Efforts to consistently increase transparency and meet growing capital market demands are an integral part of the Gerdau Group's history. Since 1999, solid results and the continuous improvement in corporate governance practices have translated into an 88.4% average annual increase in the value of Gerdau S.A. shares, and an 86.0% average annual increase in Metalúrgica Gerdau S.A. shares. Share liquidity has also improved measurably, a fact that is demonstrated by a drastic increase in the average daily trading volume during this same period: 429.5% for Gerdau S.A. and 247.4% for Metalúrgica Gerdau S.A.

The performance of the Group's companies is founded on a team of professionals who are focused on steelmaking and who strive for differentiated performances in each geographical region where our units are located.


Governance structure

The corporate governance structure is formed by the Board of Directors and the Executive Committee, together with their supporting bodies – the Strategy Committee and the Excellence Committees – in addition to the Board of Auditors.

The Board of Directors is composed of eight members who play a fundamental role in the approval of strategic decisions and risk and growth policies. The Board includes three independent members who provide important contributions for business development. Following our mission to be an international world class company, the Gerdau Group works with a team that has extensive experience in steel production management.

Board meetings occur at least four times a year. Directors are invited to present and discuss strategic issues relevant to their area of operation, granting the external members a closer proximity with the company and the scenario in which it operates.

The Executive Committee is responsible for business management and serves as a liaison between the Board of Directors and the five steelmaking operations. These operations are defined according to product line and/or the geographical location of the units: Long Steel (Brazil), Specialty Steel (Brazil), Gerdau Açominas - Ouro Branco (Brazil), North America (Canada and the United States) and South America (Argentina, Chile and Uruguay).

Each of the seven members – a president and six vice presidents – are responsible for functional processes and/or business operations. Functional processes are: logistics & transportation, procurement, scrap purchasing, industrial process, marketing & sales, information technology, strategic planning, corporate communications, organizational development and human resources, legal, finance and investor relations, accounting and audit, and management technology.

To provide support for company operations, the Strategy Committee includes Executive Committee members and those individuals responsible for major operations to assist the Board of Directors in the formulation of company strategies. The Excellence Committees provide support for the functional processes and encourage debate and the exchange of practices.

The Boards of Auditors in each of the Group's two public companies in Brazil were created four years ago and operate with the participation of minority shareholders. Their function is to accompany the activities of administrators and control the accounting operations of the companies. In both companies, members are elected on an annual basis at the general shareholders' meetings. The Committee meets on average four times per year.


Gerdau companies

In Brazil, the public companies Gerdau S.A. and Metalúrgica Gerdau S.A. are part of the Level 1 Corporate Governance program of the São Paulo Stock Exchange (Bovespa), which establishes the standards for conduct in capital markets.

Responsible for the Group's steelmaking operations in Brazil, Gerdau Açominas is a closed-capital company. However, it is as committed to presenting the same level of transparency in the disclosure of information as Gerdau's public companies. Gerdau Açominas has a Board of Directors that is formed by six members, one of which is indicated by the Açominas employee stockholding association (Clube de Participação Acionária dos Empregados da Açominas - CEA). An administrative board manages the unit, and the board's Executive Committee coordinates three business operations: Long Steel, Specialty Steel and Gerdau Açominas - Ouro Branco.

The Gerdau Ameristeel Corporation was founded in October 2002 in North America as a result of the merger of the Gerdau Group operations in the region with those of the former Co-Steel company. The corporation is a public company and has a Board of Directors that is formed by nine members, five of whom are independent. Gerdau Ameristeel meetings occur each quarter and committees were created to deal with specific topics such as auditing, human resources, corporate governance, safety, health and the environment. Gerdau Ameristeel is managed by a group of officers who focus on processes and/or geographic regions.

In Argentina, Chile and Uruguay, with closed-capital companies, governance is exercised by unit operating committees that report to the Gerdau Executive Committee.


Shareholder meetings

Once a year, the Ordinary Shareholders' Meeting analyzes and approves annual reports, and ratifies or supplements the distribution of dividends and/or interest on capital stock. The meetings also serve as a space for members to elect Board of Administration and Board of Auditors members. Extraordinary Shareholders' Meetings are called to resolve specific issues requiring shareholder approval.


Relationship with independent auditors

As required by instruction 381/2003 of the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários, CVM), the Gerdau Group's public companies in Brazil hereby inform that the services provided by PricewaterhouseCoopers Independent Auditors were limited to external auditing for the companies. The policy to hire an independent auditor for eventual services that are not related to the Board of Auditors is based on the principles that safeguard the auditor's independence: auditors should not audit their own work; auditors should not perform management functions for their clients and should not promote the client's interests.

