**EXHIBIT 1.1**
**CURRENT CORPORATE BY-LAWS OF:**
**TFM, S.A. DE C.V.**
**CHAPTER I**
**ORGANIZATION**
     **FIRST.**- The company is a capital stock company with variable capital (*Sociedad Anónima deCapital Variable*), which shall be governed by these By-Laws and by the General Law of CommercialCompanies (*Ley General de Sociedades Mercantiles*) with respect to those matters not providedherein.
**CHAPTER II**
**CORPORATE NAME, DOMICILE, TERM, PURPOSE AND NATIONALITY**
     **SECOND.**- Name.- The company’s name is “TFM”, which shall always be followed by the words"*SOCIEDAD ANÓNIMA DE CAPITAL VARIABLE*” or its abbreviation “*S.A. de C.V.*”
     **THIRD**.- Domicile.- The company’s domicile shall be Mexico City, Federal District, but thepartners may establish agencies or branches of the company anywhere within the United MexicanStates or abroad, without such act implying a change of corporate domicile.
     **FOURTH.**- Term.- The company shall have a term of 99 (ninety nine) years, that shall begin asfrom the date of its incorporation.
     **FIFTH**.- Corporate Purpose.- The company’s purpose shall be:
     1.- The construction, management, operation, exploitation, preservation and maintenance ofrailroad infrastructure, as well as general railroad communication ways and rail tracks, includingthose that are within yards and that are necessary for the operations of such tracks, as well asany of the integrating parts thereof, including, but not limited, to the right of way, trafficcontrol centers and signs for the railroad operation.
     2.- The provision of the public service for railroad transportation, using for such purposesthe railroad communications ways, rail tracks and any other type of ancillary services necessarytherefor.
     3.- The public service for freight railroad transportation, including, but not limited to,hauling services to third parties, facilities where the receipt, storage, classification,consolidation and dispatch of all types of goods is performed.
     4.- The provision of the public service for passenger railroad transportation, including theconstruction, management and maintenance of the facilities where the arrival and departure oftrains and the embarking and disembarking of passengers occur.
 

 

     5.- To construct, operate and exploit terminals and facilities for the provision of ancillaryservices under the terms of the Railroad Service Law (*Ley Reglamentaria del Servicio Ferroviario*)and its regulations.
     6.- To provide interconnection services, grant haulage rights and rights of way as well as toexploit those that are rendered or granted thereto.
     7.- To operate surveillance services, as well as control of the accesses and transit ofpeople, vehicles and goods at the railroad terminal that it exploits, notwithstanding the powers ofcompetent authorities.
     8.- The performance of all types of research for the exploitation of businesses related to theprovision of railroad transportation services, both for freights and passengers, as well as theplanning, programming and execution of the actions necessary and convenient for the promotion,operation and development of railroad services, in order to achieve greater efficiency andcompetitiveness.
     9.- To acquire in ownership or lease and to have available all types of real estate, all typesof property including, but not limited to all type of railroad equipment, traction vehicles,haulage vehicles and working vehicles, as well as other real estate properties necessary to carryout its corporate purpose.
     10.- To install and maintain communication systems that are required to perform the corporatepurpose, including, but not limited to, radio, telegraph, telephone, fiber optic and microwavesystems.
     11.- To participate in the privatization of the Mexican railroad system, to submit bids, andin general, be part in all procedures related to obtaining one or more concessions, permits,licenses or authorizations to operate the Mexican railroad system.
     12.- For the performance of the corporate purposes the company may:
     a).- Incorporate, promote, organize and manage all types of commercial or civil companies,civil and commercial associations, corporations, economic units, institutions, institutions,foundations or groupings, whether in Mexico or abroad, as well as to acquire interests orparticipations of other civil or commercial companies or associations, forming a part thereof inthe corresponding act of incorporation or by acquiring shares or participations in those alreadyincorporated, whether Mexican or foreign, provided that they are directly related to the provisionof the Mexican railroad service, as well as to dispose, encumber or transfer such shares orparticipations.
     b).- Purchase, sale, import, export and in any other manner commercialize, manufacture andindustrialize all kinds of products and equipment, necessary or convenient to perform its corporatepurpose.
     c).- Obtain permits to operate customs warehouses in the terms of applicable legislation, aswell as to provide handling, storage and foreign trade merchandise custody services, in accordancewith corresponding authorizations, as well as the construction, installation, operation andexploitation of internal cargo terminals, providing services of: trains and trucks loading andunloading, storage, transportation within the terminal, consolidation and discharging of freight,the integration of single trains with owned or leased equipment, and the surveillance and custodyof goods. Likewise, in accordance with corresponding authorizations, it may provide the following
 

