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» Company By-Laws - Chapters

Chapter I
Nature, Headquarters and Object of the Corporation

Art. 1 - Petróleo Brasileiro S.A. - PETROBRAS is a mixed-stock corporation controlled by the Federation, of indeterminate duration, to be governed by the rules of the Act on Joint Stock Companies (Act nº 6,404, of 15 December 1976) and further applicable legislation, and by these Articles of Incorporation.

Sole paragraph: The Federation's control shall be exercised by means of the ownership and possession of at least fifty percent plus one share of the Corporation's voting capital.

Art. 2 - PETROBRAS has its headquarters and legal venue in the city of Rio de Janeiro, State of Rio de Janeiro, either in the country or abroad, branch-offices, agencies, sub-branches and offices.

Art. 3 - The Corporation has as its object the research, mining, refining, processing, trade and transport of oil from wells, shale and other rocks, its derivatives, natural gas and other fluid hydrocarbons, as well as other related activities or alike ones as defined by law.

§ Paragraph 1 - Economic activities related to the corporate object shall be developed by the Corporation on the basis of free competition with other companies, according to market conditions, due consideration given to further principles and guidelines of Act nº 9,478 of 6 August 1997.

§ Paragraph 2 - PETROBRAS, directly or through its subsidiaries, either associated or not with third parties, may exercise, away from the domestic territory, any of the activities within its corporate object.

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Chapter II
Corporate Capital, Stock and Shareholders.

Art. 4 - The corporate capital is R$ 48,263,983,038.25 (Forty-eight billion, two hundred and sixty-three millions, nine hundred and eighty-three thousand, thirty eight reals and twenty five cents), divided into 4.387.038.370 (four billions, three hundred and eighty-seven millions, thirty-eight thousand, and three hundred and seventy) shares without nominal value, being 2.536.673.672 (two billions, five hundred and thirty and six millions, six hundred and seventy-three thousand and six hundred and seventy and two) common shares, and 1.850.364.698 (one billion, eight hundred and fifty million, four hundred, three hundred and sixty-four thousand, and six hundred and ninety-eight) preferred shares.

Paragraph 1 - The Company is authorized to increase the corporate capital irrespective of an amendment to the Bylaws upon deliberation of the Board of Directors up to R$ 60,000,000,000.00 (sixty billion reais), and up to the quantitative limit of 200,000,000 (two hundred million shares) by means of the issuance of preferred shares to be paid in: a) in currency; b) in goods, subject to the prior deliberation of the General Meeting evaluating them (Item IV of Article 122 of the Joint Stock Corporation Law); c) by means of credit capitalization.

Paragraph 2 - Increases of the corporate capital by means of the issuance of common shares and to be paid-in in goods shall be submitted previously to the deliberation of the General Assembly.

Paragraph 3 - At the option of the Governing Body the right of preference may be excluded or the deadline of 30 (thirty) days for its exercise, in respect of old shareholders, may be reduced in the issuances of shares, debentures convertible into shares and subscription bonds, the placement of which shall be made by exchange of stock, in a public control acquisition offering as per arts. 257 and 263 of the Act on Joint Stock Companies.

Paragraph 4 - By deliberation of the Governing Body the Corporation may acquire its own shares to keep them in the treasury, for canceling or subsequent disposal, up to the amount of the balance of profits and available reserves, except the legal reserve, without diminishment of the corporate capital, in compliance with the prevailing legislation.

Paragraph 5 - The corporate capital can be increased with the issuing of preferred stock, without maintaining proportions with common shares, respecting the legal limit of two-thirds of the corporate capital, and observing the right of preference of all shareholders.

Art. 5 - The shares of the Corporation shall be common shares, entitled to vote, and preferred shares, the latter always without vote entitlement.

§ Paragraph 1 - Preferred shares shall not be convertible to common shares, nor vice-versa.

§ Paragraph 2 - Preferred shares shall have priority in case of capital refund and in the distribution of the 5% (five percent) minimal dividend, calculated on the part of the capital represented by such kind of shares, or 3%(three percent) of the net value of the share, always prevailing the greater, with a participation equal to the common shares in corporate capital increases deriving from the incorporation of reserves and profits.

Paragraph 3 - Preferred shares shall participate, non- cumulatively, on equal conditions with the common shares in the distribution of dividends, whenever the latter are greater than the minimal percentage as guaranteed to them in the preceding paragraph.

Art. 6 - Shares shall be paid-in in accordance with the rules established by the General Assembly. In case of a shareholder's default and irrespective of questioning, the Corporation may initiate the execution and determine the sale of the shares, for that shareholder's account and risk.

