers, in 2010 the fixed portion represented 41% of the total compensation, while the variable portion represented 59%. The percentages may vary according to the results achieved and the respective attaining of the targets established in each year.
iii. calculation and adjustment method of each compensation component The fixed and variable portions of the Executive Officers compensation are based on the markets development, through surveys conducted by specialized consulting firms, so that competitiveness may be measured and the need to perform any adjustments may be verified. The fixed compensation is established considering same-size companies, as well as the duties, complexity and knowledge level required for the position. The variable compensation depends on the achievement of targets for financial and operating results that are common for all members of the Board of Executive Officers. The compensation of the Board of Directors and Fiscal Council is adjusted according to the inflation on an annual basis.
iv. reasons that justify the compensations breakdown The Company has a compensation policy that concentrates a substantial portion in the variable compensation, in line with its strategy of sharing success and value generation with the executive officers, in addition to fostering a long-term vision and sustainability.
c. main performance indicators that are taken into consideration when determining each compensation component: To determine the compensation, the Companys global indicators are taken into consideration, which are approved by the Board of Directors and include the targets set for the year (such as EBITDA, net income, dividends, quality of services rendered, safety, losses, collection, default, and other indicators).
d. how the compensation is structured to reflect the evolution of the performance indicators
345
The variable compensation is directly connected with the Companys global performance and the achievement of the targets established for the period under consideration.
e. how the compensation policy or practice aligns itself with the Companys interests in the short, medium and long terms The Companys compensation policy chiefly aims to align the interests of the members of the Management with the interests of the Shareholders, assigning a global compensation and elements that are compatible with the markets best practices in the segments where the Company operates and with its short-, mid-, and long-term goals, as well as with its goals of value generation to shareholders, sharing risks and results with the Companys executive officers.
f. Existence of a compensation supported by subsidiaries, controlled companies or direct or indirect controlling shareholders The subsidiaries Light SESA and Light Energia partially support the compensation of the Companys Management. There is no other compensation or benefit supported by direct or indirect controlling shareholders.
g . existence of any compensation or benefit connected with the occurrence of a certain corporate event, such as the sale of share control of the issuer There is no compensation or benefit connected with the occurrence of a certain corporate event, such as the sale of share control of the Company.
346
13.2 Total compensation of the board of directors, the statutory board of executive officers and the fiscal council.
Total compensation estimated for the current Fiscal Year 12/31/2011 Annual Amounts
Board of Directors Statutory Board of Executive Officers No. of members Fixed compensation Salaries or / officers compensation Direct benefits Participation committees Others Description of other fixed compensation Variable compensation Bonus Profit sharing Attendance meetings Commissions Others Description of other variable compensation Post-employment benefits Benefits due to the termination of the position held Share-based compensation Note Total compensation 543,804.00 1,189,832.00 442,944.00 2,167,580.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 190,946.00 0.00 0.00 0.00 190,946.00 at 0.00 0.00 0.00 316,059.00 0.00 0.00 0.00 0.00 0.00 316,059.00 0.00 0.00 0.00 0.00 0.00 0.00 in 0.00 0.00 0.00 0.00 and fringe 94,967.00 253,787.00 73,824.00 422,578.00 439,837.00 429,040.00 369,120.00 1,237,997.00 annual 21.66 7.66 5.00 34.32 Fiscal Council Total
0.00
0.00
0.00
0.00
347
Total compensation for the Fiscal Year 12/31/2010 Annual Amounts
Board of Directors Statutory Board of Executive Officers No. of members Fixed compensation Salaries/officers compensation Direct benefits Participation committees Others Description of other fixed compensation Variable compensation Bonus Profit sharing Attendance meetings Commissions Others Description of other variable compensation Post-employment benefits Benefits due to the termination of the position held Share-based compensation Note Total compensation 0.00 0.00 0.00 218,343.00 0.00 0.00 0.00 218,343.00 0.00 0.00 0.00 18,985.00 0.00 0.00 0.00 18,985.00 at 0.00 0.00 0.00 486,441.00 0.00 0.00 0.00 0.00 0.00 486,441.00 0.00 0.00 0.00 0.00 0.00 0.00 in 0.00 0.00 0.00 0.00 and fringe 0.00 90,665.00 0.00 90,665.00 235,156.00 421,431.00 369,120.00 1,025,707.00 annual 22.00 7.17 5.00 34.17 Fiscal Council Total
0.00
0.00
0.00
0.00
235,156.00
1,235,805.00
369,120.00
1,840,141.00
348
Board of Directors Statutory Board of Executive Officers No. of members Fixed compensation Salaries/officers compensation Direct benefits Participation committees Others Description of other fixed compensation Variable compensation Bonus Profit sharing Attendance meetings Commissions Others Description of other variable compensation Post-employment benefits Benefits due to the termination of the position held Share-based compensation Note Total compensation 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 at 0.00 0.00 0.00 457,206.00 0.00 0.00 0.00 0.00 0.00 457,206.00 0.00 0.00 0.00 0.00 0.00 0.00 in 0.00 0.00 0.00 0.00 and fringe 0.00 147,637.00 0.00 147,637.00 234,000.00 508,122.00 369,120.00 1,111,242.00 annual 22.00 7.42 5.00 34.42 Fiscal Council Total
0.00
0.00
0.00
0.00
234,000.00
1,112,965.00
369,120.00
1,716,085.00
349

