**Exhibit 1**

 

**COMPANHIA ENERGÉTICA DE MINAS GERAIS — CEMIG**

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## **BYLAWS**

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These Bylaws are a consolidation of those approved bythe Stockholders’ Meeting that established the company, on May 22, 1952 —the minutes of which were filed with the Minas Gerais Commercial Board on May 27,1952, under No. 57386, and by all subsequent Meetings of Stockholders heldto alter the Bylaws, up to the most recent Ordinary and Special General Meetingof Stockholders was realized, jointly, on April 25, 2008.

 

**CHAPTER I**

 

**Name,constitution, objects, head office and duration**

 

Clause1: Companhia Energética de Minas Gerais – Cemig, constituted on 22 May 1952as a corporation with mixed private and public sector stockholdings, isgoverned by these Bylaws and by the applicable legislation, and its objectsare: to build, operate and carry out commercial transactions with systems ofgeneration, transmission, distribution and sale of electricity, and relatedservices; to operate in the various fields of energy, from whatever source,with a view to economic and commercial operation; to provide consultancyservices within its field of operation to companies in and outside Brazil; andto carry out activities directly or indirectly related to its objects.

 

§1 The activities specified in this Clause may be exercised directly by Cemigor, as intermediary, by companies constituted by it or in which it may hold amajority or minority stockholding interest, upon decision by the Board ofDirectors, under State Laws 828 of December 14, 1951, 8655 of September 18,1984 and 15290 of August 4, 2004.

 

§2 The State of Minas Gerais is guaranteed participation in the decisions of thewholly-owned subsidiaries and companies controlled by the Company, so as topreserve its condition of controlling stockholder, in accordance with theConstitution of the State of Minas Gerais and the legislation in force.

 

Clause2: The Company shall have its head office and management in Belo Horizonte,capital city of the state of Minas Gerais, Brazil, and may open offices, representationsand any other establishments in or outside Brazil on authorization by theExecutive Board.

 

Clause3: The Company shall have indeterminate duration.

 

**CHAPTER II**

 

**Capital and shares**

 

Clause4: The Company’s registered capital is R$ 2,481,507,565.00 (two billion, fourhundred and eighty-one million, five hundred and seven thousand, five hundredand sixty five Reais), represented by:

 

a)216,923,394 (two hundred and sixteen million, nine hundred and twenty-threethousand, three hundred and ninety four) nominal common shares each withnominal value of R$ 5.00; and

 

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b)279,378,119 (two hundred and seventy nine million, three hundred and seventyeight thousand, one hundred and nineteen) nominal preferred shares with nominalvalue R$ 5.00 each.

 

§1 The right to vote shall be reserved exclusively for the common shares, andeach common share shall have the right to one vote in decisions of GeneralMeetings of Stockholders.

 

Clause5: The preferred shares shall have right of preference in the event of reimbursementof shares and shall have the right to a minimum annual dividend of the greaterof the following amounts:

 

a)10% (ten percent) of their par value; or

 

b)3% (three percent) of the value of stockholders’ equity corresponding to theshares.

 

Clause6: The common shares and the preferred shares shall have equal rights todistribution of bonuses.

 

§1 Capitalization of monetary adjustment to the value of the registered capitalshall require a decision by the General Meeting of Stockholders, but shall beobligatory when the limit specified in Section 297 of Law 6404 of 15 December 1976has been reached.

 

Clause7: In any business year in which the Company does not obtain sufficient profitto pay dividends to its stockholders, the State of Minas Gerais will guaranteeto the shares issued by the Company up to August 5, 2004 and held byindividual persons a minimum dividend of 6% (six percent) per year, inaccordance with Clause 9 of State Law 828 of 14 December 1951, and StateLaw 15290 of 4 August 2004.

 

Clause8: The State of Minas Gerais shall at all times obligatorily be the owner ofthe majority of the shares carrying the right to vote, and the capitalsubscribed by it shall be paid in in accordance with the legislation from timeto time in force. The capital subscribed by other parties, whether individualsor legal entities, shall be paid in as specified by the General Meeting ofStockholders which decides on the subject.

 

§1 The Executive Board may, in order to obey a decision by a General Meeting ofStockholders, suspend the services of transfer and registry of shares, subjectto the legislation from time to time in force.

 

§2 Stockholders shall have the right of preference in subscription of increasesof capital and in the issue of the Company’s securities, in accordance with theapplicable legislation. There shall, however, be no right of preference whenthe increase in the registered capital is paid with funds arising from taxincentive systems, subject to the terms of the sole sub-paragraph of Section 172of Law 6404 of 15 December 1976.

 

# **CHAPTER III**

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**The General Meeting of Stockholders**

 

Clause9: The General Meeting of Stockholders shall be held, ordinarily, within thefirst 4 (four) months of the year, for the purposes specified by law, and extraordinarilywhenever necessary, and shall be called with minimum advance notice of 15(fifteen) days, and the terms of these Bylaws and the relevant legislationshall be obeyed in its convocation, opening and decisions.

 

§1 The stockholder may be represented in General Meetings of Stockholders in themanner specified in Section 126 of Law 6404, as amended, by showing at thetime of the meeting, or by previously depositing at the Company’s head office,proof of ownership of the shares, issued by the depositary financialinstitution, accompanied by the proxy’s identity document and a power ofattorney with special powers.

 

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Clause10: The ordinary or extraordinary General Meeting of Stockholders shall bechaired by a stockholder elected by the General Meeting from among thosepresent, who shall choose one or more secretaries.

