FOMENTO ECONÓMICO MEXICANO, S.A. DE C.V | |||
Date: June
30, 2009
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By:
|
/s/ Javier Astaburuaga | |
Javier Astaburuaga | |||
Chief Financial Officer | |||
UNOFFICIAL
TRANSLATION
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|
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Introduction.
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Issuers
with securities registered en the National Registry of Securities (Registro Nacional de
Valores).
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Purposes
of its application.
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UNOFFICIAL
TRANSLATION
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|
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Recommendations
for its application.
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Instructions
for its application
|
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a)
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Shareholders
Meeting.
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b)
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Board
of Directors.
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c)
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Audit
duties.
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d)
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Evaluation
and Compensation duties.
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e)
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Finance
and Planning duties.
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Shareholders
Meeting
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UNOFFICIAL
TRANSLATION
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1.Information and Agenda of the
Shareholders Meeting
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Yes
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No
|
Comments
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1.Is it avoided in the
Agenda the grouping of matters related to different subjects? (Practice 1,
BCPC)
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x
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||
2.Is
it avoided in the Agenda an item of “Miscellaneous”? (Practice 1,
BCPC)
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x
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||
3.Is the information with
respect to the Agenda available at least with 15 calendar days in advance?
(Practice 2, BCPC)
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x
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||
4.Are shareholders provided
with the necessary information and possible voting alternatives on the
matters listed in the Agenda, in order for them to provide instructions to
their legal representatives with respect to the direction of their
corresponding vote in the Shareholders Meeting? (Practice 3,
BCPC)
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x
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The
Company prepares the proxy forms in accordance with the provisions of the
Securities Market Law.
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5.In the information provided to the
shareholders, does it include the proposal of the members the Board of
Directors and the curriculum with enough information to evaluate their
independency? (Practice 4, BCPC)
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x
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2.Information and Communication
between the Board of Directors and the
Shareholders.
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Yes
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No
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Comments
|
6.Does the Board of Directors in its
annual report to the Shareholders Meeting, include relevant aspects of the
duties of the intermediate bodies that perform the role of(Practice
5, BCPC):
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x
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||
a)Audit
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x
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||
b)Evaluation and
Compensation
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x
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||
c)Finance and
planning
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x
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||
d)Others
(describe).
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x
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Corporate
Practices.
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7.Are the reports of each
intermediate body or bodies that are presented to the Board available to
the shareholders together with the materials for the Meeting, excepting
such information that shall be kept confidential? (Practice 5,
BCPC)
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x
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Under
the provisions of the Securities Market Law and the General Corporations
Law, the reports from the Audit Committee and the Corporate Practices
Committee are presented for their approval.
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8.Does the annual report include the
names of the members of each intermediate body? (Practice 5,
BCPC)
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x
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||
9.Does the company have the
necessary communication mechanisms that allow it to properly maintain the
shareholders and investors in general informed? (Practice 6,
BCPC)
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x
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||
10.To
that respect, describe the most common mechanisms that the company
uses.
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The
Company has an Investors Relations department that reports directly to the
Company’s Finance and Strategic Development Department. The
Investor Relations section on FEMSA’s Internet page (ir.femsa.com)
contains wide financial information, press releases, and a business model,
so that investors and analysts can have a clear view of the company’s
conditions
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UNOFFICIAL
TRANSLATION
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Board of
Directors
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1. Duties of the Board of
Directors
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Yes
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No
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Comments
|
11.Does the Board of Directors
perform the following tasks? (Practice 7, BCPC)
|
|||
a)Establishes the strategic
vision
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x
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||
b)Supervises the operation of the
company
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x
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||
c)Appoints the Chief Executive
Officer and principal officers of the company.
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x
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||
d)Evaluates and approves the
performance of the Chief Executive Officer and principal officers of the
company.
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x
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||
e)Verifies that all shareholders
have an equal treatment, that their interests are protected and are given
access to the information of the company
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x
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||
f)Promotes the responsible issuance
and disclosure of information.
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x
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||
g)Promotes the transparency in
management.
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x
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||
h)Promotes the establishment of
internal control mechanisms.