Board of Directors Statutory Board of Executive Officers No. of members Fixed annual 22.00 7.00 5.00 34.00 Fiscal Council Total
Compensation Salaries/officers compensation Direct benefits Participation committees Others Description of other fixed compensation Variable compensation Bonus Profit sharing Attendance meetings Commissions Others Description of other variable compensation Post-employment benefits Benefits due to the termination of the position held Share-based compensation Note Total compensation 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 at 0.00 0.00 0.00 452,786.00 0.00 0.00 0.00 0.00 0.00 452,786.00 0.00 0.00 0.00 0.00 0.00 0.00 in 0.00 0.00 0.00 0.00 and fringe 0.00 151,081.00 0.00 151,081.00 224,525.00 474,128.00 324,335.00 1,022,988.00
0.00
0.00
0.00
0.00
224,525.00
1,077,995.00
324,335.00
1,626,855.00
350
13.3 Variable compensation of the board of directors, the statutory board of executive officers and the fiscal council: 13.3 Variable Compensation:
Variable compensation estimated for the current fiscal year (2011) Statutory Board of Board of Fiscal Total Directors Executive Council Officers 21.66 7.66 29.32 Number of members Bonus Minimum amount estimated in the zero zero compensation plan Maximum amount estimated in the compensation plan
Amount estimated in the compensation plan, in case the targets are achieved
140% of 9 salaries
140% of 9 salaries
Average of 7.32 salaries
Average of 7.32 salaries
Amount effectively recognized in the income for the fiscal year Profit sharing Minimum amount estimated in the compensation plan Maximum amount estimated in the compensation plan
Amount effectively recognized in the income for the fiscal year
351
13.3 Variable compensation of the board of directors, the statutory board of executive officers and the fiscal council:
Variable compensation fiscal year ended December 31, 2010 Statutory Board of Board of Fiscal Total Directors Executive Council Officers Number of 22 7.17 5 34.17 members 486,441 486,441 Bonus Minimum amount estimated in the compensation plan Maximum amount estimated in the compensation plan
140% of 12.92 salaries Average of 10.60 salaries
486,441
486,441
352
Variable compensation fiscal year ended December 31, 2009 Statutory Board of Board of Fiscal Total Directors Executive Council Officers Number of 22 7.42 5 34.42 members 457,205 457,205 Bonus Minimum amount estimated in the compensation plan Maximum amount estimated in the compensation plan
457,205
457,205
353
Variable compensation fiscal year ended December 31, 2008 Statutory Board of Board of Fiscal Total Directors Executive Council Officers Number of 22 7 5 34 members 452,786 452,786 Bonus Minimum amount estimated in the compensation plan Maximum 140% of 140% of amount estimated in 12.92 12.92 the compensation salaries salaries plan
average of 11.37 salaries
average of 11.37 salaries
452,786
452,786
354
13.4 Share-based compensation plan of the board of directors and statutory board of executive officers: 13.4 Concerning the share-based compensation plan of the board of directors and statutory board of executive officers in effect in the last fiscal year and estimated for the current fiscal year, describe: In the last fiscal year, the share-based compensation plan was in effect until January 26, when the last granted options were exercised. The share-based compensation plan is not predicted for the current fiscal year. a. general terms and conditions: At the Special Shareholders Meeting, held on March 3, 2008, the shareholders approved the Long-Term Incentive Plan of the Company, in the Modality of Stock Options, and the Long-Term Incentive Plan of the Company in the Modality of Phantom Stock Options, as per deliberation proposal previously approved by the Companys Board of Directors at the meeting held on February 13, 2008. The eligible beneficiaries of the Stock Option Modality were the Companys executive officers, provided that they had not been nominated by the Board of Directors to participate in the Long-Term Incentive Plan in the modality of Phantom Stock Options. Options granted totaled 6,917,733, equivalent to 3.4% of total shares issued by the Company, and the strike price to be paid by the holders is R$21.49 per Option, less eventual amounts paid per share to shareholders as dividends, interest on equity or capital reduction. These options may be fully exercised, in a sole opportunity, between August 10, 2010 and August 10, 2011. In the event the employment contract or term of office of the Beneficiaries of the Options is terminated by initiative of the Board of Directors, before the end of the grace period, the Beneficiary may exercise up to five (5) business days after being withdrawn from the Company: fifty percent (50%) of the Options granted to the Beneficiary, in case the
withdrawal took place between 12 and 24 months as of August 10, 2006; seventy percent (70%) of the Options granted to the Beneficiary, in case the
withdrawal took place between 24 and 36 months as of August 10, 2006; ninety-five percent (95%) of the Options granted to the Beneficiary, in case the
withdrawal took place between 36 and 48 months as of August 10, 2006; Considering that the executives were eligible to 95% of the total options granted (6,917,733 shares), equivalent to 6,571,846 shares, the other Options were automatically cancelled.
355
13.4 Share-based compensation plan of the board of directors and statutory board of executive officers:
b . main goals of the plan: The purpose of this Stock Option Plan (Plan) was to grant stock options issued by Light S.A. (Light or Company) to eligible statutory executive officers, with the following goals (i) To retain executives; (ii) To align the interests of executives with the goals and interests of shareholders; (iii) To share the success and value generation with the executives; and (iv) To create a long-term and sustainability vision.
c. how the plan contributes to these goals: The Plan contributed to the goals in the sense that the value generation to shareholders reflects on the appreciation of the Company shares. Therefore, the increase in the market value of the Company shares generated an increase in the executives gains, since the value of share purchase is fixed and, yet, deductible from dividends paid. In addition, the longer the executive remained working for the Company, the higher the appropriated percentage of this appreciation.
d. how the plan is included in the issuers compensation policy: The plan was included in the Companys compensation policy to the extent that its main objective was also to align the interests of the members of the Management with the interests of the Shareholders, assigning a global compensation that is compatible with its short-, mid-, and long-term objectives, as well as with its objectives of value generation to shareholders, sharing risks and results with the Companys executive officers.
e. how the plan aligns the Managements interests and of the issuer in the short, mid, and long-term: The gains of the Management were directly proportional to a successful value generation and their length of service at the Company.
f. maximum number of shares: The Long-Term Incentive Plan in the Stock Options modality was limited to the grant of call options for 6,917,733 shares, which represented, on the date of approval of the plan, i.e., March 3, 2008, 3.4% of total shares of Light S.A. Each option entitled its holder to acquire one (1) common share issued by Light, strictly on the terms and conditions set forth in this plan.
356
g. maximum number of options to be granted: The Long-Term Incentive Plan in the Stock Options modality was limited to the grant of call options for 6,917,733 shares, which represented, on the date of approval of the plan, 3.4% of total shares of Light S.A.
h. conditions for share acquisition: The strike price was R$21.49 per common share call option, less eventual amounts paid per share to shareholders as dividends, interest on equity or capital reduction between the date of approval of the plan and the exercise of the option, which led to an exercise price of R$15.86 on the option exercise date i . criteria to establish the purchase or strike price: The criteria to establish the purchase price was a 20% discount on the average quote of the Company shares verified within 60 days before the Board of Directors meeting that decided to submit the Stock Option Plan to the Special Shareholders Meeting for approval. j. criteria to establish the term of exercise: The options would be fully exercisable, in a sole opportunity, between August 10, 2010 and August 10, 2011, except in case of secondary sale of shares issued by the Company by its current controlling shareholders, in which event the beneficiaries would be able to exercise their stock option before August 2010. k. form of payment: The payment could be made in cash upon acquisition, except for the cases in which the Beneficiary notifies the Company about its option for immediately partially or fully selling all its shares on the stock exchange. In this case, the payment related to the amount to be immediately sold could be made through the issue, by the Beneficiary, of a pro-soluto promissory note maturing on the first business day after the financial settlement of the sale transaction. l. restrictions on the transfer of shares: The number of shares to be transferred could not be higher than 30% of the average of shares traded in the last 5 sessions.
357
m. criteria and events that, when verified, will cause the suspension, alteration or cancellation of the plan: In the event of (i) deregistering as a publicly-held company, (ii) the Companys delisting from the Novo Mercado listing segment; or (iii) corporate restructuring, in which the Company resulting from this operation was not admitted to Novo Mercado, the options would be released to be totally or partially exercised by the Beneficiaries. The Board of Directors was to establish special rules that would allow the shares purpose of the Options to be sold in the tender offer to be carried out in compliance with Bovespas Novo Mercado Listing Rules and the Bylaws in effect. In the event shareholders of RME at the time no longer held, whether directly or indirectly, at least 50% of the controlling group of the Company, the grace period for the exercise of the stock options would be anticipated, maintaining, in relation to the year in which the transfer of control was verified, the same percentages corresponding to the year of the executives withdrawal from the Company, as long as he resigned his position as an officer of Light. In case the Company were involved in: (i) merger, incorporation resulting from the liquidation of Light S.A., spin-off with transfer of all or substantially all operating assets of Light S.A. to another Company; or (ii) sale of all or substantially all operating assets of Light S.A.; or (iii) another form of corporate restructuring that generated a similar effect, the Board of Directors should adjust, by common agreement with the Beneficiaries included in previous Programs and in an equitable manner, the Plan and the other terms and conditions of the options to the changes made in the shares of Light, so as to preserve the financial and economic breakeven of the rights granted to the holders of the Options.
n. effects of the withdrawal of the issuers manager over his rights established in the share-based compensation plan: In case the employment contract or term of office of the Beneficiaries of the Options were terminated by initiative of the Board of Directors, before the end of the grace period, the Beneficiary could exercise within five (5) business days after his withdrawal * 50% of the options granted to the Beneficiary, if the withdrawal took place between 12 and 24 months as of August 10, 2006; * 70% of the options granted to the Beneficiary, if the withdrawal took place between 24 and 36 months as of August 10, 2006;
358
13.4 Share-based compensation plan of the board of directors and statutory board of executive officers: * 95% of the options granted to the Beneficiary, if the withdrawal took place between 36 and 48 months as of August 10, 2006; The early exercise of the options would not apply to the events of employment contract and/or the term of office termination with cause (as this term is defined by prevailing labor laws), neither of noncompliance with Lights Bylaws and/or other corporate provisions provided for in Law 6,404/76. In case the Beneficiary had his employee contract and/or term of office terminated with Light due to retirement, permanent disability or decease, during the effectiveness of the Plan, the grace period would be anticipated and all the options would be automatically exercised.
359
13.5. - Shares or ownership interests and other convertible securities, held by Management and fiscal council members - by body: 13.5 - Inform the number of shares or quotas directly or indirectly held in Brazil or abroad, and other securities convertible into shares or quotas, issued by the issuer, its direct and indirect controlling shareholders, subsidiaries or companies under common control, by members of the board of directors, statutory board of executive officers or fiscal council, grouped by body, on the closing date of the last fiscal year34
Light S.A. 12/31/2010 Common Shares Board of Directors Fiscal Council Board of Executive Officers Total of shares 70,023 0 2,000 203,934,060 0% 0% 0% 100% Total of shares 70,023 0 2,000 203,934,060 0% 0% 0% 100%
Board of Directors Board of Executive Officers Total of Shares
Light SESA (subsidiary) 12/31/2010 Common Shares 18 0% 0 0%
Total of shares 18 0% 0 0%
203,934,060,011
100%
203,934,060,011
100%
To avoid duplicity, when a person is a member of the board of directors and of the board of executive officers, the securities held by him or her shall be disclosed exclusively in the amount of securities held by the members of the board of directors. 360
34
13.6. Share-based compensation of the board of directors and statutory board of executive officers: 13.6 Concerning the share-based compensation of the board of directors and statutory board of executive officers recognized in the income for the last three fiscal years and the one estimated for the current fiscal year, prepare a table with the following content35 : 2008: None. 2011: There is no share-based compensation predicted for the current fiscal year.
35
To avoid duplicity, the amounts calculated as compensation of the members of the board of directors shall be deducted from the compensation of executive officers who compose said body. 361
13.6. Share-based compensation of the board of directors and statutory board of executive officers:
Share-based compensation for the fiscal year ended 12/31/2010 Board of Directors Number of members Stock option grant Grant date Number of options granted Term for options to become exercisable 3/14/2008 6,917,733* 0 Statutory Board of Executive Officers 2
August 10, 2010
Maximum term for the exercise of the options
August 10, 2011
Term of restriction on the transfer of the shares
Weighted average strike price: (a) Of the options outstanding in the beginning of the fiscal year (b) Of the options lost during the fiscal year
(c) Of the options exercised during the fiscal year
15.86**
(d) Of the options expired during the fiscal year Fair value of the options on the grant date
Nil The fair value on grant date is R$11.28
Potential dilution in case all Nil granted options are exercised * Out of the total options granted (6,917,733 shares) the executives were eligible to 95%, corresponding to 6,571,846 shares. ** A total of 1,725,346 shares were exercised until January 26, 2010.
362
13.6. Share-based compensation of the board of directors and statutory board of executive officers:
Share-based compensation fiscal year ended December 31, 2009 Board of Directors Number of members Stock option grant Grant date Number of shares granted Term for options to become exercisable 3/14/2008 6,917,733* 0 Statutory Board of Executive Officers 2
August 10, 2010
Maximum term for the exercise of the options
August 10, 2010
Term of restriction on the transfer of the shares Weighted average strike price: (a) Of the options outstanding in the beginning of the fiscal year (b) Of the options lost during the fiscal year (c) Of the options exercised during the fiscal year (R$) (d) Of the options expired during the fiscal year Fair value of the options on the grant date
15.86**
Nil The fair value on grant date is R$11.28
Potential dilution in case all Nil granted options are exercised * Out of the total options granted (6,917,733 shares) the executives were eligible to 95%, corresponding to 6,571,846 shares. ** A total of 4,846,500 shares were exercised until December 31, 2009.
363
13.7 - Information on outstanding options of the board of directors and statutory board of executive officers 13.7 - Concerning the outstanding options of the board of directors and statutory board of executive officers at the end of the last fiscal year, prepare a table with the following content36 There are no outstanding options. 13.8. Options exercised and shares granted as share-based compensation to the board of directors and the statutory board of executive officers 13.8 Concerning the options exercised and shares granted as share-based compensation for the board of directors and the statutory board of executive officers during the last 3 fiscal years, prepare a table with the following content: 2011: None 2008: None
Options exercised fiscal year ended 12/31/2010 Board of Directors 0 Statutory Board of Executive Officers 2 1,725,346 15.86
Number of members Exercised options Number of shares Weighted average strike price
Difference between the strike price and the market value of the shares related to the exercised options (R$) Shares delivered Number of shares delivered Weighted average purchase price (R$) Difference between the purchase price and the market value of the purchased shares (R$)
15,107,300 1,725,346 15.86 15,107,300
Options exercised - fiscal year ended December 31, 2009 Number of members Exercised options Number of shares Weighted average strike price Difference between the strike price and the market value of the shares related to the exercised options (R$) Shares delivered Number of shares delivered Weighted average purchase price (R$) Difference between the purchase price and the market value of the purchased shares (R$)
Board of Directors 0
Statutory Board of Executive Officers 2 4,483,900 15.86 40,486,295
4,483,900 15.86 40,486,295
36
To avoid duplicity, the amounts calculated as compensation of the members of the board of directors shall be deducted from the compensation of executive officers who compose said body. 364
13.9. Information necessary to understand the data disclosed in items 13.6 to 13.8, such as the pricing method of shares and options 13.9 Brief description of the information necessary to understand the data disclosed in items 13.6 to 13.8, such as the explanation of the pricing method of shares and options, indicating at least:
a . pricing model Black & Scholes Model
b. data and assumptions used in the pricing model, including the share weighted average price, strike price, expected volatility, life term of the option, expected dividends and riskfree interest rates
Calculation assumptions used in the model: - Share weighted average price: Not applicable. - Strike price: R$21.49 - Expected volatility: 44% - Life term of the option: 890 days - Expected dividends Not applicable. - Risk-free interest rates: 8%
c. the method used and the assumptions made to incorporate the expected effects of early exercise The best estimate of the Company at that time was that there would not be early exercise, therefore this assumption was not considered in the pricing model used.
d . how the expected volatility is determined The historical volatility was used based on share return. The last 247 observations, as of the grant date, were considered.
e. if any other features of the option was incorporated when measuring its fair value Not applicable.
365
13.10. Information on pension plans in effect for members of the board of directors and statuary board of executive officers: 13.10 Provide the following information on pension plans in effect for members of the Board of Directors and Statutory Board of Executive Officers, prepare a table with the following contents:
Board of Directors Number of members Name of the plan Number of managers who have conditions to retire Conditions for early retirement in Plan C 0
Statutory Board of Executive Officers 7 (4 are participants of Braslight, 1 in Plan C and 3 in Plan D) Plan C and Plan D 1 (with early retirement in plan C) To be at least 45 years old and have at least 36 years of credited service (period of continuous service at the sponsor). To be at least 50 years old and registered in the Plan or have a work contract with the sponsor for at least 3 years in effect R$1,094,226.97 (or R$1,033,100.97, considering only the contributions related to the period from 2007 to 2010) (*)
Conditions for early retirement in Plan D Adjusted amount of the contributions accumulated up to the end of the last fiscal year, deducting the amount related to contributions directly made by the members of the management Total accumulated amount of the contributions made during the last fiscal year, deducting the amount related to contributions directly made by the members of the management
R$219,441.60(*)
Possibility of early redemption and conditions
Redemption is always possible. Its value corresponds to: [100% of the balance of the participants individual account (resulting from the contributions made by the participant)]+[a percentage of the individual account of the sponsor (resulting from the contributions made by the sponsor) available by 50% plus 0.5% for each month of binding to the Plan, limited to 80%]+[100% of resources from publicly-held entities].
(*) Amount calculated based on the value of quota of Plan C on 12/31/2010.
366
367
13.11 - Maximum, minimum average individual compensation of the board of directors, the statutory board of executive officers and the fiscal council
Statutory Board of Executive Officers 12/31/2010 No. of members Value of highest compensation (Reais) Value of lowest compensation (Reais) Value of average compensation (Reais) 172,366.00 149,995.00 153,999.00 10,689.00 10,636.00 10,206.00 73,824.00 73,824.00 64,867.00 45,500.00 17,875.00 19,379.00 47,250.00 4,500.00 4,200.00 73,824.00 73,824.00 66,864.00 7.17 96,726.00 12/31/2009 7.42 252,836.00 12/31/2008 7.00 248,837.00 Board of Directors 12/31/2010 22.00 94,500.00 12/31/2009 22.00 90,000.00 12/31/2008 22.00 84,000.00 12/31/2010 5.00 73,824.00 Fiscal Council 12/31/2009 5.00 73,824.00 12/31/2008 5.00 66,864.00
Note Statutory Board of Executive Officers
Board of Directors
Fiscal Council
368
13.12 Compensation or indemnification mechanisms for the members of the management in case of termination of employment or retirement 13.12. Description of contractual arrangements, insurance policies or other instruments that structure compensation or indemnification mechanisms for members of management in case of termination of employment or retirement, indicating the financial consequences to the issuer. None.
369
13.13 Percentage of total compensation held by members of the management and fiscal council that are related parties to the controlling shareholders 13.13. In relation to the last 3 fiscal years, indicate the percentage of total compensation of each body recognized in the issuers result corresponding to members of the board of directors, statutory board of executive officers or fiscal council that are related parties to the controlling shareholders, direct or indirectly, as defined by the accounting principles about this subject. None.
370
13.14 Compensation of members of management and the fiscal council, grouped by body, received for any other reason, but the position held
13.14. With regard to the last three fiscal years, indicate the amounts recognized in the issuers result as compensation of members of the board of directors, statutory board of executive officers or fiscal council, grouped by body, for any reason other than the performance of their position's duties, such as commissions and consulting or advisory services rendered. None
371
13.15. Compensation of members of management and the fiscal council recognized in the result of the issuers direct or indirect controlling shareholders, jointly controlled companies and subsidiaries. 13.15 - In relation to the last three fiscal years, indicate the amounts recognized in the income of indirect and direct controlling shareholders, companies under common control and subsidiaries of the issuer, such as, compensation of the members of the board of directors, statutory board of executive officers or fiscal council, grouped by body, specifying why these amounts were assigned to these individuals. Light SESA:
2010 Number of members Annual Fixed Compensation (R$) Salary officers compensation Direct and fringe benefits Participation in committees Other Variable Compensation Bonus Profit Sharing Attendance at meetings Commissions Other (ILP) Post-employment benefits
Board of Directors 18
Statutory Board of Executive Officers 7.17 4,871,903 3,449,222 1,422,681 5,221,886 5,051,024 170,862 -
Fiscal Council
Total
25.17 5,726,566 4,303,885 1,422,681 5,221,886 5,051,024 170,862 -
854,663 854,663 -
372
Benefits due to the termination of the position held Share-based compensation Overall Total
1,853,878 -
1,853,878 -
854,663 11,947,667
- 12,802,330
373
13.15. Compensation of members of management and the fiscal council recognized in the results of the issuers indirect and direct controlling shareholders, jointly-controlled companies and subsidiaries.
Statutory Board of Executive Officers 18 891,000 891,000 7.42 4,843,267 4,386,646 456,621 3,801,665 3,801,665 -
2009 Number of members Annual Fixed Compensation (R$) Salary officers compensation Direct and fringe benefits Participation in committees Other Variable Compensation Bonus Profit Sharing Attendance at meetings Commissions Other (ILP) Post-employment benefits Benefits due to the termination of the position held Share-based compensation Overall Total (R$ )
Board of Directors
Fiscal Council
Total (R$)
25.42 5,734,267 5,277,646 456,621 3,801,665 3,801,665 -
1,613,042 -
1,613,042 -
891,000 10,257,974
- 11,148,974
374
13.15. Compensation of members of management and the fiscal council recognized in the results of the issuers direct or indirect controlling shareholders, jointly-controlled companies and subsidiaries.
Statutory Board of Executive Officers 18 808,104 808,1043 808,104 7.17 4,264,392 3,895,409 368,983 3,820,362 3,759,452 60,910 126,920 8,211,674
2008 Number of members Annual Fixed Compensation (R$) Salary officers compensation Direct and fringe benefits Participation in committees Other Variable Compensation Bonus Profit Sharing Attendance at meetings Commissions Other (ILP) Post-employment benefits Benefits due to the termination of the position held Share-based compensation Overall Total
Board of Directors
Fiscal Council
Total
25 5,072,496 4,703,513 368,983 3,820,362 3,759,452 60,910 126,960 9,019,778
375
13.15. Compensation of management and members of the fiscal council recognized in the results of the issuers direct or indirect controlling shareholders, jointly-controlled companies and subsidiaries. Light Energia:
2010 Number of members Annual Fixed Compensation (R$) Salary officers compensation Direct and fringe benefits Participation in committees Other Variable Compensation Bonus Profit Sharing Attendance at meetings Commissions Other (ILP) Post-employment benefits Benefits due to the termination of the position held Share-based compensation Overall Total Statutory Board of Executive Officers 5 363,260 347,854 15,406 346,403 346,403 111,209 820,872 Board of Directors Fiscal Council Total 5 363,260 347,854 15,406 346,403 346,403 111,209 820,872
Statutory Board of Executive Officers 5 377,132 15,077 313,185 705,394
Board of Directors
Fiscal Council
Total 5
377,132 15,077 313,185 705,394
376
13.15. Compensation of members of management and the fiscal council recognized in the results of the issuers direct or indirect controlling shareholders, jointly-controlled companies and subsidiaries.
Statutory Board of Executive Officers 5 377,266 9,449 310,403 3,451 15,865 716,434
Board of Directors
Fiscal Council
Total 5
377,266 9,449 310,403 3,451 15,865 716,434
377
378
14.1 Description of human resources 14.1. Describe the issuers human resources, providing the following information:
The Company is a holding, therefore its personnel does not represent the activities of Light Group. For this reason, the items below present the Groups consolidated information 37 a. number of employees (total, by group based on the type of activity and geographic location)
Region Position Rio de Janeiro Metropolitan Area 2008 Inland Total 2009 Rio de Inland Janeiro Metropolitan Area 792 201 737 621 820 3,171 95 23 235 31 139 523 2010 Total Rio de Janeiro Inland So Metropolitan Paulo Area Total
Administrative Managerial Operational Professional Technical TOTAL
288 200 763 611 1,313 3,175
37 25 269 29 197 557
325 225 1,032 640 1,510 3,732
887 224 972 652 959 3,694
749 201 760 633 836 3,179
94 23 227 29 138 511 1 2 3
843 225 987 664 974 3,693
b. number of outsourced workers (total, by group based on the type of activity and geographic location) The Company does not have any data from 2008. Information relating to 2009 and 2010 is shown in the table below:
2009 Region Rio de Janeiro Inland Metropolitan Area 567 3,424 1,424 8 262 6,500 235 393 10 5 643 Total 2010 Rio de Janeiro Metropolitan Inland Area 556 3,884 3,118 22 7,580 9 0 418 3 430 Total
Maintenance, Cleaning, security and conservation Other managerial activities (main activities) Other managerial activities (ancillary activities) Sales, promotion and marketing Other TOTAL
802 3,817 1,434 8 267 7,143
565 3,884 3,536 25 8,010
37
Upon the annual filing of the reference form, the information shall refer to the last 3 fiscal years. Upon the filing of the reference form due to request of registration of tender offer, the information shall refer to the last 3 fiscal years and to the current fiscal year.
379
14.1 Description of human resources c. turnover rate

