EXHIBIT 1
ENGLISH VERSION (1)
DESC, S.A. DE C.V.
CORPORATE BYLAWS
NAME
FIRST.- The name of the corporation is "DESC." This name shall be followed by
the words SOCIEDAD ANONIMA DE CAPITAL VARIABLE (variable capital stock company),
or the abbreviation thereof, "S.A. de C.V."
DOMICILE
SECOND.- The domicile of the Corporation is Mexico City, Federal district.
However it may establish offices, branches or agencies at any place in the
Mexican Republic or abroad.
PURPOSES
THIRD.- The purposes of the Company are the following:
a) Promotion and encouragement of industrial and tourism development and
acquisition, alienation, custody, and any other legal acts that have as object
stock, certificates of participation, bonds, obligations, equity interests, and
all kinds of securities issued by Mexican companies.
b) Promotion and encouragement of industrial and tourism development through
acquisition, alienation, and any other legal acts that have as object real
estate, factories, laboratories, plants, warehouses, machinery, equipment,
movable property, credits, and rights.
c) Granting all kinds of credits to companies in which it is a direct or
indirect owner of shares or equity interests, as well as being jointly bound,
giving guaranties, or securing in any form its obligations and the obligations
of the companies in which it is direct or indirectly owner of stock or equity
interests.
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(1) TN: This is an unofficial English version of the corporate bylaws of Desc,
S.A. de C.V. This version is for information purposes only. In case of
discrepancies with the Spanish version the latter will prevail.
d) Provide all kinds of services and perform studies for promotion, expansion or
restructuring intended exclusively or for those in which it has the purpose of
having any corporate participation.
e) Acquisition and alienation by any legal means of all kinds of real estate
that may be necessary or convenient to achieve the corporate purposes.
f) Lease of all kinds of real estate and execution of all kinds of legal acts by
which use or use and enjoyment of real estate is obtained or granted.
g) Acquisition of personal property, machinery, equipment and tools that may be
necessary or convenient for achieving the corporate purposes.
h) Acting as agent, representative or commission agent [comisionista] of persons
or companies, whether Mexican or foreign.
i) Giving or taking money as loan, provided it be permitted by the laws,
obtaining, as applicable, the prior permits that may be required.
j) Executing the acts and contracts which are related to the corporate purposes.
DURATION
FOURTH.- The duration of the Corporation shall be ninety-nine years, counted
from the date of this instrument (2).
NATIONALITY
FIFTH.- The company is of Mexican nationality. Present or future foreign
shareholders of the Company are formally bound to the Ministry of Foreign
Relations to consider themselves as nationals with respect to the shares in the
company that they may acquire or which they may hold, as well as with respect to
the assets, rights, concessions, participation, or interest of which the company
may be holder, or of the rights and obligations that derive from contracts to
which the company may be party with the Mexican authorities, and therefore not
to invoke the protection of their governments under penalty, should they do so,
of losing to the benefit of the Nation the corporate participation that they may
have acquired."
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(2) TN: This refers to the charter of incorporation, dated August 28, 1973
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CAPITAL
SIXTH.- The capital is variable. The fixed minimum capital is the amount of
$7,637,238.00 (SEVEN MILLION SIX HUNDRED THIRTY-SEVEN THOUSAND TWO HUNDRED
THIRTY-EIGHT AND 00/100 PESOS, MEXICAN CURRENCY) represented by 587,479,900
registered Series "A" shares, without expression of par value, and shall
represent at minimum FIFTY-ONE PERCENT of the voting shares.
The variable capital shall at all times be represented by Series "B" registered
shares, or subseries thereof, numerically progressive, which shall have the
characteristics determined by the Extraordinary Shareholders Meeting that
resolves their issue, but which, in all cases, shall be without expression of
par value and shall represent as maximum FORTY-NINE PERCENT of the voting
shares.
The Company may issue Series "B" shares that will be retained in the Corporate
Treasury to be delivered as their subscription occurs.
SEVENTH.- All shares within their respective series shall confer equal rights
and obligations on their holders.
Each share of Series "A" and "B" shall give the right to one vote in General
Shareholders Meetings.
Certificates representing shares shall carry the signatures of any two members
of the Board of Directors, regular or alternate, in accordance with the
resolutions adopted for such purpose by the Board.
Printed facsimile signatures may be used, if the Board of Directors so decides;
in this case, the originals of the respective signatures shall be deposited in
the corresponding Section of the Public Registry of Property and Commerce for
the corporate domicile.
The stock certificates shall be progressively numbered and may represent one or
several shares, and shall have coupons attached for dividend payment or for
exercise of the rights that the Shareholders Meeting may from time to time
adopt. The definitive or provisional stock certificates for each issue must meet
the requirements set forth in Article One Hundred Twenty-Five of the General Law
of Commercial Companies, and must further include the full text of Clause Fifth
of these bylaws.
