**Exhibit 1**

 

**BY-LAWS**

 

#### **CHAPTER I**

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

 

Clause 1: CompanhiaEnergética de Minas Gerais — CEMIG, constituted on May 22, 1952 as acorporation with mixed private and public sector stockholdings, is governed by these Bylaws and by theapplicable legislation, and its objects are: to build, operate and commerciallyoperate systems of generation, transmission, distribution and sale ofelectricity, and related services; to operate in the various fields of energy,from whatever source, with a view to economic and commercialoperation; to provide consultancy services within its field of operation tocompanies in and outside Brazil; and to carry out activities directly orindirectly related to its objects.

 

§1 The activities specifiedin this Clause may be exercised directly by CEMIG or, as intermediary, bycompanies constituted by it or in which it may hold a majority or minoritystockholding interest, upon decision by the Board of Directors, under StateLaws 828 of December 14, 1951, 8655 of September 18, 1984 and 15290of August 4, 2004.

 

§2 No subsidiary of orcompany controlled by CEMIG may take any action which might affect thecondition of the State of Minas Gerais as controlling stockholder of theCompany, in the terms of the Constitution of the State of Minas Gerais and thelegislation from time to time 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, representationsor any other establishments in or outside Brazil, upon authorization by theExecutive Board.

 

Clause3: The Company shall have indeterminate duration.

 

**CHAPTER II**

**Capital and shares**

 

Clause 4:  TheCompany’s Registered Capital is R$ 3,101,884,460.00 (three billion onehundred and one million eight hundred and eighty four thousand four hundred andsixty Reais), represented by:

a)                  271,154,243(two hundred and seventy one million one hundred and fifty four thousand twohundred and forty three) nominal common shares each with nominal value ofR$ 5.00 (five Reais);

b)                 349,222,649(three hundred and forty nine million two hundred and twenty two thousand sixhundred and forty nine) nominal preferred shares each with nominal value ofR$ 5.00 (five Reais).

 

§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 the GeneralMeeting of Stockholders.

 

Clause 5: The preferredshares shall have right of preference in the event of reimbursement of sharesand shall have the right to a minimum annual dividend of the greater of thefollowing amounts:

a)                  10% (tenpercent) of their nominal value;

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

 

Clause 6: The common shares and the preferredshares shall have equal rights to distribution of bonuses and stock dividends.

 

§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 Article 297 of Law 6404 of 15 December 1976has been reached.

 

Clause7: In the business years in which the Company does not obtain sufficient profitto pay dividends to its stockholders, the State of Minas Gerais shall guaranteeto the shares issued by the Company up to August 5, 2004 and held byindividual persons a minimum dividend of 6% (six percent) per 

 

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year,in accordance with Clause 9 of State Law 828 of December 14, 1951, andState Law 15290 of August 4, 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 The stockholders shallhave the right of preference in subscription of increases of capital and in theissue of the Company’s securities, in accordance with the applicablelegislation. There shall, however, be no right of preference when the increasein the registered capital is paid with funds arising from tax incentivesystems, subject to the terms of the sole sub-paragraph of Article 172 ofLaw 6404 of December 15, 1976.

 

# **CHAPTER III**

**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, andextraordinarily whenever necessary, and shall be called with minimum advancenotice of 15 (fifteen) days, and the relevant provisions of law shall be obeyedin its convocation, opening and decisions.

 

§1 The stockholder may be represented in General Meetings of Stockholders in themanner specified in Article 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 specific powers.

 

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.

 

### **CHAPTER IV**

**Management of the Company**

 

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 subsidiary Cemig Distribuição S.A. shall have a ChiefDistribution and Sales Officer, and only the wholly-owned subsidiary CemigGeração e Transmissão S.A. shall have a Chief Generation and TransmissionOfficer.

 

§2 In the management of the Company, and of the wholly-owned subsidiaries CemigDistribuição S.A. and Cemig Geração e Transmissão S.A., and of the otherwholly-owned or other subsidiaries, or affiliated companies or in the consortiain which they have direct or indirect interests, the Board of Directors and theExecutive Board shall obey the provisions of the Company’s Long-Term StrategicPlan, in particular the dividend policy therein contained, as approved by theBoard of Directors.

 

§3 The Long-Term Strategic Plan shall contain the long-term strategic planning,fundamentals, targets, objectives and results to be pursued and attained by theCompany and its dividend policy, and shall obey the commitments andrequirements specified in § 5 below.

 

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§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,forecasts, activities, strategies, capital expenditure and expenses of theCompany and its wholly-owned and other subsidiaries, and affiliated companies,and in the consortia in which it directly or indirectly participates, includingthe Company’s Multi-year Strategic Implementation Plan and Annual Budget, whichshall be approved by the Board of Directors.

