Our business proposition is subject to risks arising from inventory management, climate change and changing consumer preferences and fashion trends.

We are subject to various risks related to inventory replenishment and optimization. For example, we are subject to risks related to seasonality, new product launches, rapid changes in product cycles and prices, defective products, changes in consumer demand and spending patterns, among other factors. Demand for our products may change significantly between the times of our purchasing from our suppliers and selling to our retail customers, which may reduce our ability to sell products held in our stocks. Deciding contents of the collection is one of our main strategic differentials in relation to the market, therefore the other brands’ appeal, choice of product, fabric quality and climate change are considered strategic risks while our collection is being prepared.

We cannot provide any assurance that we will correctly select new products to be manufactured or imported or that our initial estimate of demand for any product will be maintained or accurate. Certain products we purchase may require longer delivery times and our suppliers may not accept returns or exchanges of these products. Finally, we may not be able to sell our products in sufficient quantities or during peak sales periods, which would cause inefficiency in our volume of stock. The occurrence of any of the above factors may adversely affect our results of operations.

Extended periods of higher temperatures during the winter or cooler summer temperatures may leave part of our inventory unsuited to these unexpected situations. Therefore periods in which the climate changes may lead to us selling our excess stocks at discounted prices, thus reducing our margins, which may have a material adverse effect. This factor may be more significant for winter collections, which have higher average prices.

Another inventory management risk is seasonality. Typically, our sales are disproportionately higher in the fourth quarter of each fiscal year due to higher sales during Christmas and Black Friday seasonal sales. In the year ended December 31, 2018, 33.5% of our net sales were generated in the fourth quarter. As a result, any economic crisis, disruption to our business or our suppliers, or other circumstances affecting our business in the last quarter of any fiscal year would have a disproportionate adverse effect on our financial condition and results of operations.

In addition, to prepare for shopping seasons, we have to purchase and stock more than at other times of the year and we have to hire temporary staff for our stores. Any unplanned reduction or appropriation of demand for our products during this peak purchasing period – or even the number of temporary employees hired – may force us to sell surplus inventory at substantially lower prices, which would adversely affect our results of operations and financial condition. These fluctuations in our operational results and financial condition may affect the market value of our common shares.

Finally, on the subject of fashion trends and our customers’ preferences, we compete with several other apparel companies based on price, quality, brand selection, customer service, promotions, store location and decor. We believe selling differentiated products and customer satisfaction are some of the most challenging goals for our business. Our products must appeal to a customer base whose preferences cannot be predicted accurately and are subject to rapid change.

We are exposed to risks related to customers’ financing and loans through our partnership.

We have an exclusive partnership agreement with Banco Bradescard S.A. to offer our clients financial services, including credit cards and personal loans. Our partnership finances approximately 22% of our sales, including installment payments. Financing policies and financial services offered our clients are determined by our partner, who may set rules that restrict lending to our clients, thus adversely affecting our business and growth strategy.

In addition, if economic conditions in Brazil deteriorate further due to, among other factors, a slowdown in economic activity, depreciation of the Brazilian real, inflation, a domestic interest rate hike or rising unemployment rates, a higher percentage of our clients who are most sensitive to these factors may default, increasing our losses and provisions for doubtful debt, which would prompt our partner to restrict lending to our customers. Additionally, our results of operations and financial condition may be adversely affected if demand for consumer credit falls, or the Brazilian government implements restrictive consumer credit policies, thus significantly adversely affecting our business.

Failure to control credit card fraud properly may lead to significant losses and harm our reputation and brand, which may adversely affect us. Finally, if our relationship with our partner terminates earlier, we may be subject to contractual fines and penalties, and our revenue from financial services may be adversely affected.

We may face difficulties in opening new stores and/or operating our existing stores, which may adversely affect our sales and results of operations.

Our growth depends on our ability to successfully open new stores and/or operate our existing stores, which is subject to a number of risks and uncertainties, many of which are beyond our control, including but not limited to the availability of desirable store locations and the availability and accuracy of demographic and market data, as well as our ability to determine demand for our products, satisfy our customers’ fashion preferences, obtain the necessary government licenses and permits, negotiate leases on reasonable terms and conditions, build and efficiently fit out new stores, provide sufficient stock levels to meet the needs of our stores, successfully integrate new stores into our existing systems and operations, keep up with new and existing competitors, identify strategic points of sale, conclude projects for building and refurbishing stores, attract, hire, train and retain qualified personnel and manage the growth process.

New stores openings in Brazilian states may result in competition, marketing and distribution challenges. Also, when new store are opened in markets where we already have stores, we may see lower net sales from pre-existing stores in these markets due to sales dislocation, which may adversely affect us.

Any expansion, construction and refurbishment of new and existing stores, depending on the case, may deteriorate our profit margins until these investments mature. Therefore we may be unable to maintain the same net sales growth and earnings per square meter, which may adversely affect our business, sales and results of operations.

We are highly dependent on information technology systems to operate our business.

We largely depend on the functionality, availability, integrity, and operational stability of the data center and various systems (our own or third parties’), including point of sale systems, communication systems, and other software programs used to control inventory and compile financial and sales performance reports. Additionally, our e-commerce platform (website and app) is an important channel to show consumers our business, identity and brands, as well as a source of information and means of interaction for consumers of our products. Therefore, we rely on our information technology systems to process, transmit and store electronic data, and to communicate with consumers and suppliers. Our information systems may be affected by outages due to factors beyond our control such as natural disasters, hacker attacks, telecommunications problems, viruses, malicious software, and other factors. In the event of failure or disruption of our information technology systems, we may lose data, be affected by data breaches, or fail to conduct business transactions, and thereby fail to earn sales revenue, which may have a material adverse effect on our business.

To meet our growth strategy targets, we may have to continually improve our operating and financial systems, transaction processing, procedures and controls, leading to additional costs and expenses or integration issues, which may have an adverse effect on our financial results.

In addition, technology systems are subject to constant updating; if we are unable to update them correctly, our operations may be adversely affected, which may have an adverse effect on us.

Acquisitions and investments in new companies and businesses, as well as the inability to produce the results expected from an acquisition or an investment, or inability to fully integrate an acquired company, may adversely impact our business.

