A.[RESERVED] B.CAPITALIZATION AND INDEBTEDNESS Not required, as the Company is filing this Form 20-F as an annual report. C.REASONS FOR THE OFFER AND USE OF PROCEEDS Not required, as the Company is filing this Form 20-F as an annual report. D.RISK FACTORS We are subject to various risks and uncertainties resulting from changing competitive, economic, political and social conditions that could harm our business, results of operations or financial condition. The risks described below could adversely affect our business, consolidated financial position, results of operations or cash flows. These risks are not the only ones we face. Other risks that we do not presently know about or that we presently believe are not material could also adversely affect us. Risks Relating to our Business and the Steel Industry Cyclical and Global Economic Volatility in Steel Demand The steel industry is highly cyclical and strongly influenced by global economic conditions. Fluctuations in demand, international prices, trade policies, and production overcapacity (particularly in major producing countries) create significant volatility in steel markets. Past events highlight this vulnerability: the (i) 2008–2009 global financial crisis led to a sharp decline in steel demand; (ii) the COVID-19 pandemic in 2020 caused severe disruptions before stimulus-driven recovery; and (iii) the U.S. tariff measures in 2025 further distorted trade flows and pressured international prices. These examples underscore how external shocks can quickly affect steel consumption, pricing, and global trade flows. Global crises, economic slowdowns, geopolitical tensions, and downturns in key consuming sectors such as construction and automotive can depress demand and prices, increase imports, and disrupt trade. In such environments, the Company may face reduced shipments, lower revenues, and margin compression. If the Company is unable to remain competitive under these shifting market conditions, its profitability and overall financial condition may be adversely affected. Our results and financial condition are affected by global and local market conditions that we do not control and cannot predict. Our results of operations and financial condition are subject to significant volatility due to global and local market dynamics beyond our control. The steel industry is inherently cyclical, and fluctuations in steel demand, pricing, and production costs can materially impact our profitability. A significant portion of our operations are concentrated in North America. As a result, our exposure to economic, political, and regulatory conditions in these markets has increased year over year. Changes in economic activity, interest rates, trade policies, currency fluctuations, or other market conditions in North America could adversely affect our business, financial condition, and results of operations. The range of economic factors influencing their markets is broad and often unpredictable, thereby increasing the potential impact on our operations. 3 Table of Contents Additionally, rising energy costs, constrains on raw material availability, and foreign exchange rate fluctuations can increase our operational expenses and reduce margins. External factors such as economic downturns, changes in infrastructure spending, supply chain disruptions, and shifts in global trade policies, including protectionist measures and tariffs, may also adversely affect our operations. Global economic weakness may prompt banks to limit or deny lending to us or to our customers, which could cause our customers to slow down or reduce their purchase of our products. This, in turn, could have a material adverse effect on our liquidity, operations, and our ability to carry out our announced capital investment programs. We may experience longer sales cycles, difficulty in collecting sales proceeds and lower prices for our products. We cannot provide any assurance that any of these events will not have a material adverse effect on market conditions, the prices of our securities, our ability to obtain financing and our results of operations and financial condition. Global conflicts and sanctions may adversely affect our operations and financial condition. Armed conflicts and geopolitical events may negatively impact demand for steel and iron ore, commodity prices, and energy costs. Sanctions imposed in connection with such conflicts, or any escalation thereof, could disrupt financial and commodity markets, restrict trade, and have long-lasting effects beyond the duration of the conflicts. These factors may materially and adversely affect our business, results of operations, and financial condition. The continuing Russian invasion of Ukraine, conflict on the border between Israel and the Gaza strip, the U.S. attack in Iran, the ongoing economic, political and humanitarian crisis in Venezuela, and the sanctions imposed (and further sanctions that may be imposed) could have further destabilizing effects on financial markets and certain commodity markets. Any substantial escalation would have a material adverse effect on macroeconomic conditions. In addition, sanctions may remain in place beyond the duration of any military conflict and have a long-lasting impact regionally and globally and could adversely impact the Company’s results of operations and financial condition. Any other global conflicts could have a material adverse effect on the overall macroeconomic environment, impacting financial markets and certain commodity markets, with a materially adverse impact on our results of operations and financial condition. Gerdau faces significant competition in relation to its steel products, including prices of other domestic and foreign producers, which may adversely affect its profitability and market share. The global steel industry is highly competitive with respect to price, quality of products and customer service, as well as to technological advances that allow the reduction of production costs. Brazilian exports of steel products are influenced by several factors, including protectionist policies of other countries, foreign exchange policy and the growth rate of the world economy. Moreover, continuous advances in material sciences and the resulting technologies facilitate the improvement of products such as plastic, aluminum, ceramics, glass and timber, permitting them to serve as substitutes for steel. Due to the high initial investment costs, the operation of a steel plant on a continuous basis may encourage mill operators to maintain high production levels, even in periods of low demand, which increases the pressure on industry profit margins. That said, competitive pressures that force the fall of steel prices can also affect the profitability of Gerdau. The steel industry has historically suffered from excess of production capacity, which has worsened due to a substantial increase in production capacity in emerging countries, particularly China and India and other emerging markets. China is currently the largest global steel producer. Unfavorable conditions in China and steel-exporting countries can significantly impact steel prices in other markets. China, as the world’s largest steel producer and consumer, influences global steel demand and supply dynamics. Factors like a lack of real estate investment, lower consumer confidence and rationalization of government stimulus can diminish steel demand within China, affecting global prices. Additionally, steel-exporting countries, benefiting from lower production costs, efficient supply chains, and economies of scale, can exert competitive pressures on international steel prices, particularly when coupled with government subsidies or trade agreements. These combined factors create a complex interplay of supply and demand forces that can swiftly impact steel prices worldwide. 