2008 Age Group Region Gender < 30 Rio de Janeiro F M 23 42 65 F Inland M Total Inland Overall Total 8 9 74 24 25 152 23 24 219 55 58 445 6 8 62 17 17 118 14 14 128 37 39 308 1 1 119 14 14 97 8 9 111 23 24 327 1 > 50 17 110 127 1 3050 43 152 195 1 Overall Total 83 304 387 3 < 30 18 36 54 2 2009 Age Group > 50 18 83 101 3050 20 94 114 Overall Total 56 213 269 2 < 30 42 76 118 0 2010 Age Group > 50 16 67 83 0 3050 22 80 102 1 Overall Total 80 223 303 1
Metropolitan Area Total Rio de Janeiro Metropolitan Area
d.
issuers exposure to labor liabilities and contingencies The subsidiaries of Light S.A. which are involved in labor claims up to February 28, 2011 are
Light Servios de Eletricidade S.A. (Light SESA) and Light Energia S.A. (Light Energia), and there are thirteen (13) labor claims in progress against the latter. Until February 28, 2011, Light Servios de Eletricidade S.A. (Light SESA) had approximately three thousand, three hundred and fifteen (3,315) labor claims in progress, in quantified amount until December 31, 2010 of five hundred, nineteen million and one hundred thousand reais (R$519,100,000.00). The main issues involving labor claims against Light Servios de Eletricidade S.A. (Light SESA) cover the following matters: hazardous work premium, pay parity, overtime, indemnification as established by Law 9,029/98, subsidiary/joint liability of outsourced companies employees and difference of 40% fine of the government severance indemnity fund for employees (FGTS") deriving from understated inflation adjustments.
380
14.2 Relevant changes Human resources 14.2 Comment on any relevant amendment occurred in relation to the figures disclosed in item 14.1 above Not applicable.
381
14. 3 - Description of the issuers employee compensation policy 14.3. a. Describe the issuers employee compensation policies, informing: Salary and variable compensation policy Based on market research, the Companys compensation policy is in line with the best corporate governance practices and aims to attract and retain qualified and competent professionals. The Companys strategy is to maintain a transparent and sustainable policy geared toward a resultsoriented culture. Within this context, the variable compensation plays an important role, since the executives share success and value generation, creating a long-term vision and sustainability, in addition to aligning their interests with shareholders interest.
b.
benefits policy The Company has a compensation policy composed of monthly salary, benefits and variable
compensation (Profit Sharing Program). The Companys strategy is to maintain a transparent and sustainable policy geared toward a resultsoriented culture. Within this context, the variable compensation plays an important role, since the executives share success and value generation, creating a long-term vision and sustainability, in addition to aligning their interests with shareholders interest. The benefits offered by the Company to its employees include food allowance, Christmas food allowance, and day-care assistance, sickness allowance, welfare and psychological assistance, periodical health exam and scholarships at Colgio 1 de Maio. In addition, the Company sponsors private pension plans managed by Braslight, divided into three types: (i) Plans A and B, where employees can make steady and additional contributions, based on the defined contribution unit; and (ii) Plan C, where employees regularly contribute with 1% to 6.5% of the basic salary of contribution, and being also allowed to make supplementary and additional contributions which may vary between 10% and 100%; and (iii) Plan D, where employees regularly contribute with 1% to 5% of the base salary of contribution, being also allowed to make additional contributions ranging between 10% to 100%. The Company participates with 100% of the basic contribution and 50% of the additional contribution made by employees.
382
14. 3 - Description of the issuers employee compensation policy The benefits offered are retirement, surviving spouse pension and severance pay. To be entitled to retirement benefits, employees must be at least 55 years old and have been contributing to the pension fund for 3 years. In addition, the Company participates with its contribution to risk benefits, as a complement of the sickness allowance, and its contribution to cover administrative expenses.
c.
characteristics of share-based compensation plans for employees who are not members
of the management, identifying: i. ii. iii. iii. v. groups of beneficiaries eligibility strike prices exercise terms number of shares compromised by the plan There are no share-based compensation plans for employees who are not members of the management of Light S.A.
383
14.4 - Description of the relationship between the issuer and labor unions 14.4. Describe the relationship between the issuer and labor unions The Company believes that in order to achieve its strategic goals it is paramount that it develops a joint action with its employees. Therefore, the Companys relationship with labor unions representing its labor force is based on principles of partnership grounded in trust between the parties, transparency and ethics. In this spirit, every year the Company and the labor unions jointly negotiate the collective bargaining and profit sharing agreements. They also negotiate on a biannual basis the social responsibility agreement. These three agreements were negotiated in 2010. In addition, whenever necessary, meetings are held to solve occasional non-conflicting labor issues.
384
15.1/15.2 Shareholding position

Shareholder Shareholders CPF/CNPJ
Citizenship - State
Number of common shares Common shares (%) (Units) Breakdown per class of shares (Units) Class of share Number of shares (Units) RME Rio Minas Energia Participaes S.A. 07.925.628/0001-47 26,576,149 BNDESPAR 00.383.281/0001-09 30,631,782 Brazilian Janeiro Rio de Brazilian- Rio de Janeiro 13.031737%
Party to the shareholders agreement Number of preferred shares (Units) Shares %
Controlling shareholder Preferred shares (%)
Last change Total number of shares (Units) Total shares (%)
Yes 0
Yes 0.000000%
3/25/2010 26,576,149 13.031737%
No 0
No 0.000000%
6/30/2010 30,631,782 15.020400%
15.020400%
Companhia Energtica de Minas Gerais (CEMIG) 17.155.730/0001-64 53,152,298 Brazilian Minas Gerais 26,063473% Yes 0 Yes 0.000000% 3/25/2010 53,152,298 26,063473%
Luce Empreendimentos e Participaes S.A. (LEPSA) 11.429.117/0001-01 26,576,149 OTHER 66,997,681 32.852620% 0 0.000000% 66,997,681 32.852620% Brazilian Janeiro 13.031770% Rio de Yes 0 Yes 0.000000% 3/25/2010 26,576,149 13.031770%
TREASURY SHARES Date of last change 0 TOTAL 203,934,059 100.000000% 0 0.000000% 203,934,059 100.000000% 0,000000% 0 0.000000% 0 0.000000%
385

PARENT COMPANY/INVESTOR Shareholder Shareholders CPF/CNPJ Citizenship - State Breakdown of Shares (Units) Number of common shares (Units)
PARENT COMPANY/INVESTOR
Party to the shareholders agreement
Controlling Shareholder
Last change
Common shares (%)
Number of shares (Units)
preferred
Preferred shares (%)
Total number of shares (Units)

Shareholders CPF/CNPJ
Total shares (%)

Capital Stock
BNDESPAR BNDES 33.657.248/0001-89 1 Class of share TOTAL OTHER 0 TOTAL 1 100.000000 0 0.000000 0.000000 0 0.000000 Brazilian 100.000000 No. of Shares (Units) 0 No 0 Shares % 0.000000 No 0.000000
00.383.281/0001-09
6/30/2010 1 100.000000
0.000000
100.000000
386

Last change
Common shares (%)
preferred

Total shares (%)

Capital stock
Companhia Energtica de Minas Gerais (CEMIG) Andrade Gutierrez(AGC) Energia S.A. 11.221.326/0001-65 89,383,266 Class of share TOTAL Brazilian- Minas Gerais 32.960000 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000
17.155.730/0001-64
6/30/2010 89,383,266 14.410000
State of Minas Gerais and other State entities Brazilian- Minas Gerais 138,343,449 Class of share TOTAL OTHER 43,427,528 TOTAL 271,154,243 100.000000 349,222,649 100.000000 620,376,892 100.000000 16.020000 342,784,022 98.160000 386,211,550 62.250000 51.020000 Number (Units) 0 of shares No 6,438,627 Share % 0.000000 No 1.840000 6/30/2010 144,782,076 23.340000
387

Last change
Common shares (%)
preferred

Total shares (%)