 

§5 In the administration of the Company and in the exercise of the right to votein wholly-owned and other subsidiaries, affiliated companies and consortia, theBoard of Directors and the Executive Board shall faithfully obey and complywith the following targets:

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

b)                 to keep theconsolidated ratio {Net debt / (Net debt + Stockholders’ equity)} less than orequal to 40% (forty per cent);

c)                  to limit theconsolidated balance of funds recognized in Current assets, for the purposes ofClause 30 of these Bylaws and otherwise, to the equivalent of a maximum of 5%(five per cent) of the Company’s Ebitda (Earnings before interest, taxes,depreciation and amortization);

d)                 to limit theconsolidated amount of funds destined to capital expenditure and to theacquisition 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 indistribution, generation and transmission projects only when they offer realminimum internal rates of return equal to or more than those specified in theCompany’s Long-Term Strategic Plan, subject to the legal obligations;

f)                    to limit theexpenses of the wholly-owned subsidiary Cemig Distribuição S.A. and of anysubsidiary which operates in distribution to amounts not greater than theamounts recognized in the tariff adjustments and reviews;

g)                 to keep therevenues of the wholly-owned subsidiary Cemig Distribuição S.A. and of anysubsidiary which operates in distribution at the amounts recognized in thetariff adjustments and reviews.

 

§6 The targets specified in § 5 above shall be determined on the consolidatedbasis, defined as taking into account the Company and its permanent investmentsin the wholly-owned subsidiaries Cemig Distribuição S.A. and Cemig Geração eTransmissão S.A., subsidiaries, 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 by grounds and prior specific approval by the Board of Directors,up to the following limits:

a)                  the Company’sconsolidated indebtedness to be less than or equal to 2.5 (two point five)times the Company’s Ebitda (Earnings before interest, taxes, depreciation andamortization);

b)                 theconsolidated ratio {Net debt / (Net debt + Stockholders’ equity)} to be limitedto 50% (fifty per cent);

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

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

 

**Article 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, and all shall be elected and able to bedismissed at any time by the General Meeting of Stockholders, for a period ofoffice of 3 (three) years, and may be reelected.

 

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§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 theholders of preferred shares, each have the right to elect 1 (one) member of theBoard of Directors, in a separate vote, in accordance with the law.

 

§ 4 The Boards of Directors of the wholly-ownedsubsidiaries Cemig Distribuição S.A. and Cemig Geração e Transmissão S.A.shall, obligatorily, be made up of the members and substitute members electedto the Board of Directors of the Company.

 

Clause 13: In the event of a vacancy on the Board ofDirectors, the first subsequent General Meeting of Stockholders shall elect anew member, for the period of office which was remaining to the previousmember.

 

§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.

 

§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 that 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 a tie the Chairmanshall 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.

 

Clause 17: The Board of Directors shall have thefollowing attributions:

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

b)                to elect ordismiss the Executive Officers of the Company, subject to these Bylaws;

c)                 to decide,prior to the Company entering into them, on contracts between the Company andany of its stockholders, or companies which are subsidiaries orjointly-controlled subsidiaries of such stockholders;

d)                to decide, uponproposal put forward by the Executive Board, on disposal or placement of acharge upon any of the Company’s property, plant or equipment, and on thegiving by the Company of any guarantee to any third party of which theindividual value is greater than or equal to R$ 14,000,000.00 (fourteenmillion Reais);

e)                 to decide, uponproposal put forward by the Executive Board, on the Company’s investmentprojects, signing of contracts and other legal transactions, contracting ofloans or financings, or the constitution of any obligations in the name of theCompany which, individually or jointly, have value of 

 

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R$ 14,000,000.00(fourteen million Reais) or more, including injections of capital intowholly-owned or other subsidiaries or affiliated companies or the consortia inwhich the Company participates;

f)                   to call theGeneral Meeting of Stockholders;

g)                to monitor andinspect the management by the Executive Board: the Board of Directors may, atany time, examine the books and papers of the Company, and request informationon contracts entered into or in the process of being entered into, and on anyother administrative facts or acts which it deems to be of interest to it;

h)                to give aprior opinion on the report of management and the accounts of the ExecutiveBoard of the Company;

i)                    to chooseand to dismiss the Company’s auditors, from among companies with internationalreputation authorized by the Securities Commission (CVM) to audit listedcompanies;

j)                    to authorize,upon a proposal by the Executive Board, commencement of administrative tenderproceedings, and proceedings for dispensation from or non-requirement oftender, and the corresponding contracts, for amounts of R$ 14,000,000.00(fourteen million Reais) or more;