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EIGHTH.- The Corporation shall keep a Stock Register and shall consider as owner
of the shares the person who appears as such in said Register.
On request of any interested person, after appropriate proof, the Corporation
must record in said Register transfers which occur.
NINTH.- The Company's Variable Capital may be increased or reduced without need
of amending the corporate bylaws, with the sole formality that increases or
reductions be resolved by the General Extraordinary Shareholders Meeting, and
the corresponding Minutes must be protocolled except when the shareholders
exercise their right of redemption or when the increases or reductions to which
Article 14 Bis 3, Section I of the Securities Market Law refers are at issue.
The fixed minimum capital of the company may not be increased or reduced unless
resolved in a General Extraordinary Shareholders Meeting, and the Corporate
Bylaws shall consequently be amended.
Any capital increase or reduction must be recorded in the Register kept by the
company for such purpose.
New shares may not be issued until any previous shares have been wholly paid.
CAPITAL INCREASES
When the capital is increased the following shall apply:
a) When capital increases are with distributable profits or through
capitalization of the legal reserve, through capitalization of premiums on
shares or from other prior contributions of the shareholders, or through
capitalization of retained profits or appraisal or reappraisal reserves, all
shareholders of the different stock series shall have the right to subscribe the
capital increase in proportion to the number of shares that they hold.
b) When capital increases are through cash contributions from the shareholders,
they must be decreed assuring the shareholding proportion set forth in Clause
Sixth hereof.
c) If Series "B" is increased, in order to reach the percentage established in
Clause Sixth of these Bylaws, [shareholders of shares in] Series "A" and "B"
presently outstanding shall have a preferential right to subscribe it in
proportion to the number of shares that they hold. If any of the shareholders of
these Series does not exercise their right conferred hereby, it shall be
exercised by the other shareholders of these same Series, in accordance with the
bases established by the Shareholders Meeting that decreed the increase.
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d) If a capital increase is decreed, but is not wholly subscribed by the
shareholders, the Board of Directors shall determine the form and terms in which
the portion not subscribed should be subscribed.
The right conferred in the preceding paragraphs must be exercised within the
fifteen calendar days following that on which the corresponding resolutions are
published in the federal Diario Oficial.
e) If the capital increase is decreed in order to issue unsubscribed shares for
public trading, the provisions of Article Eighty-One of the Securities Market
Law shall apply, through which the shareholders expressly waive their
preferential right in the Extraordinary Shareholders Meeting that decrees the
issue of these shares.
CAPITAL REDUCTIONS
Any capital reduction shall affect all shares representative of same, respecting
the shareholding proportion established in Clause Sixth of these Bylaws.
The redemption of whole shares shall be made to the shareholders at book value.
The designation of the shares to be redeemed shall be made as resolved by the
corresponding Shareholders Meeting through lot before a Public Broker (Corredor
Publico) or through redemption for all shareholders such that they represent,
after the corresponding capital reduction, the same stock percentages, and if
this is not possible, the percentage of stock which is most similar to that
which they previously held. Once the designation of the shares that must be
redeemed is made, a notice shall be published in the federal official gazette
(Diario Oficial) stating the system followed for redemption of the shares, the
number of shares to be redeemed, and the number of the certificates of same,
which as consequence must be cancelled or, as applicable, exchanged, and the
credit institution where the amount of the redemption is deposited, which shall
remain available to the respective shareholders from the date of the
publication, without earning any interest whatsoever.
On prior approval by the General Extraordinary Shareholders Meeting, the company
may amortize shares with accumulated profits in the terms provided by Article
One Hundred Thirty-Six of the General Law of Commercial Companies."
TENTH.- Shareholders shall have the right to partially or wholly redeem their
contributions represented by numerically progressive Series "B" shares, or
subseries thereof, provided that they give effective written notice to the
Company and comply with the requirements of Articles Two Hundred Twenty and Two
Hundred Twenty-One of the General Law of Commercial Companies. The Company shall
redeem the respective participation to the shareholder at the value that is the
lower of the following two values:
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(1) Ninety-five percent of the quoted value on the Mexican Stock Exchange (Bolsa
Mexicana de Valores), obtained from the average weighted price by trading volume
done during the last thirty days that the shares of the Company have traded
prior to the date on which the redemption is to take effect, during a period
that may not be longer than six months, or (2) the book value of the shares
according to the general balance sheet corresponding to the close of the fiscal
year immediately preceding that when the separation is to take effect,
previously approved by the General Ordinary Shareholders Meeting.
If the number of days on which the shares have traded during the period stated
in the preceding paragraph is fewer than thirty, the days shall be taken when
they actually were traded. If the shares were not traded in said period, the
book value of the shares shall be taken.
The payment of the redemption shall be due from the company from and after the
day following the General Ordinary Shareholders Meeting that approved the
general balance sheet corresponding to the fiscal year when the redemption is to
be effective.