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x
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||
i)Promotes the establishment of
mechanisms of assurance of quality of the
information.
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x
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||
j)Establishes the guidelines for
related party operations.
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x
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||
k)Approves the operations with
related parties
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x
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||
l)Verifies that the company has the
necessary mechanisms that allow inspecting the compliance of the different
applicable legal provisions.
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x
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||
m)Promotes the company to be
socially responsible; explain how
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x
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The company and all its business
units were recognized by the Mexican Center of
Philanthropy as Socially Responsible Companies, four of them for the fifth consecutive year and two of them, for its third year.
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n)Promotes the company to declare
its ethical business principles; explain how
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x
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The company has an ethics code,
which was approved by the Board of Directors and by which all of the
employees of the Company have to be guided by.
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o)Promotes the company to consider
involved third parties in decision making; explain
how.
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x
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The Board of Directors considers
all factors that are considered necessary for the making of
decisions.
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p)Promotes the disclosure of illegal
actions and the protection of the informants; explain
how.
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x
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The Company has a “Whistle-blower”
system available 365 days a year, 24 hours a
day.
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UNOFFICIAL
TRANSLATION
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2. Integration of the Board of
Directors
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Yes
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No
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Comments
|
12.Is the Board of
Directors comprised of no fewer than three and no more than fifteen
directors? (Practice 8, BCPC)***
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x
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The
Board of directors is comprised of 19 members, of which 14 are Series “B”
Directors and 5 are Series “D” Directors.
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13.Of how many alternate directors is
the Board of Directors comprised? (Practice 9,
BCPC)
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19
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14.If the Board is also comprised of
alternate directors, please indicate if each principal director suggests
who should be appointed as its alternate director? (Practice 9,
BCPC)
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x
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||
15.Is there a communication process
established between the directors and its alternates that allows them to
have and effective participation? (Practice 9,
BCPC)
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x
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||
16.Do the independent
directors represent at least 25% of all the directors? (Practice 10,
BCPC)
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x
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||
17.From the total of the members of
the Board of Directors, how many are (Practices 10 and 11,
BCPC):
|
|||
a)Independent
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12
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b)Equity
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13
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c)Related
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13
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d)Equity
Independent
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-
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e)Equity
Related
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13
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18.Do the independent and
equity directors, as a whole, constitute at least 60% of the Board of
Directors? (Practice 11, BCPC)
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x
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||
19.Does the annual report
indicate the category to which the directors belong? (Practice 12,
BCPC)
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x
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It mentions which members of the
Board, are independent members
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20.Does the annual report
indicate the principal business activities of each director as of the date
of the report, as well as any other relevant information? (Practice 12,
BCPC)
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x
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It mentions their principal
business activity.
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Note ***: The publicly traded
companies may have a maximum of 21 directors.
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UNOFFICIAL
TRANSLATION
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3. Structure of the Board of
Directors.
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Yes
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No
|
Comments
|
21.With the purpose of taking more
informed decisions, indicate which duties are performed by the
intermediate bodies over which the Board of Directors is supported
(Practice 13, BCPC):
|
|||
a)Audit
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x
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b)Evaluation and
Compensation.
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x
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c)Finance and
Planning.
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x
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||
d)Others (describe)
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x
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Corporate
Practices
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22.Are the intermediate
bodies only comprised of principal directors? (Practice 14,
BCPC)
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x
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The
Finance and Planning Committee: one related alternate director. Audit
Committee: two independent alternate directors participate In addition;
there is a Technical Secretary on each committee, who is the Company
officer in charge of the area for which the corresponding committee is
responsible, but who is not a member of the committee.
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23.Is each intermediate
body comprised of no fewer than 3 members and no more than 7? Mention the
number of independent board members that are part of such intermediate
bodies. (Practice 14, BCPC)
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x
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The Auditing Committee (4 members)
and the Corporate Practices (3 members) are totally comprised of independent
members. The Finance and Planning is comprised by 5 members,
1 of which is
independent.
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24.How frequently do these
intermediate bodies inform of their activities to the Board of Directors?
(Practice 14, BCPC)
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Quarterly
|
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25.Does the chairman of each
intermediate body invite to its meetings the officers of the company whose
responsibilities are related to the duties of the intermediate body?