k)                 to authorize,upon a proposal put forward by the Executive Board, filing of legal actions, oradministrative proceedings, or entering into Court or out-of-court settlements,for amounts of R$ 14,000,000.00 (fourteen million Reais) or more;

l)                    to authorize the issue of securities, in thedomestic or external markets, for the raising of funding, in the form ofdebentures, promissory notes, medium-term notes and other instruments;

m)              to approve the Company’s Long-Term Strategic Plan,the Multi-year Strategic Implementation Plan, and the Annual Budget andalterations and revisions to them;

n)                annually, to set the directives and establish thelimits, including financial limits, for spending on personnel, includingconcession of benefits and collective work agreements, subject to thecompetency of the General Meeting of Stockholders and the Annual Budgetapproved;

o)                to authorize the exercise of the right ofpreference in stockholders’ agreements, or of the right to vote in wholly-ownedor other subsidiaries, affiliated companies and the consortia in which theCompany participates, except in the cases of the wholly-owned subsidiariesCemig Distribuição S.A. and Cemig Geração e Transmissão S.A., for which the GeneralMeeting of Stockholders has the competency for decision on these matters; and

p)                to approve the declarations of vote in the GeneralMeetings of Stockholders and the orientations for voting in the meetings of theBoards of Directors of the wholly-owned and other subsidiaries, affiliatedcompanies and the consortia in which the Company participates, whenparticipation in the capital of other companies or consortia is involved, andthe decisions must, in any event and not only in matters relating to participationin the capital of other companies or consortia, obey the provisions of theseBylaws, the Long-term Strategic Plan and the Multi-year StrategicImplementation Plan.

 

§ 1 The Board of Directors, by specific resolutions, may delegate to theExecutive Board the power to authorize agreement of contracts for sales ofelectricity or for provision of distribution or transmission services, inaccordance with the legislation.

 

§2 The financial limits for decision by the Board of Directors shall beadjusted, in January of each year, by the IGP-M (General Market Price)inflation index, published by the Getúlio Vargas Foundation.

 

### **Article II**

##### **The Executive Board**

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Clause18: The Executive Board shall be made up of 9 (nine) Executive Officers, whomay be stockholders, elected by the Board of Directors, namely: the ChiefExecutive Officer; the Deputy Chief Executive Officer; the Chief Officer forFinance; Investor Relations and Control of Holdings; the Chief CorporateManagement Officer; the Chief Distribution and Sales Officer; the ChiefGeneration and Transmission Officer; the Chief Trading Officer; the Chief NewBusiness Development Officer; and the Chief Officer for the Gas Division.

 

§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.

 

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§ 2 The global or individualamount of the remuneration of the Executive Board, including benefits of anytype, shall be fixed by the General Meeting of Stockholders, in accordance withthe legislation from time to time in force.

 

§3 The Executive Officers shall exercise their positions as full-timeoccupations in exclusive dedication to the service of the Company. They may atthe same time exercise non-remunerated positions in the management of theCompany’s wholly-owned or other subsidiaries or affiliated companies, at theoption of the Board of Directors. They shall, however, obligatorily hold andexercise the corresponding positions in the wholly-owned subsidiaries CemigDistribuição 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, and its remuneration shall be augmented by one-third of themonthly remuneration currently in effect. This leave shall be granted to themby the Chief Executive Officer; the leave of the Chief Executive Officer shallbe granted by the Board of Directors.

 

Clause19: In the event of absence, leave, resignation or vacancy of the post of theChief Executive Officer, this post shall be exercised by the Deputy ChiefExecutive Officer, for whatever period the absence or leave may last, and, inthe case of the post being vacant, of prevention of its exercise, or ofresignation, until the post is filled by the Board of Directors.

 

§1 In the event of absence, leave, resignation or vacancy of the post of any ofthe other members of the Executive Board, the Executive Board may, by approvalof a majority of its members, attribute the exercise of the respectivefunctions to another Executive Officer, for as long as the period of absence orleave — or, in the event of vacancy, the impediment or resignation — lasts,until the post is filled by the Board of Directors.

 

§2 The Chief Executive Officer or a member of the Executive Board elected in theway described in this Clause shall hold the position for the time which remainsof the period of office of the Executive Officer who is substituted.