The redemption shall be made against delivery and cancellation of the respective
shares."
TENTH BIS.- (a) In the event of cancellation of the registration of the
Company's shares in the Securities Section of the National Securities Registry,
whether due to request by said Company or by resolution adopted by the National
Banking and Securities Commission pursuant to the law, the shareholders who own
the majority of the common shares or have the possibility, under any title, of
imposing decisions on General Shareholders Meetings or of naming the majority of
the members of the Company's Board of Directors, shall have the obligation to
make a public offer to purchase, prior to cancellation and at least at the price
that is the higher of the weighted average per volume of operations done during
the last thirty days on which the shares of the Company were quoted prior to the
date of the offer, during a period that may not be longer than six months (if
the number of days on which the shares have been traded during the referred
period is less than thirty, the days shall be taken when they were actually
traded and if the shares were not traded in said period, the book value of the
shares shall be used) or the book value of the share according to the last
quarterly report submitted to the National Banking and Securities Commission and
to the Bolsa Mexicana de Valores before initiation of the offer, except when
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said security has been modified according to the criteria applicable to
determination of relevant information, in which case, they must consider the
most recent financial information that the Company has. The shareholders
obligated to make the public offer may request of the National Banking and
Securities Commission that it authorize them, considering the financial
situation and perspectives of the Company, to use a different base for
determination of the price to which this paragraph refers, provided that they
present the resolution to the Board of Directors, on prior favorable opinion
from the Audit Committee, in which are set forth the reasons why it is felt
justified to establish a different price, attaching a report from an independent
expert that makes special emphasis on the consistency of the price with Article
16 of the Securities Market Law.
(b) If the offer includes more than one share series, the average to which the
preceding paragraph refers must be done for each of the series to be cancelled,
taking as the value of the quotation for the public offer of all series, the
average which is the greater.
(c) The Board of Directors of the Company, within the five business days prior
to the day of initiation of the offer, must announce its opinion with regard to
the justification of the price of the public offer of purchase, in which it
shall consider the interest of the minority shareholders in order to comply with
Article 16, second paragraph, of the Securities Market Law and the opinion of
the Audit Committee, which in the event it be contrary, must be disclosed. If
the Board of Directors finds itself in a situation that may generate a conflict
of interest, the opinion of the Board must be accompanied by another issued by
an independent expert selected by the Audit Committee, which makes special
emphasis on the safeguarding of the rights of minority shareholders. Said
independent expert must meet the characteristics stated in Article 1 (VII) of
the General Provisions Applicable to Securities' Issuers and Other Participants
in the Securities Market issued by the National Banking and Securities
Commission.
(d) In the event that, once the public offer of purchase occurs and prior to
cancellation of the registration of the shares of the Company on the National
Securities Registry, the shareholders to whom paragraph (a) above refers do not
achieve acquisition of 100% of the paid capital stock, such shareholders must
place in trust for a minimum period of six months the resources necessary to
purchase, at the same price as the offer, the shares of the investors who did
not participate therein.
(e) The shareholders to whom paragraph (a) of this article refers shall not be
bound to carry out the public offer mentioned for registration cancellation if
the consent of the shareholders representing at least 95% of the Company's
capital stock is evidenced through a Shareholder Meeting resolution and that the
amount to be offered for the shares that are publicly traded is less than
300,000 investment units. The foregoing is on the understanding that to request
and obtain the cancellation, the Company must create the trust referred to in
paragraph (d) above. The creation and cancellation of the aforesaid trust must
be notified through the electronic system for sending and diffusion of
information of the Bolsa Mexicana de Valores.
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(f) The provisions of this article shall be applicable to certificates of
ordinary participation and to instruments representing two or more shares of one
or more series that may exist on the shares of the Company.
A minimum voting quorum of ninety-five percent of the capital stock, and the
prior approval of the National Banking and Securities Commission, shall be
required when it is planned to amend the provisions of this clause.
GENERAL SHAREHOLDERS MEETINGS
ELEVENTH.- The General Shareholders Meeting is the highest authority of the
Corporation all other being subordinate thereto.
TWELFTH.- Shareholders Meetings shall be Ordinary, Extraordinary, and Special,
and shall be held at the Company's domicile.
a) Extraordinary Meetings shall be those that deal with any of the matters set
forth in Article One Hundred Eighty-Two of the General Law of Commercial
Companies;
b) Ordinary Meetings shall be those enumerated in Article One Hundred Eighty-One
of the General Law of Commercial Companies; the General Ordinary Shareholders
Meeting must expressly resolve, each fiscal year, on the maximum amount of
resources that may be allocated to purchase of the company's own shares, as set
forth in Clause Fortieth Bis;
c) Special Shareholders Meetings shall be those that deal with matters relating
to the shareholders of Series "A" or "B" and shall be governed by the provisions
of Article One Hundred Ninety-Five of the General Law of Commercial Companies.