Art. 7 - The shares of the Corporation, all of them recorded, shall be kept, in the name of their holders, in a deposit account of a financial institution authorized by the Securities Committee/CVM, without the issuance of a certificate.

Art. 8 - Shareholders shall be entitled, in each business year, to dividends and/or interests of their own capital, which must not be less than 25% (twenty five percent) of the net profit adjusted as per the Act on Stock Companies, and divided pro-rata by the shares into which the capital of the Corporation is divided.

Art. 9 - Except decision to the contrary by the General Assembly, the Corporation shall make the payment of the dividends and of the interests on own capital due to the shareholders within a deadline of 60 (sixty) days as of the date they are announced and, in any case, within the corresponding business year in compliance with the pertinent legal rules.

Sole paragraph - The Corporation may upon deliberation by the Governing Board advance amounts to its shareholders as against dividends or interests on the latter's own capital, and these are indexed by the SELIC rate as of the date of the actual payment until the closing of the respective business year, in the manner foreseen in article 204 of Act nº6,404 of 1976.

Art. 10 - Dividends not claimed within 3 (three) years as of the date they were placed at the shareholders' disposal shall prescribe in behalf of the Corporation.

Art. 11 - The amounts of the dividends and of the interests, as compensation of own capital, due to the National Treasury and to the other shareholders, shall be subject to financial charges equivalent to the SELIC rate as of the closing of the business year until the actual collection or payment, without detriment to the incidence of default interests when such collection does not take place on the date set by the General Assembly.

Art. 12 - In addition to the Federation in its capacity as controlling partner of the Corporation individuals or juridical persons, either Brazilians or foreigners, either residents or not in the country, may be shareholders.

Art. 13 - The shareholder may be represented at the General Assemblies in the manner foreseen in Art. 126 of Act nº 6,404, of 1976, presenting at the act or depositing in advance the voucher issued by the depository financial institution together with the identity document or a power-of-attorney with special powers.

§ Paragraph 1 - The representation of the Federation at the General Assemblies of the Corporation shall be in accordance with the specific federal legislation.

§ Paragraph 2 - At the Shareholders' General Assembly that deliberates about the election of the members of the Governing Body the entitlement to vote of the shareholders who are holders of preferred shares is conditional upon the compliance with the condition provided in paragraph 6 of art. 141 of Act nº 6,404, of 1976, of proven uninterrupted ownership of the stock participation during a period of, at least, 3 (three) months immediately prior to the holding of the Assembly.

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Chapter III
Subsidiaries and Affiliates

Art. 14 - For the strict performance of activities related to its object which make up the oil industry, PETROBRAS may, as per the authority granted by Act nº 9,478, of 1997, set up subsidiaries as well as associate itself, either majoritarily and/or minoritarily, with other companies.

Art. 15 - In compliance with Act nº 9,478, of 1997, PETROBRAS and its subsidiaries may acquire stock or share-quotas of other companies, participate in corporations with a specific purpose, as well as associate themselves with domestic or foreign companies, and constitute with them consortia, either as leader-company or not, with the purpose of expanding activities, putting together technologies and enlarging investments applied in the oil industry.

Art. 16 - The subsidiary and controlled corporations shall follow the deliberations of their respective management bodies, which shall be bound by the guidelines and the strategic planning adopted by the Governing Body of PETROBRAS, as well as the regular corporate rules established by Petrobras by means of guidance of technical, administrative, accounting, financial and legal nature.

Sole paragraph - The relations with the subsidiary, colligated and controlled companies shall be through the intermediary of a member of the Executive Board of Directors in accordance with the guidelines set up by the Governing Body.

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Chapter IV
Corporate Management

Section I
Governing Board Members and Directors.

Art. 17 - PETROBRAS shall be managed by a Governing Body with deliberative functions, and an Executive Board of Directors.

Art. 18 - The Governing Body shall comprise at least five and up to nine members elected by the Shareholders' General Assembly, which shall designate the Chairman of the Body from among the shareholders, all with a mandate that may not be longer than 1 (one) year, with re-election permitted.

Sole paragraph - In case the position of the Chairman of the Governing Body becomes vacant, the substitute shall be elected at the first next regular meeting of the Governing Body until the next General Assembly.

