Exhibit 1.1  PORTUGAL TELECOM, SGPS, S.A.  Corporate By-Laws  CHAPTER I  NAME, REGISTERED OFFICES, DURATION AND OBJECT  ARTICLE ONE  Type and Name  The company shall be a public limited company with the name of Portugal
Telecom, SGPS, S.A.  ARTICLE TWO  Registered Offices  1.The companys registered offices shall be in
Avenida Fontes Pereira de Melo, number forty, Lisbon, and its duration shall be
unlimited.  2.By resolution of the Board of Directors, the
Company may establish and maintain, at any location within or outside the
national territory, agencies, delegations or any other form of representation,
as well as may it, with the authorization of the General Meeting, to relocate
its registered office to any location within the national territory.  ARTICLE THREE  Object  1.The companys object is to manage holdings in
other companies as an indirect means of performing economic activities, as
defined by law.  2.The company may, without restrictions,
acquire or hold quotas or shares in any companies, as defined by law, in
addition to participating in complementary groupings of companies,


European Economic Interest Groupings, as well
as forming or participating in any other forms of temporary or permanent
association between public or private companies and/or entities.  CHAPTER II  SHARE CAPITAL, SHARES AND BONDS  ARTICLE FOUR  Share Capital  1.The share capital is twenty six million, eight hundred ninety-five
thousand, three hundred seventy-five Euros, and it is fully paid up.  2.The share capital is represented by eight hundred
ninety-six million, five hundred twelve thousand and five hundred shares, with
par value of three Euro cents each, with the following distribution:  a)Eight hundred ninety-six million, five
hundred twelve thousand ordinary shares;  b)Five hundred class A shares.  3.The Board of Directors may, with the
favourable opinion of the Audit Committee, increase the share capital, on one
or more occasions, through capital contributions in cash up to Euro 15,000,000,
after a resolution has been passed by the general meeting of shareholders
fixing the parameters to which such share capital increase or increases shall
be subject.  4.The general meetings definition of the
parameters pertaining to the increase in share capital to be decided by the
board of directors must specify:  a)the maximum amount of the increase;  b)without prejudice to the conditions of
article 460 of the Commercial Companies Code, whether the increase involves a
suppression or limitation of preference rights;  c)the class or classes of shares per issue
comprising the increase in share capital and, in the event of the issue of more
than one class of shares, the respective proportion thereof, without prejudice
to the consequences of an incomplete subscription.  2


ARTICLE FIVE  Share Classes  1.The company, in addition to its ordinary
shares, has A shares, the majority of which shall be held by the State or
bodies belonging to the public sector and enjoy the privileges resulting from
the rules set out in articles fourteen, number two and nineteen, number
two of these articles of association.  2.The privileges referred to in the preceding
number shall, for all purposes, notably those set out in article twenty four of
the Commercial Companies Code, constitute special rights to be attributed to
the respective class of shares.  ARTICLE SIX  Types of Shares  The companys shares shall be nominative and be recorded in book-entry
form.  ARTICLE SEVEN  Preference Rights pertaining to Share Capital
Increases  1.In the event of an increase in share capital,
based on the entry of fresh capital, current company shareholders at the time
of the resolution shall enjoy preference over non shareholders in subscribing
for new shares.  2.In the event of a fresh issue of A shares,
the preference right referred to in the preceding number shall firstly be given
to this class of shareholders, with other shareholders only being given
preference in respect of shares whose subscription rights have not been taken
up.  ARTICLE EIGHT  Preference Shares and Bonds  1.The company may issue voting or non voting
preference shares, redeemable or not, as defined by law.  2.The company may issue bonds or other
securities pursuant to the terms of the legislation in force and, in addition,
perform legally permitted operations in respect of the companys own bonds or
other securities issued by it.  3.The board of directors may decide to issue
bonds or other securities when the respective amount thereof does not exceed
the amount annually fixed for the purpose in question by the general meeting
and, in the event of the issue of convertible bonds, provided that the implicit
increase in share capital resulting from the price and initial conversion fixed
by the issue  3