(Practice 14, BCPC)
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x
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||
26.Does each of the independent board
members participate in any of the intermediate bodies? (Practice
14, BCPC)
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x
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||
27.If the answer to the above
question was negative, explain why.
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All the independent directors are
members of an intermediate body. Of the independent alternate directors,
two of them are members of the Audit Committee.
|
||
28.Is the intermediate body in charge
of the audit presided by an independent director who has knowledge and
experience in financial and accounting aspects? (Practice 14,
BCPC)
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x
|
||
29.If the answer to the above
question was negative, explain why.
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UNOFFICIAL
TRANSLATION
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4. Operation of the Board of
Directors.
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Yes
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No
|
Comments
|
30.How many sessions does the Board
of Directors have during the fiscal year? (Practice 15,
BCPC)
|
At least 4 a
year
|
||
31.If the answer to the above
question is less than 4, explain why.
|
|||
32.Is one of these sessions dedicated
to the definition and review of the strategic vision of the company?
(Practice 15, BCPC)
|
x
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||
33.Are there mechanisms by
which with the agreement of 25% of the directors or the chairman of an
intermediate body a board meeting is called? (Practice 16,
BCPC)
|
x
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||
34.If
the answer to the above question was affirmative, please describe such
mechanisms.
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The mechanisms are in accordance
with the Securities Market Law.
|
||
35.With how many days in advance do
the members of the board have access to the information that is relevant
and necessary to the decision making, in accordance to the Agenda?
(Practice 17, BCPC)
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Minimum 5 days in
advance
|
||
36.Is there a mechanism
that ensures that directors can evaluate matters on strategic affairs that
require confidentiality, even if they do not receive the necessary
information with at least 5 business days before the meeting? (Practice
17, BCPC)
|
x
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37.If the answer to the above
question is positive, explain such mechanism.
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Members
of the board may request all the information they need to be able to
discuss, evaluate and make decisions during the
meeting.
|
||
38.Are new directors
provided with the necessary information in order for them to be current on
the matters of the company and so that they may fulfill their new
responsibility? (Practice 18, BCPC)
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x
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A
new director receives complete information on the company’s condition,
annual reports from prior fiscal years, and meetings are scheduled for
such director with senior management, who detail the company’s conditions
and answer any of the director’s
questions.
|
5. Duties of the
Directors
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Yes
|
No
|
Comments
|
39.Is each member of the Board given
the necessary information with respect to the obligations,
responsibilities and rights that imply to be member of the Board of
Directors of the company? (Practice 19, BCPC)
|
x
|
||
40.Do directors communicate
to the Chairman and the Secretary of the Board of Directors any conflict
of interest that might imply that they must refrain from voting and do
they in effect refrain from participating in the corresponding
deliberations? (Pratice 20, BCPC)
|
x
|
||
41.Do directors use the
company’s assets and services only for the performance of its corporate
purpose? (Practice 20, BCPC)
|
x
|
||
42.If appropriate, are
clear guidelines defined for when directors exceptionally use the
company’s assets for personal matters? (Practice 20, BCPC)
|
x
|
||
43.Do directors invest time
to their duties by attending at least 70% of the meetings to which they
are called? (Practice 20, BCPC)
|
x
|
With
respect to the regular meetings held during the 2008 fiscal year, the
average attendance by the directors was 86.84%. If we consider the
attendance of alternate directors at meetings, average attendance was
93.42%
|
|
44.Is there a mechanism
that assures that the members of the Board maintain absolute
confidentiality about all the information they receive due to the
performance of their duties, specially, with respect to their own
participation and participation of the other board members, in the
discussions that take place in the board meetings? (Practice 20,
BCPC)
|
x
|
||
45.If
the answer to the above questions is affirmative, explain such
mechanism.
|
The
Secretary of the Board periodically reminds directors of the scope of this
confidentiality obligation.
|
||
46.Do directors and, if applicable,
their respective alternate directors, mutually maintain each other
informed about the matters discussed in the meetings of the Board of
Directors in which they participate? (Practice 20,
BCPC)
|
x
|
||
47.Do directors and, if applicable, their
respective alternate directors, support the Board of Directors with
opinions and recommendations deriving from the analysis of the performance
of the company; with the purpose that the decisions to be adopted are
properly sustained? (Practice 20, BCPC)
|
x
|
The
Board of Directors supports itself through investment banks, financial
engineering firms and outside counsel for decision-making, when it so
deems appropriate or necessary according to the specific
circumstances.