Art. 19 - In the election procedure of the members of the Governing Body by the Shareholders' General Assembly the following rules shall be complied with:

I - Minority shareholders are entitled to elect one of the members of the Governing Body, if no greater number is assigned to them by the multiple vote process.
II - Shareholders of preferred shares holding jointly at least 10% (ten percent) of the corporate capital, with the exclusion of the controlling shareholder, are entitled to select and to remove 1 (one) member of the Governing Body, in a separate voting at the general assembly; the rule contained in paragraph 4 of art. 8th of Act nº 10,303, of 31 October 2001, is not applicable.
III - Whenever cumulatively the election of the Governing Body is performed by the multiple vote system and the holders of common and preferred shares exercise the right to elect a Member, the right shall be ensured to the Federation to elect Governing Body Members in a number equal to the number of those elected by the other shareholders plus one, irrespectively of the number of Governing Body Members established in art. 18 of these Articles of Incorporation.

Art. 20 - The Executive Board of Directors shall comprise a President, chosen from among the members of the Governing Body, and up to six Directors elected by the Governing Body from among Brazilians residing in the country, with a mandate that may not be longer than 3 (three) years, with re-election permitted, and who may be removed at any moment.

§ Paragraph 1 - In choosing and electing the Directors the Governing Body ought to consider their professional qualification, notorious knowledge and specialization in the respect contact area in which these administrators will act, in accordance with the Basic Organizational Plan

Paragraph 2 - The members of the Executive Board of Directors shall perform their positions on the basis of a full-time schedule and exclusive dedication to the Petrobras service; however, the concurrent exercise of positions in the administration of the Corporation's subsidiaries, controlled and colligated companies shall be permitted, at the option of the Governing Body, according to the Good Practices Code as per item VII of art. 29 of these Articles of Incorporation.

Paragraph 3 - The President and the Directors shall be entitled annually to 30 (thirty) days vacation to be granted by the Executive Board of Directors; the payment in double of the compensation concerning vacation not enjoyed in the pertinent period is prohibited.

Art. 21 - The installation in a management position of the Corporation must comply with the conditions established by arts. 147 and 162 of Act nº 6,404, of 1976; likewise nobody may be installed in the position who have ancestors, descendants or collateral relatives in the Governing Body, in the Executive Board of Directors or in the Fiscal Board.

Art. 22 - Members of the Governing Body and Directors shall be installed in their positions by signing installation deeds in the book of minutes of the Governing Body and of the Executive Board of Directors, respectively.

Paragraph 1 - The installation deed must contain, under the penalty of nullity: (i) the indication of at least one domicile where the administrator may receive legal service and summons in administrative and judicial procedures related to acts of his(her) performance, which shall be deemed as served by means of the delivery at the domicile so indicated, which may only be altered by a written communication to the Corporation; (ii) his(her) agreement in respect of contracts possibly made by Petrobras with stock exchanges or over-the-counter market entity, organized and accredited at the Securities Committee, with a view to the adoption of corporate governing standards set up by such entities, accepting liability in respect of the fulfillment of such contracts and respective regulations ore differentiated practices of corporate government, if such is the case, and (iii) agreement to the wording of the commitment clause dealt with in art. 58 of these Articles of Incorporation.

Paragraph 2 - The installation of a Governing Body Member who is a resident or domiciled abroad is conditional upon the appointment of a representative who resides in the country, with powers to receive service in proceedings initiated against such member on the basis of corporate legislation, by means of a power-of-attorney with a validity deadline of at least further 3 (three) years after the end of the mandate of the Member.

Paragraph 3 - Before being installed, and when leaving the position, the members of the Governing Body and of the Executive Board of Directors will present their declaration of assets, which will be kept in the Company’s files.

Art. 23 - The members of the Governing Body and of the Executive Board of Directors shall be liable, according to art. 158 of Act nº 6,404, of 1976, individually and solidarily, for the acts practiced and for the losses to the Corporation resulting therefrom. They are prohibited from participating in a deliberation concerning operations involving companies in which they take part with more than 10% (ten percent), or in which they have held a management position in the period immediately prior to the installation in the Corporation.

Paragraph 1 - The Corporation shall ensure the defense in judicial and administrative proceedings in respect of its present and past administrators, in addition to a permanent insurance contract in behalf of them, to keep them harmless from liabilities due to act deriving from the performance of the position or function covering the whole time period when they performed their respective mandates.

Paragraph 2 - The guarantee provided for in the preceding paragraph covers the Fiscal Council members, as well as all employees and agents who legally act upon delegation by the administrators of the Corporation.

Art. 24 - A member of the Governing Body who fails to attend 3 (three) consecutive meetings without a justified reason or license granted by the Governing Body shall forfeit his position.

Art. 25 - In the event of a vacancy in the position as Member of the Governing Body, a substitute shall be appointed by the remaining Governing Body Members and shall perform so up to the next General Assembly, as provided in art. 150 of Act nº 6,404, of 1976.