4 Table of Contents In 2023, 2024 and 2025, steel companies in Brazil faced strong competition from imported products, mainly due to the global excess in steel production, culminating in an unhealthy market capture near the record highs, increasing the competitive imbalance, mainly driven by predatory steel imports from China. According to the Brazil Steel Institute, steel imports in Brazil reached 6.4 million tonnes in 2025, up 7.4% over 2024, which has harmed fair competition in the Brazilian markets where Gerdau operates in the country and impacted the Company’s results. Although Gerdau is a modern and highly efficient producer, the Company cannot compete with heavily subsidized imports, which may adversely affect the competitiveness of the industry, its financial condition, and results of operations in the future. An increase in China’s steelmaking capacity or a slowdown in China’s steel consumption could have a material adverse effect on domestic and global steel pricing and could result in increased steel imports into the markets in which the Company operates. One significant factor in the global steel market has been China’s high steel production capacity. However, very substantial consumers of steel have lost relevance in the Chinese economy, causing a deep and structural imbalance between steel supply and demand in the Chinese domestic market. China is currently the world’s largest steel producer and has favorable conditions such as excess steel capacity, devalued currency and a job maintenance policy. In addition, the Chinese government subsidizes surplus steel production, exporting these volumes at prices below production costs in several countries in the transoceanic region that have not yet taken sufficient trade defense measures against trade practices that enable predatory steel imports, such as Brazil, and consequently pushing down international steel prices. Trade defense measures against predatory practices are legal and supported by the World Trade Organization. Some countries such as the United States, Mexico, Colombia, Turkey, Vietnam and the 27 countries of the European Union have adopted relevant measures to combat the entry of subsidized Chinese steel, strengthening their economies, their industries, and their jobs. In 2025, steel imports in Brazil increased by 7.4% compared to 2024 and reached for the third straight year a record volume in the annual historical series, according to the Brazil Steel Institute. Over 2023,2024 and 2025, Gerdau faced again an increase in the penetration of imported steel in Brazil, particularly from China. For these reasons, players in the sector have been defending the need for a review of import tariffs in Brazil to ensure fairer and more competitive conditions for the national steel market. The Brazilian government partially addressed the steel sector since 2024 with a temporary hike of tariffs for some flat and long steel products utilizing a quota system, which proved insufficient so far. If the Brazilian government does not enhance measures against subsidized steel imports and the high level of imports continues without adequate measures that guarantee fair competition with the local market, Gerdau’s financial condition and results of operations may be negatively affected in the future. In addition to direct steel imports, the Brazilian industry also faces competition from imported finished products, which negatively affects the entire steel supply and production chain. Higher steel scrap prices or a reduction in supply could adversely affect production costs and operating margins. The main metal input for the Company’s mini mills is steel scrap. Although international steel scrap prices are determined essentially by scrap prices in the U.S., due to the United States being the main scrap exporter in the world, scrap prices in the Brazilian market are set by domestic suppliers and demand and by scrap exports to India, the main destination to Brazilian scrap exports. The price of steel scrap in Brazil varies from region to region and reflects supply, demand and transportation costs. Should scrap prices increase significantly without a corresponding increase in finished steel selling prices, the Company’s profits and margins could be adversely affected. An increase in steel scrap prices or a shortage in the supply of scrap to its units would affect production costs and potentially reduce operating margins and revenues. As a result, the Company’s financial condition and results of operations may be adversely affected. Increases in iron ore and coal prices, or reductions in market supply, and price increases in other inputs, could adversely affect the Company’s operations. When the prices of raw materials, particularly iron ore and coking coal, increase, and the Company needs to produce steel in its integrated facilities, the production costs in its integrated facilities also increase. The Company uses iron ore to produce hot pig iron at its Ouro Branco and Divinópolis mills located in the state of Minas Gerais. The Ouro Branco mill is the Company’s largest mill in Brazil, and its main metal input to produce steel is iron ore. This unit represented 55.2% of the total crude steel output (in volume) of the Brazil Business Segment in 2025. A shortage of iron ore in the domestic market may adversely affect the steel producing capacity of the Brazilian units, and an increase in iron ore prices could reduce profit margins. 5 Table of Contents The Company has iron ore mines in the Brazilian state of Minas Gerais. To mitigate its exposure to the volatility in iron ore prices, the Company invested in expanding the production capacity of these mines. All the Company’s coking coal requirements for its Brazilian unit at Ouro Branco are sourced domestically or imported. Coking coal is the main energy input at the Ouro Branco mill and is used at the coking facility and blast furnaces. Although this mill is not dependent on coke supplies, a contraction in the supply of coking coal could adversely affect the integrated operations at this site. The coking coal used in this mill is imported from Colombia, the United States and Russia. A shortage of coking coal in the international market would adversely affect the steel producing capacity of the Ouro Branco mill. To minimize the risks of shortages the Company has secured volumes under long-term contracts with negotiable indexed or fixed prices. In addition, an increase in prices could reduce profit margins. Another related risk is the currency depreciation to which the Ouro Branco Mill is exposed, since all coking coal consumed by the operation is imported. Volatility in the supply and prices of these and other raw materials, energy and transportation, could adversely affect the Company’s results of operations. We are vulnerable to inflationary cost pressures, especially in relation to the prices of electricity, natural gas and CO2. Such events could adversely affect the Company’s financial condition and results of operations. Risks Relating to our Operations The Company’s projects are subject to risks that may result in increased costs or delay or prevent their successful implementation. The Company has made investments to further enhance the productivity of its operations. These projects are subject to several risks that may adversely affect the Company’s growth prospects and profitability, including the following: ● the Company may encounter delays, availability problems or higher than expected costs in obtaining the necessary equipment, services and materials to build and operate a project; ● the Company’s efforts to develop projects according to schedule may be hampered by a lack of infrastructure, including availability of overburden and waste disposal areas as well as reliable power and water supplies; ● the Company may fail to obtain, may lose, or experience delays or higher than expected costs in obtaining or renewing the required permits, authorizations, licenses, concessions and/or regulatory approvals to build or continue a project; and ● changes in market conditions, laws or regulations may make a project less profitable than expected or economically or otherwise unfeasible. Any one or a combination of the factors described above may materially and adversely affect the Company’s financial condition and results of operations. Unexpected equipment failures may lead to production curtailments or shutdowns. Unexpected interruptions in the production capabilities at Gerdau’s principal sites and installations would increase production costs, reducing shipments and earnings for the affected period. These interruptions result from: (i) unpredictable/periodic equipment failures, which are essential to the development of the production processes of Gerdau, such as steelmaking equipment, its electric arc furnaces, continuous casters, gas-fired reheat furnaces, rolling mills and electrical equipment, including high-output transformers; and/or (ii) unanticipated events such as fires, explosions or severe weather conditions. As a result, Gerdau has experienced, and may in the future experience, material plant shutdowns or periods of reduced production. Unexpected interruptions in production capabilities would adversely affect Gerdau’s productivity and results of operations. Moreover, any interruption in production capability may require Gerdau to make additions to fixed assets to remedy the problem, which would reduce the amount of cash available for operations. Gerdau’s insurance may not cover the losses. In addition, long-term business disruption could harm the Company’s reputation and result in a loss of customers, which could adversely affect the business, results of operations, cash flows and financial condition. 