We may acquire or invest in companies or business ventures. The success of these acquisitions or investments is based on our ability to make accurate estimates of valuation, operations, growth potential, integration and other factors related to the business ventures in question. We cannot guarantee that our acquisitions or investments will produce the results we expect at the time we enter into or conclude a particular transaction. In addition, new acquisitions may give rise to difficulties for the integration of the companies acquired, thus diverting our capital and our management’s attention from other business opportunities. We may be unable to successfully integrate operations we acquire, including their employees, financial systems, distributing or operating procedures, which may adversely impact our business. The integration of any of the acquired companies and their financial results may adversely affect our results of operations.

We make use of trademarks held by one of our controlling shareholders, C&A AG, and we are subject to the termination of this trademark licensing agreement.

One of our controlling shareholders, C&A AG, owns the “C&A” trademark and other relevant brands/trademarks/patents used by us, which have been licensed to us under a user license agreement.

Under this agreement, if there is a material breach, it may be terminated and no longer producer effects, therefore we may lose the right to use the “C&A” trademark and other relevant trademarks in our operations, which may adversely affect our business, our sales and results of operations. For more details of the license agreement between us and C&A AG, see section 7.5 of this Reference Form.

Inability or failure to protect our intellectual property or infringement of the intellectual property of others may have a negative impact on our results of operations.

Unauthorized use or other misappropriation of brands or trademarks we use may diminish the value of the “C&A” brand (owned by C&A AG), our business or our reputation and cause a decline in our sales. Similarly, any infringement or claim alleging intellectual property infringement directed against us concerning the marks we use, even if lacks merit, may give rise to lengthy litigation, high costs, delayed deliveries of products, or our being sued for payments of royalties or licensing fees. Therefore any inability or failure to protect our intellectual property or any process involving an alleged infringement of third-party intellectual property by us may have an adverse effect on our results of operations.

We may not be able to renew or retain lease agreements for some of our stores or distribution centers.

We lease all sites or properties on which our stores and distribution centers are located. We may be adversely affected if we are unable to successfully negotiate or renegotiate these agreements on acceptable terms, or if lease agreements at locations believed to be material are not renewed. We may be required to vacate a property if we are unable to reach an agreement on renewal, or if our lessor decides to sell their site or property and we are unable to reach an agreement with the new owner. Therefore, the loss of any of our strategic locations, including failure to renew or keep lease agreements of our stores or distribution centers, may adversely affect our operations, financial results and/or adversely impact the prestige of our brand.

Our insurance policies may not adequately cover all losses and liabilities to which we are subject, which would adversely affect our business and financial condition.

Our insurance policies are arranged offshore by COFRA Holding AG (“COFRA”) and personalized with foreign insurers, while their local subsidiaries issue our policies in accordance with negotiations and normal practices in the local market. Certain types of risk are not covered by these policies, such as war, damages caused by natural disasters or environmental damage, unforeseeable circumstances, force majeure or stoppage of certain activities. Therefore, if any of these events occur, we may incur additional costs that may adversely affect our results of operations. In relation to any claim covered by an insurance policy, we cannot guarantee that any payments we may receive under the policies we have arranged will be sufficient to cover damages resulting from a loss event or claim of this type. Additionally, we may not be able to retain / renegotiate or obtain the required type of insurance and financial coverage at reasonable prices. If we incur significant liability for which we are not insured, our business, financial condition and results of operations may be adversely affected.

The loss of members of our management, the weakening of our corporate culture and/or inability to attract and retain qualified personnel could have a material adverse effect.

Our ability to maintain a competitive position significantly depends on services provided by our management and our corporate culture that management fosters. Key people may leave us for a number of reasons and the impact of these losses is difficult to predict. The loss of members of our management, who may not be replaced by people with the same experience and qualifications, may affect our strategic plans, disrupt our operations, undermine the sustainability of our culture and adversely affect us.

In addition, our future success also depends on our ability to identify, attract, hire, train, retain, motivate and manage other employees with specific knowledge and skills. There is stiff competition for these employees and if we are unsuccessful in attracting, hiring, training, retaining, motivating and managing sufficiently qualified employees, our business may be adversely affected.

We also face a number of challenges inherent in managing large numbers of employees in a large geographic area (every state in Brazil and the Federal District) and we are subject to specific labor union agreements that may adversely affect our business, sales and results of operations.

Unfavorable decisions in legal or administrative proceedings may have adverse effects on our business, financial condition and/or results of operations.

We are appearing, and may in the future appear as, defendants in legal and/or administrative proceedings, whether in the civil, tax, administrative, labor, corporate, intellectual property, regulatory, competitive, environmental or criminal spheres, among others. We cannot guarantee that the results of any of these cases or proceedings will be favorable to us or members of our management, or in the case of proceedings to which we are a party, that we are or will be maintaining sufficient provisioning, in full or in part, for any liabilities that may arise from these proceedings. Any involvement of our managers in proceedings that harm our image, or decisions that are contrary to our interests, including decisions that prevent us from conducting our business as originally planned, may have a material adverse effect on us.

Additionally, we are subject to oversight by different federal, state and municipal authorities who may file actions against us or assessments that may become administrative proceedings and subsequently legal proceedings against us. Decisions going against us involving material amounts or affecting our brand or our ability to run our operations as planned may have adverse effects on our business, financial condition and results of operations. Decisions against us for material amounts or affecting our brand or ability to execute our planned operations may have adverse effects on our business, financial condition and results of operations.

For details of judicial and administrative proceedings, see section 4.3 through 4.7 of this Reference Form.

The retail sector’s reliance on credit card sales and consumer finance is a growing trend; therefore any change in credit card issuer’s policies may adversely affect our business and results of operations.

Retailing is relatively dependent on credit cards. For the six-month period ended June 30, 2019, 66.1% of our sales revenue came from customers using credit cards to pay (compared to 65.5% of our sales revenue for the same six-month period of 2018). To make credit card sales, we rely on the policies of credit card companies, including fees they charge us. Any change in credit card issuer’s policies, including the administrative fees charged merchants for example, may adversely affect our business and results of operations.

We derive some of our sales to customers from installment plans offered by credit card issuers. We rely on credit card issuers to continue offering cardholders the possibility of paying for their purchases in installments. Changes in credit card company policies for installment plans or credit plans may adversely affect our business and results of operations.

Our sales may not grow at the same rate.

The most important factors driving or affecting growth of our sales are the following: (i) our brands’ appeal; (ii) ability to foresee and respond to the changing fashion and consumer trends in good time; (iii) attracting new customers and retaining existing ones; (iv) captive consumer confidence; (v) the economic situation in areas where our stores are located; (vi) commemorative dates (Black Friday, Christmas, Valentine’s Day, etc.); (vii) updating our loyalty and marketing policies; (viii) competition, (x) festive dates; and (xi) changing climate/weather. Alterations in any of the abovementioned items may adversely impact the rate of growth of our sales and therefore our business and results of operations.