 

Clause 20: The ExecutiveBoard shall meet, ordinarily, at least 2 (two) times per month and,extraordinarily, whenever called by the Chief Executive Officer or by 2 (two)Executive Officers with prior notice of at least 2 (two) days, but this noticeshall not be necessary if all the Executive Officers are present. Unless statedto the contrary in the Bylaws, the decisions of the Executive Board shall betaken by a vote of the majority of its members, and in the event of a tie theChief Executive Officer shall have a casting vote and the Board of Directorsmust be advised that the casting vote has been used.

 

Clause 21: The Executive Board is responsible forthe current management of the Company’s business, subject to the Long-TermStrategic Plan, the Multi-year Strategic Implementation Plan and the AnnualBudget, prepared and approved in accordance with these Bylaws.

 

§ 1 The Company’s Multi-year StrategicImplementation Plan shall reflect the Company’s Long-Term Strategic Plan andcontain the plans and projections for a period of 5 (five) business years, andmust be updated at least once a year, and shall deal in detail with thefollowing subjects, among others:

a)                 the Company’sstrategies and actions, including any project related to its objects;

b)                new investmentsand business opportunities, including those of the Company’s wholly-owned andother subsidiaries, and affiliated companies and of the consortia in which itparticipates;

c)                 the amounts tobe invested or in any other way contributed from the Company’s own funds orfunds of third parties; and

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

 

§ 2 The Company’s Annual Budget shall reflect theCompany’s Multi-year Strategic Implementation Plan and, consequently, theLong-Term Strategic Plan, and must give details of the operational revenue andexpenses, the costs and capital expenditure, the cash flow, the amount to beallocated to the payment of dividends, investments of cash from the Company’sown funds or funds of third parties, and any other data that the ExecutiveBoard considers to be necessary.

 

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§ 3 The Company’s Multi-year StrategicImplementation Plan and the Annual Budget shall be prepared and updatedannually, by the end of each business year, to be in effect in the followingbusiness year. Both shall be prepared in coordination with the Chief Officerfor Finance, Investor Relations and Control of Holdings and submitted toexamination by the Executive Board, and, subsequently, for approval by theBoard of Directors.

 

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

a)                 approval of theplan of organization of the Company and issuance of the corresponding rules andany changes to them;

b)                examination,and submission to the Board of Directors, for approval, of the Company’sMulti-year Strategic Implementation Plan, and revisions of it, includingtimetables, amount and allocation of the capital expenditure specified in it;

c)                 examination,and submission to the Board of Directors, for approval, of the Annual Budget,which must reflect the Multi-year Strategic Implementation Plan at the time inforce, and revisions of it;

d)                decision onre-managing of investments or expenditure specified in the Annual Budget whichamount, individually or in aggregate, in a single financial year, to less thanR$ 14,000,000.00 (fourteen million Reais), with consequent re-adaptationof the targets approved, obeying the multi-year Strategic Implementation Planand the Annual Budget;

e)                 approval ofdisposal of or placement of a charge upon any of the Company’s property, plantor equipment, and the giving of guarantees to third parties, in amounts lessthan R$ 14,000,000.00 (fourteen million Reais);

f)                   authorizationof the Company’s capital expenditure projects, signing of agreements and legaltransactions in general, contracting of loans and financings and theconstitution of any obligation in the name of the Company, based on the AnnualBudget approved, which individually or in aggregate have values less thanR$ 14,000,000.00 (fourteen million Reais), including injection of capitalinto wholly-owned or other subsidiaries, affiliated companies, and theconsortia in which the Company participates, subject to the provisions ofsub-clause ‘p’ of sub-item IV of Clause 22;

g)                approval, uponproposal by the Chief Executive Officer, jointly with the Chief Officer forFinance, Investor Relations and Control of Holdings, of the statements of votein the General Meetings of the wholly-owned and other subsidiaries, affiliatedcompanies and in the consortia in which the Company participates, except in thecase of the wholly-owned subsidiaries Cemig Distribuição S.A. and Cemig Geraçãoe Transmissão S.A., for which the competency to decide on these matters shallbe that of the General Meeting of Stockholders, and the decision must obey theprovisions of these Bylaws, the decisions of the Board of Directors, theLong-term Strategic Plan and the multi-year Strategic Implement Plan;

h)                authorizationto commence administrative tender proceedings and proceeding for exemption fromor non-requirement for tender, and the corresponding contracts, in amountsgreater than or equal to R$ 2,800,000.00 (two million eight hundredthousand Reais) and less than R$ 14,000,000.00 (fourteen million Reais);

i)                    authorizationto file legal actions and administrative proceedings, and to enter into Courtand out-of-court settlements, for amounts less than R$ 14,000,000.00(fourteen million Reais);

j)                    authorizationof provisions in the Company’s accounts, of any value, upon proposal from theChief Officer for Finance, Investor Relations and Control of Holdings;

l)                    approval of thenominations of employees to hold management posts in the Company, upon proposalby the Chief Officer concerned, subject to the provisions of sub-clause “h” ofsub-item I of Clause 22; and

m)              authorizationof expenditure on personnel expenses and collective work agreements, subject tothe competency of the General Meeting of Stockholders, the directives andlimits approved by the Board of Directors and the Annual Budget approved.