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UNOFFICIAL
TRANSLATION
|
1. General
Duties
|
Yes
|
No
|
Comments
|
48.Does the intermediate body that
performs the audit duties perform the following tasks? (Practice 21,
BCPC)
|
|||
a)Recommends to the Board of
Directors the candidates for external auditors of the company, the hiring
conditions and the scope of the professional
services?
|
x
|
||
b)Supervises the fulfillment of the
professional services of the external auditors.
|
x
|
||
c)Evaluates the performance of the
company that performs the services of external
auditing.
|
x
|
||
d)Analyses the opinions or reports
elaborated by the external auditor.
|
x
|
||
e)Meets at least once a year with
the external auditor without the presence of officers of the
company.
|
x
|
||
f)It is the channel of communication
between the Board of Directors and the external
auditors.
g)Assures the independency and
objectivity of the external auditors.
|
x
|
||
x
|
|||
h)Reviews the work program, the observation letters
and the reports of internal auditing.
|
x
|
||
i)It meets periodically with the
internal auditors, without the presence of the officers of the company, to
know their comments and observations in the progress of their
work.
|
x
|
||
j)Provides its opinion to the Board
of Directors about the guidelines and criteria used in the preparation of
the financial information, as well as the process for its
issuance.
|
x
|
||
k)Contributes to the definition of
the general guidelines of internal control and internal auditing and
evaluates its effectiveness.
|
x
|
||
l)Verifies the compliance of the
mechanisms established for risk control of which the company is subject
to.
|
x
|
||
m)Coordinates the tasks of the
external and internal auditors and examiner.
|
x
|
||
n)Verifies the existence of the
necessary mechanisms that allow the assurance of compliance by the company
of the different provisions to which it is subject
to.
|
x
|
||
o)The frequency with which it makes
a review to inform the Board of Directors about the legal situation of the
company.
|
Half-yearly
|
||
p)Contributes
to the establishment of guidelines for related party transactions.
***
|
x
|
||
q)Analyses and evaluates the
operations with related parties to recommend its approval to the Board of
Directors.***
|
x
|
||
r)Decides the hiring of third party
experts to provide their opinion with respect to related party transactions or any other
matter, which allows the adequate performance of its
duties.***
|
x
|
||
s)Verifies the compliance of the
Business Ethics Code
|
x
|
||
t)Verifies the compliance of the
disclosure mechanism of improper actions and of protection of
informants.
|
x
|
||
u)Helps the Board of Directors in
the analysis of the contingency plans and recovering of
information.
|
x
|
||
Note***. Publicly traded companies
perform these recommendations through their Corporate Practices
Committee.
|
|
UNOFFICIAL
TRANSLATION
|
2. Selections of
Auditors
|
Yes
|
No
|
Comments
|
49.Does it abstain from
hiring firms in which the fees of the external auditor and any other
additional services rendered to the company, represent a percentage more
than or equal to 10% of the total income? (Practice 22,
BCPC)
|
x
|
||
50.Is there rotation of the
partner who audits the financial statements as well as its team, at least
once every 5 years? (Practice 23, BCPC)
|
x
|
||
51.Is the person who signs
the opinion of the company’s annual statements different from the one who
acts as statutory examiner? (Practice 24, BCPC) ***
|
N/A
|
||
52.Is
the profile of the statutory examiner disclosed in the annual report
presented to the Shareholders Meeting by the Board of Directors? (Practice
25, BCPC) ***
|
N/A
|
||
Note***. For a publicly
traded company, this practice doesn’t apply.
|
3.