resolution is within the competence of the
board of directors, in conformity with the terms of number 3 of article 4 and
provided that the parameters defined for the purpose in question by the general
meeting have been complied with.  4.The general meetings definition of the
parameters in respect of the board of directors issue of convertible bonds
must specify:  a)the maximum value of the bonds to be issued
in legal tender in Portugal or its counter value at the exchange rate fixed in
the issue resolution;  b)the maximum value of the increase in
potential share capital implicit in the issue at the initial conversion price
fixed by it;  c)without prejudice to the conditions of
article 460 of the Commercial Companies Code, whether the bonds are issued with
or without a suppression or limitation of preference rights;  d)the class or classes of shares in respect of
whose issue the conversion shall be made and in the event of more than one class
of shares, the respective proportion thereof.  ARTICLE NINE  Shareholders Performing a Competing Activity  1.Shareholders who/which are, either directly
or indirectly, engaged on an activity which competes with an activity being
performed by companies in a controlling/controlled relationship with Portugal
Telecom, SGPS, S.A. may not hold more than ten per cent of the companys
ordinary shares without firstly having received permission from the general
meeting.  2.A competing activity, for the purpose of the
dispositions of the preceding number, is understood to be the provision of
public telecommunications services or network capacity, excluding in the case
of the former, audiotext services, pursuant to the terms of Portuguese law,
either in Portugal or overseas, in addition to any other activity of the same
type and nature as that being performed by companies with which Portugal
Telecom, SGPS, S.A. is in a controlling/controlled relationship.  3.Entities which either directly, or
indirectly, have a holding of at least ten per cent of the share capital of a
company engaged on any of the activities referred to in the preceding number or  4


in which an identical percentage is held by
another entity, are considered to be indirectly engaged on a competing
activity.  4.The following ordinary shares may be redeemed
without the need for the consent of their respective holders:  a)Those held without the prior authorisation of
the general meeting, by a shareholder who/which, pursuant to the terms of the
preceding numbers, is engaged on a competing activity, as defined in the
preceding numbers and when such shares, in conjunction with the shares referred
to in the following sub paragraph, exceed the amount of ten per cent of the
share capital;  b)Those held by entities whose shares, pursuant
to the terms of the Securities Market Code, would be considered, in the case of
a public take-over bid, as belonging to the shareholders referred to in the
preceding sub paragraph, whose proportion, after the redemption referred to in
this sub paragraph, exceeds the amount of ten per cent of the share capital,
with the redemption being proportional to the number of shares held by each of
the entities in question.  5.The shares referred to in the preceding
number may be redeemed at their nominal or respective market value, if lower.  6.The board of directors shall notify the
respective shareholders that their shares shall be redeemed, within a maximum
period of thirty days from the resolution to redeem the shares adopted at the
general meeting.  7.Shareholders may suspend the redemption
process if, within a period of five days from the notification, they have
applied to the board of directors for permission to alienate the shares to be
redeemed, within a period of time of no more than thirty days, with the
aforementioned application implying the renunciation of their corresponding
voting and preference rights in the event of any increase in share capital up
until the effective date of sale.  8.The Board of Directors shall promote the
performance of the acts and the fulfillment of the formalities legally required
for the execution of the share capital reduction.  9.The consideration payable to the holders of
the redeemed shares shall be paid after they have certified that the shares are
no longer recorded in the respective book-entry securities accounts and shall
be paid in a lump sum or be deferred over a period of no more than two years
from the date of redemption.  5