 

§ 5 Actions necessary for the regular functioning ofthe Company, entering into contracts, and other legal transactions shall becarried out by the Chief Executive Officer, jointly with one Executive Officer,or with a person holding a valid power of attorney.

 

§ 6 Powers of attorney must be granted by the ChiefExecutive Officer, jointly with an Executive Officer, except for the powerdescribed in sub-clause “c” of Sub-item I of Clause 22, for which only thesignature of the Chief Executive Officer is required.

 

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§7 The financial limits for decision by the Executive Board shall be adjusted,in January of each year, by the IGP-M (General Market Price) inflationindex, published by the Getúlio Vargas Foundation.

 

Clause 22: Subject to the provisions of the previousclauses, the following are the functions and powers attributed to the membersof the Executive Board:

 

I — To the Chief Executive Officer:

a)                 to oversee anddirect the work of the Company;

b)                to supervisethe preparation and implementation of the Multi-year Strategic ImplementationPlan and to develop the strategies and actions approved;

c)                 to representthe Company in the Courts, on the plaintiff or defendant side;

d)                to sign,jointly with one Chief Officer, documents which bind the Company;

e)                 to present theannual report on the Company’s business to the Board of Directors and to theOrdinary General Meeting of Stockholders;

f)                   to hire anddismiss employees of the Company;

g)                to manage anddirect the activities of internal audits, institutional relationships, legal,communication and representation activities, the Company’s Ombudsman’sdepartment and the Corporate Secretariat Office;

h)                to propose tothe Executive Board, for approval, jointly with the Chief Officer to whom theemployee is linked, nominations for management positions in the Company; and

i)                    to proposeappointments for the positions of management and on the Audit Boards of thewholly-owned and other subsidiaries, and affiliated companies, and also of *Fundação Forluminas de Seguridade Social*(Forluz) 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 Deputy ChiefExecutive Officer:

a)                  to substitutethe Chief Executive Officer if he is absent, on leave, temporarily impeded fromexercising his functions, or has resigned or his post is vacant;

b)                 to promoteimprovement of the Company’s social responsibility and sustainability policies;

c)                  to set thepolicies and guidelines for the environment, technological development,alternative energy sources and technical standardization;

d)                 to coordinatethe Company’s strategy for operations in relation to social responsibility, theenvironment, technological processes and strategic management of technology;

e)                  to coordinatethe putting in place and maintenance of the Company’s quality control systems;

f)                    to promote theimplementation of programs for the Company’s technological development; and

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

 

III — To the Chief Officer for Finance, InvestorRelations and Control of Holdings:

a)                  to makeavailable the financial resources necessary for the operation and expansion ofthe Company, in accordance with the Annual Budget, conducting the processes ofcontracting of loans and financing, and the related services;

b)                 to coordinatethe preparation and consolidation, with the participation of all the ChiefOfficers, of the Company’s Multi-year Strategic Implementation Plan and AnnualBudget;

c)                  to arrange foreconomic and financial valuation of the Company’s capital expenditureinvestment projects, except those that are the responsibility of the Chief NewBusiness Development Officer;

d)                 to accompanythe performance of the execution of investment projects, according to targetsand results approved by the Executive Board and the Board of Directors;

e)                  to carry outthe accounting of, and to control, the Company’s economic-financialtransactions;

 

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f)                    to determinethe cost of the service and to establish a policy on insurance, as set out inthe Company’s Multi-year Strategic Implementation Plan;

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

h)                 to control theCompany’s registered capital, decide policy for its shares and corporategovernance, and suggest dividend policy;

i)                     to coordinatethe preparation and negotiation of the tariffs for supply and distribution ofelectricity, and the revenues from transmission, with the National ElectricityAgency, Aneel;

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

l)                     to representthe Company to the CVM, the stock exchanges and other entities of the capitalmarkets;

m)               to arrange forthe financial and corporate management of the Company’s holdings in thewholly-owned and other subsidiaries, and affiliated companies, within thecriteria of good corporate governance and making continual efforts forcompliance with their business plans, subject to the provisions of theseBylaws;

n)                 to propose tothe Executive Board, for approval or submission to the Board of Directors or tothe General Meeting of Stockholders, in accordance with the competency definedin these Bylaws, injections of capital, exercise of the right of preference andthe making of voting agreements in the wholly-owned and other subsidiaries, andaffiliated companies and in the consortia in which the Company participates;

o)                 to take part innegotiations that involve the constitution or alteration of corporate documentsof the holdings referred to in the previous sub-clause; and

p)                 to coordinatethe processes of sale of stockholdings owned by the Company, or by itswholly-owned or other subsidiaries, or affiliated companies, upon priorlegislative authorization and approval by the Board of Directors.