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# **CHAPTER III**

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**The General Meeting of Stockholders**

 

Clause11: Management of the Company shall be exercised by a Board of Directors and anExecutive Board.

 

§1 The structure and composition of the Board of Directors and the ExecutiveBoard of the Company shall be identical in the wholly-owned subsidiaries CemigDistribuição S.A. and Cemig Geração e Transmissão S.A., with the exception thatonly the wholly-owned subsidiaries of Cemig Distribuição S.A. shall have aChief Distribution Sales Officer, and only Cemig Geração e Transmissão S.A.shall have a Chief Generation and Transmission Officer.

 

§2 The Board of Directors and the Executive Board, in the management of theCompany, the wholly-owned subsidiaries Cemig Distribuição S.A. and CemigGeração e Transmissão S.A., and of the other wholly-owned subsidiaries,jointly-controlled companies and affiliates, and of the consortia in which itdirectly or indirectly participates, must obey the provisions of the Company’sLong-term Strategic Plan, especially the dividend policy therein stated, asapproved by the Board of Directors.

 

§3 The Strategic Plan shall contain the long-term strategic planning, bases,targets, objectives and results to be followed and achieved by the Company andits dividend policy, and must obey the commitments and requirements specifiedin §5 below.

 

§4 The Long-term Strategic Plan shall be revised annually by the Executive Boardand approved by the Board of Directors and shall be reflected in all the plans,projections, activities, strategies, investments and expenses of the Companyand its wholly-owned subsidiaries, jointly-controlled companies and affiliatedcompanies and the consortia in which it directly or indirectly participates,including the multi-year Strategic Implementation Plan and the Annual Budget,which must be approved by the Board of Directors.

 

§5 In managing the Company and in the exercise of the right to vote inwholly-owned subsidiaries, jointly-controlled companies, affiliated companiesand consortia, the Board of Directors and the Executive Board shall faithfullyobey and comply with the following targets:

 

a)to keep the Company’s consolidated indebtedness equal to or less than 2 (two)times the Company’s Ebitda (earnings before interest, taxes, depreciation andamortization);

 

b)to limit the consolidated ratio Net debt / (Net debt + Stockholders’ equity) to40% (forty per cent);

 

c)to limit the consolidated balance of funds recognized in Current assets, forthe purposes of Clause 30 of these Bylaws or otherwise, to the equivalent of amaximum of 5% (five per cent) of the Company’s Ebitda (earnings beforeinterest, taxes, depreciation and amortization)

 

d)to limit the consolidated amount of funds destined to capital expenditure andthe acquisition of any assets, in each business year, to the equivalent of amaximum of 40% (forty per cent) of the Company’s Ebitda (Earnings beforeinterest, taxes, depreciation and amortization);

 

e)to invest only in distribution, generation and transmission projects whichoffer real minimum internal rates of return equal to or more than thosespecified in the Company’s Long-term Strategic Plan, subject to the legalobligations;

 

f)to maintain the expenses of the wholly-owned subsidiary Cemig Distribuição S.A.and of any subsidiary which operates in distribution of electricity at amountsnot greater than the amounts recognized in the tariff adjustments and reviews;

 

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g)to maintain the revenues of the wholly-owned subsidiary Cemig Distribuição S.A.and those of any subsidiary which operates in distribution at the amountsrecognized in the tariff adjustments and reviews.

 

§6 The targets specified in § 5 above shall be calculated on the consolidatedbasis, including the Company and its permanent investments in the wholly-ownedsubsidiaries Cemig Distribuição S.A. and Cemig Geração e Transmissão S.A., andin jointly-controlled companies, affiliated companies and consortia.

 

§7 The targets established in sub-clauses “a”, “b”, “c” and “d” of § 5 above maybe exceeded for reasons related to temporarily prevailing conditions, uponjustification, with grounds, and prior specific approval by the Board ofDirectors, up to the following limits:

 

a)the Company’s consolidated debt to be less than or equal to 2.5 (two pointfive) times the Company’s Ebitda (Earnings before interest, taxes, depreciationand amortization);

 

b)the consolidated ratio of Net debt / (Net debt + Stockholders’ equity) to belimited to 50% (fifty per cent);

 

c)the consolidated balance of the funds recognized in Current assets, for thepurposes of Clause 30 of these Bylaws or otherwise, to be the equivalent of amaximum of 10% (ten per cent) of the Company’s Ebitda (Earnings beforeinterest, taxes, depreciation and amortization);

 

d)the consolidated amount of the funds allocated to capital expenditure and tothe acquisition of any assets, only in the business years of 2006 and 2007,shall be limited to maximum values of 65% (sixty-five per cent) and 55% (fifty-fiveper cent), respectively, of the Company’s Ebitda (Earnings before interest,taxes, depreciation and amortization).

 

**Section I**

 

**The Board of Directors**

 

Clause12: The Company’s Board of Directors shall be made up of 14 (fourteen) membersand an equal number of substitute members. One of the members shall be itsChairman and another its Vice-Chairman, all being subject to election anddismissal at any time by the General Meeting of Stockholders, for a period ofoffice of 3 (three) years, and able to be reelected.

 

§1 The substitute members shall substitute the respective members of the Boardif the latter are absent or impeded from exercising their functions and, in theevent of a vacancy, shall do so until a new member is elected.

 

§2 The global or individual amount of the remuneration of the Board of Directorsshall be fixed by the General Meeting of Stockholders, in accordance with thelegislation from time to time in force.

 

§3 The minority holders of common shares, and the holders of preferred shares,each have the right to elect 1 (one) member of the Board of Directors, in aseparate vote, according to law.