 

supplementary services: multimodal operation, tax and customs procedures, repair and maintenance ofcontainers, phytosanitary services; and others deemed convenient.
     d).- Grant, draw, issue, accept, endorse, certify, guarantee or otherwise subscribe, eventhrough a joint obligor (*aval*), all kinds of credit instruments.
     e).- Obtain, acquire or use and/or dispose of, through domestic or foreign financial groups,all kinds of funds and economic proceeds that are necessary to carry out its corporate purpose, aswell as to obtain and grant money loans with or without guaranty, to execute all kinds of creditagreements, to issue obligations and any other credit instruments and grant all kinds of guarantiesincluding real and personal guaranties, such as bonds, *avales*, pledges and mortgages in favor ofthird parties, when dealing with the company’s own operations, and which are necessary to carry outits corporate purposes.
     f).- Execute all kinds of trust agreements necessary to perform its corporate purpose.
     g).- Execute and/or carry out, within Mexico or abroad, on its own behalf or on behalf ofthird parties, all kinds of main or ancillary acts, whether civil or commercial or of any otherkind, including ownership, civil, commercial, main or guarantee agreements, or any other kindspermitted by law, being also able to act as trust, *aval*or guarantor or with any other capacity,even that of joint and several debtor, secure obligations and indebtedness of third parties, whenrelated to the performance of its corporate purpose.
     h).- Receive and promote consulting services, through all kinds or people, whether individualsor entities, Mexican or foreign, of all those services necessary to carry out its corporatepurposes.
     i).- Promote, organize, participate, and contract, whether in Mexico or abroad, with Mexicanor foreign individuals or entities, bids, transactions, events, meetings, exhibitions, training,development, market research and innovations programs and, in general, to take part in allbusinesses events and meetings necessary to perform its corporate purposes.
     j).- The contracting on its own behalf or on behalf of third parties, whether in Mexico orabroad, with Mexican or foreign individuals or entities, of advertising media as well as the saleand/or purchase of advertising spaces and in general everything related to the communication andinformation media industry, necessary to perform its corporate purposes.
     k).- Carry out on its own behalf or on behalf of third parties, whether in Mexico or abroad,and with all kinds of Mexican or foreign individuals and entities, training and developmentprograms, as well as investigation works necessary to perform its corporate purposes.
     l).- Request and obtain, under any title, concessions and permits and to exercise the rightsderived therefrom, as well as to register and patent or act as intermediate or negotiator, andacquire under any legal title whether in Mexico or abroad, with Mexican or foreign individuals orentities, all kinds of inventions, utility models, industrial designs, brands, as well asnotifications, commercial names, franchises, authorizations, licenses, concessions, options,preferences, rights thereon and, in general, any other kind of use and exploitation of industrial,intellectual, literary or artistic rights that are necessary or related to the corporate purpose.
 

 

     m).- Act as agent, representative, distributor, attorney in fact and/or intermediary, whetherin Mexico or abroad, whether of individuals or entities, Mexican or foreign, necessary or relatedto the performance of its corporate purpose.
     n).- Acquire, alienate, possess, lease, use and, in general, manage, under any title, allkinds of rights and assets or real estate properties, whether in Mexico or abroad and, with Mexicanor foreign individuals or entities that are necessary and convenient to perform its corporatepurpose and to comply with the company’s purpose under the terms of applicable law.
     o).- In general, perform other activities and execute acts and agreements and contracts thatare required for its corporate purpose, or that shall be performed for legal purposes.
     **SIXTH**.- Nationality.- The company is Mexican due to the fact that it is incorporated accordingto the laws of the United Mexican States and has its legal domicile in such country.
     **SEVENTH**.- Foreign Admission Clause.- Current or future foreign investors agree before theMexican Government, through the Ministry of Foreign Affairs (*Secretaría de Relaciones Exteriores*)to consider themselves as Mexican nationals with respect to the shares of the company they acquireor which they come to hold, as well as with respect to the assets, rights, concessions,participations or interests owned by the company, or of the rights and obligations derived from theagreements entered into by the company, executed with Mexican authorities, and, therefore, agreenot to invoke the protection of their governments, under penalty of forfeiting such shares orsocial quotas in favor of the Mexican Nation.
**CHAPTER III**
**CAPITAL STOCK, SHAREHOLDERS AND SHARES**
     **EIGHTH.**- Capital stock.- The capital stock shall be variable. The fixed portion of the capitalstock with no withdrawal rights is $600,000 (SIX HUNDRED THOUSAND PESOS 00/100 MEXICAN CURRENCY),fully subscribed and paid for, represented by 60,000 (SIXTY THOUSAND) shares. The variable portionof the capital stock is unlimited.
     **NINTH.**- Shares.- The capital stock shall be represented by nominative shares, without parvalue.
     a).- Shares shall be divided into three classes: Class I shall at all times represent 51%(FIFTY ONE PERCENT) of the shares into which the capital stock is divided, with full voting rights;Class II, shall represent 29% (TWENTY NINE PERCENT) of the shares representing the capital stock,with full voting rights; and class III shall represent the remaining 20% (TWENTY PERCENT) of thecapital stock with restricted voting rights.
     The company may issue restricted voting shares with equal or less rights than those set forthin Article 113 (one hundred and thirty) of the General Law of Commercial Companies and shall bedivided into the classes determined by the general extraordinary shareholders’ meeting resolvingsuch issuance, in which case, the corresponding shares shall not be calculated for purposes ofdetermining the share percentages referred to in the preceding paragraph.
     b).- All Shares representing the capital stock shall be divided into two series: series “A”which shall represent shares that may only be subscribed by Mexican nationals; and series “B” whichare of free subscription.
 