 

IV —           To the Chief Corporate Management Officer:

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

b)                 to decide theCompany’s human resources policy and to orient and promote its application;

c)                  to orient andconduct activities related to organizational studies and their documentation;

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

e)                  to plan, put inplace and maintain the Company’s telecommunications and information technologysystems;

f)                    to decidepolicies and rules on support services such as transport, administrativecommunication, security guards, and on provision of adequate quality in theworkplace for the Company’s personnel;

g)                 to provide theCompany with infrastructure and administrative support resources and services;

h)                 to coordinatethe policies, processes and means of property security, work safety andsecurity guarding approved by the Company;

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

j)                     to manage theprocess of contracting of works and services and of acquisition and disposal ofmaterials and real estate property;

l)                     to effectquality control of the material acquired and of the qualification of contractedservice providers;

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

n)                 to arrange forand implement programs to increase, develop, perfect and continually improvesuppliers of materials and services of interest to the Company, alone or incooperation with other 

 

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ChiefOfficers’ Departments or development agencies and industry associations, in theambit of the State of Minas Gerais;

o)                 to carry outcorporate management programs and environmental action within the scope of thisChief Officer’s Department;

p)                 to authorizeinitiation of administrative tender proceedings and proceedings for exemptionor non-requirement for tender, and the corresponding contracts, in amounts upto R$ 2,800,000.00 (two million eight hundred thousand Reais);

q)                 to propose tothe Chief Executive Officer, for submission to the Executive Board forapproval, from among the employees of the Company, 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 tothe Chief Executive Officer, for submission to the Executive Board forapproval, from among the employees of the Company and of the other companiesinvolved in the negotiations, appointments of employees to the UnionNegotiation Committee, and also the appointment of its coordinator; and

s)                  to present tothe Executive Board the assessments received from a leadership successiondevelopment program, put in place by the Company, for the purpose of assistingthe Executive Board in making its decisions on appointments of employees tomanagement posts.

 

V —    To the Chief Distribution and Sales Officer:

a)                  to makecontinuous efforts on behalf of the quality of supply of energy to consumersthat are directly linked to the Company’s distribution system;

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

c)                  to manage theimplementation of the distribution facilities, including preparation andexecution of the plan, construction and assembly;

d)                 to operate andmaintain the electricity distribution system and the associated systems ofsupervision and remote control;

e)                  to manage theCompany’s work safety policy in the ambit of his/her activities;

f)                    to propose andimplement the policies for service to consumers served by this Chief Officer’sDepartment;

g)                 to developprograms and actions with captive consumers with demand lower than 500 kW, witha view to the most efficient use of electricity;

h)                 to establishcommercial relationships with and coordinate the sale of electricity andservices to captive consumers with demand lower than 500 kW;

i)                     to carry outenvironmental programs and actions within the scope of this Chief Officer’sDepartment;

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

l)                     to establishpolicies and guidelines to ensure the physical security of the distributionfacilities, and manage the asset security of these facilities; and

m)               to seekcontinual improvement of the processes of operation and maintenance, throughthe use of new technologies and methods, aiming to improve the quality andreduce the cost of those activities.

 

VI —           To the Chief Generation and Transmission Officer:

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

b)                 to prepare theplanning of generation and transmission;

c)                  to operate andmaintain the generation and transmission systems and the associated systems ofsupervision and remote control;

d)                 to carry outenvironmental programs and actions within the scope of this Chief Officer’sDepartment;

e)                  to develop andconduct such hydro-meteorological activities as are of interest to the Company;

f)                    to manage theoperations arising from interconnection of the Company’s electricitytransmission system with those of other companies, and the connection of agentsto the Company’s basic network;

 

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g)                 to representthe Company in relations with the National System Operator (ONS), the BrazilianElectricity Generators’ Association (Abrage) and other entities representingthe electricity generation and transmission sector;

h)                 to manage theCompany’s central laboratories and workshops;

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

j)                     to propose andimplement measures that aim to ensure the connectivity of the various agents ofthe electricity sector, linked to the Company’s transmission system;

l)                     to propose andimplement the policies and guidelines that aim to ensure the physical securityof the generation and transmission facilities, and to manage the industrialsafety of those facilities;

m)               to manage andpromote the Company’s work safety policy within the scope of his/heractivities;

n)                 to manage andput in place the undertakings for expansion of generation, transmission andco-generation, arranging for planning, construction and assembly, and ensuringthe proper physical and financial performance of those undertakings;

o)                 to supplytechnical support to the negotiations for making possible the projects forexpansion of generation, transmission and co-generation, and to take part inthe negotiation of documents of the consortia of entrepreneurs andspecial-purpose companies.