 

§4 The Boards of Directors of the wholly-owned subsidiaries Cemig DistribuiçãoS.A. and Cemig Geração e Transmissão S.A. shall, obligatorily, be composed ofthe members or substitute members elected to the Board of Directors of theCompany.

 

Clause13: In the event of a vacancy on the Board of Directors, the first GeneralMeeting of Stockholders shall elect a new member, for the period of officewhich was remaining to the previous member.

 

§1 In this event, if the previous Board member was elected by a minority, thenew member shall be elected by the same minority.

 

Clause14: The Board of Directors shall meet, ordinarily, every 2 (two) months and,extraordinarily, on convocation by its Chairman, or its Vice-Chairman, orone-third of its members, or when requested by the Executive Board, anddecisions taken shall be valid when the majority of its members are present.

 

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§1 The meetings of the Board of Directors shall be called by its Chairman or itsVice-Chairman, by written advice sent with 5 (five) days’ notice, containingthe agenda to be discussed. Meetings of the Board of Directors called on thebasis of urgency may be called by its Chairman without being subject to theabove-mentioned period provided the other members of the Board areunequivocally aware of the convocation.

 

§2 Decisions of the Board of Directors shall be taken by the majority of thevotes of the board members present, and in the event of equality of votes theChairman shall have the casting vote.

 

Clause15: The Chairman of the Board of Directors has the competency to grant leave tothe Board’s members, and the other members of the Board have the competency togrant leave to the Chairman.

 

Clause16: The Chairman and Vice-Chairman of the Board of Directors shall be chosen bytheir peers, at the first meeting of the Board of Directors that takes placeafter the election of its members, and the Vice-Chairman shall take the placeof the Chairman when the Chairman is absent or impeded from exercising hisfunctions.

 

Clause17: The Board of Directors shall have the following attributions:

 

a)to fix the general orientation of the Company’s business;

 

b)to elect or dismiss the Executive Officers of the Company, subject to theseBylaws;

 

c)to decide, prior to the Company entering into them, on contracts between theCompany and any of its stockholders, or companies which are sole or jointcontrolling stockholders of any of its stockholders;

 

d)to decide, upon proposal by the Executive Board, on disposal or placement of acharge on any of the Company’s property, plant or equipment, and on the givingby the Company of any guarantee to any third parties of which the individual valueis greater than or equal to R$ 5,000,000.00 (five million Reais);

 

e)to decide, upon proposal put forward by the Executive Board, on the Company’scapital investment projects, signing of contracts and legal transactions ingeneral, contracting of loans, financings, or the constitution of anyobligations in the name of the Company the value of which, individually orjointly, is R$ 5,000,000.00 (five million Reais) or more, including injectionsof capital into wholly-owned subsidiaries, jointly-controlled companies andaffiliated companies and the consortia in which it participates;

 

f)to call the General Meeting of Stockholders;

 

g)to monitor and inspect the management by the Executive Board, for which purposethe Board of Directors may, at any time, examine the books and papers of theCompany, and request information on contracts agreed or in the process of beingagreed, and on any other administrative facts or actions which it deems to beof interest;

 

h)to state prior opinion on the report of management and the accounts of theCompany’s Executive Board;

 

i)to choose, annually, and to dismiss, the Company’s auditors, from amongcompanies with international reputation authorized by the Securities Commission(CVM) to audit listed companies;

 

j)to authorize, upon a proposal by the Executive Board, the start ofadministrative proceedings for competitive bids, and proceedings fordispensation from and non-requirement of bids, and the corresponding contracts,in amounts greater than or equal to R$ 5,000,000.00 (five million Reais);

 

l)to authorize, upon proposal by the Executive Board, the filing of legalactions, administrative proceedings, and entering into Court and out-of-courtagreements whose value is R$ 5,000,000.00 (five million Reais) or more;

 

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m)to authorize the issue of securities, in the domestic or external markets, forthe raising of funds, in the form of debentures, promissory notes, medium-termnotes and other instruments;

 

n)to approve the Company’s Long-term Strategic Plan, the Multi-year StrategicImplementation Plan, and the Annual Budget, and any alterations or revisionsthereto;

 

o)annually, to set the directives and establish the limits, including financiallimits, for spending on personnel, including concession of benefits andcollective work agreements, subject to the competency of the General Meeting ofStockholders and in obedience to the Annual Budget approved;

 

p)to authorize the exercise of the right of preference under stockholders’agreements or to vote in wholly-owned subsidiaries, jointly-controlledcompanies, affiliated companies and the consortia in which the Companyparticipates, except in the case of the wholly-owned subsidiaries CemigDistribuição S.A. and Cemig Geração e Transmissão S.A., for which the competencyto decide on these matters shall be that of the General Meeting ofStockholders;

 

q)to approve the declarations of vote in the General Meetings of Stockholders andthe orientations for voting in the meetings of the Boards of Directors of thewholly-owned subsidiaries, jointly-controlled companies, affiliated companiesand the consortia in which the Company participates, when participation in thecapital of other companies or consortia is involved, and the decisions must, inany event and not only in matters relating to participation in the capital ofother companies or consortia, obey the provisions of these Bylaws, theLong-term Strategic Plan and the Multi-year Strategic Implementation Plan.

 

§1 The Board of Directors, by specific resolutions, may delegate the power toauthorize agreement of contracts for sales of electricity and for provision ofdistribution or transmission services to the Executive Board, in accordancewith the legislation.