Capital stock
Luce Empreendimentos e Participaes S.A. (LEPSA) Aldo Floris 038.816.107-82 1 Class of share TOTAL Lauro Alberto de Luca 130.016.637-15 1 Class of share TOTAL Luce Brasil FIP 07.665.283/0001-30 997 Class of share TOTAL Marcio B. Moraes Jardim No 1 Class of share TOTAL 0.100000 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000 Brazilian 99.700000 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.100000 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000 0.100000 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000
11.429.117/0001-01
0.100000
0.100000
6/30/2010 997 99,700000
0.100000
388

PARENT COMPANY/INVESTOR Shareholder Shareholders CPF/CNPJ Citizenship - State Party to the shareholders agreement Number of shares (Units) preferred Controlling Shareholder Last change
Breakdown of Shares (Units) Number of common shares Common shares (%) (Units)

Total shares (%)

Capital stock
Luce Empreendimentos e Participaes S.A. (LEPSA) OTHER 0 TOTAL 1,000 100.000000 0 0.000000 0.000000 0 0.000000
11.429.117/0001-01
0.000000
1,000
100.000000
389
Party to the shareholders agreement Number of shares (Units) preferred
Last change
Common shares (%)

Total shares (%)

Capital stock
RME Rio Minas Energia Participaes S.A. OTHER 0 Redentor Energia 12.126.500/0001-53 709,309,572 Class of share TOTAL TOTAL 709,309,572 100.000000 0 0.000000 Brazilian 100.000000 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000 0.000000 0 0.000000
07.925.628/0001-47
0.000000
6/30/2010 709,309,572 100.000000
709,309,572
100.000000
390
PARENT COMPANY/INVESTOR Shareholder Shareholders CPF/CNPJ Citizenship - State Breakdown of Shares (Units) Number of common shares Common shares (%) (Units)
Last change

Total shares (%)

Capital stock
Andrade Gutierrez(AGC) Energia S.A. AGC Participaes Ltda. 03.601.304/0001-00 25 Class of share TOTAL Brazilian Minas Gerais 0.500000 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.500000
11.221.326/0001-65
06/30/2010 50 0.500000
Andrade Gutierrez (AG) Concesses S.A. 03.601.314/0001-38 4,975 Class of share TOTAL OTHER 0 TOTAL 5,000 0.000000 0 100.000000 0 0.000000 5,000 100.000000 10,000 100.000000 0.000000 0 0.000000 Brazilian 99.500000 Number (Units) 0 of shares Yes 4,975 Share % 0.000000 Yes 99.500000 6/30/2010 9,950 99.500000
391

Last change

Total shares (%)

Capital stock
BNDES OTHER 0 TOTAL 6,273,711,452 Federal government Brazilian 6,273,711,452 Class of share TOTAL 100.000000 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000 100.000000 0 0.000000 0.000000 0 0.000000
33.657.248/0001-89 0 0.000000
6,273,711,452
100.000000
6/30/2010 6,273,711,452 100.000000
392

Last change

Total shares (%)

Capital stock
Luce Brasil FIP Fundao Seguridade Social -BRASLIGHT Brazilian 44,355,693 Class of share TOTAL 25.000000 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000
07.665.283/0001-30
6/30/2010 44,355,693 25.000000
Luce Investment Fund Energy Series Foreign 133,067,080 Class of share TOTAL OTHER 0 TOTAL 177,422,773 100.000000 0 0.000000 177,422,773 100.000000 0.000000 0 0.000000 0 0.000000 75.000000 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000 6/30/2010 133,067,080 75.000000
393

Last change

Total shares (%)

Capital stock
Redentor Energia OTHER 49,809,263 45.920000 0 0.000000
12.126.500/0001-53
49,809,263
45.920000
Parati S.A. Participaes em Ativos de Energia Eltrica 10.478.616/0001-26 58,671,565 Class of share TOTAL TOTAL 108,480,828 100.000000 0 0.000000 108,480,828 100.000000 Brazilian 54.080000 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000 5/23/2011 58,671,565 54.080000
394

Last change

Total shares (%)

Capital stock
AGC Participaes Ltda. Andrade Gutierrez (AG) Concesses S.A. 03.601.314/0001-38 29,170,181 Class of share TOTAL Andrade Gutierrez S.A. 17.262.197/0001-30 51 Class of share TOTAL OTHER 0 TOTAL 29,170,232 99.999825 0 0.000000 0.000000 0 0.000000 Brazilian Minas Gerais 0.000000 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000 Brazilian Minas Gerais 99.999825 Number (Units) 0 of shares Yes 0 Share % 0.000000 Yes 0.000000
03.601.304/0001-00
6/30/2010 29,170,181 99.999825
6/30/2010 51 0.000175
0.000000
29,170,232
100.000000
395
Last change

Total shares (%)

Capital stock
Andrade Gutierrez (AG) Concesses S.A. AG Invest Fundo de Investimento em Participaes Brazilian Minas Gerais 4,806,293 Class of share TOTAL 8.656029 Number (Units) 0 of shares No 4,806,294 Share % 0.000000 No 8.626032
03.601.314/0001-38
6/30/2010 9,612,587 8.656031
Andrade Gutierrez Participaes S.A. 03.601.314/0001-38 42,464,341 Class of share TOTAL Brazilian Minas Gerais 76.477355 Number (Units) 0 of shares No 40,634,482 Share % 0.000000 No 73.211826 6/30/2010 83,098,823 74.829590
IFC - International Finance Corporation American 8,246,717 Class of share TOTAL OTHER 8,028 TOTAL 55,525,379 100.000000 55,525,373 100.000000 111,050,752 100.000000 0.014458 1,837,880 3.309982 1,845,908 1.662220 14.852158 Number (Units) 0 of shares No 8,246,717 Share % 0.000000 No 14.852160 6/30/2010 16,493,434 14.852159
396
Last change

Total shares (%)

Capital stock
Luce Investment Fund Energy Series LIL, LLC Foreign 3,416,150 Class of share TOTAL OTHER 433,030 TOTAL 3,849,180 100.000000 0 0.000000 3,849,180 100.000000 11.250000 0 0.000000 433,030 11.250000 88.750000 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000 6/30/2010 3,416,150 88.750000
397

Last change

Total shares (%)

Capital stock
Parati S.A. Participaes em Ativos de Energia Eltrica Companhia Energtica de Minas Gerais Cemig 17.155.730/0001-64 101,913,408 Class of share TOTAL OTHER 0 0.000000 0 0.000000 Brazilian-Minas Gerais 50.000000 Number (Units) 0 of shares Yes 0 Share % 0.000000 Yes 0.000000
10.478.616/0001-26
5/23/2011 101,913,408 25.000000
0.000000
Redentor Fundo de Investimento em Participaes 11.547.888/0001-01 101,913,408 Class of share TOTAL TOTAL 203,826,816 100.000000 203,826,816 100.000000 407,653,632 100.000000 Brazilian 50.000000 Number (Units) 0 of shares No 203,826,816 Share % 0.000000 No 100.000000 5/23/2011 305,740,224 75.000000
398

Last change

Total shares (%)

Capital stock
Andrade Gutierrez (AG) Concesses S.A. AG Invest Fundo de Investimento em Participaes Brazilian 4,806,293 Class of share TOTAL 8.660000 Number (Units) 0 of shares No 4,806,294 Share % 0.000000 No 8.660000
03.601.314/0001-38
6/30/2010 9,612,587 8.660000
Andrade Gutierrez Participaes S.A 04.031.960/0001-70 42,464,341 Class of share TOTAL IFC - International Finance Corporation 8,246,717 Class of share TOTAL OTHER 8,028 TOTAL 55,525,379 100.000000 55,525,373 100.000000 111,050,752 100.000000 14.850000 Number of (Units) 0 0.010000 No 8,246,717 Share % 0.000000 1,837,880 3.310000 1,845,908 1.660000 No 14.850000 6/30/2010 16,493,434 14.850000 Brazilian 76.480000 Number (Units) 0 of shares No 40,634,482 Share % 0.000000 No 73.180000 6/30/2010 83,098,823 74.830000
shares
399

Last change

Total shares (%)

Capital stock
Andrade Gutierrez Participaes S.A. Andrade Gutierrez S.A. 17.262.197/0001-30 233,761,338 Class of share TOTAL OTHER 5 TOTAL 233,761,343 100.000000 467,522,687 100.000000 0.000002 0 0.000000
03.601.314/0001-38
Brazilian Minas Gerais 99.999998 Number (Units) 0 of shares
No 467,522,687 Share % 0.000000
No 100.000000
6/30/2010 701,284,025 99.999999
0.000001
701,284,030
100.000000
400

Last change

Total shares (%)

Capital stock
Companhia Energtica de Minas Gerais Cemig Andrade Gutierrez(AGC) Energia S.A. 11.221.326/0001-65 89,383,266 Class of share TOTAL Brazilian Minas Gerais 32.960000 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000
17.155.730/0001-64
5/23/2011 89,383,266 14.410000
State of Minas Gerais and other State entities Brazilian Minas Gerais 138,343,449 Class of share TOTAL OTHER 43,427,528 TOTAL 271,154,243 100.000000 349,222,649 100.000000 620,376,892 100.000000 16.020000 342,784,022 98.160000 386,211,550 62.250000 51.020000 Number (Units) 0 of shares No 6,438,627 Share % 0.000000 No 1.840000 5/23/2011 144,782,076 23.340000
401

Last change

Total shares (%)

Capital stock
LIL, LLC Liberal International Ltd Foreign 100 Class of share TOTAL OTHER 0 TOTAL 100 100.000000 0 0.000000 100 100.000000 0.000000 0 0.000000 0 0.000000 100.000000 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000 6/30/2010 100 100.000000
402

Last change

Total shares (%)

Capital stock
Redentor Fundo de Investimento em Participaes Banco BTG Pactual S.A. Brazilian 142 Class of share TOTAL Banco Santander (Brasil) S.A. Brazilian 285 Class of share TOTAL Banco Votorantim S.A. Brazilian 285 Class of share TOTAL 28.571400 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000 28.571400 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000 14.285800 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000
11.547.888/0001-01
5/23/2011 142 14.285800
5/23/2011 285 28.571400
5/23/2011 285 28.571400
BB Banco de Investimento S.A. Brazilian 285 Class of share TOTAL 28.571400 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000 5/23/2011 285 28.571400
403

Last change

Total shares (%)

Capital stock
Redentor Fundo de Investimento em Participaes Banco BTG Pactual S.A. Brazilian 142 Class of share TOTAL Banco Santander (Brasil) S.A. Brazilian 285 Class of share TOTAL Banco Votorantim S.A. Brazilian 285 Class of share TOTAL 28.571400 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000 28.571400 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000 14.285800 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000
11.547.888/0001-01
5/23/2011 142 14.285800
5/23/2011 285 28.571400
5/23/2011 285 28.571400
BB Banco de Investimento S.A. Brazilian 285 Class of share TOTAL 28.571400 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000 5/23/2011 285 28.571400
404

Last change

Total shares (%)

Capital stock
Redentor Fundo Investimento Participaes OTHER 0 TOTAL 997
de em
11.547.888/0001-01
0.000000
0.000000
0.000000
100.000000
0.000000
997
100.000000
405

Last change

Total shares (%)

Capital stock
Andrade Gutierrez S.A. Administradora Santana Ltda. 16.741.134/0001-01 238,663,826 Class of share TOTAL Brazilian Minas Gerais 33.330000 Number (Units) 0 of shares No 477,336,173 Share % 0.000000 No 33.330000
17.262.197/0001-30
6/30/2010 715,999,999 33.330000
Administradora Santo Estevo S/A. Brazilian 238,663,827 Class of share TOTAL 33.340000 Number (Units) 0 of shares No 477,336,173 Share % 0.000000 No 33.340000 6/30/2010 716,000,000 33.340000
Administradora So Miguel Ltda. 19.135.623/0001-08 238,663,826 Class of share TOTAL OTHER 0 TOTAL 715,991,479 100.000000 1,432,008,519 100.000000 2,147,999,998 100.000000 0.000000 0 0.000000 0 0.000000 Brazilian 33.330000 Number (Units) 0 of shares No 477,336,173 Share % 0.000000 No 33.330000 6/30/2010 715,999,999 33.330000
406

Last change

Total shares (%)

Capital stock
Liberal International Ltd Aldo Floris 038.816.107-82 3,400,000 Class of share TOTAL OTHER 0 TOTAL 3,400,000 100.000000 0 0.000000 3,400,000 100.000000 0.000000 0 0.000000 0 0.000000 Italian 100.000000 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000 3,400,000 100.000000
407

Last change

Total shares (%)

Capital stock
Administradora Ltda. Angela Gutierrez
Santana 16.741.134/0001-01 No No 0.000000 99,998 33.330000
99,998 Class of share TOTAL Cristiana Gutierrez
33.330000 Number (Units) 0 of shares
0 Share % 0.000000
No 99,998 Class of share TOTAL Roberto Gutierrezs estate No 99,970 Class of share TOTAL OTHER 34 TOTAL 300,000 100.000000 0 0.020000 0 33.320000 Number (Units) 0 of shares 0 Share % 0.000000 33.330000 Number (Units) 0 of shares 0 Share % 0.000000
No 0.000000 99,998 33.330000
No 0.000000 99,970 33.320000
0.000000
34
0.020000
0.000000
300,000
100.000000
408

