BRF shares are also traded as ADRs.

Under the Corporate Governance Rules of the New York Stock Exchange, currently in effect as approved by the U.S. Securities and Exchange Commission on November 4, 2003 (other than Section 303A.08 which was approved on June 30, 2003), BRF is required to disclose any significant ways in which the Company´s corporate governance practices differ from those required to be followed by domestic companies under NYSE listing standard. The Company has summarized these significant differences below.

The Company is permitted to follow practice in Brazil in lieu of the provisions of the Corporate Governance Rules, except that it will be required to have a qualifying audit committee under Section 303A.06 of the Rules by July 31, 2005 (or avail ourselves of an appropriate exemption) and the Company´s Chief Executive Officer is obligated, under Section 303A.12(b), to promptly notify the NYSE in writing after any of its executive officers becomes aware of any material non-compliance with any applicable provisions of the Corporate Governance Rules.

Majority of Independent Board Member: Under NYSE Rule 303A.01, each U.S. listed company must have a majority of independent Board Member. Under the Novo Mercado rules, at least 20.0% of our directors must be independent for purposes of those rules, and a majority of our Board Member currently meet that standard.

Separate Meetings of Non-Management Board Member: Under NYSE Rule 303A.03, the non-management Board Member of each U.S. listed company must meet at regularly scheduled executive sessions without management. We do not have a similar requirement under Brazilian practice, but in any event, all members of our board are non-executive directors. Our independent Board Member do not meet separately from Board Member who are not independent.

Nominating/Corporate Governance Committee: Under NYSE Rule 303A.04, each U.S. listed company must have a nominating/corporate governance committee composed entirely of independent Board Member. We are not required to have such a committee under Brazilian law.

Compensation Committee: Under NYSE Rule 303A.05, each U.S. listed company must have a compensation committee composed entirely of independent Board Member. We are not required to have such a committee under Brazilian practice. In accordance with Brazilian Corporation Law, our shareholders approve the aggregate compensation of the members of our board of directors and fiscal council for each fiscal year. Our board of directors then decides the allocation of the compensation among its members and the members of the fiscal council. In addition, our board of directors is directly responsible for employee and executive compensation and recruitment, incentive compensation and related matters.

Audit Committee: Under NYSE Rule 303A.06 and the requirements of Rule 10A-3 of the SEC, each U.S. listed company is required to have an audit committee consisting entirely of independent members that comply with the requirements of Rule 10A-3. In addition, the audit committee must have a written charter compliant with the requirements of NYSE Rule 303.A.06(c), the listed company must have an internal audit function and the listed company must fulfill all other requirements of the NYSE and Rule 10A-3. The SEC has recognized that, for foreign private issuers, local legislation may delegate some of the functions of the audit committee to other bodies. We have availed ourselves of an exemption from certain of the standards for audit committees.

Equity Compensation Plans: Under NYSE Rule 303A.08, shareholders must be given the opportunity to vote on all equity compensation plans and material revisions thereto, with certain limited exemptions as described in the Rule. Our board of directors recently authorized the establishment of a stock option plan to stimulate our growth and to retain the services of executives and certain employees by enabling them to become shareholders in our company. Under our bylaws and the Brazilian Corporation Law, stock option plans for our management and employees must be approved by our shareholders. On March 31, 2010, our shareholders approved long-term stock option plans for executive officers of BRF and Sadia.

Corporate Governance Guidelines: Under NYSE Rule 303A.09, each U.S. listed company must adopt and disclose their corporate governance guidelines. The Company does not have a similar requirement under Brazilian law. However, listed its common shares on the Novo Mercado (New Market) of the São Paulo Stock Exchange, which requires adherence to the corporate governance standards of that Exchange specified under "Market Information—São Paulo Stock Exchange Corporate Governance Standards". In addition, BRF has adopted a written policy of trading of securities and disclosure matters.

Code of Business Conduct and Ethics: Under NYSE Rule 303A.10, each U.S. listed company must adopt and disclose a code of business conduct and ethics for directors, officers and employees and promptly disclose any waivers of the code for directors or executive officers. We are subject to a similar recommendation under Brazilian law, and we have adopted a code of ethics that applies to our officers and employees. More information about our corporate governance practices and applicable Brazilian law are available on the Company’s website (

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