 

     Series “A” and Series “B” shall be divided into two sub-series when dealing with shares thatrepresent the fixed portion or the variable portion of the capital stock. Subseries “A-1” and “B-I”shall represent the fixed portion of the capital stock and subseries “A-2” and “B-2” the variableportion thereof.
     c).- Class III shares shall grant to their holders the voting rights set forth in Article 113(one hundred and thirteen) of the General Law of Commercial Companies, the spin-off of the company,and:
     1).- The granting of all kinds of guarantees with respect to third party obligations,outside the ordinary course of business of the company.
     2).- The granting of credits in favor of third parties, outside the ordinary course ofbusiness of the company.
     3).- For acquisitions not corresponding to the performance of the corporate purpose andcarried out outside the ordinary course of business of the company, if they have a value, inthe aggregate, greater than US$1,000,000 (ONE MILLION DOLLARS) lawful currency of the UnitedStates of America or, its equivalent in any other currency.
     4).- At the meeting deciding on the amortization and cancellation of the series orsub-series of shares which they hold.
     5).- The cancellation of the registration of shares issued by the company in thesection of securities or special section of the National Securities and IntermediariesRegistry (*Registro Nacional de Valores e Intermediarios*) and other foreign stock exchangeson which, if applicable, such shares are registered.
     6).- At the General Ordinary Shareholders’ Meeting held in order to appoint members ofthe board of directors, class III shareholders may be represented exclusively for purposesof appointing the director and its respective alternate in the Company’s Board of Directors.
     Class III shares shall not be entitled to receive preferential and accumulativedividends.
     d).- Class I shares shall not be directly or indirectly, totally or partially, transferred bythe holders thereof nor shall reduce its equity interest percentage without prior authorization ofthe Ministry of Communications and Transportation (*Secretaría de Comunicaciones y Transportes*). Theobligations referred to in the preceding paragraph shall have a term of three years, as of January31, 1997 and until January 31, 2000.
     e).- This article shall not be modified without the Class III shareholders’ prior consent, andany agreement to the contrary shall be null and void.
     **TENTH.**- Share Certificates.- Shares shall be represented by certificates or, until suchcertificates are issued, by provisional certificates.
     Shares certificates shall independently evidence the shares of each of the outstandingclasses, series and sub-series; shall be consecutively numbered different for each series orsub-series; and shall include the data and characteristics referred to in Articles 125 (one hundredand twenty five) and 127
 

 

(one hundred and twenty seven) of the General Law of Commercial Companies, as well as thetranscription of clause seven of these by-laws; shall include the signatures of two directors,which signatures may be original or by facsimile, in such case, the original of such signaturesmust be deposited in the Public Registry of Commerce of the Company’s corporate domicile.
     When for any reason the instructions contained in the share certificates are modified, theprovisions of Article 140 (one hundred and forty) of the General Law of Commercial Companies shallapply.
     **ELEVENTH.**- Number of shares per certificate and exchanges.- The board of directors isauthorized to issue both the shares certificates and the provisional certificates, evidencing oneor more shares. Moreover, it is authorized to exchange certificates evidencing a specific number ofshares per new certificate, as requested by the holders thereof and provided that the newcertificates shall evidence, collectively, the same total number of shares as those in the place ofwhich they are issued. The cost of any certificate exchange requested by a shareholder shall beborne by such shareholder.
     In the event of loss, theft, misplacement or destruction of any share certificate orprovisional certificate, the issuance of a duplicate certificate shall be subject to the provisionsof Title One, Chapter One of the General Law of Negotiable Instruments and Credit Transactions (*LeyGeneral de Títulos y Operaciones de Crédito)*. The share certificates issued in replacement willindicate that they are duplicates and that the original ones have been cancelled. All of thereplacement costs of share certificates will be borne by the holder of such replaced certificate.
     **TWELFTH.**- Stock Ledger.- The company shall maintain a stock ledger in which the entries setforth in Article 128 (one hundred and twenty eight) of the General Law of Commercial Companiesshall be made and shall consider as owners of the shares those persons recorded as such therein.The company shall refrain from recording in such ledger those transfers that are performed incontravention of the provisions of these by-laws or the law.
     Registrations in the stock ledger shall be suspended as from the fifth day prior to theholding of shareholders’ meetings until to the day after they are held, including the day on whichthey are held.
     **THIRTEENTH.**- Capital increases and decreases.- Increases and decreases of capital stock shallbe performed in such a way that, at all times, 51% (fifty one percent) of the voting shares isrepresented by class “I” shares, 29% (twenty nine percent) of the voting shares is represented byclass “II” shares, and the remaining 20% (twenty percent) of the capital stock is class “III”shares with restrictive voting rights, and shall also be subject to the following provisions:
     1.- Formalities.- Increases and decreases in the minimum fixed portion of the capital stock ofthe company shall be made by the resolution of the General Extraordinary Shareholders’ Meeting andconsequently, the Corporate By-laws shall be amended and the public instrument in which thecorresponding minutes are notarized shall be recorded with the Public Registry of Commerce of thecompany’s domicile.
     The agreement of the meeting resolving the reduction in the minimum fixed portion of thecapital stock shall be published in the Official Gazette of the Federation pursuant to theprovisions of the General Law of Commercial Companies.
 

