CODE
      OF
      BETTER CORPORATE PRACTICES










Code
      of
      Better Corporate Practices.









CODE
      OF BETTER CORPORATE PRACTICES




Exposition
      of Motives.





In
      order
      for investors to have trust on the handling of business associations, it is
      necessary that they have transparency in their administrations and that an
      adequate revealing to investors be promoted.





In
      this
      sense, several sectors of the Mexican economy have stated their interest in
      that
      business associations of the country reach international standards that allow
      them to be more competitive, making their administration more transparent and
      offering greater trust to the national and foreign investors, in order to
      attract investment in benefit of the national economics. With this objective
      in
      mind, a Better Corporate Practices Committee (the “Committee”) formed by members
      representative of the industrial, governmental, financial and service sectors,
      among others.





The
      first
      job of the Committee consisted of reviewing international experiences on
      mechanisms that have achieved to be able to make of knowledge the information
      regarding the handling of the business associations. It was found that the
      most
      used and adequate means to succeed in such end, has been the Codes of Better
      Practices, since these establish principles that help to attain a harmonization
      between several participants in the business associations, improving in such
      manner the corporate governance thereof.










CODE
      OF
      BETTER CORPORATE PRACTICES




In
      such
      manner, the Committee has been in charge of drafting the Code of Better
      Practices for Mexico. In such Code are established recommendations of voluntary
      application to improve the corporate governance of the Mexican business
      associations. These recommendations to not contradict the valid legislation,
      on
      the contrary, they complement many of the provisions of the applicable
      laws.





It
      is
      important to highlight that the recommendations were drafted in accordance
      with
      the practices that must be followed by a business association in Mexico in
      accordance with the economic and social reality of our country.





Also,
      the
      need to create principles not recognized in the ordainments of other countries
      was recognized.





For
      example, the equity structure of the Mexican business associations was
      considered, which is clearly different to that of other countries. In several
      developed countries, the equity is pulverized and held by large institutional
      investors, unlike Mexico, where a majority of the equity of the business
      associations that are traded are held by control shareholders, which makes
      that
      these have a preponderant position in the administration of business
      associations.





On
      the
      other hand, the Code, as a main part, establishes recommendations regarding
      the
      operation and formation of the Boards of Directors. Within such frame, specific
      aspects are recommended as well as others of functional kind.


CODE
        OF
        BETTER CORPORATE PRACTICES


With
      regards to the specific recommendations, it is important to indicate that even
      those these represent a desired standard for most of the business associations,
      each business association individually must evaluate the form to adhere
      thereto.





With
      regards to the functional recommendations, the Committee proposes the
      establishment of intermediate corporate bodies of the Board of Directors, in
      a
      manner that they act as a means to support the Board of Directors in its
      functions and in such manner, be able to take more informed
      decisions.





It
      is
      important to highlight that the Code may apply to all of the Mexican business
      associations, whether traded in the stock exchange or not, recognizing that
      here
      are some principles that only apply to those that are traded, due to the nature
      thereof. Lastly, it must be indicated that with the objective of contributing
      to
      a better revealing of the information to the market, the Committee requested
      to
      the National Banking and Securities Commission (“Comisión Nacional Bancaria y de
      Valores”) the issuing of provisions in order for the business associations,
      whose shares are traded in the stock market reveal their degree of adhesion
      to
      the suggested practices. In case a public business association does not follow
      such practices, it shall indicate the reasons why it does not follow them,
      as
      well as the alternate mechanism that it has to substitute them.


CODE
        OF
        BETTER CORPORATE PRACTICES


INTRODUCTION





By
      the
      initiative of the Corporate Coordination Council (“Consejo Coordinador
      Empresarial”) a Corporate Governance Better Practices Committee was established
      (the “Committee”) who issues this Code of Better Practices (“The Code”) where
      recommendations are established for a better corporate governance of Mexican
      business associations.





The
      recommendations of The Code are directed to define principles that may
      contribute to improve the functioning of the Board of Directors and to the
      revealing of information to the shareholders. In a specific manner, the
      recommendations seek:





**I.-**  **That
      business associations broaden the information regarding their administrative
      structure and the functions of its corporate bodies.**




**II.-**  **That
      the business associations have mechanisms that ensure that its financial
      information is sufficient;**




**III.-**  **That
      processes exist that promote the participation and communication between the
      members of the board; and**




**IV.-**  **That
      processes exist that promote the adequate revealing to the
      shareholders.**


CODE
        OF
        BETTER CORPORATE PRACTICES


It
      is
      important to indicate that the principles that are referred to are found
      throughout The Code in bold letters and with a tabulator indication. The rest
      of
      The Code intends to provide a brief explanation and to set in context each
      Principle.





In
      the
      drafting of The Code, the Committee recognized the reality and needs of Mexican
      business associations. Among them, the stock structure of such business
      associations was considered, as well as the importance that the shareholders
      may
      have in the administration thereof.