10.When the redeemed shares are registered, in
legally acceptable cases, the consideration payable to their respective holders
shall be paid against the delivery of the respective securities pursuant to the
conditions defined in the preceding number.  CHAPTER III  STATUTORY BODIES  SECTION I  General Dispositions  ARTICLE TEN  Corporate Bodies  The Corporate Bodies are the General Meeting, the Board of Directors,
the Audit Committee and the Statutory Auditor.  ARTICLE ELEVEN  Terms of Office  1.Without prejudice to no. 3 of this article,
members of the board of the General Meeting, the Board of Directors and the
Audit Committee as well the Statutory Auditor are elected for a three year
period by the General Meeting, and may be re-elected, once or more, in
accordance with the relevant legal limitations.  2.At the end of the respective terms of office,
the elected members of the board of the general meeting and statutory bodies
shall remain in office until new members have been appointed.  3.The Statutory Auditor is elected by the
General Meeting further to a proposal of the Audit Committee.  SECTION II  General Meeting  ARTICLE TWELVE  Obligations of the Shareholders and information
duties  1.Shareholders are obliged:  6


a)not to cast any votes which, in statutory
terms should not be counted, without indicating the existence of a limitation
on the counting thereof;  b)to notify the Board of Directors of the
occurrence of any of the situations foreseen in number two to article nine and
in number eleven to article thirteen;  c)to notify the board of directors of the
entering into and full contents of any shareholders agreements which they may
have entered into in respect of the company;  d)to provide to the Board of Directors, in
writing, and in a true, complete and self-explanatory manner, allowing it to be
sufficiently elucidated, all the information requested by said Board on the
situations foreseen in article nine, number four, paragraph b) and article
thirteen, number eleven.  2.The information referred to in sub paragraphs
b) and c) of the preceding number shall be provided within a period of five
working days from their respective occurrence, unless a general meeting is held
during the course of the referred to period, in which case it should also be
provided to the chairman of the board of the general meeting up until the time
of the meeting.  3.The information referred to in sub paragraph
d) of number one shall be provided within a period of time of eight days prior
to the holding of the first general meeting after the request for information.
Failure to comply with this duty within the referred to period of time implies
the shareholders acknowledgement of the facts alleged by the board of
directors in its request for information.  4.Except otherwise imposed by a legal provision
or a mandatory rule of a regulatory entity, when information is requested
by a shareholder duly qualified, in light of its holding of shares
corresponding to a minimum percentage of the share capital, such information
shall only be made available in the Companys registered office.  ARTICLE THIRTEEN  Participation and Voting Rights  1.Only shareholders with voting rights may
attend general meetings.  2.The Shareholders intending to participate on
the General Meeting must evidence, up to five working days prior to the
respective meeting, that their shares have been registered into a book entry
securities account.  7


3.Holders of shares represented by share
certificates, in the legally permitted terms, when intending to participate in
the General Meetings shall have their shares registered in their name in the
Companys share registry, up to five working days prior to date scheduled for
the meeting, or evidence, up until the same date, the respective deposit with a
financial intermediary which may legally replace such registry.  4.For the purposes of the conditions of numbers
two and three, the shares shall remain entered or registered in the shareholders
name, at least up until the time of the closing of the general meeting.  5.To each 500 shares shall correspond one vote,
and Shareholders having less than such number of shares may form a group so
that, jointly and arranging to be represented by one of the groups members,
they make up the number of shares required to exercise voting rights.  6.The exercise of vote by correspondence or by
electronic means may comprise all the matters included in the call for the
meeting, in the terms and conditions set forth therein.  7.The terms and conditions for the exercise of
vote by correspondence or by electronic means shall be defined by the Chairman
of the General Meeting in the respective call, so as to ensure its
authenticity, regularity, safety, trustfulness and confidentiality up until the
moment of the voting. In both cases, the authenticity of the vote shall be
assured before the Chairman of the General Meeting, as regards legal entities, by
means of a communication with a certified signature according to the law, or as
regards individuals, by means of a communication having enclosed a simple copy
of the identity document. In order to assure the confidentiality of the vote,
the referred communications shall be addressed in a close envelope which shall
only be considered upon the counting of votes.  8.The votes issued by correspondence or by
electronic means are counted as negative votes in relation to the proposals of
resolution which may be presented after their issuance.  9.The attendance in a general meeting of
shareholders which may have exercised their respective voting rights by
correspondence or electronic means, or by their representative, determines the
revocation of the vote expressed by those means.  10.Votes cast by an ordinary shareholder, either
on his/its own account or using the services of a representative, either in
his/its own name or as the representative of another shareholder, when
exceeding ten per cent of the companys total voting stock, shall not be
counted.  11.For the purposes of this article, shares
which would be considered as belonging to a shareholder for the purposes of a
take-over bid, pursuant to the terms of the Securities Market Code, shall be
considered as belonging to the shareholder.  8


