B3, the Brazilian stock exchange, established three special trading segments: Level 1, Level 2, and Novo Mercado.

Track&Field has a unique ownership structure and seeks to protect the long-term interests of all its stakeholders. The Company is listed at the Level 2 segment with two types of shares: common and preferred. This structure was inspired by the super-voting stock model which is broadly used in the US capital market. Our bylaws foresee that each common or preferred share holds one vote in all deliberations made during shareholder meetings, but our preferred shares have an economic right that is 10 times higher than that of our common shares.

This allows the Company to issue one-tenth of the number of preferred shares compared to what would be required for investors to be eligible to an economic value corresponding to 10 common shares. Thus, our three founding shareholders currently hold 100% of the common shares, and control the company’s interest, with a percentage of economic rights substantially lower than what would be required if there was only one type of share issued. Our bylaws include a sunset provision which foresees preferred shares being automatically converted into common shares at the ratio of 10 common shares per preferred share. This is only if and when the percentage of interest in dividends represented by the total number of common shares issued by the company, excluding the treasury shares, is lower than 10%.

To ensure best governance standards for Track&Field, we worked with B3 to adopt special corporate practices following the B3 Novo Mercado rules. Novo Mercado rules are incorporated into our bylaws, replacing certain Level 2 rules which we were exempt from starting August 7th 2020. We voluntarily committed to adhere to listing segment rules with the highest corporate governance levels at B3. Please note, we do not follow the rule that foresees capital will be solely divided into common shares.

B3 also allowed the Company, on an exceptional basis, to have the minimum percentage of outstanding shares counted based on preferred shares only (the single type of shares accepted for trading). This was under the condition that the minimum percentage of outstanding shares must exceed 50% of referred company shares. This exemption is also subject to corporate governance practices already adopted by the company. Track&Field understands that any non-compliance with conditions set forth to grant a referred exemption shall result in the cancellation thereof, subject to sanctions outlined in Level 2 rules.

This different structure aims to preserve one of our competitive advantages: the permanence of our three founding shareholders. As the Company’s controlling shareholders, they ensure the sustainability and perpetuation of principles, values, and identity of the Track&Field brand. The company was founded and has been successfully managed by these three shareholders throughout their history of success. We commit to the highest corporate governance standards by adopting B3’s Novo Mercado Rules.

For additional information about any risk derived from asymmetry between political and economic rights, or between common and preferred shares issued by the Company, please refer to the risk factor: “Our shareholders hold 100% of our common shares, and control all the matters subject to shareholder approval. The voting and power held by our controlling shareholders limit our influence over corporate matters.”