THIRTEENTH.- The Ordinary Shareholders Meeting shall meet at least once each
year within the four months following the close of the corresponding fiscal year
on the date established by the Board, and shall consider, in addition to the
items included on the Agenda, those listed in Article One Hundred Eighty-One of
the General Law of Commercial Companies.
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The Extraordinary Shareholders Meeting shall meet at any time when any of the
items within its jurisdiction are to be dealt with as enumerated in Article One
Hundred Eighty-Two of the General Law of Commercial Companies.
FOURTEENTH.- The call for the Shareholders Meetings must be done by the Board of
Directors, by the Statutory Auditors, or by judicial authority when applicable,
and will be signed by whomsoever resolves to issue the call.
FIFTEENTH.- The call for Shareholders Meetings shall be done by publication of a
notice in the federal Diario Oficial or another periodical of major circulation
in Mexico city, never less than fifteen days prior to the date for the meeting
when balance sheets are to be approved. This period may be reduced to five days
with respect to other Ordinary or Extraordinary Shareholders Meetings if the
Board deems then urgent.
SIXTEENTH.- The call for Shareholders Meetings must contain the place, date and
time when the Shareholders Meeting is to be held, the Agenda, and the signature
of the person making it.
SEVENTEENTH.- A shareholders Meeting may be held without prior call provided
that all of the shares into which the capital stock is divided are represented.
EIGHTEENTH.- Ordinary Shareholders Meetings met on a first call will be deemed
legally met when at least half of the capital stock is represented and its
resolutions shall be valid if adopted by a majority of votes present.
NINETEENTH.- If the Ordinary Shareholders Meeting could not be held on the date
set for it, a second call will be made with statement of this circumstance, and
at the meeting the matters set forth on the Agenda will be resolved by a
majority of votes regardless of the number of shares represented.
TWENTIETH.- Extraordinary Shareholders Meetings held on a first convocation
shall be deemed legally installed if at least three quarters of the capital is
represented, and their resolutions shall be valid if adopted by vote of shares
representing half of the capital.
On a second or later convocation, Extraordinary Shareholders Meetings shall be
deemed legally met when at least half of the capital is represented, and
resolutions shall be valid if adopted by favorable vote of the number of shares
representing at least fifty percent of the capital.
TWENTY-FIRST.- In order for shareholders to have the right to attend
Shareholders Meetings and to vote therein, they must deposit their share
certificates with the Secretary of the Corporation at least one day prior to the
Shareholders Meeting, receiving the corresponding admission card. They may also
deposit the stock in a Mexican credit institution, and in this case, to obtain
the admission card, they must file with the Secretary of the Corporation a
certificate from the (credit) institution that evidences the deposit of the
stock certificates and the obligation of the corresponding credit institution to
retain the certificates deposited until the Secretary of the Board of Directors
notifies if that the Shareholders Meeting has concluded.
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The Secretary of the Corporation shall deliver to the corresponding shareholders
an admission card which records the name of the shareholder, the number of
shares deposited and the number of votes to which the shareholders is entitled
by virtue of said shares.
TWENTY-SECOND.- The shareholders may be represented in Shareholders Meetings by
proxies named through a simple proxy letter or power of attorney conferred in
the form prepared by the Company, on the understanding that the members of the
Board of Directors and the Statutory Auditors may not act as proxies.
TWENTY-THIRD.- Shareholders meetings shall be presided over by the Chairman of
the Board, and in his/her absence, by one of the Directors following the order
of their appointments, and in the absence of all of these, by the person named
by those present at the Shareholders Meeting. The Secretary or Assistant
Secretary of the Board shall act as Secretary and in the absence of either of
these, the person designated by the acting Chairman.
TWENTY-FOURTH.- At the beginning of the Shareholders Meeting, the person
presiding shall name two inspectors of Election to count shares represented
therein, who must prepare an attendance list whereon they note the names of the
shareholders present or represented, and number of shares which each of them has
deposited in order to appear at the corresponding Shareholders Meeting. The
inspectors of Election shall take into account the provisions of the last
paragraph of Clause Twentieth.
TWENTY-FIFTH.- If once a Shareholders Meeting is legally met, there be not time
to decide on all of the matters for which it was called, it may adjourn and be
continued on the following days without need of a new call.
ADMINISTRATION
TWENTY-SIXTH.- The Administration of the Corporation shall be vested in a Board
of Directors that shall be composed of a number of regular members between 5 and
20, as decided by the corresponding Shareholders Meeting, of whom at least
twenty-five percent must be independent. For each director, the respective
alternate, as applicable, shall be elected, on the understanding that the
alternate directors for the independent directors must also be independent.
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One half plus one of the directors shall be elected by the vote of the majority
of the Series "A" shares, represented and voted in the Shareholders Meeting, and
but for minority rights, the rest shall be elected by majority vote of the
Series "B" or its progressive subseries shares represented and voted at the
Shareholders Meeting.