 

     2.- Variable capital increases and decreases.- Increases and decreases in the variable portionof the capital stock shall be made by means of a resolution of the General Ordinary Shareholders’Meeting and the corresponding minutes shall be notarized, however no amendment to the CorporateBy-Laws and no recordation of the notarization in the Public Registry of Commerce shall benecessary. When the shareholders exercise their withdrawal right, the procedure set forth in thelaw shall be observed. Authorized but not yet subscribed shares that are issued to represent thevariable portion of the capital stock shall be deposited in the company’s treasury, in order to bedelivered to the extent they are subscribed and paid under the terms and conditions set forth bythe General Ordinary Shareholders’ Meeting or Board of Directors, in accordance with the powersthat, if applicable, it has granted to the board of directors, provided that in this case that thepreferential rights of the shareholders shall be observed in accordance with these by-laws.
     No capital increases shall be declared and no new shares shall be issued until prior capitalincreases and shares previously issued are fully paid.
     3.- Subscription and payment.- The meeting resolving the relevant capital increase shallprovide the issuance of shares representing such capital increase and the characteristics of suchshares. The meeting declaring the increase shall be authorized to offer the corresponding sharesfor subscription in the manner, terms, conditions, and amounts it deems convenient; whether throughthe capitalization of liabilities, reserves or surpluses, whether against the payment in cash or inkind of its value and, if applicable, of the premium that the meeting so determines, which shall beapplied according to the resolutions adopted by the meeting, or only so that they are subscribed.In the event they are subscribed, the meeting shall determine the manner, terms, and otherrequirements and conditions for the payment. In any of the events set forth in this clause, theshareholders with full voting rights shall be treated equally.
     4.- Right of first refusal.- In the event of an increase to the paid portion of the capitalstock or an increase to the fixed portion through the issuance of shares, the company’sshareholders shall at all times have a right of first refusal to subscribe the new shares of thesame class and series that are issued to represent the increase in proportion to the shares thatthey hold, provided that they have the legal capacity for the subscription. Class “I” and “II”shareholders may subscribe increases to other classes proportionally to their equity interest inaccordance with the law; such right must be exercised within 15 (fifteen) days following thepublication of the meeting’s agreement resolving such increase in the Official Gazette of theFederation and one of the newspapers with broadest circulation at the company’s corporate domicile.Following such 15 (fifteen) days, if there are still shares not subscribed, such shares shall beoffered by the Board of Directors for its subscription and payment to the individuals or entitiesthat the board agrees upon, at a price that may not be lower than the offered to the company’sshareholders for subscription and payment.
     In the event of an increase by capitalization of reserves, profits pending to be applied orsurpluses, shareholders shall be entitled to the portion corresponding to such increase and, ifapplicable, to receive new shares issued to represent such increase, under the terms of thepreceding paragraph.
     5.- Capital reduction by withdrawal.- Reduction of the capital stock as a result of anexercise, total or partial, by a shareholder owner of shares of the variable portion of the capitalstock of its withdrawal rights shall be subject to the provisions of Articles 220 and 221 of theGeneral Law of Commercial Companies and the capital reduction shall be performed by reimbursing therelevant share or shares, in accordance with the lower value between (a) 95% (ninety five percent)of the listed value at the Mexican Stock Exchange by obtaining from the average of transactionsperformed during the last thirty days on which the shares of the company have been listed on theStock Exchange, prior to the closing date of the fiscal year on which the withdrawal must beperformed, or
 

 

(b) the accounting value of the shares, in accordance with the statement of financial positioncorresponding to the closing of the fiscal year in which the separation shall be effective,previously approved by the General Ordinary Shareholders’ Meeting.
     Reimbursement payment may be requested from the company from the day following the GeneralOrdinary Shareholders’ Meeting that has approved the statement of the financial positioncorresponding to the fiscal year on which the withdrawal shall be effective, in accordance with theprocedure authorized for such purpose by such meeting. Shareholders that withdraw shall beresponsible for corporate obligations with third parties under the terms of the law.
     6.- Limitations to the capital reduction.- No reduction in capital stock may be authorizedwhen it is the result of a reduction in the capital stock to less than the minimum required by law.
     The meeting declaring a reduction in the capital stock shall establish the manner and terms bywhich the respective reimbursement shall be performed, the shareholders with voting rights at suchmeeting shall be treated in the same way as other shareholders.
     7.- Capital variations book- The company shall keep a capital variations book, where increasesor decreases shall be noted, as well as the capital represented in its fixed and variable portions.
     8.- Acquisition of company’s shares.- If the company temporarily acquires its own shares, thecapital stock account shall be affected in the manner set forth in Article 14 Bis of the SecuritiesMarket Law (*Ley del Mercado de Valores*).
     As a result of the acquisition of the company’s own shares, the reduction in the capital stockshall be made on the same date of the acquisition and, if applicable, simultaneously shall affectthe reserve for acquisition of the company’s own shares, therefore, converting the acquired sharesinto treasury shares. Treasury shares so converted shall comply with the requirements set forth inArticle 14 Bis of the Securities Market Law and may not exceed 25% of the capital stock, unlessdealing with restrictive voting shares convertible into ordinary shares and complying with theprovisions of the aforementioned Article 14 Bis of the Securities Market Law.
     Treasury shares may be placed among the investor public and the proceeds thereof shall beapplied to increase the capital stock of the company in accordance with the provisions of such law.
     **FOURTEENTH.**- Registry Cancellation.- For purposes of canceling the registration of thecompany’s shares in the Securities Section of the National Securities and Intermediaries Registry,whether by the request of the company or through a resolution adopted by the National Banking andSecurities Commission under the terms of the Law, the obligation of the shareholders holding acontrolling interest in the company is set forth to make a public offer to purchase, prior to thecancellation and at the price that is the highest from the average of the transactions that havebeen performed for the last 30 days on which the shares were listed prior to the offer date, or theaccounting value of the share pursuant to the last quarterly report, filed to the National Bankingand Securities Commission and the Mexican Stock Exchange prior to the offer.
     In the event that the company decides to modify this Clause, a minimum voting quorum of 95%and the prior approval from the National Banking and Securities Commission shall be required.
 