12.The limitation set forth in number ten
applies to all resolutions, including those requiring a qualified majority.  13.In cases of the joint ownership of shares,
only the common representative or a representative thereof, may participate in
general meetings  14.The limits set out in the preceding numbers
apply to usufructs and collateral creditors of the shares.  15.Pursuant to ADR (American Depository
Receipts) or GDR (Global Depository Receipts) programmes involving the companys
shares, holders of ADRs or GDRs shall be considered as shareholders, in
accordance with the terms of the following number, and the entity in whose name
the shares have been entered as merely the 
representatives thereof.  16.Pursuant to the terms of the previous number:  a)The conditions of article three hundred and
eighty five of the Commercial Companies Code applying to the representative,
shall apply to the entity in whose name the shares used as the basis for the
issue of ADR or GDR programmes have been entered;  b)The legal or statutory limitation established
on the counting of votes shall refer to the votes cast on behalf of each holder
of ADR or GDR, who / which shall be subject to the conditions foreseen in
number eleven and as well as to those set forth in article twelve.  17.The limitation on the counting of the votes
cast by one entity on behalf of another does not apply to entities in whose
name the shares of the company used as a basis for ADR or GDR programmes have
been entered.  18.For the purpose of participating in and
voting at a general meeting, holders of ADRs and GDRs must comply with the
terms of this article.  ARTICLE FOURTEEN  Majority Required for Resolutions  1.The general meeting shall pass resolutions at
the time of its first or subsequent convocation, on the basis of the majority
of votes cast without prejudice to the need for a qualified majority in legally
defined cases.  2.However, resolutions on the election of the
board of the General Meeting, the Chairman of the Audit Committee and the
Statutory Auditor, as well as resolutions on the matters referred to in
paragraphs c) to f) and i) to j) of the following article, shall not be
approved, at the time of the first or subsequent convocation, if opposed by the
majority of A share votes.  9


ARTICLE FIFTEEN  Competency of General Meeting  1.The general meeting is specifically
responsible for:  a)Electing the Board of the General meeting,
members of the Board of Directors and of the Audit Committee as well as the
Statutory Auditor;  b)Analyzing the report of the Board of
Directors, discussing and voting on the balance sheet, the accounts, the
opinion of the Audit Committee and additional documentation legally required;  c)Deciding on the appropriation of net income
for the year;  d)Deciding on any alterations to the articles
of association and share capital increases, in addition to any limit or
suppression of preference rights and the fixing of the parameters for the share
capital increases to be decided by the board of directors pursuant to the terms
of article 4, numbers 3 and 4.  e)Deciding on the issue of bonds or other
securities and fixing the value of those which the board of directors is
entitled to authorise pursuant to the terms of article eight number three in
addition to the limitation or suppression of preference rights in respect of
the issue of  bonds convertible into
shares and the fixing of the parameters for the issue of these types of bonds
by the board of directors, pursuant to the terms of article 8 numbers 3 and 4.  f)Deciding on the authorisations referred to in
articles two, number two and nine number one;  g)Deciding on the remuneration of members of
the statutory bodies, with the right to appoint a wages commission for the
purpose in question;  h)Deciding on the existence of the companys
justified interest in the provision of real and personal guarantees in respect
of the debts of other entities which are not in a dominating/dominated or group
relationship;  i)Approving the general objectives and
fundamental principles of the companys policies;  j)Defining the general principles of the
holdings policy in companies, pursuant to the terms of article three, number
two and deciding on its respective acquisitions and alienations when, in
accordance with the said principles, they should be authorised in advance by
the general meeting;  k)Dealing with any other matters for which it
has been convened.  10