Any shareholder or group of shareholders holding shares in the same Series of
stock who represents at least ten percent of the capital stock, shall have the
right to elect one Director for the corresponding Series, pursuant to the
provisions of Article One Hundred Forty-Four of the General Law of Commercial
Companies.
The members of the Board of Directors need not be shareholders of the
Corporation.
The Directors shall be elected for one year and shall remain in office, even if
the period for which they were elected has concluded, until the persons elected
to replace them take office.
TWENTY-SEVENTH.- When the Shareholders Meeting so resolves, each of the
Directors and the Chief Executive Officer must secure the liabilities to which
they may become subject in performance of their duties, through deposit in cash
or creation of a bond in favor of the Corporation in such amount as may be
established by the Shareholders Meeting. If the Chief Executive Officer is named
by the Board, it shall pertain to the Board to determine whether said person
must provide security and the amount thereof.
The security, if any, shall remain in force until the accounts for the relevant
period have been approved by the General Shareholders Meeting.
TWENTY-EIGHTH.- The Board of Directors shall meet in Mexico City or in any other
place in the Mexican Republic or abroad that may be indicated for such purpose
at least every three months, provided that it be convened by the Chairman, the
Secretary, at least 25% of the Directors, or by any of the Statutory Auditors.
The Statutory Auditors must be convened to all Board meetings and to meetings of
the mid-level advisory bodies to which the Board may have delegated any powers,
which they may attend with the right to speak, but without vote.
The Board shall validly function with the presence of a majority of its members
and its resolutions shall be valid if adopted by majority vote of those present.
In the case of deadlock, the person who presides at the meeting shall have the
decision-making vote.
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Pursuant to Article One Hundred Forty-Three of the General Law of Commercial
Companies, the Directors may adopt resolutions outside a Board Meeting by
unanimous vote. Said resolutions shall have, for all legal effects, the same
validity as if they were adopted in a Board Meeting, provided they be confirmed
in writing. Said confirmation may be recorded in a single document or in
separate documents. The text of the resolutions shall be transcribed in the book
referred to in Clause Twenty-Ninth hereafter, with notation of the date from
which they will be effective.
TWENTY-NINTH.- For each Board Meeting, minutes shall be prepared wherein are
noted the resolutions approved. They must be recorded in the corresponding
Minute Book and will be signed by whoever presides at the meeting by the person
who acted as Secretary and by the other attendees who wish to do so.
THIRTIETH.- The Board of Directors, in its first meeting held after the
shareholders meeting appointing the Board, will name a Chairman from among its
members. The Board will also designate a Secretary and an Assistant Secretary,
who may or not be members of the Board, as well as the Presidents of the
Compensation and Evaluation, Auditing, and Finance and Planning Committees.
Furthermore, the Board at any time may designate one or more Vicepresidents, who
will perform the offices and will have the faculties and obligations that the
Board vests on them at their designation or afterwards and, if the Board deems
it necessary, one or more Delegate Directors with all necessary faculties to
carry out the Board's resolutions.
The temporary or permanent absences of the Chairman will be covered by one of
the Vicepresidents in the order of their designation or in the absence of
Vicepresidents by one of the Directors in the order of their designation; the
absences of the Secretary shall be covered by the Assistant Secretary, or in the
latter's absence by the person the Board designates. The Board of Directors may
also name a Chief Executive Officer or a Management Committee, as well as any
other types of committees, which will have the faculties and obligations
determined by the Board.
POWERS OF THE BOARD AND OF THE DIRECTORS
THIRTY-FIRST.- The Board of Directors shall have the broadest faculties for the
free and proper management of the business of the Company, with the broadest
power of attorney for lawsuits and collections, to administer property, and to
exercise acts of dominion, without any limitation whatsoever, that is, all
general and specific faculties that require a specific clause pursuant to law in
the terms of the first three paragraphs of Article 2554 of the Civil Code for
the Federal District and its corollaries in the Federal Civil Code and the Civil
Codes of the States of the Mexican Republic, including the faculties set forth
in Article 2587 of said Code.
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It shall expressly have the following faculties:
I. To represent the Company before all kinds of authorities, whether Federal,
State, or Municipal; to represent the Company before all kinds of natural or
legal persons, national or foreign; to represent the Company before Board of
Conciliation and before Boards of Conciliation and Arbitration, whether federal
or local; to file constitutional relief petitions [Amparo] and, as applicable,
withdraw them; to file criminal complaints and, as applicable, grant pardon; to
file accusations and assist the Public Prosecutor; to withdraw, settle, assume
commitments in arbitration, administer and respond to depositions, and to
receive payments.
II. To grant, subscribe, endorse, and guarantee all kinds of credit instruments
pursuant to Article 9 of the General Law of Credit Instruments and Operations.