6 Table of Contents Failure to obtain the necessary permits and licenses could adversely affect our operations. We depend on the issuance of permits and licenses from governmental agencies to undertake some of our activities that are considered polluting or potentially polluting. For obtaining said licenses, certain investments in conservation are required to offset any such impact. The operational licenses require, among other things, that we periodically report our compliance with emissions standards set by environmental agencies. Failure to obtain, renew or comply with our operating licenses may cause delays in our deployment of new activities, increased costs, monetary fines or even suspension of the affected activity, which may materially adversely affect us. The Company’s operations are energy-intensive, and energy shortages or higher energy prices could have an adverse effect on the Company’s financial condition and results of operations. Crude steel production is an energy-intensive process, especially in melt shops with electric arc furnaces. Electricity represents an important production component at these units, as does natural gas, although to a lesser extent. Electricity cannot be replaced at Gerdau’s mills and power rationing, or shortages, could adversely affect production at those units. As a result, the Company’s financial condition and results of operations may be adversely affected. Layoffs in the Company’s labor force could generate costs or negatively affect the Company’s operations. A substantial number of our employees are represented by labor unions and are covered by collective bargaining or other labor agreements, which are subject to periodic negotiation. Strikes or work stoppages have occurred in the past and could reoccur in connection with negotiations of new labor agreements or during other periods for other reasons, including the risk of layoffs during a down cycle that could generate severance costs. Moreover, the Company could be adversely affected by labor disruptions involving unrelated parties that may provide goods or services to the Company. Strikes and other labor disruptions at any of the Company operations could adversely affect the operation of facilities and the timing of completion and the cost of capital of our projects. Throughout 2025, the Company implemented workforce reductions. These measures were primarily driven by the significant increase in predatory steel imports into the Brazilian market, which adversely affected domestic production levels. If the Brazilian government does not implement measures against subsidized steel and the high level of imports persist without measures that guarantee fair competition with the local market, Gerdau may consider restructuring its operations in Brazil. This could involve shutdown of some other production capacities and, consequently, a recalibration of the workforce size, materially adversely affecting the financial condition and results of operations of the Company. We could be harmed by a failure or interruption of our information technology systems or automated machinery. We rely on our information technology systems and automated machinery to effectively manage our production processes and operate our business. Advanced technological systems and machinery are nonetheless subject to defects, interruptions and breakdowns. Any failure of our information technology systems and automated machinery to perform as we anticipate could disrupt our business and result in production errors, processing inefficiencies and the loss of sales and customers, which in turn could result in decreased revenue, increased overhead costs and excess or out-of-stock inventory levels resulting in a material adverse effect on our business results. Although we have procedures in place to prevent and minimize the impact of a potential failure, including a data back-up system for our management systems, 24/7 monitoring of our servers, and a cybersecurity program that maintains a Corporate Information Security Policy and a Data Privacy Policy in place, there is no assurance that these will work properly or that there will not be an impact on our results of operations or financial condition. In addition, our information technology systems and automated machinery may be vulnerable to damage or interruption from circumstances beyond our control, including fire, natural disasters, systems failures, viruses, cyber-attacks and other security breaches, including breaches of our production processing systems that could result in damage to our automated machinery, production interruptions or access to our confidential financial, operational or customer data. Any such damage or interruption could have a material adverse effect on our business results, including as a result of our facing significant fines, customer notice obligations or costly litigation, harming our reputation with our customers or requiring us to spend significant time and expense developing, repairing or upgrading our information technology systems and automated machinery. 7 Table of Contents Further, while we have some backup data-processing systems that could be used in the event of a failure of our primary systems, we do not yet have a disaster recovery plan or a backup data center that covers all of our units. While we endeavor to prepare for failures of our network by providing backup systems and procedures, we cannot guarantee that our current backup systems and procedures will operate satisfactorily in the event of a regional emergency. Any substantial failure of our backup systems to respond effectively or on a timely basis could have a material adverse effect on our business and results of operations. We are subject to information technology risks related to breaches of security pertaining to sensitive company, customer, employee and vendor information as well as breaches in the technology used to manage operations and other business processes. Cybersecurity is a significant concern due to the importance of information technology to the successful conduct of our business operations.We have an executive dedicated to leading the Information Security and Data Protection effort as well as an internal team with qualified specialists and analysts to conduct and evaluate the adequacy of the security and data protection controls. Additionally, we also have an incident response service provider to support our team to prevent and respond to cyber incidents. We rely upon secure information technology systems for data capture, processing, storage and reporting. Despite careful security and controls design, implementation, updating and independent third-party verification, that also includes specific policies, procedures, and specialized software tools for cybersecurity and data protection, our information technology systems, and those of our third-party providers, could become subject to employee error or malfeasance, natural disasters or be susceptible to cyberattacks. Network, system, application, and data breaches could result in operational disruptions or information misappropriation. Access to internal applications required to plan our operations, source materials, manufacture and goods and account for orders could be denied or misused. Theft of intellectual property or trade secrets, and inappropriate disclosure of confidential company, employee, customer or vendor information, could stem from such incidents. Any of these operational disruptions and/or misappropriation of information could result in lost sales, business delays, negative publicity and could have a material effect on our business. We also could be required to spend significant financial and other resources to remedy the damage caused by a security breach, including repairing or replacing networks and information technology systems, liability for stolen information, increased cybersecurity protection costs, litigation expense and increased insurance premiums. Outbreaks of disease and health epidemics could have a negative impact on our business revenues and results of operations. The Company monitors the outbreaks of disease and health epidemics and the impacts these may have on the routines of employees, contractors, suppliers, customers and other business partners who may be prevented from conducting certain business activities for an indefinite period. These effects include shutdowns that may be requested or mandated by governmental authorities or otherwise elected by companies as a preventive measure. In addition, mandated