Financial Information
|
Yes
|
No
|
Comments
|
53.Does
the intermediate body that performs the auditing duties, support with its
opinion to the Board of Directors in order for it to take decisions with
reliable financial information? (Practice 26, BCPC)
|
x
|
||
54.Such
financial information, is it executed by the Chief Executive Officer and
the responsible officer of its elaboration? (Practice 26,
BCPC)
|
x
|
||
55.Does the intermediate body that
performs the auditing duty previously provide its opinion to the Board of
Directors for the approval of the accounting guidelines and criteria used
in the making of the financial information of the company? (Practice 28,
BCPC)
|
x
|
||
56.Does the intermediate body that
performs the auditing duty previously provide its opinion to the Board of
Directors for the approval of the changes made to the accounting
guidelines and criteria used in the making of the financial information of
the company? (Practice 29, BCPC)
|
x
|
||
57.Does
the Board of Directors approve, with a previous opinion of the committee
that performs the auditing duties, the necessary mechanisms to assure the
quality of the financial information that is presented to it? (Practice
30, BCPC)
|
x
|
||
58.In
the event the financial information corresponds to intermediate periods
during the fiscal year, does the committee performing the auditing duties
supervise that it is made with the same guidelines, criteria and practices
by which the annual information is prepared? (Practice 30,
BCPC)
|
x
|
4. Internal
Control
|
Yes
|
No
|
Comments
|
59.Do the general guidelines of
internal control and, if applicable, is the review to such guidelines
submitted for the approval of the Board of Directors, with the previous
opinion of the intermediate body performing the auditing duties? (Practice
31, BCPC)
|
x
|
||
60.Does the company have an area of
internal auditing and are its general guidelines, reviews and work plans
approved by the Board of Directors, with a previous opinion of the
intermediate body performing the auditing duties? (Practice 27,
BCPC)
|
x
|
||
61.Is the Board of Directors
supported in order to assure the effectiveness of the internal control, as
well as the process of issuance of the financial information? (Practice
32, BCPC)
|
x
|
||
62.Do the internal and external
auditors evaluate, according to their normal work plan, the effectiveness
of the internal control, as well as the process for the issuance of the
financial information and are the results specified in the situations
letter, commented with such auditors? (Practice 33,
BCPC)
|
x
|
UNOFFICIAL
TRANSLATION
|
5. Related
Parties
|
Yes
|
No
|
Comments
|
63.Does the intermediate body in
charge of the auditing duties support the Board of Directors in? (Practice
34, BCPC) ***
|
|||
a) The establishment of guidelines
for transactions with related parties.
|
x
|
||
b) The analysis of the approval
process of the operations with related parties.
|
x
|
||
c) The analysis of hiring
conditions of operations with related parties.
|
x
|
||
64.Does the intermediate body in
charge of the auditing duties support the Board of Directors in the
analysis of proposals to make operations with related parties outside of
its ordinary course of business of the company? (Practice 35,
BCPC)***
|
x
|
||
65.Are the operations outside of the
ordinary course of business with related parties that may represent more
than 10 per cent of the consolidated assets of the company presented for
approval to the Shareholders Meeting? (Practice 35,
BCPC)
|
x
|
||
Note***. Publicly traded companies
perform these recommendations in the through their Corporate Practices
Committee?
|
6. Review of provisions
compliance.
|
Yes
|
No
|
Comments
|
66.Does the intermediate body in
charge of the auditing duties make sure the existence of mechanisms that
allow determining if the company properly complies with the applicable
legal provisions? (Practice 66, BCPC)
|
x
|
||
67.If the answer to the above
question is affirmative, describe those mechanisms.
|
The audit committee meets
quarterly in order to review the financial statements, which afterwards
are delivered to the CNBV and BMV. Furthermore, such committee
reviews the annual information delivered to the CNBV and BMV (Annual
Report and Form 20-F). The committee each
semester reviews the tax, legal and labor
contingencies.
|
||
68.At least once a year, is a review
of the legal situation of the company made and informed to the Board of
Directors? (Practice 36, BCPC)
|
x
|
UNOFFICIAL
TRANSLATION
|
1. General
Duties
|
Yes
|
No
|
Comments
|
69.Does the intermediate body in
charge of the evaluation and compensation function present to the Board of
Directors, for its approval, the following? (Practice 37,
BCPC)
|
|||
a)The criteria to appoint or remove
the Chief Executive Officer and the principal officers.