 

     The company’s majority shareholders shall not be required to carry out the previouslymentioned public offer, if the agreement of all shareholders for the cancellation of the registryis evidenced.
**CHAPTER IV**
**GENERAL SHAREHOLDERS’ MEETINGS**
     **FIFTEENTH.**- Shareholders’ Meeting.- The supreme body of the company is the generalshareholders’ meeting.
     1.- The general ordinary meeting shall convene at least once a year, at the corporate domicileof the company, on the date determined by the board of directors within the four months followingthe closing of the fiscal year. In addition to the matters included in the agenda, the ordinaryannual meeting shall deal with the discussion, approval or modification of the directors’ reportand statutory examiners’ report, of the prior fiscal year, referred to in Articles 172 and 166,section IV, respectively, of the General Law of Commercial Companies, of this company as well asthose companies of which it is the majority shareholder, when the value of the investment in eachof these companies exceeds 20% of the capital stock of this Company according to the statement offinancial position at the closing of the corresponding fiscal year.
     2.- The extraordinary meetings may meet at any time, at the corporate domicile of the companywhen dealing with any of the matters set forth in Article 182 (one hundred and eighty two) of theGeneral Law of Commercial Companies, with the spin-off of the company and with the followingmatters which shall be of the exclusive competence of the Extraordinary Shareholders’ Meeting.       I).- The granting of all type of guarantees with respect to third party obligations,outside the ordinary course of business.       II).- The granting of credits in favor of third parties, outside the ordinary courseof business.       III).- In the acquisitions not corresponding to the performance of the corporate purpose andcarried out outside the ordinary course of business of the company, if they have anaggregate value of more than US$1,000,000 dollars (ONE MILLION DOLLARS), lawfulcurrency of the United States of America, or its equivalent in any other currency.       IV).- At the meeting that decides on the amortization or cancellation of the sharesof the class of which they are holders; and       V).- Cancellation of the registration of shares issued by the company in thesecurity section or special section of the National Securities and IntermediariesRegistry and in other foreign stock exchanges on which, if applicable, they are listed.
     This article may not be modified without the prior approval of the Class III shareholders, andany agreement to the contrary shall be null and void.
 

 

     3.- Special meetings shall meet to discuss matters that exclusively affect the shareholders ofany class. These meetings shall be subject to the provisions of Article 195 (one hundred and ninetyfive) of the General Law of Commercial Companies.
     In the event that one shareholder is the holder of all the outstanding shares of one class, nomeeting shall be required to be held to agree upon matters related thereto, provided that theresolutions are notified to the secretary of the company’s board. The secretary shall make thecorresponding entries in the company’s corporate books.
     **SIXTEENTH.**- Call.- Meetings shall be called by the board of directors or by any of thestatutory examiners, as well as by the shareholders representing 33% of the voting shares accordingto the provisions of Articles 168, 184 and 185 (one hundred and sixty eight, one hundred and eightyfour and one hundred and eighty five) of the General Law of Commercial Companies. Calls shallinclude the date, time and place for the meeting; shall contain the agenda, shall be signed by thecalling party or, if the calling party is the board of directors, by its chairman or by thesecretary, and shall be published in the Official Gazette of the Federation, and in one of thenewspapers with broadest circulation nationwide, at least fifteen calendar days prior to the dateof the meeting. During such term, documents related to the report set forth in Articles 172 and 173of the General Law of Commercial Companies shall be available to the shareholders at the company’soffices.
     If any meeting is not held on the date set forth for the meeting, it shall be held within thenext thirty days, for which a second or subsequent call shall be made, expressing the circumstancesthereof, and complying with the requirements set forth for the first call.
     Meetings may be validly held without previous call, if all outstanding shares with votingrights on the matters to be dealt therewith are represented at such meeting.
     **SEVENTEENTH.**- Evidence as shareholder.- In order to evidence the status as shareholder and itsright to attend the meetings, shareholders must deliver to the secretary of the board of directorsat the corporate domicile no later than two business days prior to the day set forth for holding ameeting: a) the corresponding share certificates; or b) the evidences of deposit with respectthereto that may have been issued by the credit institution or institutions, whether Mexican orforeign, in the places set forth for the respective call, duly authorized for such purpose. Whenshares were deposited in offices located outside of the corporate domicile of the company, theinstitutions receiving them must notify the company by mail or cable, telegraph or facsimile thedepositor’s name, number of shares deposited and the day on which the deposit was made.
     Such evidences shall include the shareholder’s name, amount of shares deposited, number ofcertificates, the date of the meeting and the condition that such shares shall remain depositeduntil after the end of the relevant meeting.
     Upon delivery, the secretary of the board of directors shall issue the corresponding proxycards to the interested parties, which shall indicate the name of the shareholder and the number ofvotes such shareholders is entitled to cast, as well as, if applicable, the name party with whichthe shares are.
     Shareholders shall not need to evidence their right to attend a meeting through theaforementioned mentioned deposit, with regards to shares registered under their name in the stockledger.
 