government authority measures or other measures elected by companies as preventative measures may lead to our customers being unable to complete purchases or other activities. Demand for our steel products is directly linked to overall economic activity within those international markets in which we sell our products. A decline in the level of activity in either the domestic or the international markets within which we operate as a result of future outbreaks of disease and health epidemics and related measures to contain them could adversely affect and impact both the demand and the price of our products and have a material adverse effect on us. Furthermore, the nature of our business is complex and, to keep operating, most of our work cannot be performed remotely. Our focus is on protecting the health of our employees and, therefore, we encourage them to take care of their health, since operational continuity is key to people’s jobs, to local communities and to the economies of the countries and regions where we operate. Risks Relating to our Mining Operations Estimates of Gerdau’s mineral resources are based on interpretations and assumptions, involving a level of uncertainty, and may differ substantially from the quantities that can be extracted. Gerdau’s mineral resources refer to estimated quantities of iron ore and minerals. In 2023, Gerdau received the certification report for the iron ore reserves at the mine located in Miguel Burnier District, municipality of Ouro Preto (MG - Brazil). The report was prepared by the independent certifier SRK Consulting, and according to the report, the Company had certified reserves of 476 million dry metric tons of iron ore, comprised of 138 million tonnes of proven reserves and 338 million tonnes of probable reserves. These mining operations are part of Brazil Business Segment, with the focus on supplying iron ore for it. 8 Table of Contents Notwithstanding the report, there are several uncertainties that are inherent to such estimates of resources, including many factors that are beyond our control, such as geological and technological factors. All estimates of Gerdau’s mineral resources and reserves are based on interpretations and assumptions that involve a level of uncertainty. If the amount of mineral resources that actually can be extracted differs materially from our estimates, our business, results of operations and financial condition could be materially adversely impacted. The Company has one mining dam for the disposal of tailings, and any accident or defect that affects the structural integrity could affect its image, operating results, cash flows and financial condition. Gerdau has one mining dam, downstream, for the disposal of tailings in the state of Minas Gerais, the Alemães Dam, which has been in operation since 2011 and is regularly monitored. In 2023, this structure had its construction methodology changed to downstream heightening from originally upstream heightening, and therefore fully complying with the Brazilian regulations. Furthermore, following Gerdau’s decision, the tailings disposal at the Dam was ceased by February 2023, and therefore the Company is disposing 100% of its tailings through dry stacking. The Alemães Dam is classified as Class B (low risk) in accordance with the National Mining Dam Registry available on the website of the National Mining Agency (ANM). Gerdau adopts rigorous standards for engineering control and environmental supervision and conducts a half-yearly Geotechnical Stability Audit to ensure the stability of the dam. Gerdau maintains Mining Dam Emergency Action Plans that are filed at the regulatory agencies, as required by applicable regulations. The Company also has other structures that are treated as Mining Dams by the ANM: UTM 2 Bays, North Dike of Waste Pile 01, and North and South Bays of Waste Pile A. These are structures that receive stormwater runoff and/or effluents from drainage at the Ore Treatment Units to enable the sedimentation of solid waste before the water is returned to the environment. An accident involving any of these dams could have serious adverse consequences, including: ● Temporary/permanent shutdown of mining activities and consequently the need to buy iron ore to supply mills; ● High expenditures on contingencies and on recovering the regions and people affected; ● High investments to resume operations; ● Payment of fines and damages; and ● Potential environmental impacts. Any of these consequences could have a material adverse impact on the Company’s operating results, cash flow and financial condition. Financial Risks Any downgrade in the Company’s credit ratings could adversely affect the availability of new financing and increase its cost of capital. In 2007, the international rating agencies, Fitch Ratings and Standard & Poor’s, classified the Company’s credit risk as “investment grade”, enabling the Company to access more attractive borrowing rates. During reviews in 2025, despite a lower local sovereign credit rating, the Company maintained its investment grade rating with S&P (BBB), Fitch (BBB) and Moody’s (Baa2) with Moody’s with stable outlook, reflecting the Company’s history of conservative capital allocation, combined with the expectation of robust operating performance throughout the year. The loss of any one or more of Gerdau’s investment grade ratings could increase its cost of capital, impair its ability to obtain capital and adversely affect its financial condition and results of operations. 9 Table of Contents The Company’s level of indebtedness could adversely affect its ability to raise additional capital to fund operations, limit the ability to react to changes in the economy or the industry and prevent it from meeting its obligations under its debt agreements. The Company’s degree of leverage, together with a resulting change in rating by the credit rating agencies, could have important consequences, including the following: ● It may limit the ability to obtain additional financing for working capital, additions to fixed assets, product development, debt service requirements, acquisitions and general corporate or other purposes; ● It may limit the ability to declare dividends on its shares; ● A portion of the cash flows from operations might be dedicated to the payment of interest on existing indebtedness and would not be available for other purposes, including operations, additions to fixed assets and future business opportunities; ● It may limit the ability to adjust to changing market conditions and place the Company at a competitive disadvantage compared to its competitors that have less debt; ● The Company may be vulnerable in a downturn in general economic conditions; and ● The Company may be required to adjust the level of funds available for additions to fixed assets. As a result, the Company’s financial condition and results of operations may be adversely affected. Variations in the foreign exchange rates between the U.S. dollar and the currencies of countries in which the Company operates may increase the cost of servicing its debt denominated in foreign currency and adversely affect its overall financial performance. The Company’s results of operations are affected by fluctuations in the foreign exchange rates between the Brazilian real, the currency in which the Company prepares its financial statements, and the currencies of the countries in which it operates. For example, the North America Business Segment reports its results in U.S. dollars. Therefore, fluctuations in the exchange rate between the U.S. dollar and the Brazilian real could affect its results of operations. The same occurs with all other businesses located outside Brazil with respect to the exchange rate between the local currency of the respective subsidiary and the Brazilian real. Export revenue and margins are also affected by fluctuations in the exchange rate of the U.S. dollar and other local currencies of the countries where the Company produces in relation to the Brazilian real. The Company’s production costs are denominated in local currency, but its export sales are generally denominated in U.S. dollars. Revenues generated by exports denominated in U.S. dollars are reduced when they are translated into Brazilian real in periods during which the Brazilian currency appreciates in relation to the U.S. dollar. The Brazilian real appreciated against the US dollar by 5.3% in 2022 and by 8.0% in 2023. In 2024, the Brazilian real depreciated against the US dollar by 21.8%. In 2025, the Brazilian real appreciated against the US dollar by 11.1%. To date in 2026, the Brazilian real has appreciated against the US dollar by 6.4% by the beginning of March 2026. The