 

VII — To the Chief Trading Officer:

a)                  to carry outresearch, studies and projections on the markets of interest to the Company;

b)                 to coordinatethe planning and execution of the purchase of electricity to serve the Company’smarket and the sale of energy from its own generation sources;

c)                  to coordinatethe purchase and sale of electricity in its different forms and modalities,including importation, exportation and holdings in all the segments of marketsspecialized in energy;

d)                 to coordinatethe provision of services of intermediation of business transactions related tothe sale of electricity to any authorized agent;

e)                  to representthe Company in the Electricity Trading Chamber (CCEE), taking responsibilityfor the transactions carried out in the ambit of that chamber, and to representthe Company in relations with the other electricity trading entities;

f)                    to coordinatethe establishment of the prices for purchase and sale of electricity, and topropose them to the Executive Board for approval;

g)                 to establishcommercial relations with and coordinate the sale of electricity and servicesto individual consumers, or groups of consumers, served at voltages of 2.3kV ormore and contracted demand of 500kW or more, and also business groups;

h)                 to identify,measure and manage the risks association with the trading of electricity;

i)                     to negotiateand manage the commercial transactions involved in transport and connection ofany party accessing the distribution system;

i)                     to negotiateand manage the Contracts for Use of the Transmission System with the NationalSystem Operator (ONS) and for connection to the Distribution System withtransmission companies; and

l)                     in coordinationwith the Chief New Business Development Officer, to manage thecommercialization of the Company’s carbon credits.

 

VIII — To the Chief New Business DevelopmentOfficer:

a)         to arrange for prospecting,analysis and development of new business of the Company in the areas ofgeneration, transmission and distribution of electricity, oil and gas, and alsoin other activities directly or indirectly related with the Company’s objects;

b)        to arrange for technical,economic-financial, and environmental feasibility studies of new business forthe Company, in coordination with the Chief Officers’ Departments related tothose businesses;

c)         to coordinate thenegotiations and implement the partnerships, consortia, special-purposecompanies and other forms of association with public- or private-sectorcompanies necessary for the development of new business, and also thenegotiation of contracts and corporate documents of those projects;

d)        to coordinate theparticipation of the Company in tender proceedings for obtaining grant ofconcessions in all the areas of its operations;

 

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e)         to prospect, coordinate,evaluate and structure the opportunities for acquisition of new assets in theelectricity sector and in the oil and gas sector;

f)           to coordinate the Company’sparticipation in the auctions of new business opportunities held by theNational Electricity Agency (Aneel), and the National Oil, Natural Gas andBiofuels Agency (ANP);

g)        to arrange for prospectingand analysis, within the scope of the Company, of business opportunitiesrelated to the use of carbon credits;

h)        to consolidate planning ofexpansion of the generation, transmission and distribution systems;

i)            to consolidate the Company’sProgram of Investments in generation, transmission and distribution;

j)            to represent the Company inrelations with the entities for planning of expansion of the electricity sectorin his/her areas of operation;

k)         to carry outenvironmental programs and actions within the scope of this Chief Officer’sDepartment; and

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

 

IX — To the Chief Officer for the Gas Division:

a)         to coordinate, in the nameof the Company and its wholly-owned and other subsidiaries, all the activitiesrelated to exploration, acquisition, storage, transport, distribution and saleof oil and gas or oil products and by-products, directly or through thirdparties;

b)        to propose to the ExecutiveBoard guidelines, general rules and plans of operation, prospecting,exploration, acquisition, storage, transport, distribution and sale ofactivities of the oil and gas business;

c)         to carry out research,analyses and studies of investments and new technologies related to oil andgas, jointly with the Office of the Chief New Business Officer;

d)        to develop standardized rules forprojects in the field of oil and gas;

e)         to propose to the ExecutiveBoard a multi-year plan for investments and expenses of Gasmig;

f)           to propose to the ExecutiveBoard a multi-year plan for investments and expenses of other special-purposecompanies associated with the activity of oil and gas;

g)        to consolidate themanagement of the work safety policies of Gasmig and of other special-purposecompanies, in the oil and gas activities, in accordance with the generalguidelines laid down by the Company, through the Office of the Chief CorporateManagement Officer;

h)        to carry out research,studies, analyzes and market projections of interest to the Company within thescope of the oil and gas activities;

i)            to carry out environmentalprograms and actions within the scope of this Chief Officer’s Department; and

j)            to represent the Company inthe various entities that bring together the companies of the oil and gassector.