2.Resolutions on any of the issues referred to
in sub paragraph i) of the preceding number shall be adopted solely on the
basis of proposals to be submitted by the board of directors or by shareholders
fulfilling the requirements set out in article seventeen.  ARTICLE SIXTEEN  Board of the General Meeting and Convocation Thereof  1.The
board of the general meeting shall comprise its respective chairman, a deputy
chairman and a secretary.  2.The
general meeting shall be convened and directed by the chairman of the board
thereof or, in the event of his absence or inability to be present, by the
deputy chairman.  3.The
convocation of the General Meeting shall be made with the advance notice and in
the form foreseen in the law, expressly indicating the matters to be dealt
with.  4.The
General Meeting shall take place in the Companys registered office, or at
another location chosen by the Chairman of the General Meeting under the legal
terms, and can not take place trough telematic means.  ARTICLE SEVENTEEN  General Meetings  The General Meeting shall be held, at least, once
per year, and whenever a request for its convening is submitted to its Chairman
by the Board of Directors, the Audit Committee or by Shareholders representing,
at least, five percent of the share capital.  SECTION III  Board of Directors  ARTICLE EIGHTEEN  Board of Directors  1.The
Board of Directors is composed by a minimum of fifteen and a maximum of twenty
three members.  2.The
chairman shall have the casting vote in board resolutions.  11


3.The
chairman of the board of directors shall be chosen by the general meeting in
accordance with the terms of these articles of association.  ARTICLE NINETEEN  Election of Directors  1.Directors
shall be elected by a majority of the votes cast.  2.The
majority referred to in the preceding number shall include the majority of A
share votes for the election of one third of the total number of directors,
which shall include the chairman of the board of directors.  3.One
of the directors may be chosen, in isolation, by the general meeting, pursuant
to the terms of nos. six and seven of article three hundred and ninety two of
the Commercial Companies Code.  ARTICLE TWENTY  Executive Committee  1.The
board of directors may delegate the running of the companys day to day affairs
to an executive committee comprising five or seven members.  2.Executive
committee members shall be chosen by the board of directors from among its
members and shall comprise at least one or two of the directors elected
pursuant to the terms of no. two of article nineteen, depending on whether the
executive committee comprises five or seven members.  3.The
board of directors shall define the executive committees responsibilities in
respect of the day to day running of the companys affairs and shall delegate
thereto, when necessary, all of the competencies whose inclusion is not
prohibited under the terms of article four hundred and seven of the Commercial
Companies Code.  4.The
Chairman of the Executive Committee shall:  a)Ensure
that all the information regarding the activity and the resolutions of the
Executive Committee is provided to the other members of the Board of Directors;  b)Ensure
the compliance with the delegation limits, the Companys strategy, and the
duties of cooperation with the Chairman of the Board of Directors.  5.The
executive committee shall, in principle, operate in conformity with the
regulations defined in articles twenty one, twenty two, twenty three and twenty
four of the articles of  12


association for the board of directors, without
prejudice to the adaptations which the board of directors may decide to make in
respect of such operation.  6.The
board of directors may authorise the executive committee to charge one or more
of its members to deal with certain tasks and delegate the performance of
several of the powers which have been delegated to it to one or more of its
members.  7.The
resolutions of the Executive Committee shall be taken by majority of the
expressed votes and the Chairman has a casting vote.  ARTICLE
TWENTY ONE  Competences of the Board of Directors and Surety of
the Directors  1.The
board of directors is responsible namely for:  a)Managing
the companys affairs and performing all acts and operations in respect of the
companys corporate object which are not the specific responsibility of other
statutory bodies of the company;  b)Representing
the company in legal and non legal matters with the right to withdraw, come to
terms and confess in respect of any lawsuits, in addition to entering into
arbitration agreements;  c)Acquiring,
selling, or in any other manner, alienating or encumbering rights, notably when
affecting the companys holdings, moveable and immovable assets, without
prejudice to the conditions set out in article fifteen;  d)Establishing
the companys technical and administrative organisation and its internal
operating rules;  e)Appointing
legal or other proxies with the powers considered expedient, including the
power to sub-delegate authority;  f)Electing
the effective and substitute Secretary of the Company;  g)Proceed,
trough co-optation, to the replacement of the Directors which have a definitive
absence, being the co-opted members in functions up to the end of the term to
which the replaced Directors had been elected to, without prejudice of the
ratification in the next General Meeting and of the foreseen in number three;  h)Performing
the other competencies attributed by the general meeting.  2.The
absence of any Director to more than half of the ordinary Board of Directors
meetings, during a financial year, either in a continuous or interpolated
manner, without justification  13