Sole paragraph - The member of the Governing Body, or the member of the Executive Board of Directors, elected in replacement, shall complete the mandate time of the member he is replacing, and once this mandate time has elapsed he shall remain in the job until the installation of the successor.

Art. 26 - The Company shall be represented, in the Court or outside it, by its Board of Directors, individually by its President or by two Directors jointly, who may appoint proxies or representatives.

Art. 27 - The President and the Directors may not be absent from the exercise of the position for more than 30 (thirty) days without license or authority of the Governing Body.

Paragraph 1 - As per item IV of art. 38 it is incumbent upon the President to designate, from among the Directors, his possible substitute.

Paragraph 2 - In the event of absence or impediment of any Director, his functions shall be taken over by a substitute chosen by him from among the other members of the Executive Board of Directors or one of his direct subordinates, the latter until maximally 30 (thirty) days.

Paragraph 3 - In case a subordinate is indicated conditional upon approval by the President, the former shall take part in all routine activities of the Director, including attendance at meetings of the Board of Directors, in order to deal with matters of the contact area of the respective Director, without, however, exercising the voting right.

Section II
Governing Body

Art. 28 - The Governing Body is the highest-level guiding and directing body of PETROBRAS; it is incumbent upon it:

I - to set the overall direction of the affairs of the Corporation, defining its mission, its strategic goals and guidelines;

II - to adopt the strategic plan as well as the pluri-annual and annual programs of expenditures and investment;

III - to inspect the Directors' management and to establish their assignments, checking, at random, the books and documents of the Corporation;

IV - to evaluate performance results;

V - to approve every year the amount above which acts, contracts or operations, though of competence of the Executive Board of Directors, particularly those provided for in items III, IV, V, VI and VIII of art. 33 of these Articles of Incorporation, must be submitted to the approval of the Governing Body;

VI - to deliberate about the issuance of simple debentures not convertible into shares and without real guarantee;

VII - to set up the overall policies of the Corporation, including those concerning the strategic, commercial, financial, investments, environmental and human resources management;

VIII - to approve the conveyance of the ownership of assets of the Corporation, including assignment contracts and authorization re oil refining, natural gas processing, transport, import and export of oil, its derivatives and natural gas, with the possibility of limiting the value for performing such acts by the Executive Board of Directors.

IX - deliberate on the increase of capital with the issuance of preferred shares, within the authorized limit, as provided for by § 1 of art. 4 of these By-Laws.

Art. 29 - It is incumbent directly upon the Governing Body to deliberate about the following matters:

I - the Basic Organizational Plan and its amendments as well as the distribution to the Director, upon the president's proposal, of jobs corresponding to the contact areas defined in the plan referred to;

II - authority to acquire shares issued by the Company to remain in the treasury or canceling, as well as subsequent disposal of such shares, in compliance with the legal, regulatory and statutary provisions;

III - approval re exchange of securities issued by it;

IV - election and removal of the members of the Executive Board of Directors;

V - the setting up of subsidiaries, participations in controlled or colligated companies, or the termination of such participation, as well as the acquisition of shares or quotas of other companies;

VI - to call a Shareholders' General Assembly, in the cases provided for in the law, and the publishing of the respective announcement at least 15 (fifteen) days in advance;

VII - approval of a Good Practices Code and of its By-Laws, which must provide for the designation of the Rapporteur and the organization of Governing Body Committees comprising some of its members, with specific assignments regarding the analysis and recommendation in respect of certain matters;

VIII - approval of Petrobras’ Corporate Governance Guidelines;

IX - choice and removal of independent auditors, who will not be allowed to render consultancy services to the Corporation during the effectiveness of the contract;

X - report about the management and the accounts of the Executive Board of Directors;

XI - the setting up of the Business Committee and approval of the assignments and operational rules of such Committee, consistent with the Basic Organizational Plan, and which must be publicized to the market in summary, at the time the financial statements of the Corporation are published, or when they are altered.

XII - matters which, in view of a legal provision or upon instruction from the General Assembly, depend upon its deliberation;

Sole paragraph - The Business Committee dealt with in item X shall submit to the Executive Board of Directors its opinion concerning the corporate matters involving more than one business area, as well as those the importance and relevance of which require a broader debate.

Art. 30 - The Governing Body may order inspections, audits or account-rendering to be made in the Corporation, including by hiring outside specialists, experts and auditors, in order to inform more about the matters submitted to its deliberation.

Art. 31 - The Governing Body shall meet with the attendance of the majority of its members, upon being called by its Chairman or by the majority of the Members, regularly at least every thirty days and, especially, whenever necessary.