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### **Section II**

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**The Executive Board**

 

Clause18: The Executive Board shall be made up of 8 (eight) Executive Officers, whomay be stockholders, elected by the Board of Directors, namely: the ChiefExecutive Officer; an Executive Vice-Chairman; a Chief Officer for Finance,Investor Relations and Control of Holdings; a Chief Corporate ManagementOfficer; a Chief Distribution and Sales Officer; a Chief Generation andTransmission Officer; a Chief Trading Officer; and a Chief New BusinessDevelopment Officer.

 

§1 The period of office of the Executive Officers shall be 3 (three) years, andre-election is permitted. The Executive Officers shall remain in their postsuntil their duly elected successors take office.

 

§2 The global or individual amount of the remuneration of the Executive Board,including benefits of any type, shall be fixed by the General Meeting ofStockholders, in accordance with the legislation currently in effect.

 

§3 The Directors shall exercise their positions as full-time occupations in theregime of exclusive dedication to the service of the Company. They may at thesame time hold and exercise non-remunerated positions in the management of theCompany’s wholly-owned subsidiaries, jointly-controlled companies or affiliatedcompanies, at the option of the Board of Directors. They shall, however,obligatorily exercise the corresponding positions in the wholly-ownedsubsidiaries Cemig Distribuição S.A. and Cemig Geração e Transmissão S.A.

 

§4 Executive Officers who are not employees shall have the right to an annualperiod of not more than 30 (thirty) days’ remunerated leave. This leave may notbe accumulated into the subsequent year, and its remuneration shall beaugmented by one-third of the monthly remuneration currently in effect. Thisleave shall be given by the Chief Executive Officer, whose own leave shall begiven by the Board of Directors.

 

Clause19: In the event of absence, leave, or resignation of the Chief ExecutiveOfficer or of the post of Chief Executive Officer being vacant, this post shallbe exercised by the Executive Vice-Chairman, for as long as the period ofabsence or leave – or, in the event of vacancy, the impediment or resignation –lasts, until the post is filled by the Board of Directors.

 

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§1 In the event of absence, leave, resignation or vacancy of any of the othermembers of the Executive Board, the Executive Board may by a majority voteattribute the exercise of the respective functions to another ExecutiveOfficer, for as long as the period of absence or leave – or, in the event ofvacancy, the impediment or resignation – lasts, until the post is filled by theBoard of Directors.

 

§2 A Chief Executive Officer or a member of the Executive Board elected in theway described in this clause shall hold the position for the remaining time ofthe period of office of the Executive Officer who is substituted.

 

Clause20: The Executive Board shall meet, ordinarily, at least 2 (two) times permonth and, extraordinarily, whenever called by the Chief Executive Officer orby 2 (two) Executive Officers with prior notice of at least 2 (two) days, butthis notice shall not be necessary if all the Executive Officers are present.Unless stated to the contrary in the Bylaws, the decisions of the ExecutiveBoard shall be taken by a vote of the majority of its members, and in the eventof a tie the Chief Executive Officer shall have a casting vote and the Board ofDirectors must be advised that the casting vote has been used.

 

Clause21: The Executive Board is responsible for the current management of theCompany’s business, subject to the Long-term Strategic Plan, the Multi-yearStrategic Implementation Plan and the Annual Budget, prepared and approved inaccordance with these Bylaws.

 

§1 The Company’s Multi-year Strategic Implementation Plan shall reflect theCompany’s Long-term Strategic Plan and contain the plans and projections for aperiod of 5 (five) financial years, and must be updated at least once a year,and shall deal in detail with the following subjects, among others:

 

a)the Company’s strategies and actions, including any project related to itsobjects;

 

b)the new investments and business opportunities, including those of the Company’swholly-owned subsidiaries, jointly-controlled companies, and affiliatedcompanies and the consortia in which it participates;

 

c)the amounts to be invested or in any other way contributed from the Company’sown funds or funds of third parties;

 

d)the rates of return and profits to be obtained or generated by the Company.

 

§2 The Company’s Annual Budget shall reflect the Company’s Multi-year StrategicImplementation Plan and, consequently, the Long-term Strategic Plan and mustgive details of operational revenue and expenses, costs and capitalexpenditure, cash flow, the amount to be allocated to the payment of dividends,investments of cash from the Company’s own funds or funds of third parties, andany other data that the Executive Board considers to be necessary.

 

§3 The Company’s Multi-year Strategic Plan and the Annual Budget shall beprepared and updated annually, by the end of each business year, to be ineffect in the following business year. Both shall be prepared in coordinationwith the Chief Officer for Finance, Investor Relations and Control of Holdingsand submitted to examination by the Executive Board, and, subsequently, forapproval by the Board of Directors.

 

§4 The following decisions shall require a vote by the Executive Board:

 

a)approval of the plan of organization of the Company and issuance of thecorresponding rules and any changes to them;

 

b)examination and submission to the Board of Directors, for approval, of theCompany’s Multi-year Strategic Implementation Plan, and revisions of it,including timetables, amount and allocation of the capital expenditurespecified in it;

 

c)examination and submission to the Board of Directors for approval of the AnnualBudget, which shall reflect the multi-year Strategic Implementation Plan atthat time in force, and any revisions of it;

 

d)decision on re-managing of investments or capital expenditure specified in theAnnual Budget which amount, individually or in aggregate during a singlefinancial year, to less than R$ 5,000,000.00 (five million Reais), withconsequent re-adaptation of the targets approved, obeying the multi-yearStrategic Implementation Plan and the Annual Budget;

 

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e)approval of disposal of or placement of a charge upon any of the Company’sproperty, plant or equipment, and the giving of guarantees to third parties, inamounts less than R$ 5,000,000.00 (five million Reais);