Our sales depend on pedestrian traffic in the shopping malls in which we are located.

Our success depends on our stores being located in prominent high pedestrian traffic locations; approximately 84% of our stores, which accounted for 79.4% of sales of merchandise in the six months ended June 30, 2019, are located in shopping centers. We believe that a considerable part of our sales volume and productivity per square meter result from high levels of traffic in the malls in which our stores are located. Pedestrian traffic in malls and therefore our volume sales may be adversely affected by factors beyond our control, such as economic decline in a given area, new shopping malls opening and closing or declining attractiveness of other stores in the mall where we are located, among other factors.

In addition, the success of our growth strategy may depend on opening of new malls in the future or availability of retail store spaces in existing malls. If the number of malls frequented by our target segment has no available space or increases, or if the growth of malls is insufficient, our ability to maintain or open stores in these malls may be limited and this may lead to a decline in customer numbers visiting our stores, thus significantly reducing our sales, which may adversely affect our business, results of operations and financial condition.

Integrating our multiple channels (physical and online stores) is essential for our business operation and growth prospects.

We conduct our operations through physical and online stores (website and app) and our long-term strategy focuses on improving this multichannel offer through integration. Our inability to integrate our sales channels in terms of business, logistics, and communication and marketing aspects in order to respond to our customers’ needs may prevent us from fully benefiting from a multichannel structure and may adversely affect our business, results of operations and financial condition.

In addition, our long-term sales growth strategy is heavily dependent on consolidation and expansion of digital sales channels. We are vulnerable to competitive pressures from e-commerce activities in the marketplace because our competitors may, for example, use advertising channels (such as social media) more efficiently than those used by us. In addition, the expansion of digital sales channels may make us more dependent on constant technological developments, which may adversely affect our sales growth and results of operations.

We depend on public and private logistics infrastructure systems to ship our products to our facilities and e-commerce customers.

We depend on the continuing operation of public and private logistics infrastructure, including roads, airports, ports (since our imports are generally transported by ships) and all other the logistics used by our service providers and suppliers to deliver our products to our facilities and e-commerce customers.

The occurrence of any adverse events, such as strikes, fires, logistics problems, floods and theft, among others, leading to significantly disrupted or reduced infrastructure activities or transportation operations or any failure to transport products between our facilities, suppliers or customers for any reason may delay or affect our ability to distribute our products, adversely affect product demand and pricing, prevent or delay delivery, cause additional costs for our products and reduce pedestrian traffic, which may reduce our sales and adversely affect our business, results of operations and financial condition.

Finally, the efficiency of our shipments depends on efficient inspections of Brazilian customs (ports and airports) or state borders, among other factors. These inspections may be delayed for a variety of reasons, including: (i) the quality of the information and documentation prepared and required for the release of the goods, (ii) agent strikes; (iii) increased demand that may exceed agents’ processing capacity, (iv) lack of resources to develop operations or hire other agents, or (v) changes in regulations or implementation of regulations that may increase the bureaucracy involved in these inspections or require a more thorough analysis of goods passing through Brazilian customs (ports and airports) or state borders. If inspections are substantially slower, the flow of goods will be reduced. Late delivery of our products would directly affect our reputation and encourage our customers to seek alternative products from our competitors and could adversely affect our business, results of operations and financial condition.

We may have to fund additional amounts by issuing securities, which may lead to dilution of investors’ holdings in our share capital.

We may arrange additional funds in the future through public or private share offerings or issue other convertible securities. Funding through public distribution of shares or securities converted into shares may be obtained by excluding our current shareholders’ rights of first refusal, including investors in our common shares, as provided for in Brazilian Corporate Law, which may dilute our shareholders’ holdings. In addition, there may be a dilution of our shareholders’ holdings in our common shares in the event of a merger, consolidation or any similar corporate event in relation to companies we may acquire in the future.

We depend on the efficacy of our marketing and advertising campaigns.

Our business spends significant amounts on advertising and marketing campaigns in order to promote the attractiveness and dynamics of our sales channels. If these campaigns do not enable us to reach the targets we have set, our sales and profitability may be adversely affected, and we may not be able to strengthen our brand as expected. Therefore our results of operations and financial condition may be adversely affected. In addition, if we are unable to identify changing consumer behavior and preferences and respond appropriately in our marketing and advertising campaigns, we may be adversely affected.

We face risks related to registrations, authorizations, licenses and permits for the installation and operation of our stores and distribution centers.

We depend on a number of federal, state, and municipal registrations, authorizations, licenses, and permits, including fire-department inspection certificates related to the operation and location of our distribution centers and stores. Most of these documents have expiration dates and must be renewed from time to time, with or without payment of renewal fees. Due to the number of stages required to obtain and renew registrations, licenses, permits and authorizations (including the time required to implement corrective action plans to comply with new regulations and/or requirements from the competent authorities and take the measures related to construction or repair work), together with the slow responses of certain administrative bodies, we may be unable to obtain or renew them in good time. Failure to obtain or renew our licenses may (1) result in notifications of infractions, (2) subject us to fines, (3) prevent us from opening and operating stores and distribution centers, (4) result in closure of our stores and distribution centers, (5) expose us to additional risks in if there is a safety or protection related accident or similar event that adversely affects a facility while a license is pending; and (6) expose us and the Company’s representatives to criminal sanctions in the event of engaging in activities without obtaining the proper environmental licenses and permits.

Our business strategy could be materially and adversely affected if we are unable to open and operate new stores and distribution centers, if we have to suspend or close some of our existing stores and distribution centers as a result of our inability to obtain or renew registrations, authorizations, licenses and permits, or if an accident adversely affects a store while there is a license pending issue.

Some of our products are imported and any limitations on our ability to import these products, including fluctuating currency exchange rates and changing legislation, may restrict supply of our products and adversely affect our business.

We estimate that approximately 20% of purchases of our products are imported. Therefore store prices depend on the currency exchange rates of the countries where we purchase these products, thus limiting our ability to pass on any price increase to customers. Therefore, in the event of a depreciation of the Brazilian Real against the currency of these countries or against the US dollar or currencies of those countries in relation to the US dollar, we may not be able to pass the higher costs on to our customers, thus reducing our margins or even making the sale of certain goods unviable or, if these additional costs are passed on, our products may be less attractive for our customers, resulting in an adverse impact on our results of operations.