Company held debt denominated in foreign currency, mainly U.S. dollars, in an aggregate amount of R$ 8.0 billion on December 31, 2025, representing 56% of its consolidated gross debt (loans, financings, and debentures). Significant further depreciation in the Brazilian real in relation to the U.S. dollar or other currencies could reduce the Company’s ability to service its obligations denominated in foreign currencies, particularly since a significant part of its net sales revenue is denominated in Brazilian reais. As a result, the Company’s financial condition and results of operations may be adversely affected. See Note 15 - Short-Term Debt and Long-Term Debt in its Consolidated Financial Statements included herein for further details. Exchange rate instability also may adversely affect the amount of dividends we can distribute to our shareholders, including the holders of our ADSs and the market price of our shares and ADSs. 10 Table of Contents We are involved in several tax, environmental, civil and labor disputes involving significant monetary claims. Unfavorable outcomes in judicial, administrative and regulatory litigation may negatively affect our results of operations, cash flows and financial condition. In the ordinary course of our business dealings, we are, and may become, party to numerous tax, environmental, civil and labor disputes involving, among other remedies, significant monetary claims. An unfavorable outcome against us may result in our being required to pay substantial amounts of money, including penalties and interest, which could materially adversely affect our reputation, results of operations, cash flows and financial condition. For certain of these legal proceedings and claims, we have not established a provision on our balance sheet or have only established provisions for part of the amounts in question, based on our external or internal counsels’ judgment as to the likelihood of an outcome unfavorable to us. Additionally, the amounts provisioned for legal proceedings may increase and existing provisions may become insufficient due to unfavorable outcomes in disputes against us. Although we are contesting existing proceedings and claims, the outcome of each specific proceeding and claim is uncertain and may result in obligations that could materially and adversely affect us. For further information concerning the principal pending matters, see Item 5.E - “Provisions for tax, civil and labor claims”, Item 8.A - “Legal Proceedings” and Note 19 – “Tax, Civil and Labor Claims and Contingent Assets” to the Consolidated Financial Statements appearing elsewhere in this Annual Report. Default by our clients or not receiving amounts invested with financial institutions could adversely affect the Company’s financial condition. Gerdau may suffer losses from the default of our clients. Gerdau has a broad base of active clients and, in the case of default of a group of clients, Gerdau may suffer an adverse effect on its business, financial condition, results of operations and cash flows. This risk arises from the possibility of the Company not receiving amounts arising from sales to customers or investments made with financial institutions, which could also have an adverse effect on the business, financial condition, results of operations and cash flows of Gerdau. Regulatory Risks Restrictive measures on trade in steel products may affect the Company’s business by increasing the price of its products or reducing its ability to export. This could adversely affect its business operations, financial condition and results of operations. Gerdau is a steel producer that supplies both the domestic market where it operates and several other international markets. The Company’s exports face competition from other steel producers, as well as restrictions imposed by importing countries in the form of quotas, ad valorem taxes, tariffs or increases in import duties, any of which could increase the costs of products and make them less competitive or prevent Gerdau from selling in these markets. There are no assurances that importing countries will not impose quotas, ad valorem taxes, tariffs or increase import duties, which could adversely affect the Company’s financial condition and results of operations. Conversely, restrictive measures on trade might positively impact the domestic steel demand in markets where Gerdau operates. An example of that scenario is the steel import tariffs reinstated by the Trump administration in early 2025. Effective March 12, 2025, the administration mandated that steel imports from several countries—including Canada, Mexico, the European Union, Japan, South Korea, the United Kingdom, Argentina, Australia, and Brazil—be subject to a 25% tariff. Following the initial reinstatement, trade policy tightened further when these tariffs were increased to 50% in June 2025 (with the exception of the UK, which remained at 25% pending trade negotiations). This series of measures represented a significant shift in U.S. trade policy, moving away from negotiated agreements and exemptions toward a more universal tariff structure. These decisions aimed to curb surging imports, address circumvention concerns, and strengthen domestic steel production. Gerdau believes that the trade defense measures aimed at strengthening the U.S. industry will influence greater capacity utilization and further improve the competitiveness of the Company’s operations in the U.S. The revised 50% import tariffs have addressed the exceptions resulting from Section 232, where previously only approximately 20% of the steel shipments imported to the United States were subject to tariffs. The current shift in U.S. trade policy is still developing, and therefore there are no assurances that the 50% tariffs favoring domestic steel production will not be lifted, altered, or significantly weakened—whether by legal challenges, new legislation, additional executive actions, or other means. However, a recent U.S. Supreme Court decision invalidating certain tariffs imposed under emergency economic powers is not expected to affect the steel tariffs implemented under Section 232. Nevertheless, if these tariffs were to be lifted or significantly weakened, it is likely that foreign steel imports would rise, leading to a decrease in U.S. steel prices. This change could have a significant negative impact on our revenues, financial performance, and cash flow. On the other hand, with the new tax on steel exports, Brazil could face a challenging period, especially as it is a major exporter of semi-finished products to the United States. In addition, Brazil could face increased imports due to higher tariffs in other markets and the ineffectiveness of the current quota-tariff system. 11 Table of Contents Costs related to compliance with environmental regulations could increase if requirements become stricter, which could have a negative effect on the Company’s results of operations. The Company’s industrial units and other activities must comply with a series of federal, state and municipal laws and regulations regarding the environment and the operation of plants in the countries in which they operate. These regulations include procedures relating to control of air emissions, disposal of liquid effluents and the handling, processing, storage, disposal and reuse of solid waste, hazardous or not, as well as other controls necessary for a steel company and with mining activities. Non-compliance with environmental and regulatory laws and regulations could result in administrative, civil or criminal sanctions and closure orders, in addition to the obligation of repairing damage caused to third parties and the environment, such as clean-up of contamination. If current and future laws become stricter, spending on fixed assets and costs to comply with legislation could increase and negatively affect the Company’s financial condition. Moreover, future acquisitions could subject the Company to additional spending and costs to comply with environmental and regulatory legislation. As a result, the Company’s financial condition and results of operations may be adversely affected. Laws and regulations to reduce greenhouse gases and other atmospheric emissions could be enacted in the near future, with significant, adverse effects on the results of the Company’s operations, cash flows and financial condition. The Company expects operations overseas to be affected by future federal, state and municipal laws related to climate change, seeking to deal with the question of GHG and other atmospheric emissions. Thus, one of the possible effects of this increase in legal requirements could be an increase in energy costs. As a result, the