III. To designate, as applicable, the members of the Executive Committee, and
the Executive President, Vice-Presidents, officers, employees, managers and
attorneys-in-fact of the Company, for whom it must state their duties,
obligations and remuneration. Further, to appoint the Chairs of the Committees
of Evaluation and Compensation; Audit; and Finance and Planning.
IV. Establish or close offices, branches or agencies.
V. Acquire stock and securities issued by third parties.
VI. Determine, exclusively, how the voting rights on shares or equity interests
of the Company in other companies should be exercised in General Ordinary or
Extraordinary Shareholders Meetings.
VII. Execute, amend and rescind all kinds of contracts and legal acts.
VIII. Accept in the Company's name mandates from natural and legal persons,
whether Mexican or foreign.
IX. Establish bank accounts and withdraw deposits from same and designate the
persons authorized to use the corporate signature and to deposit into said bank
accounts and to withdraw deposits from same with the limitations that the Board
deems it appropriate to establish.
X. Confer, replace, delegate and revoke general and specific powers of attorney.
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XI. Convene Shareholders Meetings and execute the resolutions that they may
adopt.
XII. Establish the Company's strategic vision.
XIII. Assure that the shareholders and market have access to the Company's
public information.
XIV. Establish internal control mechanisms.
XV. Assure that the Company has the mechanisms that are deemed necessary which
permit the Company to prove that it complies with the different legal provisions
applicable thereto.
XVI. Evaluate the performance of the Executive President and the high level
officers of the Company regularly.
XVII. Approve the operations that depart from the ordinary course of business
and that are planned to be carried out between the Company or its subsidiaries
and its shareholders, with persons who are part of the Company's management or
that of its subsidiaries or with whom said person have economic relationships
or, as applicable, blood relationship or relationship through marriage to the
second degree, the spouse or the common law spouse.
XVIII. Approve the purchase or sale by the Company, or any of its subsidiaries,
of ten percent or more of the consolidated assets.
XIX. Approve the grant of guaranties done by the Company or by any of its
subsidiaries for an amount of more than thirty percent of the consolidated
assets.
XX. Approve operations done by the Company or by any of its subsidiaries
different from those indicated in Sections XVII through XIX that represent more
than one percent of the consolidated assets.
XXI. Designate the person(s) responsible for acquisition and placement of the
Company's own shares.
XXII. Issue the opinion referred to in paragraph (c) of Clause Tenth Bis.
The faculties indicated in Sections XVII through XX above shall not be subject
to delegation unless that the applicable legislation otherwise permits.
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The members of the Board of Directors shall be responsible for the resolutions
that they reach by reason of the items to which Sections XVII through XX of this
clause refer, except in the case established in Article 159 of the General Law
of Commercial Companies.
THIRTY-SECOND.- The Chairman shall preside at the Shareholders Meetings and at
the Board Meetings, shall be the representative of the Board, shall execute the
resolutions of the Shareholders Meeting and of the Board of Directors, unless
either shall designate a Delegate for execution thereof, shall oversee generally
corporate operations, assuring exact compliance herewith, with the regulations
and with the resolutions and provisions of the Shareholders Meetings, of the
Board of Directors and of the Law; he shall sign with the Secretary Minutes of
Shareholders Meetings and Board Meetings.
In the temporary or permanent absence of the Chairman, his functions shall be
performed with the same authorities by one of the Directors according to the
order of appointment.
THIRTY-THIRD.- The Board of Directors shall have three intermediate management
bodies to support said Board in performance of its tasks: an Evaluation and
Compensation Committee; an Audit Committee; and a Finance and Planning
Committee. Said intermediate bodies shall be made up of a minimum of three and a
maximum of seven Directors, as determined by the Shareholders Meeting.
The members of the Committees must be Directors of the Company and elected in
the General Ordinary Shareholders Meeting that resolves the election of the
members of the Board of Directors. The Chair and the majority of the members of
the Audit Committee must be independent directors.
These Committees shall act without exception as collegial bodies, and their
faculties may not be delegated to natural persons such as Directors, Managers,
Advisors, Delegates or Attorneys-in-Fact.
The Evaluation and Compensation, Finance and Planning, and Audit Committees
shall present at least once during each fiscal year a report of their
performance to the Board of Directors, or when facts or acts of importance arise
for the Company which, in their judgment, warrant it. The report from the Audit
Committee must be presented in the Annual Shareholders Meeting.
The Statutory Auditors must be convened to all meetings of the Committees, and
they must attend with the right to speak but without a vote.
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The Evaluation and Compensation, Audit, and Finance and Planning Committees
shall have the following faculties:
I. The Evaluation and Compensation Committee shall have the following functions:
a) To suggest to the Board procedures to propose to the Executive President and
high level officers.
b) Propose to the Board the criteria for evaluation of the Executive President
and the high level officers, according to the general guidelines that the Board
of Directors may establish.
c) Analyze and take to the Board of Directors the proposal made by the Executive
President on the structure and amount of remunerations for the principal
executives of the Company.