Last change

Total shares (%)

Capital stock
Administradora Santo Estevo S/A. OTHER 13,776 Sergio Lins Andrade No 4,986,587 Class of share TOTAL TOTAL 5,000,363 100.000000 0 0.000000 5,000,363 100.000000 99.720000 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000 4,986,587 99.720000 0.280000 0 0.000000 13,776 0.280000
409

Last change

Total shares (%)

Capital stock
Administradora So Miguel Ltda. gua Branca Participaes Ltda. 07.151.347/0001-84 1,392,800 Class of share TOTAL Alvaro Furtado de Andrade No 1,376,400 Class of share TOTAL Cristlia Participaes Ltda. 07.147.738/0001-25 1,431,200 Class of share TOTAL Flvio Furtado de Andrade No 1,203,600 Class of share TOTAL 6.338073 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000 Brazilian 7.536598 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000 7.248025 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000 Brazilian 7.334387 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000
19.135.623/0001-08
6/30/2010 1,392,800 7.334387
1,376,400
7.248025
6/30/2010 1,431,200 7.536598
1,203,600
6.338073
410

Last change

Total shares (%)

Capital stock
Administradora So Miguel Ltda. Gabriel Donato de Andrade No 200 Class of share TOTAL Guvidala Participaes Ltda. 07.154.488/0001-50 1,497,200 Class of share TOTAL Heloisa Furtado de Andrade No 1,320,000 Class of share TOTAL Laura Furtado de Andrade No 1,320,000 Class of share TOTAL 6.951027 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000 6.951027 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000 Brazilian 7.884150 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000 0.001503 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000
19.135.623/0001-08
200
0.001503
6/30/2010 1,497,200 7.884150
1,320,000
6.951027
1,320,000
6.951027

411
Last change

Total shares (%)

Capital stock
Administradora So Miguel Ltda. Luciana Furtado Andrade No 1,368,000 Class of share TOTAL Marlia Furtado de Andrade No 1,261,200 Class of share TOTAL Marrote Participaes Ltda. 07.154.654/0001-19 1,196,000 Class of share TOTAL Nadja Participaes Ltda. 07.154.477/0001-70 1,404,800 Class of share TOTAL Brazilian 7.397126 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000 Brazilian 6.298052 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000 6.641390 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000 7.203791 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000
19.135.623/0001-08
1,368,000
7.203791
1,261,200
6.641390
6/30/2010 1,196,000 6.298052
6/30/2010 1,404,800 7.397126
412

Last change

Total shares (%)

Capital stock
Administradora So Miguel Ltda. OTHER 0 Paulo Furtado de Andrade 0.000000
19.135.623/0001-08 No 0 No 0.000000 0 0.000000
No 1,390,800 Class of share TOTAL TOTAL 18,990,000 Travessia Participaes Ltda. 07.154.469/0001-24 1,455,200 Class of share TOTAL Vera Furtado de Andrade No 200 Class of share TOTAL 0.001053 Number (Units) 0 of shares 0 Share % 0.000000 Brazilian 7.662981 Number (Units) 0 of shares No 0 Share % 0.000000 100.000000 0 7.323855 Number (Units) 0 of shares 0 Share % 0.000000
No 0.000000 1,390,800 7.323855
0.000000
18,990,000
100.000000
No 0.000000
6/30/2010 1,455,200 7.662981
No 0.000000 200 0.001053
413

PARENT COMPANY/INVESTOR Shareholder Shareholders CPF/CNPJ Citizenship - State Party to the shareholders agreement Number of shares (Units) preferred Controlling Shareholder Last change
Breakdown of Shares (Units) Number of common shares Common shares (%) (Units)

Total shares (%)

Capital stock
Administradora So Miguel Ltda. Verdigris Participaes Ltda. 07.149.689/0001-60 1,372,400 Class of share TOTAL Brazilian 7.226962 Number (Units) 0 of shares No 0 Share % 0.000000 No 0.000000
19.135.623/0001-08
6/30/2010 1,372,400 7.226962
414

Last change

Total shares (%)

Capital stock
gua Branca Participaes Ltda. Camila da Cunha Pereira 5 Class of share TOTAL Gabriel Donato de Andrade 1 Class of share TOTAL 0.000072 Number (Units) 0 No 0 Share % 0.000000 No 0 Share % 0.000000 No 0 Share % 0.000000 No 0.000000 No 0.000000 No 0.000000 0.000359 Number (Units) 0 No 0 Share % 0.000000 No 0.000000
07.151.347/0001-84
0.000359
of
shares
0.000072
of
shares
Gabriela Andrade da Cunha Pereira 5 Class of share TOTAL Laura Furtado de Andrade 1,392,780 Class of share TOTAL 99.998492 Number of (Units) 0 1,392,780 99.998492 0.000359 Number (Units) 0 5 0.000359
of
shares
shares
415

Last change

Total shares (%)

Capital stock
gua Branca Participaes Ltda. Mariana da Cunha Pereira No 5 Class of share TOTAL OTHER 0 0.000359 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000
07.151.347/0001-84
0.000359
0.000000
0.000000
0.000000
Rafael Andrade da Cunha Pereira No 5 Class of share TOTAL TOTAL 1,392,801 100.000000 0 0.000000 1,392,801 100.000000 0.000359 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000 5 0.000359
416

Last change

Total shares (%)

Capital stock
Cristlia Participaes Ltda. Gabriel Donato de Andrade No 1 Class of share TOTAL Heloisa Furtado de Andrade No 1,431,200 Class of share TOTAL OTHER 0 TOTAL 1,431,201 100.000000 0 0.000000 0.000000 0 0.000000 99.999930 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000 0.000070 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000
07.147.738/0001-25
0.000070
1,431,200
99.999930
0.000000
1,431,201
100.000000
417

Last change

Total shares (%)

Capital stock
Guvidala Participaes Ltda. lvaro Furtado de Andrade No 1,497,000 Class of share TOTAL Gabriel Donato de Andrade No 1 Class of share TOTAL OTHER 0 TOTAL 1,497,001 100.000000 0 0.000000 0.000000 0 0.000000 0.000067 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000 99.999933 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000
07.154.488/0001-50
1,497,000
99.999933
0.000067
0.000000
1,497,001
100.000000
418

Last change

Total shares (%)

Capital stock
Marrote Ltda.
Participaes 07.154.654/0001-19
Flvio Furtado de Andrade No 1,196,000 Class of share TOTAL Gabriel Donato de Andrade No 1 Class of share TOTAL OTHER 0 TOTAL 1,196,001 100.000000 0 0.000000 1,196,001 100.000000 0.000000 0 0.000000 0 0.000000 0.000084 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000 1 0.000084 99.999916 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000 1,196,000 99.999916
419

Last change

Total shares (%)

Capital stock
Nadja Participaes Ltda. Gabriel Donato de Andrade No 1 Class of share TOTAL Luciana Furtado de Andrade No 1,404,800 Class of share TOTAL OTHER 0 TOTAL 1,404,801 100.000000 0 0.000000 0.000000 0 0.000000 99.999929 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000 0.000071 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000
07.154.477/0001-70
0.000071
1,404,800
99.999929
0.000000
1,404,801
100.000000
420

Last change

Total shares (%)

Capital stock
Travessia Ltda.
Participaes 07.154.469/0001-24
Gabriel Donato de Andrade No 1 Class of share TOTAL OTHER 0 Paulo Furtado de Andrade No 1,455,200 Class of share TOTAL TOTAL 1,455,201 100.000000 0 0.000000 1,455,201 100.000000 99.999931 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000 1,455,200 99.999931 0.000000 0 0.000000 0 0.000000 0.000069 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000 1 0.000069
421

Last change

Total shares (%)

Capital stock
Verdigris Ltda.
Participaes 07.149.689/0001-60
Gabriel Donato de Andrade No 1 Class of share TOTAL Marlia Furtado de Andrade No 1,372,401 Class of share TOTAL OTHER 0 TOTAL 1,372,402 100.000000 0 0.000000 1,372,402 100.000000 0.000000 0 0.000000 0 0.000000 99.999927 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000 1,372,401 99.999927 0.000073 Number (Units) 0 of shares 0 Share % 0.000000 No 0.000000 1 0.000073
422
15.3 Distribution of Capital