Company’s financial condition and results of operations may be adversely affected. A significant number of scientists, environmentalists, international organizations, regulators and other commentators sustain that global climate change has contributed, and will continue to contribute, to the increasing unpredictability, frequency and severity of natural disasters (including, but not limited to, hurricanes, droughts, tornadoes, freezes, other storms and fires) in certain parts of the world. As a result, several legal and regulatory measures as well as social initiatives have been introduced in numerous countries in an effort to reduce carbon dioxide and other greenhouse gas (GHG) emissions and combat global climate change. Such reductions in GHG emissions could result in increased energy, transportation and raw material costs and may require us to make additional investments in facilities and equipment. Although we cannot predict the impact of changing global climate conditions without certain assumptions, or of legal, regulatory and social responses to concerns about global climate change, any such occurrences may negatively affect our business, financial condition, results of operations and cash flows. Laws and regulations seeking to reduce GHG emissions can be enacted in the future, which could have a significant adverse impact on the operating results, cash flows, and the financial condition of the Company. One of the possible effects of the expansion of GHG emissions reduction requirements is an increase in costs, mainly resulting from the demand for renewable energy and the implementation of new technologies in the productive chain. On the other hand, demand is expected to grow constantly for recyclable materials such as steel, which, being a product that could be recycled numerous times without losing its properties, results in lower emissions during the lifecycle of the product. On December 11, 2024, the carbon market in Brazil was regulated by law, establishing the Brazilian Emissions Trading System (SBCE). Penalties can be applied for non-compliance. The implementation will occur in five phases, starting with the regulation, and the last one being the full implementation, which is expected to take at least four years from the regulation date. Penalties can be applied for non-compliance once they are in force. At state levels, there are demands for accounting for the inventory of GHG emissions and reporting to regulatory bodies as well as discussions about decarbonization strategies. In the U.S., future federal and/or state carbon regulation potentially presents impacts to our operations. To date, the U.S. Congress has not legislated carbon constraints, and near-term passage of any federal domestic carbon tax appears unlikely. In terms of a carbon tax on imported goods, the U.S. has not yet enacted a federal carbon border adjustment, but the issue is being considered in Congress. There are bipartisan bills and proposals in play that would impose fees on imports based on their carbon intensity, especially as other major economies (like the EU) have already adopted similar mechanisms. Passage is possible but unlikely in the near-term and likely to depend on negotiation with trade allies and industry stakeholders. Also, additional state regulations, such as those adopted in California, may impact Gerdau from 2026, imposing additional reporting obligations when the Company transacts business in these states. 12 Table of Contents The Inflation Reduction Act (“IRA”), passed by the U.S. Congress in August 2022. The 2025 Budget Reconciliation Bill significantly curtailed IRA clean energy tax credits, accelerating phase-outs for wind and solar, and imposing other restrictions that have contributed to renewable energy industry uncertainty and investment challenges. The renewable energy sector represents a significant and growing market for Gerdau’s products. Mexico has advanced in consolidating its carbon market, through an Emissions Trading System (ETS) and it could affect our operations in the future. The Brazilian Securities and Exchange Commission (CVM) has published resolutions referring to the adoption of IFRS S1 and S2 standards, which are part of the International Financial Reporting Standards (IFRS) issued by the International Sustainability Standards Board (ISSB). The standards are focused on the disclosure of information related to, respectively, sustainability and climate risks and opportunities, when it is financially material. The voluntary adoption of these standards began in January 2024, and mandatory adoption is scheduled for January 2026. The European Union (EU) Carbon Border Adjustment Mechanism (CBAM) aims to avoid “carbon leakage”, ensuring that its climate policies are not undermined by production relocating to countries with less ambitious green standards or by the replacement of EU products by more carbon-intensive imports. EU has the EU Emissions Trading System (ETS) in place. EU importers of some goods, including steel will have to report on the volume of their imports and GHG emissions embedded during their production, but without paying any financial adjustment at this stage. The transitional phase, which started in October 2023, will last until 2026, when the definitive period starts. As of that date, importers will need to buy and surrender the number of “CBAM certificates” corresponding to the GHG emissions embedded in imported CBAM goods. This new mechanism will not only impact our operations, which may lead to increased costs for our customers who are importers, but it can also shift the flow of steel products. Any products that do not meet the criteria set forth by the CBAM or any other future mechanism will be less competitive in these markets. However, they may still be accepted in countries or regions without a carbon border adjustment mechanism in place, resulting in an increase in the volume of steel with less ambitious green standards in the market. This will lead to competition with steel that is differentiated based on GHG emissions. Legislation related to air quality and atmospheric emissions in Brazil influence management, monitoring, and reporting practices. Operations subject to these requirements must maintain full compliance, as noncompliance may lead to penalties and other regulatory consequences. As a result of these rules, our legal, accounting, and other compliance expenses may increase significantly, and compliance efforts may divert management time and attention. We may also be exposed to legal or regulatory action or claims as a result of these new regulations. Although the Company is in the process of evaluating the new rules, some of these risks could have a material adverse effect on our business, financial condition, results of operations and the prices of our securities. Our operations expose us to risks and challenges associated with conducting business in compliance with applicable anti-bribery, anti-corruption and antitrust laws and regulations. We have operations in Brazil and other countries in South America and North America. We face several risks and challenges inherent in conducting business internationally, where we are subject to a wide range of laws and regulations such as the Brazilian Anti-Corruption Law (Law 12,846/2013), Antitrust Law (Law 12,529/2011), the U.S. Foreign Corrupt Practices Act, or FCPA, and similar anti-bribery, anti-corruption and antitrust laws in other jurisdictions. In recent years, there has been an increased focus on corruption in Brazil and the investigation and enforcement activities of the United States under the FCPA and by other governments under similar laws and regulations. These laws generally prohibit corrupt payments to governmental officials and certain payments, gifts or remunerations to or from clients and suppliers. Violations of these laws and regulations could result in fines, criminal penalties and/or other sanctions against the Company, our officers or our employees, requirements to impose more stringent compliance programs, and prohibitions on the conduct of the Company’s business and our ability to participate in public biddings. The Company may incur expenses and must recognize provisions and other charges in respect of such matters. In addition, the increased attention focused upon liability issues because of investigations, lawsuits and regulatory and environmental proceedings could harm our brand or otherwise impact the growth of our business. The retention and renewal of many of our contracts depend on creating a sense of trust with our customers and any violation of these laws and regulations may irreparably undermine that trust and may lead to termination of such relationships, as well as having a material adverse effect on our financial condition and results of operations. If any of these risks materialize, our reputation, strategy, international expansion efforts and our ability to attract and retain employees could be negatively impacted, and, consequently our business, financial condition and results of operations could be adversely affected. 