 

     Shareholders may be represented at the meetings by an attorney-in-fact through a proxy orpower-of-attorney, which also must be delivered to the secretary of the board of directorsaccording to the rules mentioned above. Attorneys-in-fact of Federal, State or MunicipalGovernments, as well as decentralized entities shall evidence their capacity under the terms ofapplicable administrative legislation.
     The company’s managers or statutory examiners shall not be attorneys-in-fact for suchpurposes.
     **EIGHTEENTH.**- Ordinary Meetings.- In order for a General Ordinary Shareholders’ Meeting to bevalidly held by virtue of first call, at least 50% of ordinary common voting shares of the companymust be represented therein. If the General Ordinary Meeting meets by virtue of a second orsubsequent call, shall be validly held if class I and class II shareholders attend to the meeting,regardless of the number of shares represented thereat, and regardless of the nature of theresolutions to be taken.
     **NINETEENTH.**- Extraordinary Meetings.- General Extraordinary Shareholders’ Meetings met byvirtue of first call to discuss matters in which class “III” shares do not have voting rights,shall be deemed legally convened if at least three fourths of class “I” and “II” common votingshares of those into which the capital stock is divided are represented thereat, and theresolutions shall be valid if adopted at least by the majority of common shares of such classes.
     General Extraordinary Shareholders’ Meetings met by virtue of first call to discuss any of thematters set forth in number 2, paragraph I through V of Clause Fifteenth of these By-Laws, shall bedeemed legally installed if at least 85% (eighty five percent) of the shares of the capital stockare represented thereat, and its resolutions shall be valid if adopted by, at least, the majorityof shares into which the capital stock is divided.
     General Extraordinary Shareholders’ Meetings met by virtue of a second or subsequent call todiscuss any of the matters of those in which class “III” shares do not have voting rights, shall beconsidered legally convened, if at least the majority of class “I” and class “II” common votingshares of the company are represented thereat, and their resolutions shall be valid if adopted by,at least, the majority of common shares of such classes.
     General Extraordinary Shareholders’ Meetings met by virtue of a second or subsequent call todiscuss any of the matters of those in which class “III” shares do have voting rights, shall beconsidered legally convened if at least the majority of the capital stock is represented thereat,and the resolutions shall be valid if adopted by, at least, the majority shares into which capitalstock is divided.
     **TWENTIETH.**- Voting. At general meetings voting shall be by hand, unless one of the attendantsrequest ballots.
     If for any reason a meeting cannot be legally installed, this fact and its causes shall beevidenced in the minutes’ book, in accordance with the provisions of clause twenty-third of theseby-laws.
     **TWENTY-FIRST.**- Process. Shareholders’ Meetings shall be presided by the Chairman of the Boardof Directors, or, in absence of the Chairman, by the Vice Chairman, and upon absence of both, andin case of special shareholders’ meetings, by the person appointed by the majority of theshareholders present at the meeting.
 

 

     The Secretary of the Board of Directors, or in his absence, the Alternate Secretary, and incase of absence of both, the person appointed by the majority of the shareholders’ present at themeeting shall act as secretary of the shareholders’ meeting.
     The Chairman shall appoint, within the persons present at the meeting, two examiners who shallvalidate the attendance list, indicating the number of shares represented by each person present atthe meeting, and shall inform the meeting thereof. The certification of the examiners shall betranscribed in the minutes of the Meeting. The meeting shall not address any matters not set forthin the agenda of such meeting, unless all the shares entitled to vote at that meeting are presentthereat.
     Notwithstanding the possibility to defer the shareholders’ meeting in terms of Article 199(one hundred ninety nine) of the General Law of Commercial Entities, in case of any impossibilityto address any of the items on the agenda on the date for which the meeting was called, the meetingshall continue thereafter on the date determined by such meeting, without need for a new call, andshall be convened with the required quorum for shareholders’ meeting held upon second call.
     **TWENTY-SECOND**.- Resolutions adopted outside of a meeting by the unanimous vote of theshareholders representing all voting shares, with respect to the matter in question, or whendealing with matters corresponding top the special meeting, all of the shares representing part ofthe capital stock corresponding to the respective series shall have, for all legal purposes, thesame validity as if adopted at a general or special meeting, as the case may be, provided that theapproving votes are confirmed in writing.
     The secretary of the board of directors shall integrate the respective file and make thecorresponding entries in the company’s corporate books.
     **TWENTY-THIRD.**- Meetings’ minutes.- Meetings’ minutes shall be transcribed in the meetings’minutes book, and be signed by the person presiding the meeting, the secretary, the statutoryexaminer or examiners attending thereat.
     For each minutes an appendix shall be opened, which shall contain a copy of the minutes, alist of the attendants with the number, class and series of shares that they represent, as well asdocuments justifying the shareholders’ capacity, as well as evidence of their representatives, acopy of the newspapers where the call is published and the reports and other documents that mayhave been submitted at the meeting or prior thereto.
     In the same meetings’ minutes book, the resolutions adopted in terms of clause twenty-secondof these by-laws shall be included, of which the secretary or alternate secretary shall attest.
**CHAPTER V**
**MANAGEMENT OF THE COMPANY**
     **TWENTY-FOURTH.**- Board of directors.- The management of the company shall be entrusted to aboard of directors, the members of which shall be appointed according to the provisions of theseby-laws and applicable standards of the General Law of Commercial Companies.
     **TWENTY-FIFTH.**- Structure. The Board of Directors shall be comprised of six directors and theirrespective alternates, who may not be shareholders, with capacity to act as directors, in terms ofthe
 

