25. Equity

25.1. Share Capital

On December 31, 2018, the share capital of Suzano is R$ 6,241,753, divided into 1,105,826,145 registered, book-entry common shares without par value.

The composition of the share capital is presented below:


	Common Shares
Shareholder	Number	(%)
Suzano Holding S.A.	367,612,234	33.24	%
Controlling Shareholders	185,693,440	16.80	%
Subtotal	553,305,674	50.04	%
Management	69,918,251	6.32	%
Treasury	12,042,004	1.09	%
BNDESPAR	75,909,985	6.86	%
Mondrian Investment Partners	72,878,900	6.59	%
Other shareholders	321,771,331	29.10	%
Total	1,105,826,145	100.00	%

By resolution of the Board of Directors, the capital may be increased, irrespective of any amendment to the Bylaws, up to the limit of 780,119,712 common shares, all exclusively book-entry shares.

On December 31, 2018, SUZB3 common shares ended the year quoted at R$ 38.08 (on December 31, 2017, SUZB3 was quoted at R$ 18.69).

25.2. Capital reserve

The Capital Reserve is composed of the balances of the tax incentive reserve, the stock option reserve, the treasury shares the and the costs directly attributable to the Share Offering, which are primarily composed of the expenses with the fees and commissions charged by legal counsel, consultants and auditors.

25.3. Treasury shares


						Average price
	Number of shares					per share
	Ordinary	Pref. A	Pref. B	Total	R$	(R$)
Balance on December 31, 2016	6,786,194	8,846,932	1,912,532	17,545,658	273,665	15.60
Shares sold (a)	—	(1,800,000)	—	(1,800,000)	(15,552)	8.64
Shares transferred (b)	7,055,810	(7,055,810)	—	—	—	—
Shares canceled (c)	—	—	(1,912,532)	(1,912,532)	(17,107)	8.94
Repurchase of shares (d)	—	8,878	—	8,878	82	9.24
Balance on 12/31/2017	13,842,004	—	—	13,842,004	241,088	17.42
Shares sold (a)	(1,800,000)	—	—	(1,800,000)	(22,823)	12.68
Balance on 12/31/2018	12,042,004	—	—	12,042,004	218,265	18.13

^(a)

Treasury shares used to meet the share-based compensation plan (Note 23).

^(b)

On September 29, 2017, the Company approved the proposal for migration to the Novo Mercado Listing Segment of B3 S.A. — Brasil, Bolsa, Balcão (“B3”) and the consequent conversion of all preferred shares issued by the Company into common shares at the ratio of one (1) preferred share, class “A” or class “B”, for one (1) common share.

^(c)

On April 28, 2017, the Annual and Extraordinary Shareholders Meeting approved the cancellation of 1,912,532 class “B” preferred shares.

^(d)

Repurchase of shares related to withdrawal rights exercised by shareholders who did not adhere to the conversion of preferred shares to common shares.

25.4. Retained earnings

The Reserve for Capital Increase is composed of 90% of the remaining balance of net income for the year, after dividends, and legal reserve and aims to ensure the Company adequate operational conditions.

The Special Statutory Reserve includes the remaining 10% of the remaining balance of net income for the year and aims to ensure the distribution of dividends.

25.5. Other reserves


			Exchange
	Conversion of		variation/
	debentures -	Actuarial	Conversion
	5th issue	gains/losses (a)	reserves	Deemed cost (a)	Total
Balances on December 31, 2016	(45,745)	(55,503)	(11,384)	2,427,199	2,314,567
Actuarial losses net of deferred income and social contribution taxes	—	2,754	—	—	2,754
Gains from conversion of operations abroad	—	—	38,006	—	38,006
Partial realization of cost adjustment attributed to assets, net of deferred income and social contribution taxes	—	—	—	(56,999)	(56,999)
Balances on December 31, 2017	(45,745)	(52,749)	26,622	2,370,200	2,298,328
Actuarial gain of deferred income tax and social contribution	—	(45,741)	—	—	(45,741)
Gains from conversion of operations abroad	—	—	137,546	—	137,546
Partial realization of cost adjustment attributed to assets, net of deferred income and social contribution taxes	—	—	—	(68,424)	(68,424)
Balances on December 31, 2018	(45,745)	(98,490)	164,168	2,301,776	2,321,708

^(a)

Net of deferred tax effects

25.6. Earnings per share

Basic

Basic earnings (loss) per share is calculated by dividing the profit attributable to the Company’s shareholders by the weighted average common shares issued during the year, excluding the common shares acquired by the Company and held as treasury shares.

As described in Note 27.3) b), in November 2017, the Company migrated to the Novo Mercado segment. Thus, all preferred shares were converted into common shares at the ratio of one preferred share for one common share. Considering that there was no change in capital stock, with mere conversion of preferred shares, for the purposes of calculation and presentation of earnings per share, this conversion was considered retrospectively.