Paragraph 1 - If required, the Members of the Governing Body may participate in a meeting by telephone, video-conference or other communication means capable of ensuring an effective participation and the authenticity of the respective vote. In such event the member of the Governing Body shall be deemed as present at the meeting and his vote shall be deemed valid for all legal purposes, and incorporated into the minutes of the meeting in point.

Paragraph 2 - Matters submitted to the appreciation of the Governing Body must be accompanied by the decision of the Executive Board of Directors, by the expressions of the technical area or of the competent Committee, plus a legal opinion when this is necessary for examining the matter.

§ Paragraph 3 - The Chairman of the Governing Body, at his own initiative or at the request of any of the Members, may summon Directors of the Corporation to attend the meetings and to render clarifications or information in respect of the subjects being considered.

§ Paragraph 4 - The resolutions of the Governing Body shall be taken by the vote of the majority of the Members in attendance and shall be recorded in the pertinent minute book.

§ Paragraph 5 - In case of a tie vote, the Chairman of the Governing Body may cast the deciding vote.

Section III
Executive Board of Directors

Art. 32 - The management of the affairs of the Corporation is incumbent upon the Executive Board of Directors in compliance with the mission, goals, strategies and guidelines established by the Governing Body.

Art. 33 - It is incumbent upon the Executive Board of Directors:

I - to work out and to submit to the approval of the Governing Body:

a) the bases and guidelines for working out the strategic plan as well as of the annual programmes and the pluri-annual plans;

b) the strategic plan as well as the respective pluri-annual plans and annual programmes of expenditures and investments of the Corporation with the respective projects;

c) the cost and investment budgets of the Corporation;

d) the assessment of the result of the performance of the activities of the Company;

II - to approve:

a) the technical-economic assessment criteria for investment projects, with the respective liability delegation plans for their execution and implementation;

b) the criteria for the economic use of producing areas and the minimal coefficient of oil and gas reserves, in compliance with the specific legislation

c) the price policy and basic price structures of the products of the Corporation;

d) account plans, basic criteria to establish results, the amortization and depreciation of invested capitals and changes in the accounting practices;

e) handbooks and rules in respect of accounting, finances, personnel management, the hiring and implementation of works and services, the supply and disposal of materials and equipment, in respect of operation and others required to guide the functioning of the Corporation;

f) rules concerning the assignment of the use, the letting or renting of real-estate items belonging to the Corporation;

g) the yearly insurance plan of the Corporation;

h) the basic structure of the Company’s bodies and their respective Norms of Organization, and create, transform, or extinguish operational or corresponding bodies, in addition to temporary construction bodies, agencies, branches, and offices in the Country and abroad;

i) plans providing for the admission, career, access, benefits and disciplinary regime of the employees of PETROBRAS;

j) the assignment of the staff of the bodies of the Corporation;

k) the designation of the incumbents of the Superior-Level Management of the Corporation;

l) the annual business plans;

m) the setting up of consortia, of joint ventures and of corporations for specific purposes, in the country and abroad;

III - to authorize the capturing of funds, signing of loans taken and financings in the country and abroad, including by means of the issuance of securities;

IV - to authorize the rendering of real or fiduciary guarantees, in compliance with the pertinent legal and contractual provisions;

V - to authorize the acquisition, in accordance with the specific legislation, of real-estate goods, ships and maritime drilling and production units, as well as the encumbrance and the disposal of assets of the Corporation;

VI - to authorize the disposal or encumbrance of shares or quotas of companies in which the Corporation owns more than 10% (ten percent) of the corporate capital, as well as the assignment of rights in consortia or joint ventures in which the Corporation owns more than 10% (ten percent) of the investment; limits may be established for delegating the practice of such acts to the Chairman or the Directors;

VII - to authorize the signing of agreements or contracts with the Federation, the States, the Federal District and the Municipalities, with the possibility of setting value limits for delegating the exercise of such acts to the Chairman or the Directors;

VIII - to authorize, in the form of specific legislation, the waiving of acts or judicial or extrajudicial transactions, in order to end lawsuits or pending issues, with the possibility of setting value limits for delegating the exercise of such acts to the Chairman or the Directors;

IX - to follow up and control the activities of the subsidiaries and companies in which PETROBRAS participates, or with which it is associated;

X - to deliberate about trademarks and patents, names and logos;

XI - to establish other Committees linked to the Business Committee, with the approval of the respective operational rules and assignments consistent with the Basic Organizational Plan.

Art. 34 - The Executive Board of Directors shall meet regularly once a week with the majority of its membership, among whom the Chairman or his deputy, and in special meetings upon the summons of the Chairman or of two-thirds of the Directors.