II. The Audit Committee shall have the following functions:
a) To recommend to the Board of Directors candidates for external auditors for
the Company.
b) Recommend to the Board the conditions for contracting and the scope of the
professional mandates of the external auditors.
c) Support the Board of Directors by supervising the performance of the audit
contracts.
d) Serve as a communications channel between the Board of Directors and the
external auditors, as well as assure the independence and objectivity of the
latter.
e) Review the work plan, letters of observations, and audit reports and report
to the Board of Directors on the results.
f) Recommend to the Board the bases for preparation of the financial
information.
g) Assist the Board through review of the financial information and its process
of issue.
h) Contribute to the definition of the general guidelines for the internal
control system and evaluate its effectiveness.
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i) Assist the Board in coordination and evaluation of annual internal audit
programs.
j) Coordinate the work of the external auditor, internal auditor and Statutory
Auditor.
k) Verify that there are mechanisms that are deemed necessary such that the
Company can prove that it complies with the different provisions to which it is
subject.
l) Give opinion on the transactions referred to in Sections XVII through XX of
Clause Thirty-First of these bylaws.
m) Propose contracting of independent specialists in cases where it deems
advisable in order that they give their opinion with respect to the transactions
to which Clause Tenth Bis (c) refers, as well as Sections XVII through XX of
Clause Thirty-First above of these Bylaws.
III. The Finance and Planning Committee shall have the following functions:
a) To evaluate and, as applicable, suggest investment policies for the Company
proposed by the Executive President to thereafter submit them for the approval
of the Board.
b) Evaluate and, as applicable, suggest financing policies (capital or debt) for
the Company proposed by the Executive President, to thereafter submit them to
the approval of the Board.
c) Evaluate and, as applicable, suggest the general guidelines for determination
of the Company's strategic planning.
d) Give an opinion on the premises of the annual budget and propose them to the
Board for its approval.
e) Follow-up on application of the budget and the strategic plan.
f) Identify the risk factors to which the Company is subject and evaluate the
policies for their management.
THIRTY FOURTH.- The Secretary shall have the powers that the Board assigns to
him and shall keep the Minute Books, in one of which he shall note and sign with
the Chairman all minutes of Shareholders Meetings and in the other all minutes
of the Board of Directors.
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In the absence of the Secretary these functions shall be assumed by the
Assistant Secretary, if any, and in the absence of the latter, the person who
the acting, Chairman designates shall perform said functions.
The Secretary and the Assistant Secretary, if any, must assure that the Company
keeps available to the securities market intermediaries who evidence
representation of the Company's shareholders, during the period to which Article
173 of the General Law of Commercial Companies refers, the forms of powers of
attorney for the representation of shareholders at shareholders meetings of the
Company, so that such intermediaries may cause their timely delivery to the
principals they represent. The Secretary and the Assistant Secretary, if any,
must report on the foregoing to the shareholders meeting, and such report shall
be recorded in the respective minutes.
THIRTY-FIFTH.- The Chief Executive Officer, and as applicable, the Management
Committee shall have the faculties, if any, conferred thereon by the Board of
Directors, and the remuneration that the latter may establish.
THIRTY-SIXTH.- The oversight of the Company shall be the responsibility of one
or more Statutory Auditors and the respective Alternates thereof, who need not
be shareholders and who shall be named by the General Shareholders Meeting by
majority vote. Any shareholder or group of shareholders that represents ten
percent of the Company shares shall have the right to name a Statutory Auditor
and an Alternate, the appointments of whom may not be revoked unless the
appointments of all others also be revoked.
The Statutory Auditors shall have the powers and obligations determined by the
law and shall remain in their positions for one year, on the understanding, that
they shall continue to act until those appointed to replace them assume their
duties.
The Statutory Auditors must be convened to all meetings of those mid-level
advisory bodies to which the Board of Directors has delegated any power, in
addition to the meetings of the Board of Directors.
THIRTY-SEVENTH.- To assume the position of Statutory auditor, those elected must
guarantee their performance in the same manner as the Directors pursuant to
Clause Twenty Seventh herein.
FISCAL YEARS AND BALANCE SHEETS
THIRTY-EIGHTH.- The fiscal years shall be twelve months, commencing on the first
of January and concluding on December 31.
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If the Company enters into liquidation or is merged, its fiscal year shall end
in advance on the date when it goes into liquidation or is merged, and it shall
be deemed that there will be one fiscal year throughout the time that the
Company is in liquidation, and this last fiscal year must meet with the
provisions for such purpose established by the Federal Tax Code.
THIRTY-NINTH.- At the end of each fiscal year, a financial position statement
shall be prepared which must be audited by an independent public accountant and
which be completed within the four months following close of the corresponding
fiscal year.