	12/31/2018	12/31/2017	12/31/2016

Earnings attributed to shareholders	319,814	1,820,994	1,677,815

Weighted average number of shares in the year	1,105,826	1,106,297	1,107,739
Weighted average treasury shares	(12,333)	(14,597)	(17,696)
Weighted average number of outstanding shares	1,093,493	1,091,700	1,090,043

Total basic earnings per common share	0.29236	1.66804	1.53922

Diluted

Diluted earnings per share is calculated by adjusting the weighted average of outstanding common shares assuming the conversion of all common shares that would cause dilution. The Company presents dilution potential: call options exercisable at the discretion of the holder.


	12/31/2018	12/31/2017	12/31/2016

Earnings attributed to shareholders	319,814	1,820,994	1,677,815

Weighted average number of shares in the year	1,093,493	1,091,700	1,090,043
Adjustment by stock options	1,386	2,428	3,493
Weighted average number of shares (diluted)	1,094,879	1,094,128	1,093,536

Total diluted earnings per common share	0.29199	1.66433	1.53430

25.7. Dividends

The minimum dividends for each fiscal year should be equivalent to the lowest of: (i) twenty-five percent (25%) of the net income from the year adjusted pursuant to article 202 of Brazilian Corporations Law; or (ii) ten percent (10%) of the Company’s operating cash generation in the respective fiscal year.”

On December 31, 2018, based on the criteria defined in the bylaws, mandatory minimum dividends were determined based on item i)


		12/31/2018
Net income for the year		318,339
Accrual of legal reserve – 5%		(15,917)
Accrual of reserve for tax incentives		(288,557)
Dividend calculation base		13,865

Minimum mandatory dividends – 25%		3,466

As a proposal of the Management, the amount of R$ 600,000 of total dividends will be submitted to Annual General Meeting/Extraordinary approval. The portion exceeding the mandatory minimum dividends, if approved, will be allocated to the profit reserves.

On December 31, 2017, the Company calculated dividends as follows:


		12/31/2017

Net Income for the year		1,807,433
Accrual of legal reserve - 5%		(90,372)
Accrual of reserve for tax incentives		(196,604)
Dividend calculation base		1,520,457
Minimum mandatory dividends - 25%		380,115

Dividends paid in advance as interest on own capital		(199,835)
		180,280

The Company revised the calculation of the proposed dividends for the fiscal year ended December 31, 2017 as follows:


Article 26, c), i)

Net Income under statutary book for the year		1,807,433

Net Income Allocation:
Legal Reserve 5% - Art. 31, "a" of the Bylaws and Art. 193 of Federal Law 6,404/76		90,372
Tax Incentive Result (Profit from Exploration) Art. 19 of Decree 1,598/77		196,604

Dividend distribution base		1,520,458

Proposed dividends		380,115
Interest on own capital		199,835
(-) Withholding Income Tax on interest on own capital		(29,975)
Minimum mandatory dividends payable		210,255


Article 26, c), ii)

Net Income under statutary book for the year		1,807,433
(-) Financial income		(379,049)
(+) Financial expenses		1,397,889

(+) Depreciation/Amortization/Depletion		1,402,778

(+) IRPJ / CSLL		431,632
EBITDA		4,660,683
(-) Fair Value of Biological Assets		(192,504)
(+) Other non-recurring adjustments		146,720
Adjusted EBITDA*		4,614,899

(-) Sustaining CAPEX		(1,099,771)
Operating Cash Generation - GCO		3,515,128

Dividends - Art 26, "c" of the Bylaws		351,513

Interest on equity		199,835
(-) Withholding Income Tax on interest on own capital		(29,975)
Minimum mandatory dividends payable		181,653

Based on the calculation above, the amount of R$ 351,513 was considered as minimum mandatory dividends for fiscal year 2017, of which the net amount of R$169,860 was paid as interest on own capital, with the balance of R$ 181,653 remaining payable. The difference of R$ 1,373 between the amount previously disclosed in December 31, 2017 (R$ 180,280) and the minimum dividend calculated in accordance with article 26, c), item ii) of the Bylaws off the Company was deemed immaterial by the Management and therefore the financial statements for the fiscal year ended December 31, 2017 will not be restated.

Even though the minimum mandatory dividend amounted R$ 351,513, Management submitted to the Annual Shareholders' Meeting held on April 26, 2018 and approved the proposal for total dividends related to the fiscal year of 2017 in the amount of R$ 380,115, which was paid on December 11, 2017 by interest on equity the amount of R$ 199,835 and on May 9, 2018 the remaining balance.