Sole paragraph - Matters brought to the appreciation of the Executive Board of Directors shall be accompanied by the expressions of the technical area, of the Business Committee, plus the legal opinion when this is required to study the matter.

Art. 35 - In addition to the matters of the original competence of a collegiate deliberation, as provided for in art. 33 of these Articles of Incorporation, the Executive Board of Directorsmay deliberate about managerial acts of business of the individual liability of each one of the Directors, within the contact areas set out by the Governing Body in the Basic Organizational Plan. Furthermore, it is incumbent upon the Directors:

I - to give instructions to the representatives of the Corporation at the General Assembly of its subsidiaries, controlled and colligated companies in accordance with the guidelines established by the Governing Body;

II - to hire and separate employees and to formalize the appointments to leading positions and functions approved by the Executive Board of Directors;

III - to designate corporate employees for missions abroad;

IV - to sign acts, contracts and agreements, as well as to manage the monetary funds of the Corporation, always jointly with another Director.

Art. 36 - The deliberations of the Executive Board of Directors shall be taken by the vote of the majority of the attendants and recorded in the respective minutes book.

Sole paragraph - In case of a tie vote, the Chairman may cast the quality vote.

Art. 37 - The Executive Board of Directors shall forward to the Governing Body copies of the minutes of its meetings and shall render the information allowing the assessment of the performance of the activities of the Corporation.

Section IV
The President

Art. 38 - Incumbent upon the President are the heading and coordination of the work of the Executive Board of Directors, namely:

I - to call and to chair the meetings of the Executive Board of Directors;

II - to propose to the Governing Body the distribution among the Directors of the contact areas defined in the Basic Organizational Plan;

III - to propose to the Governing Body the names for Directors of the Corporation;

IV - to designate, from among the Directors, his possible substitute, in his absences and impediments;

V - to follow up and to supervise, by means of coordinating the action of the Directors, the activities of all of the bodies of the Corporation;

VI - to appoint the Corporation's representatives at the General Assemblies of its subsidiaries, controlled and colligated companies, in accordance with the guidelines set by the Governing Body;

VII - to render information to the State Minister to which the Corporation is subordinated, and to the control bodies of the Federation, as well as to the Federal Accounting Court and the National Congress.

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Chapter V
The General Assembly

Art. 39 - The Regular General Assembly shall be held yearly within the deadline provided for in art. 132 of Act nº 6,404, of 1976, at the place, the date and hour established in advance by the Governing Body, in order to resolve about matters of its competence, particularly:

I - to examine and accept the accounts of the managers, to examine, discuss and to vote the financial statements;

II - to resolve about the destination of the net profit of the business year and the distribution of dividends;

III - to elect the members of the Governing Body and of the Fiscal Board.

Art. 40 - The Special General Assembly, in addition of the cases established by the law, shall meet upon summons of the Governing Body to resolve about matters of interest to the Corporation, particularly:

I - the amendment of the By-Laws;

II - the increase of the limit of authorized capital;

III - the increase of the corporate capital, except as provided for in § 1 of art. 4 in these Articles of Incorporation;

IV - evaluation of the assets the shareholder will compete with to increase the corporate capital;

V - reduction of corporate capital;

VI - the issuance of debentures convertible into shares or their sale when in the treasury;

VII - the joining of the Corporation with another company, its dissolution, transformation, split, merger;

VIII - the participation of the Corporation in a group of companies;

IX - the disposal of the control of the corporate capital of subsidiaries of the Company;

X - the removal of Governing Body members;

XI - the disposal of debentures convertible into shares belonging to the Corporation and issued by its subsidiaries;

XII - establishing the compensation of the administrators;

XIII - the canceling of the registry as an open Corporation;

XIV - the choice of a specialized company, based on the submission by the Governing Body of a treble list of specialized companies, to work out the assessment deed of its shares by the respective economic value, to be utilized in cases of the canceling of the registry as an open Company and deviation from the standard rule of corporate management, defined by stock exchanges or an organized over-the-counter market entity, accredited at the Securities Committee, with the purpose of complying with the rules established in the competent regulation of practices differing from corporate governance as issued by such entities, and in accordance with the wording of the contracts possibly signed by Petrobras with such entities.

XV - waiver of the right to subscribe shares or debentures convertible into shares of subsidiaries, controlled or colligated companies.

Paragraph 1 - The resolution of the subject dealt with in item XI of this article shall be taken by an absolute majority of the votes of the outstanding common shares; blank votes are not to be computed.