Date of last meeting/Date of last change No. of individual shareholders (Units) No. of corporate shareholders (Units) No. of institutional investors (Units) 4/30/2011 9,857,584 17,393,461 0
Outstanding shares Outstanding shares correspond to all Issuer shares except for those held by controlling shareholder, persons bound thereto, Issuers Management and treasury shares.
No. of common shares (Units) No. of preferred shares (Units) Total
97,629,483 0 97,629,483
47.900000% 0.000000% 47.900000%
15.4 Shareholders organizational chart 15.4 In case the issuer intends to include the organizational chart showing the shareholders of the issuer, identifying all direct and indirect controlling shareholders, as well as all shareholders with interest equal to or higher than 5% of one class or type of stock, provided that it is compatible with the information in items 15.1 and 15.2 Items 15.1 and 15.2 of this Form refer to the direct and indirect controlling shareholders and shareholders with interest equal to or higher than 5% of the Issuers total voting capital.
15.5 Shareholders agreement filed at the Issuers headquarters or to which the controlling shareholders are a party 15.5. Concerning any shareholders agreement filed at the issuers headquarters or to which controlling shareholders are a party to, governing the exercise of voting rights or transfer of the issuer stocks, indicate: a. Parties The parties to the Companys Shareholders Agreement are: Companhia Energtica de Minas Gerais CEMIG, Andrade Gutierrez Concesses S.A., Luce Empreendimentos e Participaes S.A. and RME Rio Minas Energia Participaes S.A.
b.
date of execution December 30, 2009.
c.
effectiveness term The Agreement will be valid for 30 years as from the date of execution or until the Parties
execute a new Shareholders Agreement.
d.
clauses addressing the exercise of voting rights and power of control The parties shall exercise their voting rights at the Companys meetings and preliminary meeting
to ensure compliance with the provisions set forth in the Agreement, as well as through the board members nominated by them. Regarding control power, the parties will compete with their votes and the board members appointed by them will carry out any acts that are necessary to ensure control of the Company and its subsidiaries in compliance with the principles and rules set forth in the Shareholders Agreement. Before any shareholders or board of directors meeting, the parties undertake to attend to a preliminary meeting to establish their common vote at the meeting or guidance of common vote to the members of the Board of Directors of the Company nominated by them.
15.5 Shareholders agreement filed at the Issuers headquarters or to which the controlling shareholders are a party As a rule, the matters will be approved at preliminary meeting with affirmative votes representing more than half of the shares. However, some subjects depend on approval by vote representing at least 2/3 of the shares, such as: (i) contracting, by the Company or any of its subsidiaries, of obligation in an amount that exceeds R$5,000,000.00; (ii) approval of the annual budget of the Company and its subsidiaries; (iii) redemption, amortization or purchase for treasury of shares of the Company or its subsidiaries, as well as sale or encumbrance of such shares; (iv) hiring and dismissal of external auditors, as well as change in the accounting and fiscal policy of the Company and its subsidiaries; (v) creation of any capital reserve for contingencies and/or profit reserve of the Company and its subsidiaries; and (vi) amendment to the Companys Bylaws to reflect the resolutions related to the matter of the items indicated above. Other matters depend on the approval by vote representing at least 85% of the shares, such as: (i) change in the corporate purpose of the Company and its subsidiaries; (ii) change in the dividends policy of the Company or its subsidiaries; (iii) amendment to the Bylaws to change the composition, competence and activities of the meeting or body of the management or executive committees of the Company and its subsidiaries; (iv) operation of merger, spin-off or amalgamation involving the Company or its subsidiaries; (v) deregistering as publicly-held company, (vi) association of the Company or its subsidiaries with third parties, (vii) dissolution, liquidation, petition for bankruptcy or reorganization proceedings by the Company or its subsidiaries; (viii) conduction of any legal business which has as purpose the acquisition or sale, or also, the constitution of encumbrances of any nature by the Company and its subsidiaries on ownership interests; (ix) increase or reduction of the capital of the Company and its subsidiaries not established in the business plans, and (x) amendment to the Companys Bylaws to reflect the resolutions on the matters of the items indicated above. The resolutions validly made by the parties at preliminary meetings shall bind the votes of the parties, including the votes of those who failed to attend to the preliminary meeting.
15.5 Shareholders agreement filed at the Issuers headquarters or to which the controlling shareholders are a party e. description of clauses related to the nomination of members of the management The Agreement establishes that each party will have the right to nominate a number of board members, within the total of board members elected or to be elected by the controlling group, proportionally to the percentage of interests held by such party in the controlling group. However, considering that the interests of the parties in the capital of Light have changed in relation to the interests held on the same date of execution of the Agreement, this established, therefore, that each Party will nominate the number of members of the Board of Directors of Light by adopting the multiple voting system established in the Brazilian Corporation Law. Concerning the election by the Board of Directors of the Companys executive officers, this will be carried out after the nomination, at preliminary meeting attended by the parties, with a favorable vote of 5/8 of the shares.
f. description of causes related to share transfer and preemptive rights The Shareholders Agreement establishes preemptive right to the other parties, in case of sale, which shall be exercised proportionally to the interest of each party in the controlling group, without considering the interest of the selling party. The offer shall be made in writing, sent to the addresses of the parties to the Agreement, and shall specify the amount and price, followed by an evaluation performed by an institution and a list of third parties to whom the shares will be offered. In the event that the preemptive right is not exercised within 10 days, after the reference value of the shares is established, the sale to the third parties included in the list mentioned above will be permitted within 45 days. The third party shall adhere to the terms of the Shareholders Agreement. The rules on preemptive right are not applicable to CEMIG, which shall sell the shares held by it in a public auction. Should either party, jointly or severally, decide to sell 50% or more of the shares, the other parties shall be entitled to sell all their shares jointly with the selling parties. The selling parties shall notify the other parties in writing about the intended sale, and the parties intending to exercise their tag along right shall notify the selling parties and the buyer in writing within 10 business days as of the
15.5 Shareholders agreement filed at the Issuers headquarters or to which the controlling shareholders are a party receipt date of the sale notification. The price per share to be paid shall correspond to the price per share paid to the selling parties. Any share assignment and transfer shall be carried out only if the buying third party adhere to the Shareholders Agreement, undertaking all rights and obligations of the selling or assigning party. The parties shall have the option to buy all the shares owned by either party that directly or indirectly transferred their controlling interest. Each party shall have the right to acquire a portion of the shares proportionally to its interest in the controlling group.
g.description of clauses that limit or qualify the voting rights of the members of the board of directors See answer to item 12.4 (b) of this Reference Form.
15.6 Material changes in the interest held by members of the controlling group and issuers management 15.6. Indicate material changes in the interest held by members of the controlling group and issuers management38 In compliance with provisions in item 9.1 of its Shareholders Agreement, entered into on March 23, 2006, on November 17, 2009, RME Rio Minas Energia Participaes S.A. (RME) merged Lidil Comercial Ltda. (Lidil), and on December 31, 2009, RME was split up into three parts. The interests split off were merged by Andrade Gutierrez Concesses S.A. (AGC), Companhia Energtica de Minas Gerais CEMIG (CEMIG), and by Luce Empreendimentos e Participaes S.A. (LEPSA), a company incorporated and controlled by Luce Brasil Fundo de Investimento em Participaes. Equatorial Energia S.A. (Equatorial) remained the sole shareholder of RME. The corporate restructuring of RME by its shareholders streamlined the ownership structure by eliminating the holding company RME, now each of the four shareholders AGC, CEMIG, LEPSA, and RME hold twenty-six million, five hundred, seventy-six thousand, one hundred and forty-nine (26,576,149) common shares issued by the Company, representing a direct interest of approximately 13.03% in the Companys capital stock. RMEs shareholders agreement was replaced with a new Agreement between the four shareholders of the Company, reproducing the rights and obligations set forth in RMEs Shareholders Agreement. On December 30, 2009, CEMIG entered into a Share Purchase Agreement (AGC Agreement) with AGC, and, on March 25, 2010, the payment for the acquisition by CEMIG of twenty-five million, four hundred, ninety-four thousand and five hundred (25,494,500) common shares issued by the Company and owned by AGC, representing 12.50% of the total and voting capital of the Company. In addition, on November 17, 2010, one million, eighty-one thousand, six hundred and forty-nine (1,081,649) common shares issued by the Company and held by AGC have been paid and transferred to CEMIG, representing approximately 0.53% of the total and voting capital of the Company, corresponding to the remaining amount of the acquisition announced in Material Fact released by the Company on March 26, 2010.
38
Upon the annual filing of the reference form, the information shall refer to the last 3 fiscal years. Upon the filing of the reference form due to request of registration of securities tender offer, the information shall refer to the last 3 fiscal years and to the current fiscal year.
15.6 Material changes in the interest held by members of the controlling group and issuers management On December 30, 2009, Fundo de Investimento em Participaes PCP (FIP PCP), the indirect controlling shareholder of Equatorial, entered into a Share Purchase Agreement and Other Covenants with CEMIG, (Equatorial Agreement), with Equatorial being the consenting intervening party, for the sale of the indirect interest of FIP PCP in the Company, corresponding to 55.41% of a total of twenty-six million, five hundred, seventy-six thousand, one hundred and forty-nine (26,576,149) common shares issued by the Company, or of a company in which CEMIG holds not less than twenty percent (20%) interest. On April 29, 2010, the annual and special shareholders meetings of Equatorial approved its partial spin-off, through the transfer of a portion of its shareholders equity corresponding to its interest in the capital stock of RME to a new corporation called Redentor Energia S.A. (Redentor), incorporated specifically for this purpose upon the partial spin-off. The conclusion of Equatorial Agreement is subject to certain conditions provided for therein, to the registration of Redentor with CVM, and to other regulatory approvals and approvals of governmental bodies, as applicable. On March 24, 2010, CEMIG entered into an Quota Put Option and Other Covenants Agreement (Option) with Enlighted Partners Venture Capital LLC (ENLIGHTED), a limited-liability company incorporated in compliance with the Laws of Delaware, United States of America. Said transaction refers to granting an option to sell quotas of Luce Investment Fund (LUCE Fund), headquartered in Newark, DE, USA, which holds seventy-five percent (75%) of the quotas of Luce Brasil Fundo de Investimento em Participaes (FIP Luce), which, through LEPSA, holds an indirect interest of twenty-six million, five hundred, seventy-six thousand, one hundred and forty-nine (26,576,149) common shares issued by the Company, representing approximately 13.03% of its total and voting capital. In Material Fact disclosed on October 7, 2010 by shareholder CEMIG, ENLIGHTED exercised the put option of its quotas held in LUCE Fund to Cemig or third party appointed thereby, subject to certain requirements contractually agreed upon, as well as to the approval of the Brazilian Electricity Regulatory Agency (Aneel), the Antitrust Authority (CADE), the Brazilian Development Bank (BNDES) and other financial agents and debenture holders of the Company and its subsidiaries, when necessary.
15.6 Material changes in the interest held by members of the controlling group and issuers management Pursuant toMaterial Fact announced by the Company on October 11, 2010, ENLIGHTED formalized its interest to start negotiations with CEMIG, aiming at maintaining part of its stake in Luce Brasil Fundo de Investimento em Participaes, indirect holder of 13.03% of the Company shares. On April 11, 2011, CEMIG announced in Notice to the Market that agreements were executed between CEMIG, Redentor Fundo de Investimento em Participaes (FIP Redentor) and Parati S.A. Participaes em Ativos de Energia Eltrica (Parati) setting forth the partnership conditions between Cemig and FIP Redentor to acquire through Parati S.A. equity interests of Redentor Energia S.A. and Luce Investment Fund in the Companys capital stock, corresponding to up to twenty-six point six hundredths percent (26.06%) of its capital stock. On May 12, 2011, Parati S.A. a corporation held by CEMIG and FIP Redentor, acquired 58,671,565 common shares from FIP PCP, accounting for 54.08% of Redentors total capital stock, indirect shareholder of the Company through its subsidiary RME Rio Minas Energia Participaes S.A., which holds 13.03% of the Companys capital. Therefore, Parati reached an indirect interest of 7.05% of Lights voting capital, and FIP Redentor reached an indirect interest of 5.29%. This acquisition resulted in the transfer of Redentor control, and as a result, Parati will conduct the tender offer for the acquisition of Redentor remaining shares for the same price per share paid to FIP PCP (OPA). For more information on the Companys Shareholders Agreement, dated December 30, 2009, see item 15.5 of this Reference Form. Below we present a table with the controlling groups shareholding on November 16, 2009, before the beginning of the corporate restructuring with the merger of Lidil on November 17, 2009, December 31, 2009 and December 31, 2010.
15.6 Material changes in the interest held by members of the controlling group and issuers management
Light S.A. November 16, 2009 December 31, 2009 Number of % Number of % Common Shares Common Shares 26,576,149 13.03 December 31,2010 Number of % Common Shares 53,152,298 26.06
Shareholders COMPANHIA ENERGTICA DE MINAS GERAIS S.A. CEMIG ANDRADE GUTIERREZ CONCESSES S.A. LUCE EMPREENDIMENTOS E PARTICIPAES S.A. (LEPSA) RME Rio Minas Energia Participaes S.A. Lidil
26,576,149
13.03
26,576,149
13.03
26,576,149
13.03
100,719,912 5,584,685
49.39 2.74
26,576,150 -
13.03 -
26,576,150 -
13.03
15.7 Other Relevant Information 15.7 Provide other information the Issuer deems as relevant Not applicable.
16.1 Description of the issuers rules, policies and practices regarding transactions with related third parties 16.1 Describe the issuers rules, policies and practices regarding transactions with related third parties, as defined in the accounting rules addressing this subject All transactions with related parties are carried out at market price and disclosed through notes to the financial statements. In addition, the concessionaires and authorized companies, subsidiaries of Light S.A. must abide by the rules included in Aneel Resolution 334/2008, which establishes the procedures for prior and subsequent control of Aneel of all legal acts and business activities between concessionaries, permissionaires, authorized companies and their related parties. The main transactions currently performed by Light S.A. (consolidated) that involve related parties are transactions of the Companys business, such as the purchase and sale of electricity, loan agreements and actuarial liabilities with the pension fund sponsored by Light S.A. and its subsidiaries.
16.2 Information on related-party transactions

Related party CEMIG Relationship with the issuer Purpose of the agreement Guarantees and insurance Termination Nature and purpose of the transaction CEMIG Relationship with the issuer Purpose of the agreement Guarantees and insurance Termination Nature and purpose of the transaction Braslight Relationship with the issuer Purpose of the agreement Guarantees and insurance Termination Nature and purpose of the transaction CEMIG Relationship with the issuer Purpose of the agreement Guarantees and insurance Termination Nature and purpose of the transaction Transaction Amount involved Current balance date (R$) 1/31/2005 156,239,000.00 77,256,000.00 Party to the controlling group Energy sales agreement between Light Energia and CEMIG Receivables None Amount (R$) Term Dec/2013 Loan or other type of debt NO Interest rate charged 0.000000
12/31/2002 0.00 1,634,000.00 Party to the controlling group Basic network usage charge commitment between Light SESA and CEMIG Receivables None
Undetermined
NO
0.000000
6/30/2001 535,052,000.00 1,016,185,000.00 Indirect party to the controlling group Fundao de Seguridade Social BRASLIGHT Receivables None In addition to 6% interest, add the IPCA Extended Consumer Price Index 11/30/2003 0.00 381,000.00 Party to the controlling group Collection of distribution system usage charge between Light SESA and CEMIG Receivables None
Jun/2026
YES
6.000000
Undetermined
NO
0.000000
16.2 Information regarding transactions with related third parties

Related party Lightger Relationship with the issuer Purpose of the agreement Guarantees and insurance Termination Nature and purpose of the transaction CEMIG Relationship with the issuer Purpose of the agreement Guarantees and insurance Termination Nature and purpose of the transaction CEMIG Relationship with the issuer Purpose of the agreement Guarantees and insurance Termination Nature and purpose of the transaction CEMIG Relationship with the issuer Purpose of the agreement Guarantees and insurance Termination Nature and purpose of the transaction Transaction Amount involved Current balance Amount Term Loan or other type of Interest rate date (R$) (R$) debt charged 10/1/2010 11,042,000.00 11,156,000.00 Oct/2011 YES 0.900000 Parent Company Loan Agreement with Light S.A., which holds 50.9% of Lightgers capital, to honor the financial commitments contracted to set up PCH Paracambi Promissory note None In addition of a 0.9% annual interest rate, add the interbank deposit certificate (CDI) 1/1/2006 614,049,000.00 450,358,000.00 Party to the controlling group Strategic agreement Energy purchase agreement between Light SESA and CEMIG Receivables 30% of the remaining balance Dec/2038 NO 0.000000
1/1/2010 37,600,000.00 36,348,000.00 Party to the controlling group Strategic agreement Energy purchase agreement between Light SESA and CEMIG Receivables 30% of the remaining balance
Dec/2029
NO
0.000000
1/1/2005 156,239,000.00 54,066,000.00 Party to the controlling group Strategic agreement Energy sales agreement between Light Energia and CEMIG Receivables None
Dec/2013
NO
0.000000
16.2 Information regarding transactions with related third parties