 

§1               Thecompetencies of representation before technical and administrative bodies andassociations granted to the Chief Officers under this Clause do not exclude theChief Executive Officer’s competency of representation, nor the need for obedienceto 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 set forthem in these Bylaws, each Chief Officer’s Department has the competency toensure the cooperation, assistance and support of the other Chief Officers’Departments in the areas of their respective competencies, with the aim ofsuccess in the greater objectives and interests of the Company.

 

§ 3            The projects developed by the Company in the area ofthe Chief New Business Development Officer’s Department, once structured andconstituted, should be assumed by the respective Chief Officer’s Departmentsresponsible for their construction, execution, operation and sales, as definedin these Bylaws.

 

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§ 4            It is the competency of each Chief Officer, withinthe area of his/her operation, to arrange for the actions necessary forcompliance with and effective implementation of the work safety policiesapproved by the Company.

 

§5                       The financiallimit set by sub-clause “p” of Item IV of this Clause shall be adjusted, in January ofeach year, by the IGP-M (General Market Price) inflation index, produced by theGetúlio Vargas Foundation.

 

**CHAPTER V**

# **The Audit Board**

#  

Clause 23: The Company’sAudit Board shall function permanently and shall be made up of between 3(three) and 5 (five) members and their respective substitute members, who shallbe elected annually, on the occasion of the Annual General Meeting, and may bere-elected.

 

§ 1 The Audit Board shallelect its Chairman from among its members, and the Chairman shall call andchair 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 responsibilities and powers of the Audit Board are those set by theCorporate Law, and also, to the extent that they do not conflict with Brazilianlegislation, those required by the laws of the country in which the Company’sshares are listed 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 from time to time in force.

 

**CHAPTER VI**

**The business year**

 

Clause27: The business year shall coincide with the calendar year, closing on December 31ofeach year, when the Financial Statements shall be prepared, in accordance withthe relevant legislation. Financial statements for periods of six months orinterim statements for shorter periods may be prepared.

 

Clause28: Before any profit share, retained losses, the provision for income tax, theSocial Contribution on Net Profit and, successively, the profit shares of theemployees and the managers, shall be deducted from the result for the businessyear.

 

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

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

b)                 50% (fiftypercent) distributed as obligatory dividends to the stockholders of theCompany, subject to the other terms of these Bylaws and the applicablelegislation; and

c)                  the balance,after the retention specified in a capital expenditure and/or investment budgetprepared by the Company’s management, in compliance with the Company’sLong-Term Strategic Plan and the dividend policy contained therein and dulyapproved, shall be applied in the constitution of 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.

 

Clause 29: The dividends shall be distributed in thefollowing order:

a)                  the minimum annual dividendguaranteed to the preferred shares;

b)                 the dividendfor the common shares, up to a percentage equal to that guaranteed to thepreferred shares.

 

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§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.

 

Clause 30: Without prejudiceto the obligatory dividend, every two years, starting from the business year of2005, or more frequently if the Company’s availability of cash so permits, theCompany shall use the profit reserve specified in sub-clause “c” of Clause 28of these Bylaws for the distribution of extraordinary dividends, up to thelimit of cash available, as determined by the Board of Directors, in obedienceto the Company’s Long-Term Strategic Plan and the Dividend Policy containedtherein.

 

Clause 31: The dividendsdeclared, obligatory or extraordinary, shall be paid in 2 (two) equalinstallments, the first by June 30 and the second by December 30 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.

 

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

 

Clause33: It is the competency of the General Meeting of Stockholders to set,annually, the limits to 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, as specifiedby the law and by these Bylaws.

 

Clause35: The Company guarantees defense of members of the Board of Directors, theAudit Board and the Executive Board in Court and/or administrative proceedings,on the plaintiff or defendant side, during or after their periods of office,occasioned by events or acts related to the exercise of their specificfunctions which do not violate legal provisions or the provisions of theseBylaws.

 

§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 may contract third-party liability insurance to cover theexpenses of proceedings, fees of counsel and indemnities arising from the legalor administrative 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 Executive Officer or employee against whom a Court judgmentsubject to no further appeal is given must reimburse the Company all the costs,expenses and losses caused to it.

 

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