1.     Introduction

This institutional policy establishes the rules in order to guide the Company’s process for the distribution of dividends.

2.     Purpose

2.1      Establishing guidelines to lead the company in the process of distribution of dividends, as set forth in Item V of Article 8 of the Federal Law 13303/2016.

2.2      Disclosing to all interest parties, shareholders and investors, the Company’s guidelines for the distribution of dividends

3.     Guidelines

3.1      The Company’s fiscal year has twelve (12) months, starting on January 1 and ending on December 31 of each year.

3.2      Common shares will be entitled to a minimum mandatory dividend of twenty-five percent (25%) of the fiscal year’s net income, after the deductions established or authorized by law, until the universalization of basic sanitation services in the operated area is reached.

3.3      Dividends may be paid by the Company as Interest on Equity - IoE.

3.3.1      The portion of the dividends paid as Interest on Equity will be calculated according to the provisions of Article 9 of Federal Law 9249/1995 and is subject to withholding income tax, which will be considered as an additional dividend.

3.4      Five per cent (5%) of the net profit will be primarily, before any other allocation, used in the legal reserve, which shall not exceed twenty per cent (20%) of the share capital, as established by Article 193 of Federal Law 6404/1976.

3.5      The proposal for the distribution of dividends must take into account:

-       the need for investments to universalize the basic sanitation services;

-       the fulfilment of the Company’s corporate purpose, as set forth in its Bylaws;

-       the cash generation and requirement; and

-       the Company’s economic and financial sustainability.

3.6      The Board of Directors is responsible for resolving on the statement of Interest on Equity and/or distribution of dividends, not exempting the Shareholders’ Meeting from ratifying such resolution.

3.7      The Fiscal Council is responsible for issuing a legal opinion on the Management's Proposal to be submitted to the Shareholders’ Meeting, on the matter of the distribution of dividends

3.8      The Board of Directors may propose to the Shareholders’ Meeting the allocation of the remaining balance of the fiscal year’s profit to create an investment reserve, as set forth in the Bylaws and in the current law.

3.9      The allocation of the fiscal year’s net profit and of the distribution of dividends shall be submitted to the Ordinary Shareholders’ Meeting, held annually, on the first four months after the end of the fiscal year.

3.10   Pursuant to Article 205 of Federal Law 6404/1976, the Company will pay the dividend due to the common shares held by the person that, at the date of the dividend statement, is registered as the share’s owner or beneficial owner.

3.11   The dividend will be paid, unless otherwise resolved by the Annual Shareholders’ Meeting, within 60 (sixty) days as of date of the statement and, in any case, within the fiscal year.

3.12   The payment of the dividend will be made through the bank checking account held in the name of the shareholder, through the depositary financial institution or through any other means provided by law.

3.13   The dividends approved will not accrue interest and, if not claimed within three (3) years from the date of the Shareholders’ Meeting that approved them, will expire and be returned to the Company.

4.     Supplements