The Board of Directors shall deliver the financial position statement to the
Statutory Auditors at least fifteen days prior to the date of the General
Shareholders Meeting, which is to discuss it, together with the profit and loss
statement, the statement of changes in the financial position, the statement of
changes in the entries that constitute the corporate property and the notes
needed to clarify or complete the information on the foregoing statements. The
Statutory Auditors within the fifteen days that follow shall render the report
referred to in Article One Hundred Sixty Six (IV) of the General Law of
Commercial Companies.
RESERVE FUND AND MANNER OF DISTRIBUTION PROFITS AND LOSSES
FORTIETH.- The liquid profits shown on the statement of financial position after
being approved by the Annual Ordinary Shareholders Meeting shall be distributed
as follows:
a) First, five percent shall be separated for creation or replenishment of the
legal reserve fund until it represents an amount equal to one -fifth of the
capital.
b) Then, the amount, if any, that the General Shareholders Meeting resolves to
constitute additional reserve, special or extraordinary funds shall be
separated.
c) The remainder of the liquid profits may be distributed as a dividend among
the shareholders in proportion to their respective contributions to the capital;
the dividend payments shall be made against the respective coupons, unless the
Shareholders Meeting resolves another form of proof.
Dividends not collected in five years counted from and after the date
fixed for their payment shall prescribe in favor of the corporation.
d) The remainder of the distributable profits may also be applied to
amortization of shares, pursuant to Article One Hundred Thirty-Six of the
General Law of Commercial Companies, pursuant to the resolutions that the
Extraordinary Shareholders Meeting adopts for such purpose.
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The Annual Ordinary Shareholders Meeting shall establish the
remuneration for the Directors and Statutory Auditors, which shall be charged to
general expenses.
If there are losses, these shall be reported by the shareholders in
proportion to the respective number of their shares, but at all times the
obligations of the shareholders shall be limited to payment of the amount of
their shares, and no additional payment may be demanded of them.
FORTIETH BIS.- The Company may acquire shares representing its capital stock
through the securities market, at the price current on the market, without the
prohibition set forth in the first paragraph of Article 134 of the General Law
of Commercial Companies being applicable, provided the purchase be made with
charge to net worth to the extent that said shares belong to the issuer itself,
or as applicable, to the corporate capital if it is resolved to convert them
into treasury shares, in which case no resolution by the shareholders meeting
shall be required.
The general ordinary shareholders meeting must expressly resolve for each fiscal
year the maximum amount of resources that may be allocated to these stock
repurchases, with the sole limitation that the sum of the resources which may be
allocated to this purpose may not in any case exceed the total balance of the
Company's net profits, including the retained profits. The Board of Directors
must designate the person or persons responsible for the purchase and placement
of the Company's own shares.
To the extent that the shares belong to the issuer, they may not be represented
in shareholders meetings of any kind.
The Company's shares that belong to the Company, or as applicable, the treasury
shares, without prejudice to the provisions of the General Law of Commercial
Companies, may be publicly offered without, in this last case, the increase to
the capital requiring a resolution of any kind from the shareholders meeting,
nor a resolution from the Board of Directors with respect to their placement.
Purchase and placement of shares pursuant to this Clause, the reports on same
that must be submitted to the general ordinary shareholders meeting, the rules
for disclosure in the financial information, and the form and terms by which
these operations are notified to the National Banking and Securities Commission,
to the corresponding securities market, and to the investing public, shall be
subject to the general provisions issued by the National Banking and Securities
Commission.
FORTY-FIRST.- The incorporating shareholders do not reserve any participation in
the profits.
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FORTY-FIRST BIS.- The subsidiaries of the Company may not directly or indirectly
invest in the capital stock of the Company, or in any other company with respect
to which the Company is its subsidiary.
FORTY-SECOND.- The Corporation shall dissolve:
I. Due to expiration of the period established herein.
II. Due to impossibility of continuing realization of the primary purpose of the
corporation.
III. By agreement of the shareholders taken in accordance with the corporate
bylaws and the law.
IV. Because the number of shareholders becomes less than two, the minimum
required by the law.
V. Due to losses of two thirds of the capital."
BASES FOR LIQUIDATION
FORTY-THIRD.- Should a case of liquidation arise, the General Shareholders
Meeting will appoint by majority vote one or more liquidators, who shall be the
representatives of the corporation and shall have the powers and obligations set
forth in Article Two Hundred Forty Two of the General law of Commercial
Companies, and who must in due course proceed to distribution of the remainder
among the shareholders pursuant to Article Two Hundred Forty Seven and Two
Hundred Forty Eight of the law.
FORTY-FOURTH.- The provisions of the General Law of Commercial Companies shall
govern in all matters on which these bylaws do not provide an express clause.
FORTY-FIFTH.- Any dispute that may arise from the execution, interpretation and
performance of this contract shall be submitted to the competent courts of the
First Judicial District of those into which the Federal District is divided.
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