Related party CEMIG Relationship with the Company Purpose of the agreement Guarantees and insurance Termination Nature and purpose of the transaction Transaction Amount (R$) Current balance Amount date (R$) 12/1/2022 0.00 10,000.00 Party to the controlling group Strategic agreement Basic network usage charge commitment between Light Energia and CEMIG Receivables None Duration Indeterminate Loan or other type of debt NO Interest rate 0.000000
16.3 Identify the actions taken to cope with conflicts of interests and demonstrate the strictly arms length nature of the conditions agreed or the appropriate compensatory payment 16.3 Regarding each of the transactions or set of transactions referred to in item 16.2 carried out in the past fiscal year: a) identify the actions taken to cope with conflicts of interests, and b) demonstrate the strictly arms length nature of the conditions agreed or the appropriate compensatory payment The Energy Purchase Agreements in a Regulated Environment mentioned above (1, 2 and 3) were executed in strict compliance with the respective energy auctions, and the price is the same as practiced for other distribution concessionaries that acquired energy at the same auction, as well as the payment conditions. In relation to the System Usage Agreements (4, 5 and 6), these agreements observe the conditions established by the regulation in effect, being the tariffs regulated. Loan Agreements between Light and Lightger aims at honoring financial commitments established to implement PCH Paracambi, and contractual conditions are set forth as agreed upon between the parties. The agreement entered into with Fundao Braslight, mentioned in item 19, aims at leveling the technical deficit of Fundao, following the determination of Secretaria de Previdncia Complementar (Supplementary Pension Plan Department). The deficit restatement rate is equal to the actuarial target of Fundao.
17.1- Capital Stock

Date of authorization or approval Type of capital 1/13/2006 Number of common shares (units) 203,965,072,011 Number of preferred shares (units) 0
Capital (R$) Authorized capital 0.00
Payment term
Total shares (units) 203,965,072,011
17.2- Capital stock increases

Body resolving on the matter Board of 1/31/2007 Directors Meeting Criterion for determination of issue price Resolution date Total issue (in reais) 73,968,000.00 Type of increase Public subscription Common shares (units) 6,410,020 Preferred shares (units) 0 Total shares (units) 6,410,020 Subscription /previous capital 0.00400000 Issue price 0.01
Issue date 1/31/2007
Quotation factor R$ per unit
The price of conversion of Light SESA 4th Issue debentures was based on the book value per thousand (1,000) shares issued by the Company on December 31, 2004, corresponding to eleven reais, one hundred and thirty-five thousandths (R$11.135), which shall be restated by the Capitalization Term (TC = [(1 + TJLP/100)/1.06]n/360), as of the date of issue. Local currency 3/23/2007 3,264.00 Public subscription 282,795 0 282,795 0.00023045 0.01 R$ per unit
Type of payment Board of Directors Meeting Criterion for determination of issue price 3/23/2007
The price of conversion of Light SESA 4th Issue debentures was based on the book value per thousand (1,000) shares issued by the Company on December 31, 2004, corresponding to eleven reais, one hundred and thirty-five thousandths (R$11.135), which shall be restated by the Capitalization Term (TC = [(1 + TJLP/100)/1.06]n/360), as of the date of issue. Local currency 5/2/2007 119,771.00 Public subscription 10,369,150 0 10,369,150 0.00800000 0.01 R$ per unit
Type of payment Board of 5/2/2007 Directors Meeting Criterion for determination of issue price
The price of conversion of Light SESA 4th Issue debentures was based on the book value per thousand (1,000) shares issued by the Company on December 31, 2004, corresponding to eleven reais, one hundred and thirty-five thousandths (R$11.135), which shall be restated by the Capitalization Term (TC = [(1 + TJLP/100)/1.06]n/360), as of the date of issue. Local currency 5/25/2007 720,296,480.00 Public subscription 62,318,214,440 0 62,318,214,440 50.85000000 0.01 R$ per unit
The price of conversion of Light SESA 4th Issue debentures was based on the book value per thousand (1,000) shares issued by the Company on December 31, 2004, corresponding to eleven reais, one hundred and thirty-five thousandths (R$11.135), which shall be restated by the Capitalization Term (TC = [(1 + TJLP/100)/1.06]n/360), as of the date of issue. Local currency 6/22/2007 114,424.00 Public subscription 9,897,858 0 9,897,858 0.00500000 0.01 R$ per unit
The price of conversion of Light SESA 4th Issue debentures was based on the book value per thousand (1,000) shares issued by the Company on December 31, 2004, corresponding to eleven reais, one hundred and thirty-five thousandths (R$11.135), which shall be restated by the Capitalization Term (TC = [(1 + TJLP/100)/1.06]n/360), as of the date of issue. Local currency
Type of payment

Body resolving on the matter Board of 7/27/2007 Directors Meeting Criterion for determination of issue price Resolution date Subscription /previous capital 0.00400000
Issue date 7/27/2007
Total issue (in reais) 76,315.00
Type of increase Public subscription
Common shares (units) 6,598,550
Preferred shares (units) 0
Total shares (units) 6,598,550
Issue price 0.01
The price of conversion of Light SESA 4th Issue debentures was based on the book value per thousand (1,000) shares issued by the Company on December 31, 2004, corresponding to eleven reais, one hundred and thirty-five thousandths (R$11.135), which shall be restated by the Capitalization Term (TC = [(1 + TJLP/100)/1.06]n/360), as of the date of issue. Local currency 9/28/2007 1,527,017.00 Public subscription 131,971,000 0 131,971,000 0.07100000 0.01 R$ per unit
The price of conversion of Light SESA 4th Issue debentures was based on the book value per thousand (1,000) shares issued by the Company on December 31, 2004, corresponding to eleven reais, one hundred and thirty-five thousandths (R$11.135), which shall be restated by the Capitalization Term (TC = [(1 + TJLP/100)/1.06]n/360), as of the date of issue. Local currency 10/26/2007 81,848,277.00 Public subscription 7,071,948,830 0 7,071,948,830 3.82700000 0.01 R$ per unit
The price of conversion of Light SESA 4th Issue debentures was based on the book value per thousand (1,000) shares issued by the Company on December 31, 2004, corresponding to eleven reais, one hundred and thirty-five thousandths (R$11.135), which shall be restated by the Capitalization Term (TC = [(1 + TJLP/100)/1.06]n/360), as of the date of issue. Local currency 10/3/2008 4,919,331.00 Public subscription 424,097 0 424,097 0.22200000 11.60 R$ per unit
The price of conversion of Light SESA 4th Issue debentures was based on the book value per thousand (1,000) shares issued by the Company on December 31, 2004, corresponding to eleven reais, one hundred and thirty-five thousandths (R$11.135), which shall be restated by the Capitalization Term (TC = [(1 + TJLP/100)/1.06]n/360), as of the date of issue. Local currency 11/07/2008 544,588.00 Public subscription 46,942 0 46,942 0.02400000 11.60 R$ per unit
Type of payment Board of 11/7/2008 Directors Meeting Criterion for determination of issue price Type of payment

Body resolving on the matter Board of 5/8/2009 Directors Meeting Criterion for determination of issue price Resolution date Subscription /previous capital 0.00014759
Issue date 5/8/2009
Total issue (in reais) 3,284.00
Type of increase Public subscription
Common shares (units) 282
Preferred shares (units) 0
Total shares (units) 282
Issue price 11.65
Type of payment
17.3 - Stock split, reverse split and bonus information Justification for not completing the chart: There was no stock split, reverse split and bonus over the past three fiscal years.
17.4 Capital stock reduction information Justification for not completing the chart: There was no capital stock reduction over the past three fiscal years.
17.5 - Other relevant information 17.5 Provide other information the Issuer deems as relevant There is no other relevant information about the Companys capital stock.
18.1- Share rights
Type of shares or Share Deposit Certificates (CDA) Tag along Right to dividends
Common shares 100.000000 In compliance with the Brazilian Corporation Law and the Companys Bylaws, in each fiscal year, the shareholders shall be entitled to a minimum mandatory dividend of twenty-five percent (25%) of the Companys net income, pursuant to Article 202 of the Brazilian Corporation Law. The Company by resolution of the Board of Directors may declare interim dividends to the account of the net income verified in the period and interim dividends to the account of retained earnings or of profit reserve, including as total or partial advance of the mandatory dividend of the year in progress. The Board of Directors may also resolve on the payment of interest on equity according to the current legislation, in total or partial replacement of dividends, including interim dividends. The Shareholders Meeting may decide on attributing the interest on equity authorized by the Company to the mandatory dividend. Full voting rights Not provided Yes In the event of liquidation of the Company, shareholders shall receive the payments related to capital refund proportionally to their interest in the capital stock, after the payment of all liabilities proportionally to their respective interests in the total of shares issued by the Company. In relation to refund to dissenting shareholders, either Companys shareholder dissenting from certain resolutions made at Shareholders Meeting may withdraw from the Company through a refund in the amount of their shares, in compliance with the criteria established in the Brazilian Corporation Law. Yes The Companys Disclosure Policy of Material Act or Fact and Trading of Securities establish restrictions on the trading of securities issued by the Company by the persons and as indicated therein. For more information, see item 20 of this Reference Form.
Right to vote Convertibility Right to capital reimbursement Description of the capital refund characteristics
Restrictions to be traded on the market Restriction
18.1- Share rights

Conditions for changing the rights ensured by said securities According to the Brazilian Corporation Law, neither the Companys Bylaws nor resolutions taken at Shareholders Meeting may deprive shareholders of the following rights: (i) right to profit sharing; (ii) right to participate, proportionally to their interest in the capital stock, in the distribution of any remaining assets in the event that the Company is liquidated; (iii) preemptive right for the subscription of shares, debentures convertible into shares or warrants, except under certain circumstances envisaged in the Brazilian Corporation Law; (iv) right to inspect, pursuant to the Brazilian Corporation Law, the management of corporate activities; (v) right to vote at shareholders meetings; and (vi) right to withdraw from the Company, in the cases set forth in the Brazilian Corporation Law. In cases of a merger or amalgamation of the Company into another entity, or the Companys interest in a group of companies, the shareholders of the Company shall not be entitled to withdrawal right if their shares have the following characteristics: (1) they are liquid, in other words, composing the BM&FBOVESPAs IBOVESPA index, or the index of any other stock exchange, as defined by CVM; and (2) they are widely held on the market, so that our controlling shareholders, the parent company or other companies under common control hold less than half of the shares of class or type purpose of the withdrawal. The right to withdraw expires 30 days after publication of the minutes of the Shareholders Meeting that resolves on the matter that gives rise to such right. In addition, the Company is entitled to reconsider any resolution giving rise to the right of withdrawal for ten days after the expiration of this period if the Company deems that the payment of the refunding amount to the dissenting shareholders will jeopardize its financial stability.
Other relevant characteristics
18.2 - Description of any provision restricting the voting rights of significant shareholders, or any rule requiring the same to perform any tender offer 18.2. Describe, if any, provision restricting the voting rights of significant shareholders, or any rule requiring the same to perform any tender offer See item 18.1 (e) above of this Reference Form.
18.3 Description of the exceptions and suspensive clauses concerning equity or political rights provided for in the bylaws 18.3. Describe exceptions and suspensive clauses concerning equity or political rights provided for in the bylaws Not applicable.
18.4 - Trading volume as well as highest and lowest quotes of securities traded
Fiscal year Quarter 3/31/2010 6/30/2010 9/30/2010 12/30/2010 Fiscal year Quarter 3/31/2009 6/30/2009 9/30/2009 12/31/2009 Fiscal year Quarter 3/31/2008 6/30/2008 9/30/2008 12/31/2008
12/31/2010 Security Shares Shares Shares Shares 12/31/2009 Security Shares Shares Shares Shares 12/31/2008 Security Shares Shares Shares Shares Type Common Common Common Common Class Market Stock exchange Stock exchange Stock exchange Stock exchange Management entity BM&FBovespa S.A Securities, Commodities and Futures Exchange BM&FBovespa S.A Securities, Commodities and Futures Exchange BM&FBovespa S.A Securities, Commodities and Futures Exchange BM&FBovespa S.A Securities, Commodities and Futures Exchange Trading volume (In Reais) 347,984,755 338,289,753 377,289,264 316,170,676 Highest quotation (In Reais) 27.80 28.19 25.80 24.60 Lowest quotation (In Reais) 21.80 22.00 20.62 18.00 Type Common Common Common Common Class Market Stock exchange Stock exchange Stock exchange Stock exchange Management entity BM&FBovespa S.A Securities, Commodities and Futures Exchange BM&FBovespa S.A Securities, Commodities and Futures Exchange BM&FBovespa S.A Securities, Commodities and Futures Exchange BM&FBovespa S.A Securities, Commodities and Futures Exchange Trading volume (In Reais) 351,708,509 423,738,439 1,772,384,184 1,321,644,535 Highest quotation (In Reais) 26.20 28.00 28.48 26.70 Lowest quotation (In Reais) 21.61 22.40 23.51 23.71 Type Common Common Common Common Class Market Stock exchange Stock exchange Stock exchange Stock exchange Management entity BM&FBovespa S.A Securities, Commodities and Futures Exchange BM&FBovespa S.A Securities, Commodities and Futures Exchange BM&FBovespa S.A Securities, Commodities and Futures Exchange BM&FBovespa S.A Securities, Commodities and Futures Exchange Trading volume (In Reais) 1,305,198,668 933,017,553 1,214,138,287 1,201,613,278 Highest quotation (In Reais) 22.08 21.13 20.82 24.23 Lowest quotation (In Reais) 19.15 17.23 17.27 19.77
Quotation factor R$ per unit R$ per unit R$ per unit R$ per unit
Quotation factor R$ per unit R$ per unit R$ per unit R$ per unit
Quotation Factor R$ per unit R$ per unit R$ per unit R$ per unit
18.5 Description of other securities issued Justification for not completing the chart: There were no securities issued rather than stocks.
451
18.6 Brazilian markets in which the securities of the issuer are accepted for trading 18.6. Inform the Brazilian markets in which the securities of the issuer are accepted for trading The Company common shares have been accepted for trading on the Novo Mercado listing segment of BM&FBOVESPA S.A. Securities, Commodities and Futures Exchange under the ticker symbol LIGT3 since February 2006.
452
18.7 Information on class and type of security accepted for trading on foreign markets 18.7 a. Regarding each class and type of security accepted for trading on foreign markets, inform: country The Company shares are traded in the United States of America.
b.
market The Company shares are traded on over-the-counter market or OTC.
c.
entity that manages the market where the securities are traded The market is managed by Financial Industry Regulatory Authority FINRA.
d.
date of admission for trading The Company shares started being traded on November 17, 2008.
e.
if any, indicate the trading segment Not applicable.
f.
date of listing on the trading segment Not applicable.
g.
percentage of trading volume on the foreign markets in relation to the total volume of trades for each class and type of shares in the last
fiscal year The percentage of trading volume on foreign markets is not significant compared to the total trading volume, totaling 0%.
453
h.
if any, proportion of deposit certificates on the foreign markets in relation to each class and type of shares Each deposit certificate corresponds to one common share issued by the Company.
i.
if any, depositary bank The depositary bank is Citibank, N.A.
j.
if any, custodian institution The custodian institution is Banco Bradesco.
454
18.8 - Tender offers made by the issuer or third parties, including the controlling shareholders, associated companies and subsidiaries, related to the issuers securities 18.8. Describe the tender offers made by the issuer or third parties, including the controlling shareholders, associated companies and subsidiaries, related to the issuers securities39 Secondary tender offer: on July 14, 2009, the commencement of the secondary tender offer of shares of Light S.A. was announced, through which 29,470,480 shares were tendered, 16,079,135 of which were held by BNDESPar and 13,391,345 by EDF, corresponding to 14.4% of the Companys capital stock. The offering price, defined through a bookbuilding process, was R$24.00, totaling R$707.3 million. After this transaction, the effective free float was 22.1% of the capital stock. On August 11, 2009, Banco Ita BBA, lead manager of the offering, fully exercised the option for acquiring an overallotment of up to 2,700,000 shares held by BNDESPAR. Therefore, the total number of shares offered was 32,170,480 shares, 18,779,135 of which were held by BNDESPAR and 13,391,345 by EDF. Total shares sold corresponded to 15.8% of the Companys capital stock. There were no tender offerings made by the Company in 2008 and 2010.
39
Upon the annual filing of the reference form, the information shall refer to the last 3 fiscal years. Upon the filing of the reference form due to request of registration of securities tender offer, the information shall refer to the last 3 fiscal years and to the current fiscal year. 455
18.9 Description of the tender offers made by the issuer for the acquisition of shares issued by third parties 18.9 Describe the tender offers made by the issuer for the acquisition of shares issued by third parties40 There were no tender offers made by the Company for the acquisition of shares issued by third parties.
40
18.10 - Other relevant information 18.10 Provide other information the issuer deems as relevant Not applicable.
457
19.1.
Date of Resolution
Regarding the issuers buyback plans:

Buyback Period Profits and reserves (R$) Type Class Estimated number (Units) % outstanding shares ratio Amount Acquired Approved (Units) 6,571,846 PMP Quotation factor % purchased
Other characteristics 11/10/2009 to 11/6/2009 1/26/2010
74,132,000.00
Common
6,571,846
6.730000
24.72
R$ per unit
100.000000
458
19.2 Breakdown of treasury shares
Fiscal Year 12/31/2009
Type of share Common

Breakdown
Preferred share class
Securities description
Number (Units) 0 4,742,800 4,483,900 0 258,900
Total amount (Reais) 0.00 119,562,620.98 113,201,967.13 0.00 6,360,653.85
Weighted average price (Reais) 0.00 25.21 25.25 0.00 24.57
Opening balance Acquisitions Sales Cancellations Closing balance
459
19.3 Information on treasury shares on the closing date of the last fiscal year
Securities Shares
Share Type Common
Share class
Securities description
Number (Units) 258,900
Weighted average price of acquisition 24.57
Acquisition date 12/31/2009
Outstanding shares ratio (%) 0.265186
460
Version : 4
19.4.
Provide other information the issuer deems as relevant Not applicable.
461
Version : 4
20.1. Information on policy on the trading of securities: Date of approval 11/29/2005 i ii iii iv v vi vii viii the Company; direct and indirect controlling shareholders; executive officers; Board of Directors members; Fiscal Councils members; members of other bodies with technical or advisory duties (vii) set forth in Bylaws; employees; any person who, due to his/her office, duty or position in the Company, its parent company, subsidiaries or associated companies, is aware of any information related to the material act of fact; any person any other person who is aware of the material act or fact information not yet announced to the market and those that have a commercial, professional or trust relationship, independent auditors, securities analysts, who are responsible for verifying if the information has been disclosed before trading securities; managers withdrawing from the management before the disclosure of a material act or fact initiated during their management period, so that they shall be prohibited from such disclosure during a six-month period following their withdrawal.
ix
Main characteristics The Disclosure and Trading Policy establishes that executive officers, members of the board of directors, fiscal council, as well as members of any other bodies with technical or advisory duties set forth in the Companys Bylaws, shall notify the Company about the quantity, the characteristics and the form of acquisition of securities issued by the Company and subsidiaries or parent companies, which are publicly-held companies or securities referring thereto to which they are holders, as well as any changes to their positions. The persons mentioned above shall also indicate which securities pertaining to a spouse from whom they are not legally separated, a partner, any dependent person included in their annual tax return, and any direct or indirect subsidiaries. In addition, the Disclosure and Trading Policy establishes that the Company shall forward all aforementioned information to CVM and BM&F Bovespa within ten days after the end of the month in which changes to the positions held take place or of the month in which the aforementioned persons take office as member of the management or fiscal council. Finally, shareholders who reach, directly or indirectly, an interest corresponding to 5% or more of type or class of shares representing the Companys capital stock, and who, after such percentage is reached, their interest is increased by 5%, shall notify the corresponding operations to the Company. Once the Company is notified, it will send this information to CVM within the terms established by the applicable legislation. Lock-up periods and description of the procedures adopted to monitor trading during these periods Pursuant to the Disclosure and Trading Policy, the trading of the Company securities is prohibited to the persons mentioned in item a above for a period of 15 days preceding the disclosure of the Companys results and before the disclosure of material act or fact to the market related to the Companys activities.
462
Version : 4
However, the purchase of shares issued by the Company is authorized in the period of 15 days preceding the disclosure of the Companys results by management, the Fiscal Council and any body with technical or advisory duties of the Company, its subsidiaries and associated companies, as set forth by the Companys Bylaws, made according to an investment plan estimated in the budget and approved by the Company, provided that the Company approved a schedule defining the specific dates for disclosing the ITR and DFP forms and as long as the investment plan establishes the irrevocable and irreversible commitment.
463
Version : 4
20.2
Provide other information the issuer deems as relevant All relevant information has been disclosed in the items above.
464
Version : 4
21.1 - Describe the reporting standards, rules or internal procedures
21.1 Describe the standards, rules or internal procedures adopted by the issuer to make sure information to be publicly disclosed is collected, processed, and reported accurately and appropriately The Companys Board of Directors held a meeting on November 29, 2005 and approved the Disclosure and Trading Policy, and subsequently, on July 17, 2009, it amended it to reflect the changes issued by CVM Rule 449/07.
465
Version : 4
21.2 Description of disclosure policy of material act or fact and procedures related to the maintenance of confidentiality of undisclosed material information
21.2 Describe the policy for the disclosing of material act or fact adopted by the issuer, indicating the procedures adopted for the maintenance of confidentiality of undisclosed material information The Disclosure and Trading Policy is applicable to the persons mentioned in item 20 (a) of this Reference Form. The Chief Financial and Investor Relations Officer, when being informed of a material act or fact by any holder of information, or when having access to any such information, regardless of having been informed, shall see to the immediate disclosure of this information to CVM in a clear and accurate manner and in accessible language. The information shall also be disclosed to the stock exchanges and organized over-the-counter market entities where securities issued by the Company are accepted for trading, where applicable. In case the holders of information verify that the Chief Financial and Investor Relations Officer failed to comply with his/her obligations to disclose and communicate information, including the event that information is leaked or an uncommon fluctuation of quotes, price or traded amount of Company shares takes place, they shall immediately forward the information to CVM. If uncommon fluctuation of quotes occurs, as mentioned above, the Chief Financial and Investor Relations Officer shall inquire the holders of this information, with the purpose of verifying if they are aware of any information that should be disclosed to the market. The Chief Financial and Investor Relations Officer shall remain at the disposal of CVM and the stock exchanges and organized over-the-counter market entities that request additional information about any disclosed material act or fact, making sure of only disclosing information that is of interest to the Company and its investors. The Chief Financial and Investor Relations Officer shall ensure wide and immediate disclosure of the material acts or facts related to the Company, concurrently in all markets in which said securities are accepted for trading. Simultaneous disclosure of material act or fact comprises any means of communication used by the Chief Financial and Investor Relations Officer, including information to the press, meetings with professional associations, investors, analysts and selected public in Brazil or abroad.
466
Version : 4
21.2 Description of disclosure policy of material act or fact and procedures related to the maintenance of confidentiality of undisclosed material information Whenever possible, the Chief Financial and Investor Relations Officer shall disclose any material act or fact before or after the closing of trades on the stock exchanges and organized over-the-counter market entities where securities issued by the Company are accepted for trading. Holders of information shall keep the confidentiality of any information related to a material act or fact to which they have privileged access due to their job or position in the Company until its disclosure to the market. In addition, they shall ensure that subordinated persons and third parties who are also aware of the matter, by virtue of their job or position, also do the same.
467
Version : 4
21.3 Management responsible for implementing, maintaining, assessing and inspecting the disclosure policy
21.3 Inform the management responsible for implementing, maintaining, assessing and inspecting the disclosure policy The Chief Financial and Investor Relations Officer is appointed as the officer responsible for enforcing and monitoring the Disclosure and Trading Policy.
468
Version : 4
21.4 Other information deemed as relevant 21.4 Provide other information the issuer deems as relevant All relevant information has been disclosed in the items above.
469
Version : 4
22.1 Acquisition or sale of any relevant asset that does not fit into the regular operation of the issuer businesses
22.1 Inform the acquisition or sale of any relevant asset that does not fit into the regular operation of the issuer businesses41 On June 11, 2010, Light S.A. entered into a Private Instrument of Onerous Assignment of Shares and Other Covenants, through which it acquired from Nansen S.A. Instrumentos de Preciso, FIR Capital Partners Gesto de Investimentos S.A., Leme Engenharia Ltda., and Concert Technologies S.A. a total of three million, six hundred and seventy-two thousand (3,672,000) common shares issued by Axxiom Solues Tecnolgicas S.A. (Axxiom), a corporation headquartered in the city of Nova Lima, state of Minas Gerais, whose corporate purpose is to provide technology solutions and systems for the operational management of public utility concessionaires, including electric power companies. The shares acquired by the Company correspond to fifty-one percent (51%) of Axxioms capital stock. The acquisition price was three million, nine hundred, seventy-five thousand, six hundred and thirty-six reais (R$3,975,636.00).
41
Version : 4
22.2 - Significant changes in the conduction of the issuers businesses 22.2 Inform any significant changes in the conduction of the issuers businesses42 Not applicable.
42
Upon the annual filing of the reference form, the information shall refer to the last 3 fiscal years. Upon the filing of the reference form due to request of registration of securities tender offer, the information shall refer to the last 3 fiscal years and to the current fiscal year 471
Version : 4
22.3 - Relevant agreements executed by the issuer and its subsidiaries not directly connected with their operating activities
22.3 Identify the relevant agreements executed by the issuer and its subsidiaries not directly connected with their operating activities43 Not applicable.
43
Upon the annual filing of the reference form, the information shall refer to the last 3 fiscal years. Upon the filing of the reference form due to request of registration of securities tender offer, the information shall refer to the last 3 fiscal years and to the current fiscal year 472
Version : 4
22.4 Other information deemed as relevant 22.4 Provide other information the issuer deems as relevant Not applicable.
473

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Reference Form 2011 LIGHT SA