 

applicable legal provisions. The members of the Board of Directors shall be elected by the GeneralOrdinary Shareholders’ Meeting as follows:
     (a) Shareholders of the Ordinary, Class I and II with full-voting shares of theCompany shall appoint 5 (five) directors and 5 (five) alternate directors. The appointment of theChairman of the Board of Directors shall be made by the favorable vote of the majority of suchshares. Class III shareholders shall have the right to appoint only one director and its respectivealternate. The director representing the participation of Ferronales, the Mexican FederalGovernment and/or the Federal Public Administration shall be appointed by the head of the FederalExecutive Branch, directly or through the sector coordinating office.
     (b) Class “III” shareholders may be represented at the Ordinary Shareholders’ Meetingcalled for the purpose of appointing the members of the Board of Directors, only to appoint thedirector and its alternate of such series of shares.
     **TWENTY-SIXTH**.- Term. The directors shall hold office for the term set forth at the time oftheir appointment, and in case no such term is established, the following rules shall apply:
     (a) The members of the Board of Directors shall hold office during one fiscal year,but may be reelected one or more times. The directors shall continue in their offices until theirsuccessors take office. The General Ordinary Shareholders’ Meeting shall be entitled, at any time,to revoke their appointment, with the favorable vote of the series of shares that appointed them.
     (b) Directors appointed due to their position as public officers of the Federal, Localor Municipal Government, shall hold office as long as they remain officers of the governmentalagency that proposed their appointment.
     All directors or members of the board of directors of the Company shall comply with anyrequirements set forth in applicable laws.
     **TWENTY-SEVENTH.**- Alternates.- Temporary or definitive absences of any directors shall befilled in by any alternate director indistinctly, as long as such alternate director is appointedby the same class of shares as the absent director. In case of a definitive absence of anydirector, the Board of Directors shall issue a call for the ordinary shareholders’ meeting for itto appoint such directors’ successor.
     **TWENTY-EIGHTH**.- Appointment of Chairman. The Board of Directors at its first meeting followingthe annual shareholders’ meeting of the Company shall appoint from its members a Chairman, only incase such shareholders’ meeting does not make such appointment. It shall also appoint a ViceChairman, and a Secretary and one or more Alternate Secretaries of the Board of Directors. TheSecretary and any and all Alternate Secretaries of the Board of Directors may or may not beDirectors.
     The Secretary and the Alternate Secretaries may be removed from their offices at any time bythe Board of Directors and their absences shall be filled in by the person appointed by such body.
     **TWENTY-NINTH.**- Meetings. Meetings of the Board of Directors shall be ordinary andextraordinary. Ordinary meetings shall be held on the date and time previously resolved by theBoard of Directors. Extraordinary meetings shall be held upon call by the Chairman of the Board,the Vice Chairman of the Board or at the request of any of the Directors to the Chairman of theBoard. The call issued by the Secretary or the Alternate Secretary of the Board of Directors shallbe made in writing and delivered to each Director, Alternate Director and the Statutory Examinersof the Company at least 5
 

 

(five) days prior to the date of the meeting at the domicile recorded with the Secretary of theBoard of Directors. Meetings may be validly held without need of prior call if at the time of suchmeeting all the members of the Board of Directors are present, or otherwise, if any absentDirectors or Statutory Examiners waive in writing their right to receive a call.
     The meetings of the Board of Directors shall be duly convened if at least the majority of itsmembers are present thereat. All resolutions of the Board of Directors shall be valid when adoptedby the favorable vote of the majority of its members. Neither the Chairman of the Board nor theperson acting as Chairman of any meeting of the Board of Directors shall have a tie-breaking vote.
     The Chairman of the Board of Directors shall preside over any meeting of the Board ofDirectors, and in his absence, the Vice Chairman shall act as Chairman thereof. Upon absence ofboth officers, the person appointed by the majority of the Directors present at the meeting shallpreside.
     **THIRTIETH.**- Resolutions outside of a meeting.- Resolutions adopted unanimously outside of aboard of directors meeting shall have, for all legal purposes, the same validity as if adopted by ameeting, provided that the respective approval votes are confirmed in writing before the secretaryof the board, who shall make the corresponding entries in the company’s corporate book.
     **THIRTY-FIRST.**- Meetings’ Minutes of the Board.- The minutes from the board of directors’meetings shall be signed by the person presiding it, the secretary and if applicable, by thestatutory examiners attending the meeting, an shall be evidenced in the board’s meeting minutesbook, of which the secretary or alternate secretary may issue certified copies, certifications orextracts.
     In the same minutes book resolutions adopted under the terms of clause thirty of these by-lawsshall be noted of which the secretary or alternate secretary shall attest.
     **THIRTY-SECOND**.- Powers.- The Board of Directors shall have the powers that are attributed tothe bodies of its type according to law and these by-laws, and it shall have, enunciatively andwithout limitation the following powers:
     a).- General powers to manage the businesses and properties of the Company, grant and issueall kinds of guarantees and joint and several obligations (*aval*), execute the agreements, signdocuments and grant or underwrite the credit instruments required by such management.
     b).- General powers for exercising the acts of domain permitted by law.
     c).- General powers for lawsuits and collections, with all the general powers and thoserequiring a special clause according to law, including those to grant pardon, to dismiss all kindsof trials, remedies and proceedings in general, as well as the constitutional protection (*amparo*)proceedings, to submit claims and complaints of a criminal nature and to be the aide of theDistrict Attorney, power that may be exercised before all sorts of persons and authorities, whetherjudicial or administrative, civil, criminal and labor, federal or local, inside or outside a trial,with the broadest powers possible.
     d).- Powers to establish branches and agencies of the Company and to remove them.
     e).- Powers to appoint and remove the chief executive officer and one or several directors,under-directors, general managers, under-managers, special managers and in general officers,factors,
 