accepted by the Board of Directors, shall be
considered as a definitive absence of such Director. Such definitive absence
shall be declared by the Board of Directors, and such Directors shall be
replaced under the legal and statutory terms.  3.When
a director who is definitively unavailable, is one of those elected on the
basis of the application of the rule contained in article, nineteen number
two and when, in respect of the cooption, they have not voted with the majority
of the members of the board of directors who, elected pursuant to the terms of
the said disposition remain in office, the respective replacement shall be made
by an election at a general meeting.  4.The
board of directors may particularly appoint one or more directors to deal with
certain administrative matters.  5.In
the event of any delegating of powers, at least one of the directors elected in
accordance with the terms of article nineteen, number two, shall be appointed,
either solely or in conjunction with another or other managing directors and
shall, in this latter case,  be given the
same powers as the others.  6.The
responsibility of each Director shall be necessarily secured by any of the
mandatory forms legally foreseen in accordance with the minimum impositions set
forth by law.  ARTICLE TWENTY TWO  Relationship with the General Meeting  The board of directors, in its management of the companys affairs,
shall comply with the general guidelines issued by the general meeting,
pursuant to the terms and limitations as defined by law.  ARTICLE TWENTY THREE  Competencies of the Chairman of the Board of
Directors  1.The
chairman of the board of directors is specifically responsible for:  a)Representing
the board in legal and non legal matters;  b)Co-ordinating
the activity of the board of directors and apportioning tasks among members
when recommended on the basis of management expediency;  c)Convening
and directing the meetings of the board;  d)Ensuring
that the resolutions of the board of directors are properly complied with.  14


2.In
the event of the Chairmans absence or impairment and under the terms permitted
by law, the Chairman shall be replaced by the member of the Board of Directors
indicated by him for the purpose in question.  ARTICLE TWENTY FOUR  Resolutions  1.The
Board of Directors schedules its ordinary meetings dates or its frequency and
shall meet in extraordinary sessions whenever convened by its Chairman, or two
Directors or the Audit Committee.  2.The
Board of Directors shall not meet without the participation of the majority of
its members in functions, although its Chairman may, in cases of recognized
urgency, permit such meeting without the presence of such majority if it is assured
by vote by correspondence or by proxy, according to the terms established in
following number.  3.Without
prejudice to the conditions set out in the preceding number, postal and proxy
votes are permitted although a director may not represent more than one other
director.  4.Board
of directors resolutions shall be adopted by a majority of the votes cast.  ARTICLE TWENTY FIVE  Minutes  1.The
resolutions passed at meetings of the board of directors, in addition to voting
statements, shall be recorded in minutes.  2.The
minutes shall be signed by all members of the board of directors participating
in the meeting.  3.Participants
at the meeting may dictate a summary of their statements for inclusion in the
minutes.  ARTICLE TWENTY SIX  Binding/Committing of Company  1.The
company shall be bound/committed:  a)By
the signatures of two members of the board of directors, one of whom shall be
the chairman of the board of directors, chairman of the executive committee or
a director to whom either has delegated such authority;  15