We import from various Eastern countries through a related party, which operates by purchasing products and providing us with quality control and developing product sampling services. We may be subject to an adverse impact on this system with a consequent adverse impact on the supply of our imported products if we or C&A Sourcing meet with difficulties to comply with new or existing customs, tax and/or trade regulations. For more details of the license agreement between us and C&A Sourcing, see section 16 of this Reference Form on Related Party Transactions.

Finally, changing international trade rules between the countries we import from and Brazil may affect product availability or alter the costs involved, with a consequent impact on our results.

The disruption of our distribution centers’ activities as well as our inability to expand capacity could adversely impact our business as well as our growth strategy.

We currently have three distribution centers in operation, two located in São Paulo and one in Rio de Janeiro. All clothing merchandise we sell is distributed through these distribution centers. If the normal operation of one of these distribution centers were to be interrupted for any reason, we could only partly distribute our goods on time, which would have a material adverse effect on our financial condition and results of operations. In addition, our growth strategy includes new store openings, which may mean adding more capacity at our distribution centers, reorganizing our current distribution centers or setting up new distribution centers. If we are unable to find suitable locations to establish new distribution centers, or if we are unable to integrate new ones or expand distribution centers or logistics operator services to efficaciously integrate with our inventory control process, we may be unable to deliver stock to our stores in good time which may have an adverse impact on our sales, results of operations and growth strategy.

We may not be successful in our business strategies and innovations.

The Company’s ability to implement its business strategies depends on a number of factors, such as: (a) local political and economic conditions; (b) maintaining existing laws and regulations, in particular those related to the data management and analysis sector; (c) maintaining operating costs; (d) developing technological infrastructure; (e) boosting operational efficiency; and (f) creating new products.

The Company cannot guarantee that it will successfully implement its new strategies and innovations if there are changes in the above circumstances, which may have a material adverse effect on our business, financial condition and results of operations.

Faults in our risk management systems, policies and procedures may adversely affect our business.

Our policies and procedures for identifying, monitoring and managing risks may not be fully efficacious. Risk management methods may fail to predict future exposures or be insufficient to work against unknown risks that may be significantly greater than those shown by the historical measures we use. Other risk management methods adopted by us that depend on assessing data relating to markets, customers or other publicly available matters may not be fully accurate, complete, updated or adequately assessed. The information on which we base our estimates or feed and run historical and statistical models may be incomplete or incorrect, which could have a material adverse effect on our business. Therefore, a failure or the inefficacy of our internal controls could have a material adverse effect on our business. Additionally, our internal compliance and control procedures may not be sufficient to prevent or detect all misconduct, fraud or violations of applicable laws by our employees or members of our management. If our employees or others related to us engage in fraudulent, corrupt or unfair practices or violate applicable laws and regulations or our internal policies, we may be held liable for any such violations, which may lead to penalties, fines or sanctions that may substantially and adversely affect our business and image.

We are controlled by our indirect controlling shareholder COFRA, whose interests may conflict with those of our shareholders.

We are indirectly controlled by COFRA. Our controlling shareholders will have the right to exercise their voting rights to elect or remove the majority of the members of our board of directors, control our management and policies, determine the outcome of almost any measure that requires shareholders’ approval, including but not limited to, related party transactions, corporate restructurings, acquisitions, disposals of assets, partnerships and the payment and timing of future dividends, which may conflict with other shareholders’ interests.

Our controlling shareholders may have interests in acquisitions, disposals of assets, partnerships or additional financing, among other transactions that may conflict with our other shareholders’ interests. In addition, our controlling shareholders may prevent or postpone certain transactions or business strategies that our other shareholders may view favorably.

In addition, any social, economic or political development unfavorable to Switzerland or Luxembourg, where the headquarters of our direct and indirect controlling shareholders are located, may lead to additional regulations that we may have to comply with that have a negative effect on one or more of C&A’s brands that we use for our business in Brazil, which may lead to deterioration of the value of these brands and therefore for our results of operations, too.

We may continue our involvement in a number of different transactions with our controlling shareholders, COFRA, and other COFRA Group companies.

At the time of completing this offering, we may not have concluded the process of segregating all transactions in which have been involved over the years with our controlling shareholders and other COFRA Group companies, as shown in the organizational chart in item 15.4 herein, so we may have to continue being involved in a variety of transactions for some time, including intercompany loans and borrowings, a number of services provided, cost sharing arrangements, supplies of products and negotiations with international suppliers, among other matters.

In order to successfully prosecute our business strategy, we may have to start making transactions previously executed by our controlling shareholders and other COFRA Group companies, thus requiring additional expenses and/or investments, which could adversely affect our financial results.

We may fail to pay dividends to our shareholders.

Our net income may be capitalized, used to offset losses and liabilities or retained as per Brazilian Corporate Law, in which case it will not be available for dividend payments or interest on shareholders’ equity. Our board of directors may decide against dividends payments to our shareholders in a given fiscal year if we have no available net income or reserves, or if paying dividends is not advisable or incompatible with our financial condition at the time and our shareholders decided against dividend payments.

We depend on third parties to manufacture our products.

We depend on third parties (local and international) to manufacture our products. By using third parties to manufacture our products, we are subject to these suppliers’ operations being disrupted by industrial accidents, environmental events, logistics or information systems outages, loss or weakening of large manufacturing sites or distribution issues, quality control issues, security concerns, licensing requirements, and other regulatory or governmental matters, as well as natural disasters, pandemics, frontier disputes, or other external factors beyond our control, which could adversely affect our business, sales, and results of operations.

In addition, some product categories are mostly purchased from a small number of suppliers. If any supplier is unable to supply products of the quantity and quality needed at the times we normally purchase them, and if we are unable to switch to another supplier on acceptable terms or on any terms at all, we may be unable to reach our usual level of sales in the product category affected by non-fulfillment, which may have a material adverse effect on our business and results of operations. We have a supply agreement with a related party based in Hong Kong, which is responsible for sourcing imported products from the East (“C&A Sourcing”). This agreement sets forth a period in which either party may unilaterally cancel it; if this were to happen, we will have to look for alternative access to suppliers located in this region and we may incur additional costs.

Finally, most of our suppliers are small and medium-sized manufacturing companies that will be susceptible to financial and operational difficulties if there is an economic crisis. Some macroeconomic factors may prompt our suppliers to raise their prices to offset costs spikes caused by higher commodity prices or rising inflation, and we cannot predict whether we will be able to raise prices for our consumers. Higher costs of our products may adversely affect our business, results of operations and share price.