Paragraph 2 In the case of a public offer formulated by the controlling shareholder, such shareholder will bear the costs for the elaboration of the evaluation report.

Art. 41 - The General Assembly shall establish every year the overall or the individual amount of the managers' compensation as well as the limits of their participation in the profits in compliance with the rules of the specific legislation.

Art. 42 - The General Assembly shall be chaired by the President of the Corporation or the substitute he may appoint, and in the absence of both by a shareholder chosen by the majority vote of those in attendance.

Sole paragraph - The Chairman of the Assembly shall choose, from among the shareholders in attendance, the Secretary of the chair.

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Chapter VI
Fiscal Board

Art. 43 - The Fiscal Board, of a permanent nature, comprises up to five members and their respective deputies, elected by the Regular General Assembly, all of them residing in the country, in compliance with the requirements and impediments set up by the Act on Corporations, either shareholders or not, one of whom shall be elected by the holders of the minority common stock and another by the holders of the preferred stock, in separate voting.

§ Paragraph 1 - From among the members of the Fiscal Board, one of them shall be nominated by the Finance Minister as representative of the National Treasury.

§§ Paragraph 2 - In the event of a vacancy, resignation, impediment or unjustified absence at two consecutive meetings, such member of the Fiscal Board shall be replaced, until the end of the mandate, by the respective deputy.

§Paragraph 3 - The members of the Fiscal Board shall be installed in their jobs by signing the installation deed in the minutes book and the opinions of the Fiscal Board, which shall mention: (i) agreement with contracts possibly signed by Petrobras with a stock exchange or an organized over-the-counter market entity, accredited at the Securities Committee, with the purpose of adopting corporate governship standards set by those entities, and with liability in respect of such contracts and the respective regulations of differentiated practices of corporate governship, if such is the case, and (ii) agreement in respect of the wording of the commitment clause dealt with in art. 58 of these Articles of Incorporation.

Art. 44 - The mandate of the members of the Fiscal Board is one year, re-election being permitted.

Art. 45 - The compensation of the members of the Fiscal Board, in addition to the compulsory refund of the transport and stay expenditures necessary to perform the function, shall be set up by the General Assembly electing them and in compliance with the limit established in Act nº 9,292, of 1996.

Art. 46 - It is incumbent upon the Fiscal Board, without detriment to other assignments that are vested in it due to legal provision or resolution of the General Assembly:

I - to fiscalize, by any one of its members, the acts of the managers and to verify the fulfillment of their legal and statutory duties;

II - to opine about the annual report and the management, with the inclusion in its opinion of such supplementary information as it deems necessary or useful to the resolution by the General Assembly;

III - to opine about the managers' proposals to be submitted to the General Assembly concerning the amendment of the corporate capital, the issuance of debentures or subscription bonds, investment or capital budget plans, the distribution of dividends, the transformation, joining with, merger or split of the Corporation;

IV - to denounce, by any one of its members, to the management bodies and, in case the latter fail to take the necessary steps to protect the interests of the Corporation, to the General Assembly, the mistakes, frauds or offenses they may discover, suggesting measures useful to the Corporation;

V - to call the Regular General Assembly, if the managers delay for more than one month the calling of it, and the Special General Assembly whenever serious or urgent reasons occur, with the inclusion on the agenda of the subjects they may deem necessary;

VI - to analyze, at least quarterly, the balance- sheet and further financial statements periodically worked out by the Board of Directors;

VII - to examine the financial statements of the business year and opine about them;

VIII - to perform such assignments during liquidation.

Sole paragraph - The members of the Fiscal Board shall participate compulsorily in the meetings of the Governing Body in which the subjects referred to in items II, III and VII of this article are to be considered.

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Chapter VII
Corporate Employees

Art. 47 - The employees of PETROBRAS are subject to the labour legislation and to the internal regulations of the Corporation, in compliance with the legal rules applicable to employees of mixed-economy corporations.

Art. 48 - The admission of employees by PETROBRAS and by its subsidiaries and affiliates shall follow the public selection procedure, according to the provisions adopted by the Executive Board of Directors.

Art. 49 - The functions of the Superior-Level Management and the powers and responsibilities of the respective incumbents shall be defined in the Basic Organizational Plan of the Corporation.

§ Paragraph 1 - The functions referred to in the heading of this article may, exceptionally and at the Board of Directors' option, be assigned to technicians or experts alien to the permanent staff of the Corporation.

§ Paragraph 2 - The managerial functions that must exist in the organizational staff of the Corporation, at all further levels, shall be vested with the powers and responsibilities of those holding these positions as defined in the rules of the respective bodies.