***
|
x
|
||
b)The criteria for the evaluation
and compensation of the Chief Executive Officer and of principal
officers.***
|
x
|
||
c)The criteria for the compensation
of the Board Members.
|
x
|
||
d)The proposal made by the Chief
Executive Officer about the structure and criteria for the compensation of
the personnel.
|
x
|
||
e)The proposal to declare the
company as a socially responsible entity.
|
x
|
||
f)The Ethics Business Code of the
company.
|
x
|
||
g)The information system of improper
actions and protection of the informants.
|
x
|
||
h)The formal system of succession of
the Chief Executive Officer and principal officers, and verifies its
compliance.
|
x
|
||
70.Do the Chief Executive Officer and
principal officers abstain in participating in the deliberation of the
matters mentioned in question 69, a) and b) with the purpose of preventing
a possible conflict of interest? (Practice 38,
BCPC)
|
x
|
||
Note***. Publicly traded companies
perform these recommendations through the Corporate Practices
Committee.
|
2. Operative
Aspects
|
Yes
|
No
|
Comments
|
71.In the annual report presented by
the Board of Directors to the Shareholders Meeting, are the guidelines
used, and the items
that form part of the compensation package of the Chief Executive
Officer and principal
officers of the company, disclosed?
(Practice 39, BCPC)
|
x
|
||
72.Does the intermediate body in
charge of the evaluation and compensation duties support the Board of
Directors in reviewing the hiring conditions of the Chief Executive
Officer and principal officers, in order to assure their probable payments
for severance of the company are in line with the guidelines approved by
the Board of Directors? (Practice 40, BCPC)
|
x
|
||
73.With the purpose of assuring a
stable succession process, does it have a formal plan of succession for
the Chief Executive Officer and principal officers of the company?
(Practice 41, BCPC)
|
x
|
||
74.If the answer to the above
question is negative, explain why.
|
UNOFFICIAL
TRANSLATION
|
1. General
Duties
|
Yes
|
No
|
Comments
|
75.Does the intermediate body in
charge of the finance and planning duties perform the following? (Practice
42, BCPC)
|
|||
a)Analyzes and proposes general
guidelines for the determination and follow-up of the strategic plan of
the company.
|
x
|
The Finance Committee analyzes and
monitors main topics, particularly on those related to significant
transactions.
|
|
b)Evaluates and provides and opinion
with respect to the investment and financing guidelines of the company
proposed by management.
|
x
|
||
c)Provides an opinion with respect
to the premises of the annual budget and follows-up its application, as
well as its control system.
|
x
|
The Finance Committee provides its
opinion mainly about matters related to the macroeconomic framework and
the principal assumptions.
|
|
d)Analyzes and evaluates the risk
factors which the company is subject to, as well as the mechanisms for its
control.
|
x
|
The Finance Committee
analyzes and evaluates matters related to risk of the finance structure
(leverage, derivatives, currency issues, rates,
etc)
|
2. Operative
Aspects
|
Yes
|
No
|
Comments
|
76.Does the intermediate body in
charge of the finance and planning duties present to the Board of
Directors for its approval?:
|
|||
a)An evaluation about the
reasonability of the principal investments and financing operations of the
company in accordance of the established guidelines? (Practice 43,
BCPC)
|
x
|
||
b)Periodically evaluates
the company’s strategic position as stipulated in the strategic plan?
(Practice 44, BCPC)
|
x
|
||
c)The assurance that the investment
and financing guidelines are consistent with the strategic plan of the
company? (Practice 45, BCPC)
|
x
|
||
d)The review of the financial
projections of the company, verifying its consistency with the strategic
plan (Practice 46, BCPC)
|
x
|
||
77.Does the intermediate body in
charge of the finance and planning duties supports the Board of Directors
in the identifying of risks of which the company is subject to, and the
evaluation of the mechanisms to prevent and control them? (Practice 47,
BCPC)
|
x
|
These duties are performed by the
Audit Committee.
|
|
78.If the answer to the above
question is affirmative, explain such mechanisms.
|