We cannot guarantee that our suppliers or marketplace partners will not be involved in unlawful practices.

Given the capillarity and diversity of our suppliers and service providers since we have outsourced our supply chain for products and services, including our marketplace partners, we cannot guarantee they will not have problems related to working conditions for their employees, contractors and subcontractors, sustainability, environmental friendliness and safety, or that they will not use irregular practices, including slave-like and/or child labor, to reduce product costs. If any of our suppliers is involved in unlawful practices, including but not limited to the above practices, our reputation may be affected and therefore our customers’ perceptions of our products may be adversely affected, thereby lowering net sales and reducing results of operations and the trading price of our common shares.

We may be liable for tax, labor and social security obligations of suppliers or service providers.

Under Brazilian law, if suppliers or service providers fail to comply with their obligations under tax, labor and social security laws, we may be jointly and severally liable for such non-compliance, resulting in fines and other penalties that may materially adversely affect us. We may also be liable for bodily injury or death within our facilities of third-party employees, which may adversely affect our reputation and our business.

We may fail to comply with privacy laws or properly address privacy issues by disclosing confidential or sensitive information that may harm our business and reputation.

The main laws governing the use of personal data in Brazil are its federal constitution, Law No. 10.406/02 (Civil Code), Law No. 8.078/90 (Consumer Protection Code) and Law No. 12.965/14 (Civil Regulatory Framework for the Internet) and Decree No. 8.771/16. Among other requirements, for personal data to be collected and used, when through providers, we need to obtain the data subjects’ express and informed consent. Notwithstanding these provisions, the General Data Protection Law (Law No. 13.709/18), which will come into effect on August 16, 2020, was recently enacted to regulate the processing of personal data. Because we collect, store, process and use personal, employee and customer information and other user data in our business, we must comply with all privacy and personal data protection laws. A significant risk associated with our business, particularly our e-commerce and communications business in general, is the secure transmission of personal data over public networks to our servers and secure storage of personal data on systems connected to our servers.

Perceived negligence in relation to data protection matters, whether valid or not, may adversely affect us. We must ensure that any processing, collection, use, storage, sharing, transfer and disposal of personal data for which we are responsible complies with applicable data protection laws. Protecting the personal data of our customers and employees is critical for us. We rely on commercially available systems, software, tools and monitoring to provide secure processing, transmission and storage of customers’ personal and transactional data, such as credit cards and other personal information capable of individualizing them. Our facilities and systems, both our e-commerce platform and our physical stores, as well as our third-party service providers, may be vulnerable to security breaches, fraud, vandalism, computer viruses, mislaid or lost data, programming or human errors or similar events.

Any breach of security, or any perceived failure involving misuse, loss or other unauthorized disclosure of personal data, or any failure or apparent failure to comply with laws, policies, legal obligations or industry standards for data privacy and protection, involving us or our suppliers, may harm our reputation, expose us to legal risks and liabilities, subject us to negative publicity, disrupt our operations and harm our business dealings. We cannot guarantee that our security measures will prevent personal data from leakage, security incidents, or that failure to prevent them will not have a material adverse effect on us.

We may be liable for losses caused by our consumer services or products, which may adversely affect our results.

Brazil’s strict consumer protection laws place the burden of proof on suppliers and consumers’ claims may be pursued through individual or class actions, which may be brought in favor of consumers by state or federal authorities or by directly or indirectly controlled government or public sector bodies, in particular the Consumer Protection and Defense Foundation (PROCON) and the public prosecutors’ office, or by consumer protection associations. Legal or administrative proceedings may include claims that our services were not properly provided by our employees, or that third-party financial services were incorrectly sold or improperly charged for, or that our products are not suitable for use, or are counterfeits, or do not contain adequate information, or other reasons.

If we are held liable in a lawsuit, there may be a material adverse effect on our business, reputation, brand, operating and financial condition, cash flow and profitability.

In addition, our defense in these legal proceedings may require additional costs and substantial time and attention from our administrative and technical personnel. In addition, unfavorable publicity associated with our services or products, including defects, errors, faults (including accidents) and quality, may adversely affect our reputation with current and future consumers, our corporate image and our brands, which may adversely affect our business and financial condition.

We have to quickly and successfully identify changes in consumer preferences and fashion trends and respond to them.

The success of our sales and results of operations depends on our ability to manage our inventory, as well as promptly identify, predict and respond to changes and possible changes in market and fashion trends (including design, style, quality, production, merchandising and product prices) and our customers’ preferences. Any failure to accurately manage our inventory, stay current with latest trends, or successfully adjust our products to fit customer preferences could lead to falling sales due to excessive amounts of stocks, low-quality or outdated stock or missed opportunities, non-availability of other products and therefore adversely affect our business, results of operations, financial condition and the image of our brands.

Brazil’s retail segment is highly competitive, which may adversely affect our market share and therefore our results of operations.

Competition in the retail industry is based primarily on product variety, price, quality, availability, advertising and promotion, storage convenience or location, security and support, and customer service. Some of our competitors, including local retailers and multinational retail chains, may have higher financial facilities, lower product acquisition costs and lower operating expenses than us. Our competitors may use discounts, aggressive pricing policies, and advertising to boost sales during vacation seasons, other holiday dates, and the “back to school” period. Our business is vulnerable to changing demand and prices as well as consumer preferences. If we are unable to compete with our competitors, our sales may fall and we may decide to offer our customers deeper discounts, or be required to do so, which may reduce our profits and affect our financial condition.

In addition, e-commerce is highly competitive. Other retailers and e-commerce companies may sign business alliances and agreements that may strengthen their competitive position. As our customer base grows and customer loyalty for different segments of the Internet market increases, companies in these segments may attempt to expand their business into the industry in which we operate. In addition, new technologies may make online retailing yet more competitive, which may reduce our sales and operating income.

In addition, our retailing and e-commerce competitors may have more resources to develop their technology and marketing strategies than us. With increased use of the Internet and other online services increases, retailers operating in this market may be acquired, attract investment, or join forces with larger, more established companies that may have more financial resources than us, which could adversely affect us.

The retail sector is sensitive to downtrends in consumer purchasing power and unfavorable economic cycles.