13 Table of Contents Our governance and compliance processes may fail to prevent regulatory penalties and reputational harm. The Company operates in a global environment and our activities extend over multiple jurisdictions and complex regulatory frameworks, with increased enforcement activities worldwide. Our governance and compliance processes, which include the review of internal controls over financial reporting, may not be able to prevent future breaches of legal, accounting or governance standards. We may be subject to breaches of our Code of Ethics and Conduct, anti-corruption policies and business conduct protocols, as well as to cases of fraudulent behavior, corrupt practices and dishonesty by our employees, contractors and other agents. The Company’s failure to comply with applicable laws and other standards could subject it to fines, loss of operating licenses and reputational harm. Risks Relating to Brazil Any further downgrading of Brazil’s credit rating could adversely affect the price of our shares. We can be adversely affected by investors’ perceptions of risks related to Brazil’s sovereign debt credit rating. Rating agencies regularly evaluate Brazil and its sovereign ratings, which are based on several factors including macroeconomic and industry trends, fiscal and budgetary conditions, indebtedness metrics and the perspective of changes in any of these factors. On July 26, 2023, Fitch Ratings upgraded Brazil’s sovereign rating to “BB” from “BB-” and subsequently affirmed the rating at “BB” with a stable outlook in June 2025, citing the country’s resilient and diversified economy, strong external finances and deep local markets, balanced against fiscal challenges and rising government debt. On December 19, 2023, S&P Global Ratings upgraded Brazil’s sovereign credit rating to “BB” from “BB-”, reflecting structural reforms and a strong external position. In June 2025, S&P affirmed Brazil’s “BB” rating with a stable outlook, supported by robust external accounts and domestic capital markets, although constrained by persistent fiscal deficits and a high debt burden. On October 1, 2024, Moody’s Ratings upgraded Brazil’s long-term issuer and senior unsecured bond ratings to “Ba1” from “Ba2.” In May 2025, Moody’s affirmed the Ba1 rating but revised the outlook from positive to stable due to slower progress in addressing fiscal rigidities and concerns regarding debt affordability. Therefore, Brazil remains rated below investment grade by the three main credit rating agencies. Over the next few years, potential fiscal deterioration, increasing debt levels or weaker policy credibility could result in rating downgrades or negative outlook revisions. Conversely, continued structural and microeconomic reforms, sustained economic growth, and progress in stabilizing fiscal accounts and debt dynamics could support future rating upgrades. Brazil continues to experience political instability, which may adversely affect the Company. Brazil’s political environment has historically influenced, and continues to influence, the performance of the country’s economy. Political crises have affected and continue to affect the confidence of investors and the public, which have historically resulted in economic deceleration and heightened volatility in the securities issued by Brazilian companies. Recent developments underscore the persistence of political instability in Brazil. The lead-up to the 2026 presidential elections has been marked by heightened polarization, frequent disputes between different branches of government, and uncertainty regarding the direction of future economic and industrial policies. These dynamics may affect regulatory frameworks, trade relations, and infrastructure investments that are critical to the steel industry. In particular, changes in government priorities or delays in policy implementation could impact demand for steel in construction and manufacturing, as well as alter the competitive landscape through adjustments in taxation, environmental regulation, or labor policies. Such instability may reduce investor confidence, increase market volatility, and adversely affect the Company’s operations and financial performance. In addition, the Brazilian economy remains subject to government policies, which may affect our operations and financial performance. Governmental policies and actions, if unsuccessful or poorly implemented, may affect our operations and financial performance. Uncertainty regarding the implementation by the administration of promised transformational changes in monetary and fiscal policy, as well as the enactment of the corresponding legislation, could contribute to economic instability. 14 Table of Contents Inflation and government actions to combat inflation may contribute significantly to economic uncertainty in Brazil and could adversely affect the Company’s business. If Brazil experiences high levels of inflation once again, the Brazilian Central Bank will need to implement higher interest rate and the country’s rate of economic growth could slow, which would lead to lower demand for the Company’s products in Brazil. Inflation is also likely to increase some costs and expenses which the Company may not be able to pass on to its customers and, as a result, may reduce its profit margins and net income. In addition, higher domestic interest rates, could lead the cost of servicing the Company’s debt denominated in Brazilian reais to increase. Inflation may also hinder its access to capital markets, which could adversely affect its ability to refinance debt. Inflationary pressures may also lead to the imposition of additional government policies to combat inflation that could adversely affect our business. As a result, the Company’s financial condition and results of operations may be adversely affected. Developments and the perception of risks in other countries, especially in the United States and emerging market countries, may adversely affect the market prices of our shares. The market for securities issued by Brazilian companies is influenced, in some degree, by economic and market conditions in the United States and emerging market countries, especially other Latin American countries. The reaction of investors to economic developments in one country may cause the capital markets in other countries to fluctuate. Developments or adverse economic conditions in other emerging market countries have at times resulted in significant reductions of the investments from investment funds and declines in the amount of foreign currency invested in Brazil. The Brazilian economy is also affected by international economic and market conditions, especially economic and market conditions in the United States. Share prices on the B3, for example, have historically been sensitive to fluctuations in United States interest rates as well as movements of the major United States stocks indexes. Economic developments in other countries and securities markets could adversely affect the market prices of our shares, which could make it more difficult for us to access the capital markets and finance our operations in the future on acceptable terms, besides having a material adverse effect on our financial condition and results of operations. Risks Related to our Corporate Structure The interests of the controlling shareholder may conflict with the interests of the non-controlling shareholders. Subject to the provisions of the Company’s Bylaws, the controlling shareholder has powers to: ● elect a majority of the directors and nominate executive officers, establish the administrative policy and exercise full control of the Company´s management; ● sell or otherwise transfer the Company´s shares; and ● approve any action requiring the approval of shareholders representing a majority of the outstanding capital stock, including corporate reorganization, acquisition and sale of assets, and payment of any future dividends. By having such power, the controlling shareholder can make decisions that may conflict with the interest of the Company and other shareholders, which could adversely affect the financial condition and the results of operations of the Company. Nonetheless, it should be noted that the controlling shareholder has responsibilities under the Brazilian Corporations Law (Law No. 6,404/76, which impose a duty to prevent the adoption of decisions that may lead in this direction, and such conflict-of-interest matters are also addressed in the Company’s Related Parties Policy. 