Art. 50 - Without detriment to the requirements foreseen in the law the assignment of employees of PETROBRAS and of its subsidiaries or controlled companies shall depend upon an authorization, in each case, of the Executive Board of Directors, and shall be made, whenever possible, with the reimbursement of the corresponding costs.

Art. 51 - The Corporation shall separate a share of the yearly results for distribution to its employees, in compliance with the criteria adopted by the Governing Body and in compliance with the prevailing legislation.

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Chapter VIII
General Provisions

Art. 52 - The activities of PETROBRAS shall comply with the Basic Organizational Plan adopted by the Governing Board, and shall contain the general structure and shall define the nature and the assignments of each body, the subordination, coordination and control relationship required for its operation in accordance with these Articles of Incorporation.

Art. 53 - The business year shall coincide with the calendar-year ending on 31 December of each year, on which date the property balance-sheet and further financial statements to comply with the applicable legal provisions shall be established. Sole paragraph. - The Corporation may establish half-yearly balance-sheets for the payment of dividends or interests on capital of its own, upon resolution of the Governing Body.

Art. 54 - Concerning funds transfered from the Federation or deposited by minority shareholders for purposes of increasing the capital of the Corporation, financial charges equivalent to the SELIC rate shall incide from the transfer date through the date of the capitalization.

Art. 55 - PETROBRAS shall assign, from the net profit established in its Annual Balance-sheet, a minimal part of 0.5% (five-tenth percent) of the paid-in corporate capital, to constitute a special reserve to cover the cost of technological research and development programmes of the Corporation.

Sole paragraph - The accrued balance of the reserve provided for in this article must not exceed 5% (five percent) of the paid-in corporate capital.

Art. 56 - After the distribution of the minimal dividend foreseen in article VIII of these Articles of Incorporation has been resolved, the General Assembly may, in compliance with the corporate law and the specific federal rules, assign percentages or bonuses to the members of the Executive Board of Directors of the corporation, as participation in the profits.

Art. 58 - Disputes or controversies involving the Corporation, its shareholders, administrators and fiscal counselors shall be resolved by means of arbitration as per the rules of the Market Arbitration Chamber, with the object of applying the provisions contained in Act nº 6,404, of 1976, in these Articles of Incorporation, in the rules issued by the National Monetary Council, by the Central Bank of Brazil and by the Securities Committee, as well as in all further rules applicable to the operation of the capital market at large, in addition to those contained in the contracts possibly signed by Petrobras with the stock exchange or organized over-the-counter market entity, accredited at the Securities Committee, with the purpose of the adoption of corporate governship standards established by those entities, and of the respective differentiated practices of corporate governship, if such is the case.

Sole paragraph - The deliberations of the Federation, through the vote at the General Assembly, aimed at guiding its business, as per article 238 of Act nº 6,404, of 1976, shall be deemed as forms of exercising indisposable rights and shall not be subject to the arbitral procedure mentioned in the heading of this article.

Art. 59 - Contractual agreements entered by PETROBRAS for acquiring goods and services shall be preceded by a simplified bidding procedure as defined in the regulation adopted by Decree nº 2,745, of 24 August 1998.

Art. 60 - With the purpose of drawing up its proposals to participate in biddings preceding the assignments dealt with in Act 9,478, of 1997, PETROBRAS may sign pre-contractual agreements by sending out invitation letters, guaranteeing prices and commitments concerning the supply of goods and services.

Sole paragraph - The pre-contractual agreements shall contain a full-right resolutive clause, to be applicable without penalty or indemnity of any kind in case another bidder is announced as the winner, and shall be submitted subsequently to the appreciation of the external control and fiscalization bodies.

Art. 61 - The Federation, as controlling shareholder of the Corporation, the members of the Governing Body, of the Fiscal Board and of the Executive Board of Directors shall:

I - abstain from negotiating Securities in the following time periods:

a) in the period of one month prior to the closing of the corporate exercise until the publication of the announcement placing at the disposal of the shareholders the Corporation's financial statements or their publication, prevailing whichever occurs first;

b) in the period between the decision taken by the competent corporate body to increase or to reduce the corporate capital, to distribute dividends or share bonusses or to issue other Securities, and the publication of the respective announcements or ads.

II - To communicate to the Corporation and to the stock exchange or organized over-the-counter market entity, accredited at the Securities Committee, its periodic security negotiation plans, if they have them, as well as the subsequent alteration or non-fulfillment of such plans. The communication must inform at least whether the plan is a programmed investment or de-investment plan, the periodicity and the programmed quantities.

Responsible party: SEGEPE

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