 

f)authorization of the Company’s capital expenditure projects, signing ofagreements and legal transactions in general, contracting of loans andfinancings, or constitution of an obligation in the name of the Company, basedon the Annual Budget approved, such as individually or in aggregate have valuesless than R$ 5,000,000.00 (five million Reais), including the injection ofcapital into wholly-owned subsidiaries, jointly-controlled companies,affiliated companies, and the consortia in which the Company participates,subject to the provisions of sub-clause ‘p’ of sub-item IV of Clause 22;

 

g)approval, upon proposal by the Chief Executive Officer, jointly with the ChiefOfficer for Finance, Investor Relations and Control of Holdings, of thestatements of vote in the General Meetings of Stockholders and the meetings ofthe Boards of Directors of the wholly-owned subsidiaries, jointly-controlledcompanies, affiliated companies and the consortia in which the Companyparticipates, except in the case of the wholly-owned subsidiaries CemigDistribuição S.A. and Cemig Geração e Transmissão S.A., for which thecompetence to decide on these matters shall be that of the General Meeting ofStockholders, and the decision must obey the provisions of these Bylaws, thedecisions of the Board of Directors, the Long-term Strategic Plan and themulti-year Strategic Implement Plan;

 

h)authorization to initiate administrative tender proceedings and proceedings forexemption from or non-requirement for tenders, and the corresponding contracts,in amounts greater than or equal to R$ 1,000,000.00 (one million Reais) andless than R$ 5,000,000.00 (five million Reais);

 

i)authorization to file legal actions and administrative proceedings, and toenter into Court and out-of-court settlements for amounts less than R$5,000,000.00 (five million Reais);

 

j)authorization of provisions in the Company’s accounts, of any value, onproposal from the Chief Officer for Finance, Investor Relations and Control ofHoldings;

 

l)approval of the nominations of employees to hold management posts in theCompany, upon proposal by the Chief Officer concerned, subject to theprovisions of sub-clause “h” of sub-item I of Clause 22;

 

m)authorization of expenditure on personnel expenses and collective workagreements, subject to the competency of the General Meeting of Stockholders,the directives and limits approved by the Board of Directors, and the AnnualBudget approved.

 

§5 Actions necessary for the regular functioning of the Company, signing ofcontracts, and other legal transactions, shall be effected by the ChiefExecutive Officer, jointly with one Executive Officer, or with a person holdinga valid power of attorney.

 

§6 Powers of attorney must be granted by the Chief Executive Officer, jointlywith an Executive Officer, except for the power described in sub-clause “c” ofSub-item I of Clause 22, for which only the signature of the Chief ExecutiveOfficer is required.

 

Clause22: Subject to the provisions of the previous clauses, the following are thefunctions and powers attributed to the Executive Board:

 

I– To the Chief Executive Officer:

 

a)to oversee and direct the work of the Company;

 

b)to supervise the preparation and implementation of the Multi-year StrategicImplementation Plan and to develop the strategies and actions approved;

 

c)to represent the Company in the Courts, actively and passively;

 

d)to sign, jointly with one of the Executive Officers, documents which bind theCompany;

 

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e)to present the annual report of the Company’s business to the Board ofDirectors and to the Ordinary General Meeting of Stockholders;

 

f)to hire and dismiss the Company’s personnel;

 

g)to manage and direct the activities of Internal Audits and InstitutionalRelationships, legal, communication and representation activities, the GeneralSecretariat and the function of the Company’s Ombudsman;

 

h)to propose to the Executive Board for approval, jointly with the Chief Officerto whom the employee is linked, nominations for posts of Superintendent of theCompany;

 

i)to propose appointments for positions of management and on the Audit Boards ofthe wholly-owned subsidiaries, jointly-controlled companies and affiliatedcompanies, and also Forluz (Fundação Forluminas de Seguridade Social) afterhearing the opinion of the Chief Officer for Finance, Investor Relations andControl of Holdings, except in the case of the wholly-owned subsidiaries CemigDistribuição S.A. and Cemig Geração e Transmissão S.A., for which theprovisions of paragraph 4 of Clause 12 and paragraph 3 of Clause 18 of theseBylaws prevail.

 

II– To the Executive Vice-Chairman:

 

a)to substitute the Chief Executive Officer if he is absent, on leave,temporarily impeded from exercising his functions, or has resigned or his postis vacant;

 

b)to promote improvement of the Company’s social responsibility andsustainability policies;

 

c)to set the policies and guidelines for the environment, technologicaldevelopment, alternative energy sources and technical standardization;

 

d)to co-ordinate the Company’s strategy for operations in relation to socialresponsibility and the environment, technological processes and strategicmanagement of technology;

 

e)to coordinate and put in place the maintenance of the Company’s quality controlsystems;

 

f)to promote implementation of programs for the Company’s technologicaldevelopment;

 

g)to monitor the management of plans for compliance with the guidelines for theenvironment, technology and improvement of quality.