b)By
the signature of a single member of the board of directors to whom the powers
for so doing have been delegated;  c)By
the signature of the appointed proxies, subject to the scope and in accordance
with the terms of the corresponding mandate.  2.The
signature of a sole director shall be sufficient for the day to day running of
the affairs of the company.  3.Company
bonds, when in certificate form, shall bear the signatures of two directors,
which signatures may be replaced by a simple mechanical reproduction or a
seal/stamp.  4.The
board of directors may decide, in accordance with the terms and subject to
legal limitations, that certain company documents be signed using mechanical
processes or seals/stamps.  SECTION IV  Audit Committee  ARTICLE TWENTY SEVEN  Membership  1.An
Audit Committee, consisting of three directors, one of them being its Chairman,
all elected by the General Meeting under the following paragraphs, is responsible
for the supervision of Companys activity.  2.The
Members of the Audit Committee will be elected by the General Meeting jointly
with the other directors, being individually identified as such in the lists
proposed for the Board of Directors membership as well as being expressly
identified its Chairman.  3.The
members of the Audit Committee shall comply with the requirements on
incompatibilities, independence and expertise arising from the law and
regulations as well as from other relevant binding market rules, including
those in force in the jurisdictions where the Company has securities admitted
to trading.  4.The
absence of any of the Audit Committees member is deemed as a definitive
absence in the situation referred to in number 2 to article twenty one, as
applicable. Such definitive absence shall be declared by the Audit Committee
and the absent member will be replaced in accordance with the law and the
provisions of these Articles of Association.  16


ARTICLE TWENTY EIGHT  Competences  1.In
addition to the competences established in law and in other provisions of this
Articles of Association, the Audit Committee has the following competences:  a)To
verify the accuracy of the financial statements and, in general, to supervise
the quality and integrity of the financial information included in the
Companys financial statements;  b)To
supervise the process of preparation and disclosure of financial information;  c)To
analyze and issue its opinion about the relevant matters related to accounting
and audit issues and to the impact on the financial statements of amendments to
the accounting rules applicable to the Company, as well as to its
accounting policies;  d)To
supervise the statutory audit and the auditing to the Companys financial
statements as well as to supervise and evaluate the internal proceedings
related to accounting and audit matters;  e)To
make a proposal to the general meeting as regards the appointment of the
Statutory Auditor;  f)To
supervise the independence of the Statutory Auditor, in particular in what
concerns the provision of additional services;  g)Direct
and exclusive responsibility to appoint, hire, retain or dismiss and to
establish the compensation of the Companys Independent Auditors, as well as to
supervise their qualifications and independence and to approve the audit
services and/or non-audit services to be rendered by said Independent Auditors
or associated persons;  h)To
resolve any disagreements between the Executive Committee and the Independent
Auditors referred to in previous paragraph, with respect to financial
information to be included in the financial statements to be reported to the
competent authorities as well as with respect to the audit report process;  i)To
supervise the quality, integrity and effectiveness of the risk management
system, the internal control system, as well as the internal audit system,
including the annual revision of its adequacy and effectiveness, and, in
general, to supervise the performance of the functions discharged by the
internal audit and the internal control system of the Company;  j)To
receive the communications of irregularities, claims and/or complaints
submitted by shareholders, employees of the Company or third parties, as well
as to implement the proceedings for the receipt, retention and treatment of the
above referred irregularities,  17


claims and/or complaints whenever concerning
accounting and auditing matters as well as related to internal controls as
regards those subject matters;  k)To
give its opinion and prior advice, within the scope of its competences foreseen
in the law or in these Articles of Association and whenever it deems convenient
or necessary, in regard to any reports, documentation or other information to
be disclosed or submitted by the Company to the competent authorities.  2.The
Independent Auditors referred in the previous number shall report to and be
subject to the direct and exclusive overseeing of the Audit Committee, who
shall annually obtain and review an audit report with the Independent Auditors.  ARTICLE TWENTY NINE  Resolutions  1.The
Audit Committee shall schedule its meetings, at least, once every two months of
each financial year, at the time and place determined by its Chairman, without
prejudice of additional meetings being convened by the Chairman or at request
of the majority of its members.  2.The
Audit Committee shall not meet without the attendance of the majority of its
members, provided that the Chairman may, in cases of recognized urgency or
justified impossibility, permit such meeting without the attendance of such
majority if it is assured by vote by correspondence or by proxy, according to
the terms established in following number.  3.Voting
rights can be exercised by correspondence or proxy, provided however each
member does not act on behalf of more than one Audit Committee member.  4.The
resolutions of the Audit Committee shall be adopted by the majority of votes
cast and its Chairman has a casting vote.  5.The
resolutions adopted during the Audit Committees meetings, as well as its
members voting statements shall be recorded in minutes prepared for such
purpose, which shall be signed by all members of the Audit Committee
participating in the meetings, all having the prerogative of summarizing their
interventions to be mentioned in such minutes.  18