 

agents and other employees of the Company, providing the titles that they shall use, theirhierarchy, the payments that they shall receive and the guarantees that they shall give.
     f).- Powers to grant and revoke special and general powers of attorney with all the powers itdeems convenient.
     g).- Powers to sign all sorts of documents, contracts and deeds that are directly orindirectly related to the corporate purpose.
     h).- Powers to execute the resolutions adopted by the general shareholders’ meetings.
     i) — In general, to carry out all acts and execute all agreements necessary for the corporatepurpose and those granted in other clauses of these by-laws. In the event there is no specialappointment, the representation shall correspond to the Board’s Chairman.
     j).- No member of the board of directors may exercise the board’s powers individually. Theboard may appoint from among its members, delegates for specific acts. In the event there is nospecial appointment, such specific acts shall correspond to the chairman of the board.
     k).- The Board of Directors of the Company shall have the authority to create and establishthe Committees, Commissions and any other intermediate body of the Board of Directors as it maydeem necessary or convenient, and to delegate in such bodies the necessary or convenientauthorities for the due accomplishment of their purpose. In any case, all intermediate bodies ofthe Board of Directors of the Company shall be comprised by Directors of the Company and theiralternates, as applicable. The intermediate bodies of the Board of Directors of the Company shallrefrain from addressing or resolving any matter specifically reserved to the Shareholders’ Meetingor the Board of Directors in these by-laws or the law.
     **THIRTY-THIRD**.- Executive Committee. The Class “I” and Class “II” Shareholders of the Company,shall appoint at the Ordinary Shareholders’ Meeting where the members of the Board of Directors areappointed, the members of the Executive Committee.
     The Executive Committee shall be comprised by three Directors and three alternates.
     This intermediate body of the Board of Directors shall be responsible for the implementationof the policies and guidelines of the Board of Directors, and shall only resolve on those mattersthat are not exclusively reserved to the Shareholders’ Meeting or the Board of Directors.
     The members of the Executive Committee shall always act jointly, and their appointment shallnot be delegated either totally or partially, to any other person. The meetings of the ExecutiveCommittee shall be duly installed with at least the majority of its members and its resolutionsshall be valid when adopted by the favorable vote of at least the majority of the members presentat such meeting. In case of a tied vote, the Executive Committee shall submit the relevant item tothe Board of Directors. Likewise, the Executive Committee shall periodically inform the Board ofDirectors, of the actions taken and resolutions adopted by it, or otherwise, upon the occurrence ofany material event for the Company.
     The meetings of the Executive Committee shall be held periodically, in the terms set forth bythe Executive Committee.
 

 

     The Executive Committee, the Board of Directors, or, the Shareholders’ Meeting, as the casemay be, shall appoint from the members of the Executive Committee a Chairman, a Secretary and anAlternate Secretary thereof.
     The Executive Committee shall have the following authorities:
     (a) General power of attorney for lawsuits and collections, acts of administration andacts of domain, with all the authorities, including those that require a special clause, pursuantto law, in terms of articles 2554 and 2587 of the Civil Code for the Federal District and theircorrelative Articles of the Civil Codes of the States of the United Mexican States, and shall beentitled to exercise such powers with respect to any and all matters of the Company, except forthose expressly reserved to any other corporate body either by these by-laws of by law.
     (b) General power of attorney to underwrite, guarantee, accept and endorse negotiableinstruments, pursuant to Article 9 (nine) of the General Law of Negotiable Instruments and CreditTransactions.
     (c) To transfer, encumber, pledge, mortgage or otherwise grant any security over theassets and real property of the Company.
     (d) To grant and revoke powers of attorney.
     (e) To appoint and remove the chief executive officer, and one or more managers,under-managers, and in general officers, representatives, agents, and any other employee of theCompany; to determine their positions, rank and considerations payable to each of them, and, ifsuch is the case, the guaranties to be posted by them.
     (f) In general, to decide and resolve on any asset or business of the Company,provided, however, that it shall not address or resolve any matter expressly reserved to the Boardof Directors or the Shareholders’ Meeting by these by-laws or the law.
     No member of the Executive Committee shall be entitled to exercise the authority granted tosuch body individually. However, the Executive Committee shall appoint one or more delegates forthe execution and implementation of its resolutions, and in case no special delegate is appointed,the Chairman of the Board of Directors shall execute and implement the resolutions of the ExecutiveCommittee.
     The members of the Executive Committee shall not receive any special consideration for theperformance of their duties in the Executive Committee.
**CHAPTER VI**
**SURVEILLANCE**
     **THIRTY-FOURTH**.- Statutory Examiners.- The Company shall be surveyed by one or more statutoryexaminers, temporary and revocable, who may be partners or external persons to the company, whoshall be appointed by the shareholders’ meeting. At the shareholders’ meeting in which one or moreofficers are appointed, each shareholder holding at least 25% of the ordinary
 

 

shares, shall be entitled to appoint a statutory examiner and his alternate. Statutory examinersshall receive the payments set forth by the general ordinary shareholders’ meeting with charge toresults.
     **THIRTY-FIFTH**.- Term.- Statutory examiners shall hold their positions for one year and may bereelected one or more times.
**CHAPTER VII**
**FISCAL YEARS, FINANCIAL INFORMATION,**