 

III– To the Chief Officer for Finance, Investor Relations and Control of Holdings:

 

a)to make available the financial resources necessary for the operation andexpansion of the Company, in accordance with the Annual Budget, conducting theprocesses of contracting of loans and financings, and related services;

 

b)to co-ordinate the preparation and consolidation, with the participation of allthe Chief Officers, of the Company’s Multi-year Strategic Implementation Planand Annual Budget;

 

c)to arrange for economic and financial valuation of the Company’s capitalexpenditure investment projects, except those that are the responsibility ofthe Chief New Business Development Officer;

 

d)to accompany the performance of the execution of investment projects, accordingto targets and results approved by the Management;

 

e)to carry out the accounting of, and to control, the Company’seconomic-financial transactions;

 

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f)to determine the cost of the service and to establish an insurance policy, aslaid out in the Company’s Multi-year Strategic Implementation Plan;

 

g)to prepare the short-, medium- and long-term financial programming in detail,as specified in the Company’s Multi-year Strategic Implementation Plan andAnnual Budget;

 

h)to control the Company’s registered capital, decide policy for its shares andfor corporate governance, and to suggest dividend policy;

 

i)to coordinate the preparation and negotiation of the tariffs for retail supplyand distribution of electricity, and the revenues from transmission, with theNational Electricity Agency, Aneel;

 

j)to be responsible for the provision of information to the investing public, tothe Securities Commission (CVM) and to the Brazilian and international stockexchanges or over-the-counter markets, and the corresponding regulation andinspection entities, and to keep the Company’s registrations with theseinstitutions updated;

 

l)to represent the Company to the CVM, stock exchanges and other entities of thecapital markets;

 

m)to arrange for the financial and corporate management of the Company’s holdingsin the wholly-owned subsidiaries, subsidiaries and affiliates, within thecriteria of good corporate governance and making continual efforts forcompliance with their business plans, subject to the provisions of theseBylaws;

 

n)to propose to the Executive Board, for approval or submission to the Board ofDirectors or to the General Meeting of Stockholders, depending on thecompetency defined in these Bylaws, injections of capital, exercise of theright of preference and the making of voting agreements in the wholly-ownedsubsidiaries, jointly-controlled companies, and affiliated companies and in theconsortia in which the Company participates;

 

o)to take part in negotiations that involve the constitution or alteration ofcorporate documents of the holdings referred to in the previous sub-clause;

 

p)to coordinate the processes of sale of stockholdings owned by the Company, byits wholly-owned subsidiaries, jointly-controlled companies and affiliatedcompanies, upon prior legislative authorization and approval by the Board ofDirectors.

 

IV– To the Chief Corporate Management Officer:

 

a)to ensure the provision of appropriate personnel to the Company;

 

b)to decide the Company’s human resources policy and to orient and promote itsapplication;

 

c)to orient and conduct activities related to organizational studies and theirdocumentation;

 

d)to decide, conduct and supervise the Company’s telecommunications andinformation technology policy;

 

e)to plan, put in place and maintain the Company’s telecommunications andinformation technology systems;

 

f)to decide policies and rules on support services such as transport,administrative communication, security guards, and provision of adequate qualityin the workplace for the Company’s personnel;

 

g)to provide the Company with infrastructure and administrative support resourcesand services;

 

h)to coordinate the policies, processes and means of property security, worksafety and security guarding approved by the Company;

 

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i)to carry out the negotiations of collective work agreements, in accordance withthe guidelines and limits approved by the Board of Directors, submitting theproposals negotiated for approval by the Executive Board;

 

j)to manage the process of contracting of works and services and of acquisitionand disposal of materials and real estate property;

 

l)to effect quality control of the material acquired and of the qualification ofcontracted service providers;

 

m)to administer and control the stock of material, and separation and recovery ofused material, and to carry out sales of excess and unusable material, andscrap;

 

n)to arrange for and implement programs to increase, develop, perfect andcontinually improve suppliers of materials and services of interest to theCompany, alone or in cooperation with other Chief Officers’ Departments ordevelopment agencies and industry associations, in the ambit of the State ofMinas Gerais;

 

o)to conduct corporate management programs and environmental actions within thescope of his Department;

 

p)to authorize initiation of administrative tender proceedings and proceedingsfor exemption from or non-requirement for tenders, and the correspondingcontracts, in amounts up to R$ 1,000,000.00 (one million Reais);

 

q)to propose to the Chief Executive Officer, for submission to the ExecutiveBoard for approval, from among the employees of the Cemig Distribuição S.A. andCemig Geração e Transmissão S.A., appointments for the positions of sitting andsubstitute members of the Integrated Pro-Health Administration Committee;

 

r)to propose to the Chief Executive Officer, for submission to the ExecutiveBoard for approval, from among the employees of the Company and of the othercompanies involved in the negotiations, appointments of employees to the UnionNegotiation Committee, and also the appointment of its coordinator;

 

s)to present to the Executive Board the assessments received from a leadershipsuccession development program, put in place by the Company, for the purpose ofassisting the Executive Board in making its decisions on appointments ofemployees to management posts.

 

V– To the Chief Distribution and Sales Officer:

 

a)to make continuous efforts on behalf of the quality of supply of energy toconsumers that are directly linked to the Company’s distribution systems;

 

b)to prepare the planning of the Company’s distribution system;

 

c)to manage the implementation of the distribution facilities, includingpreparation and execution of projects, construction and assembly;

 

d)to operate and maintain the Company’s systems of distribution and theassociated systems of supervision and long-distance control;

 

e)to manage the Company’s Work Safety Policy in the ambit of its activities;

 

f)to formulate and implement the policies for service to consumers served by thisDepartment;

 

g)to develop programs and actions with captive consumers with demand lower than500 kW, with a view to the most efficient use of electricity;

 

h)to establish commercial relationships with and coordinate the sale ofelectricity and services to captive consumers with demand lower than 500 kW;

 

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i)to carry out environmental programs and actions within the scope of this ChiefOfficer’s Department;

 

j)to represent the Company in the Brazilian Electricity Distributors’ Association(Abradee) and with other entities of the distribution sector;

 

l)to ensure the physical security of the distribution facilities, establishingpolicies and guidelines and managing the asset security of these facilities;

 

m)to seek continuous improvement of the processes of operation and maintenance,through the use of new technologies and methods that aim for improvement ofquality and reduction of the cost of those activities.