Historically, Brazil’s retail sector has been through economic slowdowns that have led to lower consumer spending. The success of our operations depends on a number of factors, including general business conditions, interest rates, inflation, consumer credit facilities, taxation, consumer confidence in future economic conditions, and employment and salary levels. Our results of operations and financial condition have been affected and will continue to be affected by Brazil’s gross domestic product (GDP) growth rate. We cannot guarantee that Brazilian GDP will grow or remain stable. The evolution of the Brazilian economy may affect Brazil’s growth rates and therefore our results of operations. In addition, we depend on the growth rate of Brazil’s urban population and its different income levels. Any reduction or slowdown in this growth could adversely affect our sales and results of operations.

Exchange rate instability may adversely affect our financial condition, results of operations and the market value of our shares.

Brazil’s currency has frequently and substantially fluctuated against the US dollar and other foreign currencies in recent decades. The Brazilian real’s depreciation against the US dollar may lead to inflationary pressures in Brazil and interest rate hikes that negatively affect the growth of the Brazilian economy, resulting in material and adverse effects for our financial condition and results of operations. Local currency depreciation also restricts access to international financial markets and determines government interventions, including contractionary policies. In addition, the Brazilian real’s depreciation against the US dollar may lead to falling consumption and slower economic growth. On the other hand, the Brazilian real’s appreciation against the US dollar and other foreign currencies may result in the deterioration of Brazil’s trade balance as well as slower growth of exports. Depending on the circumstances, the Brazilian real’s devaluation or appreciation may have material negative effects on the Brazilian economy’s growth and on our business.

Changing tax laws, tax incentives, benefits or differing interpretations of tax laws may adversely affect our results of operations.

The Brazilian tax authorities regularly implement changes in the tax regime that may affect us and ultimately may undermine consumers’ demand for our products. These measures include changes in effective tax rates and occasionally the creation of temporary or permanent taxes. Some of these changes may directly or indirectly increase our tax burden, which may lead us to charge higher prices for our products, restrict our ability to do business and therefore materially and adversely impact our business and results of operations.

We currently benefit from tax incentives related to logistics operations in the state of Santa Catarina. Moreover, we cannot guarantee that the tax benefits we enjoy will be maintained or renewed. If these tax benefits are not renewed or if our tax benefits are modified, limited, suspended or revoked, our business and financial condition may be adversely affected as a result of the increased tax burden. To ensure the continuity of these incentives over time, the Company must fulfill a number of requirements that may be challenged, including litigation. In addition, certain tax laws may be subject to controversial interpretations by tax authorities. If the tax authorities’ interpretations of tax laws clash with our interpretations, we may be adversely affected.

If we fail to comply with some or all of our obligations, our tax incentives or even operating authorizations may be suspended, revised or canceled, including by judicial and/or administrative decisions, and we may also be required to pay the full amount of taxes due, plus charges and penalties, which would have a material adverse effect on us.

Tax reform is currently being discussed in Brazil’s congress. The proposals being discussed include the possibility of a complete change in the tax system for consumer spending, which would abolish three federal taxes – IPI, PIS and COFINS; state governments’ ICMS tax, and municipal ISS tax. Instead of the latter there would one single tax known as the Goods and Services Tax (local acronym IBS) levied on consumption. If there is tax reform or any changes in applicable laws and regulations that alter tax incentives for operating subsidiaries during or after their effective application, this may adversely affect our business.

When our current tax incentives end, new ones may be introduced that lead to less favorable conditions than those currently in effect, which could adversely affect our business and operating activities. If tax incentives change or expire and we are unable to renew them, or new tax incentives are not created after the expiration of those currently in effect, or if the terms and conditions of any new incentives are not as beneficial as those currently in effect, we will be materially and adversely affected.

Given the Brazilian scenario in relation to tax benefits, especially state governments’ efforts to attract business through tax breaks or incentives, referred to as the “Fiscal War between States”, there may be a risk of the constitutional standing of ICMS tax benefits being challenged, if they are not approved by the National Fiscal Policy Council (CONFAZ), or through actions known as ‘direct unconstitutionality actions’ filed with the Federal Supreme Court (STF), which may adversely affect our business.

In addition, any changes in tax laws or any declaration of the unconstitutional standing of legislation governing tax benefits may affect the activities of our company’ and/or the industry as a whole.

Also in relation to the “Fiscal War between States”, Supplementary Law 160/2017 (“LC 160/2017”) and CONFAZ ICMS Agreement No. 190/2017 were published for the purpose of validating tax benefits granted by state governments, thus diminishing the risks of previously granted tax benefits being declared unconstitutional, extinguishing the possibility of creating new benefits, with the duration of previously granted incentives being subject to different deadlines depending on the sector:

• Until December 31, 2032: Agriculture and industry, including agroindustrial business and investment in infrastructure for roads, waterways, railroads, ports, airports and urban transportation;
• Until December 31, 2025: Port and airport activities related to foreign trade, including operations subsequent to importation, practiced by the importer-taxpayer;
• Until December 31, 2022: Maintenance and addition of commercial activities provided that the benefit is for the actual purchaser of the merchandise;
• Until December 31, 2020: Interstate operations and services for agricultural products and fresh plant extracts;
• Until December 31, 2018: Other sectors.

If the validation rules are not complied with by the states, the possibility cannot be ruled out that state treasuries may demand ICMS tax from the Company. According to available public information to date, the states in which the Company has tax benefits have complied with the rules for validating these benefits.

We may be materially affected by violations of the Anti-Corruption Law and similar anti-corruption laws.

Law No. 12.846 of August 1, 2013 (Anti-Corruption Law) introduced the concept of strict liability for legal entities involved in acts harmful to the public administration and subjects violators to civil and administrative penalties. Similar to the United States Foreign Corrupt Practice Act, Brazil’s Anti-Corruption Law sets forth administrative sanctions for any act that is detrimental to the public administration. Failure to comply with anti-corruption laws or any investigations of our alleged misconduct or our prosecution may lead to fines, loss of business licenses, reputational damage and other penalties, which may adversely affect our business, image and financial condition.

We do not have operations in foreign countries, but we and other COFRA Group international companies use C&A brands that are widely known in Brazil, therefore any unfavorable publicity or comments involving other companies controlled by COFRA, or associated with COFRA globally may have a negative effect on one or more of the C&A brands and brands we use in Brazil, which could reduce the value of these brands and therefore adversely affect our results of operations.

We may be adversely affected if our supply chain does not comply with social and environmental laws and regulations.