15 Table of Contents The loss of members of the senior management and executives of the Company can have an adverse impact on the business. Gerdau has various programs to attract, incentive and retain its senior management and executives, backed up by an inclusive and diverse culture. The Company also carries out evaluations of performance, potential and readiness for advancement to senior management and executives. Gerdau’s ability to remain competitive depends to a large degree on the continuity of efforts and services rendered by its senior management and executives. The loss of members of the senior management and executives can impact the Company’s business, since it can negatively affect our capacity to develop and implement our strategy, adversely impacting our operations and our financial and operating condition, possibly impacting investors’ investment decisions. Some senior management and executives have left Gerdau in the past and others may do so in the future, such that we cannot predict the impact of the departure of senior management or executives or the consequences on the achievement of our business objectives. As a foreign issuer, we have different disclosure and other requirements than U.S. domestic registrants. As a foreign issuer, we may be subject to different disclosure and other requirements than domestic U.S. registrants. For example, as a foreign issuer, in the United States, we are not subject to the same disclosure requirements as a domestic U.S. registrant under the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), including the requirements to prepare and issue quarterly reports on Form 10-Q or to file current reports on Form 8-K upon the occurrence of specified significant events, the proxy rules applicable to domestic U.S. registrants under Section 14 of the Exchange Act or the insider reporting and short-swing profit rules applicable to domestic U.S. registrants under Section 16 of the Exchange Act. In addition, we intend to rely on exemptions from certain U.S. rules that will permit us to follow Brazilian legal requirements rather than certain requirements that are applicable to U.S. domestic registrants. Furthermore, foreign issuers are required to file their annual report on Form 20-F within 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year. As a result of the above, even though the Company must file reports on Form 6-K disclosing the information that it has made or is required to make public pursuant to Brazilian law, or is required to distribute to shareholders generally, and that is material to the Company, the investors may not receive information of the same type or amount that is required to be disclosed to shareholders of a U.S. company. As a foreign issuer, we are permitted to, and we do, rely on exemptions from certain NYSE corporate governance standards, including the requirement that a majority of our board of directors consist of independent directors. This may afford less protection to our shareholders. The NYSE’s rules require listed companies to have, among other things, a majority of their board members be independent and to have independent director oversight of executive compensation, nomination of directors and corporate governance matters. As a foreign issuer and a subsidiary, we are permitted to, and we do, follow home country practice in lieu of the above requirements. Brazilian law, the law of our home country, does not require that a majority of our board consist of independent directors or the implementation of a compensation committee or nominating a corporate governance committee, and our board includes fewer independent directors than would be required if we were subject to the NYSE rules applicable to most U.S. companies. As long as we rely on the foreign issuer exemptions to the NYSE rules, a majority of our board of directors is not required to consist of independent directors, our compensation committee is not required to be comprised entirely of independent directors, and we are not required to have a nominating and corporate governance committee. Therefore, our board’s approach may be different from that of a board with a majority of independent directors, and, as a result, the management team’s oversight of the Company may be more limited than if we were subject to the NYSE rules applicable to most U.S. companies. Risks Relating to Our Preferred Shares and ADSs If we do not maintain a registration statement and no exemption from the Securities Act registration is available, U.S. Holders of ADSs may be unable to exercise preemptive rights with respect to our Preferred Shares. We may not be able to offer our Preferred Shares to U.S. holders of ADSs residing in the U.S. pursuant to preemptive rights granted to holders of our Preferred Shares in connection with any future issuance of our Preferred Shares unless a registration statement under the Securities Act is effective with respect to such Preferred Shares and preemptive rights, or an exemption from the registration requirements of the Securities Act is available. We are not obligated to file or maintain a registration statement relating to any preemptive rights offerings with respect to our Preferred Shares, and we cannot assure you that we will file or maintain any such registration statement. If such a registration statement is not filed and maintained and an exemption from registration does not exist, our depositary will attempt to sell the preemptive rights, and you will be entitled to receive the proceeds of such sale. However, these preemptive rights will expire if the depositary does not sell them, and U.S. holders of ADSs will not realize any value from the granting of such preemptive rights. 16 Table of Contents Judgments of Brazilian courts with respect to our Preferred Shares will be payable only in reais. If proceedings are brought in the courts of Brazil seeking to enforce our obligations in respect of the Preferred Shares, we will not be required to discharge our obligations in a currency other than reais. Under Brazilian exchange control limitations, an obligation in Brazil to pay amounts denominated in a currency other than reais may only be satisfied in Brazilian currency at the exchange rate, as determined by the Central Bank, in effect on the date the judgment is obtained, and such amounts are then adjusted to reflect exchange rate variations through the effective payment date. The then prevailing exchange rate may not afford non-Brazilian investors with full compensation for any claim arising out of, or related to, our obligations under the Preferred Shares or the ADSs. If an ADS holder surrenders its ADSs and withdraws Preferred Shares, it risks losing the ability to remit foreign currency abroad and certain Brazilian tax advantages. An ADS holder benefits from the electronic certificate of foreign capital registration obtained by the custodian for our Preferred Shares underlying the ADSs in Brazil, which permits the custodian to convert dividends and other distributions with respect to the Preferred Shares into non-Brazilian currency and remit the proceeds abroad. If an ADS holder surrenders its ADSs and withdraws Preferred Shares, it will be entitled to continue to rely on the custodian’s electronic certificate of foreign capital registration for only five business days from the date of withdrawal. Thereafter, upon the disposition of or distributions relating to, the Preferred Shares unless it obtains its own electronic certificate of foreign capital registration or qualifies under Brazilian foreign investment regulations that entitle some foreign investors to buy and sell shares on Brazilian stock exchanges without obtaining separate electronic certificates of foreign capital registration, such former holder of ADSs would not be able to remit abroad non-Brazilian currency. In addition, if an ADS holder does not qualify under the foreign investment regulations, it will generally be subject to less favorable tax treatment of dividends and distributions on, and the proceeds from any sale of, our Preferred Shares. If an ADS holder attempts to obtain its own electronic certificate of foreign capital registration, it may incur expenses or suffer delays in the application process, which could delay its ability to receive dividends or distributions relating to our Preferred Shares or the return of its capital in a timely manner. The depositary’s electronic certificate of foreign capital registration may also be adversely affected by future legislative changes.