 

VI– To the Chief Energy Generation and Transmission Officer:

 

a)to make continuous efforts on behalf of the quality of supply of electricity toconsumers that are directly linked to the transmission system;

 

b)to prepare the planning of generation and transmission;

 

c)to operate and maintain the systems of generation and transmission and theassociated systems of supervision and long-distance control;

 

d)to carry out environmental programs and actions within the scope of this ChiefOfficer’s Department;

 

e)to develop and conduct hydro-meteorological activities of interest to theCompany;

 

f)to manage the operations arising from interconnection of the Company’selectricity transmission system with those of other companies, and theconnections of agents to the Company’s basic network;

 

g)to represent the Company in relations with the National System Operator (ONS),the Brazilian Electricity Generators’ Association (Abragee) and other entitiesrepresenting the electricity, generation and transmission sector;

 

h)to manage the Company’s central laboratories and workshops;

 

i)to coordinate and put in place projects for refurbishment, modernization,improvement, reactivation and de-activation of the generation and transmissionfacilities;

 

j)to propose and implement measures that aim to ensure connectivity of thevarious agents of the electricity system, linked to the Company’s transmissionsystem;

 

l)to ensure the physical security of the generation and transmission facilities,establishing policies and guidelines and managing the asset security of thesefacilities;

 

m)to manage and promote the Company’s work safety policy within the scope of itsactivities;

 

n)to manage and put in place projects for expansion of generation, transmissionand co-generation, arranging for planning, construction and assembly, andensuring the proper physical and financial performance of these undertakings;

 

o)to supply technical support to the negotiations to make the projects forexpansion of generation, transmission and co-generation possible, and to takepart in the negotiation of documents of the consortia of the entrepreneurs andspecial-purpose companies.

 

VII– To the Chief Trading Officer:

 

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a)to carry out research, studies and projections of interest to the Company;

 

b)to coordinate the planning and execution of the purchase of electricity toserve the Company’s market and the sale of energy coming from the Company’s ownsources of generation;

 

c)to coordinate the purchase and sale of electricity in its different forms andmodalities, including importation, exportation and holdings in all the segmentsof markets specialized in energy;

 

d)to coordinate the provision of business intermediation services related to thesale of energy to any authorized agent;

 

e)to represent the Company in the Electricity Trading Chamber (CCEE), takingresponsibility for the transactions carried out in the ambit of the chamber,and to represent the Company in relations with the other entities tradingelectricity;

 

f)to coordinate the establishment of the prices for purchase and sale ofelectricity, and to propose them to the Executive Board for approval;

 

g)to establish commercial relations with and coordinate sales of electricity andservices to individual consumers or groups of consumers served at voltagesgreater than or equal to 2.3kV and contracted demand greater than or equal to500kW, and also business groups;

 

h)to identify, measure and manage the risks associated with the trading ofelectricity;

 

i)to negotiate and manage the commercial transactions involved in transport andconnection of any party accessing the distribution system;

 

j)to negotiate and manage contracts with the National System Operator (ONS) foruse of the transmission system and with transmission companies for connection tothe distribution system;

 

l)to manage, in coordination with the Chief New Business Development Officer,trading of the Company’s carbon credits.

 

VIII– To the Chief New Business Development Officer:

 

a)to arrange prospecting, analysis and development of new business of the Companyin the areas of generation, transmission and distribution of electricity,transport and gas distribution, and also in other activities directly orindirectly related to the Company’s objects;

 

b)to arrange for technical, economic-financial, and environmental feasibilitystudies of new business projects for the Company, in coordination with theChief Officers’ Departments related to the said businesses;

 

c)to coordinate negotiations and implement partnerships, consortia, special-purposecompanies and other forms of association with public or private companies suchas are necessary for the development of new business, and also the negotiationof contracts and corporate documents for these projects;

 

d)to coordinate the participation of the Company in tender proceedings forobtaining grants of concessions in all the areas of its operations;

 

e)to coordinate, evaluate and structure the opportunities for acquisition of newassets in the electricity sector and the sector of transport and distributionof gas;

 

f)to arrange for prospecting and analysis, within the Company, of businessopportunities related to the use of carbon credits;

 

g)to consolidate the planning of expansion of the generation, transmission anddistribution systems;

 

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h)to consolidate the Company’s Program for Capital Investment in generation,transmission and distribution;

 

i)to represent the Company in relations with the entities for planning ofexpansion of the electricity sector in its areas of operation;

 

j)to carry out environmental programs and actions within the area related to thisChief Officer’s Department;

 

l)to accompany, within the Company, the energy planning of the State of MinasGerais.

 

§1 The competencies of representation before technical and administrative bodiesand associations granted to the Chief Officers under this Clause do not excludethe Chief Executive Officer’s competency of representation, nor the need forobedience to the provisions in these Bylaws in relation to prior obtaining ofauthorizations from the management bodies to contract obligations in the nameof the Company.

 

§2 As well as the exercise of the attributions herein specified and demanded bylaw, each Chief Officer’s Department has the competency to ensure the cooperation,assistance and support of the other Chief Officer’s Departments in the areas oftheir respective competencies, with the aim of success in the greaterobjectives and interests of the Company.

 

§3 The projects developed by the Company in the area of the Chief New BusinessDevelopment Officer’s Department, once structured and constituted, should beassumed by the respective Chief Officer’s Departments responsible for theirconstruction, execution, operation and sales, as defined in these Bylaws.