Our product supply chain, from growing cotton to producing clothes, is subject to local and international laws and regulations governing environmental protection, including the use of chemicals, environmental licensing, solid waste management and water resources, such as rules for effluent treatment and others. In addition to our supply chain there are numerous laws, regulations and treaties (local and international) for labor relations and conditions, which address matters such as: working hours, employment of foreign workers, child labor, slave-like labor, personal data protection, infrastructure and buildings, and occupational health and safety.

Failure to comply with social and environmental laws and regulations, in whole or in part, may subject us to reputational risks and compromise inventory management if fines and penalties are applied, or even if licenses are revoked, for one or more of the parties directly or indirectly involved in our supply chain.

We may be subject to legal sanctions for not properly managing waste generated by our operations.

Law No. 12.305/10 introduced the National Solid Waste Policy with principles, objectives and instruments, as well as guidelines for integrated management and solid waste management. As a result, we are responsible for managing the waste generated at our facilities (including paper, cardboard, lamps, plastics, cosmetic and perfumery recipients, merchandising material and other items), for any non-compliance with applicable environmental legislation and, if applicable, for any environmental damage caused by our operations, provided that there is evidence of a chain of causality between our activities and environmental damage. Penalties may apply if we fail to comply with the required conditions, which would adversely affect our operations and reputation.

Developments and changes in investor perceptions of risk in other countries, especially the United States, Europe and other emerging countries, may materially and adversely affect the Brazilian economy and the market value of Brazilian securities, including our shares.

The market prices of Brazilian issuers’ securities are affected by economic and market conditions in other countries, including the United States, European and other Latin American and emerging market countries. Although economic conditions in Europe and the United States may differ significantly from economic conditions in Brazil, investors’ reactions to developments in these other countries may have an adverse effect on the market price of Brazilian issuers’ securities. Prices of stocks traded on B3 S.A. – Brasil, Bolsa, Balcão, or B3 stock exchange, for example, have historically been sensitive to fluctuating interest rates in the United States as well as varying prices on the leading stock exchanges there. In addition, crises in other emerging market countries may diminish investor interest in Brazilian issuers’ securities, including our common shares. These events may adversely affect the market price of our common shares, restrict our access to capital markets and compromise our ability to finance future operations on favorable terms or at all. In addition, the financial crisis and political instability in the United States, Europe and other countries has affected the global economy and had various effects that have directly or indirectly impacted the capital market and the Brazilian economy, such as fluctuating prices of securities issued by listed companies, shrinking credit facilities, deterioration in the global economy, fluctuating currency exchange rates and inflation, among others, which may directly or indirectly have adverse effects for us. In June 2016, the United Kingdom held a referendum in which the majority voted to leave the European Union. We have no control over, nor can we predict the effect of the UK’s exit from the European Union or whether and to which extent other Member States will decide to leave the European Union in the future. These developments, as well as potential crises and resulting political instability or other unforeseen developments may adversely affect us and the market value of our shares.

Political and economic instability in Brazil may adversely affect our business, results of operations and the trading price of our shares.

The Brazilian political environment has historically influenced and continues to influence the performance of the country’s economy. Political crises have affected and continue to affect investor and general public confidence, resulting in economic slowdown and increased volatility of securities issued by Brazilian companies.

Brazil’s recent economic instability weakened the market’s confidence in the economy and made the domestic political situation worse. In addition, Brazilian markets have shown higher volatility due to uncertainties arising from several ongoing investigations into money laundering and corruption charges conducted by the Brazilian Federal Police and the Federal Prosecutors’ Office, including the largest investigation known as Operation Car Wash. These investigations had a negative impact on the country’s economy and political environment. Several leading politicians, including current and former members of federal government and the legislative power, as well as high-ranking executives of major corporations and state-owned companies in Brazil, were arrested, convicted on various corruption-related charges, and made plea bargains with prosecutors and/or have resigned or been removed from their positions as a result of these Operation Car Wash investigations. These individuals allegedly accepted bribes through kickbacks on government contracts awarded for various infrastructure, oil and gas and construction companies, among others. The large amounts of these bribes allegedly financed political campaigns for parties that had been in the former pro-government coalition led by former President Dilma Rousseff, which were not accounted for or publicly disclosed. These funds were also allegedly used for the personal enrichment of certain individuals. The effects of Operation Car Wash and other corruption related investigations had an adverse impact on the image and reputation of the companies involved, as well as on the market’s general perception of the Brazilian economy, political environment and capital markets. We have no control over these factors and cannot predict whether ongoing investigations or allegations will lead to further political and economic instability or whether new allegations against government officials and/or companies will emerge in the future.

Amid this scenario of recent political uncertainty, after administrative and judicial proceedings alleging violation of budget laws, the Brazilian Senate voted to remove President Dilma Rousseff from office in August 2016. Former vice-president Michel Temer, who had been interim president after Dilma Rousseff’s suspension in May 2016, was sworn in for the remaining presidential term, which ended in 2018. Throughout Mr. Temer’s presidency, his approval ratings remained historically low and he was submitted to scrutiny for other matters, including allegations of bribery and other corrupt practices, which added to the uncertain political and economic environment in Brazil. After a polarized presidential campaign, Jair Bolsonaro, a former member of the armed forces and congressman for 30 years, was elected president of Brazil on October 28, 2019 and sworn into office on January 1, 2019. We cannot predict whether and how long the political divisions that emerged in Brazil before the election will continue and affect his presidency. It is also unclear what effects, if any, these political divisions will have on President Bolsonaro’s ability to govern Brazil and implement reforms.

Any continuation of these divisions could lead to an impasse in congress, political unrest, and mass protests and/or strikes that could adversely affect our operations. Uncertainty over the new government’s introduction of changes in monetary, fiscal and social security policies, as well as the relevant legislation, may contribute to economic instability. These uncertainties and other new measures may heighten the volatility of the Brazilian securities market, including our common shares.

The Brazilian economy has seen a steep decline in recent years, due partly to the Brazilian government’s interventionist economic and monetary policies and globally weaker commodity prices. The current Brazilian federal government will probably pose general fiscal reform terms for 2019 to stimulate the economy and reduce the projected budget deficit, but it is uncertain whether the Brazilian government will be able to muster support in the Brazilian Congress to pass additional specific reforms. As of the date of this offering memorandum, many of the public spending items posed in Brazil’s budget have been maintained and it is not clear whether other expenses will be reduced or eliminated altogether. If some or all of these public spending items are maintained, Brazil will continue to post budget deficits for 2019 and the following period. We cannot predict the effects of this budget deficit for the Brazilian economy or which policies the Brazilian federal government may adopt or alter, or the effect these policies may have on our business and the Brazilian economy. Political and economic uncertainty and any new policies or changes in current policies could have a material adverse effect on our business, results of operations, financial condition and prospects. Uncertainty as to whether the Brazilian government will implement changes in policies or regulations that will affect these or other factors in the future may add to economic uncertainty in Brazil and the volatility of securities issued by Brazilian companies in other countries. Historically, the political scenario in Brazil has influenced the performance of the Brazilian economy; in particular, political crises have affected the confidence of investors and the general public, which adversely affected economic development in Brazil.