ARTICLE THIRTY  Funding  The Companys annual budget shall establish the financial resources
required for the Audit Committee to pay the compensation or funding of the
independent auditor referred to in article twenty eight and of any advisors of
the Audit Committee as well as to cover the expenses required for the Audit
Committee to perform its powers and duties.  SECTION V  Statutory Auditor  ARTICLE THIRTY ONE  Appointment and Competences  1.A
statutory auditor or a statutory audit company, which may have a substitute,
appointed by the General Meeting, under proposal of the Audit Committee, is
responsible for the examining the Companys accounts.  2.The
Statutory Auditor has the competences established in law.  CHAPTER IV  APPROPRIATION OF NET INCOME  ARTICLE THIRTY TWO  Appropriation of Net Income  1.The
duly approved annual net income shall be appropriated as follows:  a)A
percentage of not less than five per cent shall be paid into a legal reserve
until it reaches the amount defined by law;  b)A
percentage of not less than forty per cent of the distributable profit shall be
distributed among the shareholders in the form of a dividend, without prejudice
to the general meetings having the right, on the basis of a qualified majority
of two thirds of the votes cast, to decide on a reduction of the dividend or not
to proceed with any distribution thereof;  c)the
remainder to be appropriated at the discretion of the general meeting.  2.The
privilege attached to A shares as a result of the conditions set out in
article fourteen, number two is only applicable in respect of the approval of
the percentage of dividends when higher than the minimum amount established in
sub paragraph b) of the preceding number.  19


3.Pursuant
to the terms of and within the legally established limits, shareholders are
entitled to an advance of profits for the year in progress.  CHAPTER V  DISSOLUTION AND LIQUIDATION  ARTICLE THIRTY THREE  Dissolution and Liquidation  1.The
company shall be dissolved in accordance with legally defined cases and terms.  2.The
liquidation of the company shall be governed by the dispositions defined by law
and the resolutions of the general meeting.  CHAPTER VI  FINAL, TRANSITORY CONDITIONS  ARTICLE THIRTY FOUR  Deposit Programme Contract  1.Entities
which, pursuant to the development of the conditions set out in article eight,
number one of Decree Law number forty four/ninety five of the twenty second of February may,
on account of the deposit programme contract agreed with the company, become
direct or indirect titleholders to the companys shares, shall not be
considered as being engaged on activities which compete with those of the
company owing to the mere circumstance of being engaged on analogous contracts
by third parties which are competing with the company.  2.The
conditions of the preceding number do not preclude the application of the
conditions of articles nine and twelve to the referred to depository entities
when, pursuant to the scope of the respective deposit programme contracts, the
participants therein are either directly or indirectly engaged on activities
which compete with those of the company and when the percentage number of
shares in the company held by them is higher than the percentage permitted
under these articles of association for the equivalent ownership of shares.  20


ARTICLE THIRTY FIVE  Board of Directors Resolutions  Board of directors resolutions to increase share capital or issue
bonds convertible into shares may be based on parameters and on the suppression
or limitation of preference rights pursuant to a general meetings resolution
adopted prior to the public deed resulting in the inclusion of numbers 3 and 4
of article 4, the alteration of number 3 and the inclusion of number 4 of
article 8 and the amendment of sub paragraphs d) and e) of number 1 of article
15 of these articles of association, provided that such resolutions fulfil the
requirements set out in these projects, in addition to number 2 of article 14.  21