The Management of TIM Participações S.A. ("Company") proposes that the Net Profits related to the Fiscal Year 2009, in the amount of two hundred and fourteen million, eight hundred and ninety-three thousand, three hundred and fifty-three reais and seventy-five cents (R$ 214,893,353.75), be applied as follows:
1. Legal Reserve
Pursuant to the Section 193 of the Brazilian Law No. 6,404/76, it is mandatory the allocation of five percent (5%) of the Net Profits for the constitution of the Legal Reserve, in the amount of ten million, seven hundred and forty-four thousand, six hundred and sixty-seven reais and sixty-nine cents (10,744,667.69) .
According to the Company`s By-Laws, the non-cumulative prime dividends due to the holders of preferred shares of the Company, determined as six percent (6%) of the Company's capital stock, correspond to three hundred and twenty-two million, four hundred and one thousand, seven hundred and twenty-seven reais and fifty cents (R$ 322,401,727.50).
However, the outstanding balance of the Net Profits of the Fiscal Year 2009 reaches only the amount of two hundred and four million, one hundred and forty-eight thousand, six hundred and eighty-six reais and six cents (R$ 204,148,686.06).
In this regard, the Management of the Company proposes to fully distribute the outstanding balance, as prime dividends, to the holders of preferred shares of the Company in the date of the Shareholders`Meeting convened to approve their distribution, to be credited by the Company within sixty (60) days from the date of approval of their distribution by the Shareholders` Meeting, in the bank accounts previously informed by such shareholders.
It shall be emphasized that, according to this proposal, the holders of common shares of the Company shall not receive the mandatory minimum dividends, whereas the results of the Company in the fiscal year 2009 have been insufficient to fully pay the prime dividends due to the holders of preferred shares of the Company.
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