BOARD OF DIRECTORS Chairman Jorge Gerdau Johannpeter Vice Chairmen Germano H. Gerdau Johannpeter Klaus Gerdau Johannpeter Frederico C. Gerdau Johannpeter Carlos J. Petry Board Members Affonso Celso Pastore André de Lara Resende Oscar de Paula Bernardes Neto General Secretary Expedito Luz GERDAU EXECUTIVE COMMITTEE President Jorge Gerdau Johannpeter Vice Presidents Frederico C. Gerdau Johannpeter Senior Vice President Carlos J. Petry Senior Vice President André B. Gerdau Johannpeter Claudio Gerdau Johannpeter Domingos Somma Osvaldo B. Schirmer General Secretary Expedito Luz BOARD OF AUDITORS Metalúrgica Gerdau S.A. Permanent Carlos Roberto Schroder Domingos Matias Urroz Lopes Luciano Carvalho Ventura Substitutes Pedro Floriano Hoerde Ruben Rohde Cláudio Vilar Furtado Gerdau S.A. Permanent José Antônio Cruz de Módena Peter Wilm Rosenfeld José Bernardo de Medeiros Neto Substitutes Rudolfo Teodoro Tanscheit Tranquilo Paravizi Alfredo Tostes Bello da Silva Brazil GERDAU AÇOMINAS S.A. BOARD OF DIRECTORS Chairman Jorge Gerdau Johannpeter Vice Chairmen Germano H. Gerdau Johannpeter Klaus Gerdau Johannpeter Frederico C. Gerdau Johannpeter Carlos J. Petry Board Member Marco Antônio Pepino Substitutes Claudio Gerdau Johannpeter Expedito Luz Osvaldo B. Schirmer Ruy Lopes Filho Guilherme Rocha Murgel de Rezende General Secretary Expedito Luz OFFICERS President Jorge Gerdau Johannpeter Vice Presidents Frederico C. Gerdau Johannpeter Senior Vice President André B. Gerdau Johannpeter Claudio Gerdau Johannpeter Osvaldo B. Schirmer Gerdau Brazil Long Steel Operation Domingos Somma Executive Vice President Gerdau Açominas - Ouro Branco Operation Luiz André Rico Vicente Executive Vice President Gerdau Specialty Steel Operation Cláudio Mattos Zambrano Executive Director

Executive Officers Alfredo Huallem André Felipe G. Reinaux Dirceu Tarcisio Togni Elias Pedro Vieira Manna Érico Teodoro Sommer Expedito Luz Fladimir B. Lopes Gauto Francesco S. Merlini Geraldo Toffanello Gerson Marcos Venzon Guilherme C. Gerdau Johannpeter Heitor L. B. Bergamini João A. de Lima João Carlos Salin Gonçalves Joaquim de Souza Gomes Joaquim G. Bauer Julio Carlos Lhamby Prato Luiz Alberto Morsoletto Luiz Augusto Polacchini Manoel Vitor Mendonça Filho Moacir Curi Meneguzzi Nestor Mundstock Omar de Oliveira Fantoni Paulo Ricardo Tomazelli Paulo Roberto Perlott Ramos Ruy Lopes Filho Sirleu José Protti Tadeu Petterle Canada and the United States GERDAU AMERISTEEL CORP. BOARD OF DIRECTORS Chairman Jorge Gerdau Johannpeter Board Members Phillip E. Casey Kenneth W. Harrigan Joseph J. Heffernan J. Spencer Lanthier Michael D. Sopko Frederico C. Gerdau Johannpeter André B. Gerdau Johannpeter Arthur Scace OFFICERS President and CEO Phillip E. Casey Vice Presidents André B. Gerdau Johannpeter Paulo Fernando Bins de Vasconcellos Mike Mueller Tom J. Landa Andre Beaudry J. Neal McCullohs James S. Rogers Robert P. Muhlhan James F. Oliver Donald R. Shumake Edward C. Woodrow Wilburn G. Manuel Anthony S. Read Roger Paiva Glen A. Beeby William E. Rider Robert L. Bullard Matthew C. Yeatman MRM Special Sections Division Garry A. Leach President Chile GERDAU AZA S.A. Hermann Von Mühlenbrock S. General Manager Uruguay GERDAU LAISA S.A. Salvador Elias Gimenez Daou Executive Director Stakeholding - Argentina SIPAR ACEROS S.A. Amaury Cordeiro de Oliveira Executive Director

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