Inflation and the federal government’s measures taken to combat inflation may significantly contribute to economic uncertainty in Brazil and may have an adverse effect on us and the market price of our common shares.

Historically, Brazil has seen high rates of inflation. Inflation, as well as government measures designed to combat inflation had a material adverse effect on the Brazilian economy, particularly prior to the introduction of monetary reform (the Real Plan) in July 1994. Brazil’s Inflation measured by the Broad Consumer Price Index or IPCA, published by IBGE, rose 3.7% in 2018, 2.9% in 2017 and 6.3% in 2016. In the six-month period ended June 30, 2019, the IPCA rose 2.2%. Inflationary pressures persist and measures taken in an effort to curb inflation, together with public speculation about possible future governmental measures, have in the past contributed to economic uncertainty in Brazil and heightened volatility in the Brazilian securities market, which may cause adverse effects for us.

As a result of inflationary pressure and macroeconomic instability, the Brazilian government has historically adopted monetary policies that led to high interest rates in Brazil. The Central Bank determines the basic interest rates generally available to the Brazilian banking system based on the Brazilian economy’s the growth or contraction, inflation rates and other economic indicators. Higher interest rates may adversely affect our financing cost, including the cost of our current debt, as well as our cash and cash equivalents, securities and leasing payments.

Exchange rate instability may have a material adverse effect on the Brazilian economy and on us.

Brazil’s currency fluctuates against the US dollar and other foreign currencies. In the past, its federal government has adopted different exchange rate regimes, including sudden devaluations, periodic mini-devaluations (during which the frequency of adjustments varied from daily to monthly), exchange controls, dual exchange-rate markets and a floating exchange-rate system. Since 1999, Brazil has adopted a floating exchange-rate system with Central Bank of Brazil interventions buying or selling foreign currency. From time to time, there are significant fluctuations in the exchange rate between the Brazilian real and US dollar and other currencies. The Brazilian Real may substantially depreciate or appreciate against the US dollar in the future. Currency instability may have a material adverse effect on us. The Brazilian real’s depreciation against the US dollar may drive inflationary pressure in Brazil and cause interest rate hikes, which could negatively affect the growth of the Brazilian economy as a whole and have a material adverse effect on us. Depreciation would also reduce the amount of dividends paid in US dollars and the trading price of our common shares in US dollars.

Any further decline in Brazil’s credit rating could adversely affect the trading price of our common shares.

Credit ratings affect investors’ perceptions of risk and therefore the trading price of securities and earnings required for future issues of debt in capital markets. Rating agencies regularly assess Brazil and issue its sovereign ratings, which are based on a number of factors, including macroeconomic trends, fiscal and budgetary conditions, debt metrics, and the prospects of changes in any of these factors. Brazil’s sovereign debt rating has been downgraded by the three main US-based rating agencies: Standard & Poor’s, Moody’s and Fitch.

• In September 2015, Standard & Poor’s downgraded Brazil’s sovereign credit rating to lower investment grade from BBB- to BB +, citing, among other reasons, overall instability in the Brazilian market caused by government intervention in the economy and budgetary difficulties. Standard & Poor’s downgraded Brazil’s credit rating in February 2016 from BB + to BB and maintained its negative outlook on the rating, citing a worsening credit situation since the September 2015 downgrade. In January 2018, Standard & Poor’s downgraded its rating to BB with a stable outlook, given concerns around this year’s pension-reform efforts and presidential elections.
• In December 2015, Moody’s placed Brazil’s Baa3 ratings under review, citing negative macroeconomic trends and a deterioration in the government’s fiscal conditions. Subsequently, in February 2016, Moody’s downgraded Brazil’s ratings below investment grade to Ba2 with a negative outlook, citing the prospect of further deterioration in Brazil’s debt servicing in a negative or low growth environment, and challenging political dynamic. In April 2018, Moody’s held Brazil’s credit rating at Ba2 but changed its outlook from negative to stable, which it held in September 2018, citing expectations of more government spending cuts.
• Fitch also downgraded Brazil’s sovereign credit rating to BB + with a negative outlook in December 2015, mentioning the country’s rapidly widening budget deficit and worse-than-expected recession and in May 2016 again downgraded to BB with negative outlook, which it held in 2017 before downgrading to BB- in February 2018.

Any further downgrading of Brazil’s sovereign credit ratings could heighten investor’s risk perception and therefore drive up the future cost of issuing debt and adversely affect the trading price of our common shares.

An active and liquid market for our common shares may fail to develop. The volatility and illiquidity inherent in the Brazilian securities market may significantly limit investors’ ability to sell our common shares at the desired price and time.

Investing in securities traded on emerging country markets such as Brazil’s often involves higher risk than other world markets, so these investments are generally considered to be of a more speculative nature. These investments are subject to certain political and economic risks, including, but not limited to:

• Changes in the regulatory, fiscal, economic and political environment that may affect investors’ ability to obtain full or partial return on their investments; and
• Restrictions on foreign investment and repatriation of invested capital.

The Brazilian securities market is substantially smaller, less liquid and more concentrated than major world securities markets such as the United States and the European Union, and may be more volatile. As of June 30, 2019, B3’s market capitalization was approximately R$4 trillion and its average daily trading volume was R$14.9 billion, while the NYSE’s market capitalization was approximately R$93.5 trillion with average daily trading volume of R$236.8 billion. We cannot guarantee that the offering’s conclusion will be followed by a liquid market or that there will be no possible restriction on trading the common shares, which may limit an investor’s ability to sell shares at the desired price and time. The price of our common shares may fluctuate significantly in response to a number of factors beyond our control. In addition, B3’s regulations may be different from those that foreign investors are used to, which may limit shareholders’ ability to sell their shares at the desired price and time.

In addition, stock prices following a public offering are often subject to volatility. These characteristics of the Brazilian capital markets may substantially limit investors’ ability to sell our common shares at the price and time desired. If an active and liquid market trading our common shares is not developed and maintained, the trading price of our common shares may be adversely affected.