 

§4 It is the competency of each Chief Officer, within the area of his operation,to arrange for the actions necessary for compliance with and effectiveimplementation of the work safety policies approved by the Company.

 

**CHAPTER V**

 

# The Audit Board

#  

Clause23: The Company’s Audit Board shall function permanently and shall be made upof between 3 (three) and 5 (five) members and their respective substitutemembers, who shall be elected annually, on the occasion of the Annual GeneralMeeting, and may be re-elected.

 

§1 The Audit Board shall elect its Chairman from among its members, and theChairman shall call and chair the meetings.

 

Clause24: In the event of resignation of the position, death or impediment, a memberof the Audit Board shall be replaced by his respective substitute, until thenew member is elected, and such member shall be chosen by the same party thatappointed the substitute.

 

Clause25: The Audit Board shall have the attributions set by the Corporate Law, andalso, to the extent that they do not conflict with the Brazilian Legislation,those required by the laws of the countries in which the Company’s shares arelisted and traded, in accordance with its regulations.

 

Clause26: The remuneration of the members of the Audit Board shall be fixed by theGeneral Meeting of Stockholders which elects it, in accordance with thelegislation that is in force.

 

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**CHAPTER VI**

 

**The business year**

 

Clause27: The business year shall coincide with the calendar year, closing on December 31of each year, when the financial statements shall be prepared, in accordancewith the relevant legislation. Financial statements may be prepared for periodsof six months or shorter periods.

 

Clause28: Prior to the deduction of any sharing in results, the following shall bededucted from the result for the business year: retained losses, the provisionfor income tax, the Social Contribution on Net Profit and, successively, theprofit shares of the employees and the managers.

 

§1 The net profit ascertained in each business year shall be allocated asfollows:

 

a)5% (five percent) to the legal reserve, up to the limit specified by law;

 

b)50% (fifty percent) distributed as obligatory dividends to the stockholders ofthe Company, subject to the other terms of these Bylaws and the applicablelegislation; and

 

c)the balance, after the retention specified in a capital expenditure and/orinvestment budget prepared by the Company’s management, in obedience to theCompany’s Long-term Strategic Plan and the dividend policy contained thereinand duly approved, shall be allocated to constitute a profit reserve for thepurpose of distribution of extraordinary dividends, in accordance with Clause30 of these Bylaws, up to the maximum limit specified by Clause 199 of theCorporate Law.

 

Clause29: The dividends shall be distributed in the following order:

 

a)The annual minimum dividend guaranteed to the preferred shares;

 

b)The dividend for the common shares, up to a percentage equal to that guaranteedto the preferred shares.

 

§1 Once the dividends specified in sub-clauses “a” and “b” of the head paragraphof this clause have been distributed, the preferred shares shall have equalityof rights with the common shares in any distribution of additional dividends.

 

§2 The Board of Directors may declare interim dividends, in the form of Intereston Equity, to be paid from retained earnings, profit reserves or profitsascertained in six-monthly or interim financial statements.

 

§3 The amounts paid or credited as Interest on Equity, in accordance with therelevant legislation, shall be imputed to the amounts of the obligatorydividend or of the dividend payable under the Bylaws to the preferred shares,being for all purposes of law a part of the amount of the dividends distributedby the Company.

 

Clause30: Without prejudice to the obligatory dividend, every two years, startingfrom the business year of 2005, or more frequently if the Company’savailability of cash so permits, the Company shall use the profit reservespecified in sub-clause “c” of Clause 28 of these Bylaws for the distributionof extraordinary dividends, up to the limit of cash available, as determined bythe Board of Directors, in obedience to the Company’s Long-term Strategic Planand the Dividend Policy contained therein.

 

Clause31: The obligatory or extraordinary dividends declared shall be paid in 2 (two)equal installments, the first by 30 June and the second by 30 December ofeach year, and the Executive Board shall decide the location and processes ofpayment, subject to these periods.

 

§1 Dividends not claimed within a period of 3 (three) years from the date onwhich they are placed at the disposal of the stockholder shall revert to thebenefit of the Company.

 

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Clause32: The employees have the right to a share in the profits or results of theCompany, upon the criteria defined by the Executive Board based on theguidelines approved by the Board of Directors and limits set by the GeneralMeeting of Stockholders, in accordance with the specific legislation.

 

Clause33: It is the competency of the General Meeting of Stockholders to set,annually, the limits for sharing by the managers in the profits of the Company,subject to the provisions of the sole sub-paragraph of Article 190 of Law6404 of December 15, 1976.

 

**CHAPTER VII**

 

# **Responsibilities of the management officers**

#  

Clause34: The management officers are responsible to the Company and to third partiesfor the actions which they take in the exercise of their functions, asspecified by the law and by these Bylaws.

 

Clause35: The Company shall provide to the members of the Board of Directors, theAudit Board and the Executive Board, defense in Court and/or administrativeproceedings in which they are parties on the Plaintiff or Defendant side,during or after their periods of office, for actions or events related to theexercise of their specific functions and which do not violate legal provisionsor the provisions of the Bylaws.

 

§1 The guarantee given in the head paragraph of this Clause extends to employeeswho legally carry out actions by delegation from the Company’s managementofficers.

 

§2 The Company shall contract third-party liability insurance to cover expensesof proceedings, fees of counsel and indemnities arising from the legal andadministrative proceedings referred to in the head paragraph of this Clause,upon decision by the Board of Directors

 

§3 Any member of the Board of Directors or the Audit Board, or any ExecutiveOfficer or employee, against whom a Court judgment subject to no further appealis given must reimburse the Company all the costs, expenses and losses causedto it.

 

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