Finally,
      it is important to highlight that The Code may apply to all Mexican business
      associations, whether for those whose shares are traded in the stock exchange
      (listed) or for those that are not, recognizing that there are some principles
      that may only apply for the first. For the listed business associations, it
      is
      considered adequate to inform their degree of adhesion to the suggested
      practices. In case that a listed business association does not follow such
      practices, it may indicate the reasons why it does not follow such practices,
      as
      well as an alternate mechanism that it has to substitute them. It must be noted
      that, with the purpose of facilitating the compliance with the recommendations
      of The Code, subsidiaries may decide to adhere to The Code through their
      Holdings.





1.-  BOARD
      OF
      DIRECTORS.





The
      daily
      operation of a business association is the responsibility of the directive
      team
      thereof, while the work of defining its strategic vision and to approve the
      undertaking must be the responsibility of the Board of Directors. In these
      endeavors, all of the members of this body have responsibility.


CODE
        OF
        BETTER CORPORATE PRACTICES
  In
        order
        to comply with their objective, it is recommended that the Board of Directors
        has members that are not involved in the daily operation of the business
        association and that may provide an external and independent point of view.
        Also, in order to facilitate their tasks, the Board of Directors must be
        supported by intermediate bodies that are destined to evaluate information
        and
        to propose actions in specific areas of relevance for the Board of Directors,
        in
        such a manner that it counts with greater information to make its decision
        taking more efficient. Finally, it must make sure that there are clear rules
        regarding the operation and functioning of the Board of
        Directors.





1.1.  Functions.




Whereas
      it is true that the law establishes certain attributions for the Board of
      Directors, the Committee considers that complying with the following functions
      helps to outline its work and contributes for the information of the business
      association to be more useful, timely and trustworthy.


CODE OF BETTER CORPORATE PRACTICES


**It
      is recommended that, in addition to the obligations that the Mexican General
      Corporate Code (“Ley General de Sociedades Mercantiles”), Credit Institutions
      Act (“Ley de Instituciones de Crédito”), the Stock Exchange Act (“Ley del
      Mercado de Valores”) and other specific acts provide, within the attributions of
      the Board of Directors, the following be included: (I) To establish the
      strategic vision of the business association, (II) To insure that the
      shareholders and the market have access to the public information of the
      business association; (III) To establish mechanisms of internal control; (IV)
      To
      insure that the business associations has the necessary mechanisms that allow
      to
      prove that it complies with the different legal provisions that are applicable
      to it; and (V) To evaluate on a regular basis the fulfillment of the President
      and the High Level Officers** **1**  **of
      the Business Association.**





1.2  Composition.




The
      composition of the Board of Directors constitutes an essential element for
      its
      adequate functioning. Therefore, it is considered that it is necessary for
      there
      to be a minimum number of members of the Board that generate a plurality of
      opinion within the Board. However, it must be looked for to establish a maximum
      number to insure that the members effectively have the possibility of expressing
      and arguing their points of view without falling in the lack of efficiency
      that
      may provoke the fact of functioning with an excessive number of members of
      the
      Board.





**It
      is recommended that the Board of Directors be formed by a number that is set
      between 5 and 15 principal members of the Board.**




1
        High Level Officer refers to the category immediately inferior to the President.
 CODE OF BETTER CORPORATE PRACTICES
  It
              is
              important to avoid that the principal Members of the Board, by not
              being
              present, be substituted indistinctly by any substitute member, diluting
              in such
              manner their obligations before the rest of the Board. Also, it is
              considered
              convenient that the principal member of the Board form a team with
              his/her
              substitute member with the purpose of reaching a more effective participation.
              In such sense it is considered relevant to allow that the principal
              member
              participate in the process of selecting his/her corresponding
              substitute.





**It
      is recommended that there be no substitute members, and if there are, they
      may
      only substitute one principal member previously established. In this last case,
      it is recommended that each candidate to principal member suggests who shall
      be
      his/her substitute.**





The
      composition of the Board of Directors is fundamental for it to be able o define
      the strategic vision of the business association and to be the back up in its
      operation. In a manner that is consistent with the aforementioned, it is
      important to incorporate the concept of the independent member of the Board.
      The
      term independent member of the Board is used to identify those that are not
      related with the directive team of the business association. These members
      of
      the Board are called to form a part of the Board due to their personal and
      professional prestige. Their fundamental work is to contribute with the
      impartial view of the strategic planning of the business association and to
      the
      rest of the functions that are entitled to the Board of Directors.


CODE OF BETTER CORPORATE PRACTICES


**Independent
      Members of the Board: Are those selected due to their experience, capacity
      and
      professional prestige and that in addition, are not located in any of the
      following situations at the moment of their appointment: (I) To be employees
      or
      officers of the business association; (II) Without being employees or officers
      and being shareholders of the business association, have power of ordering
      over
      the officers of the business association; (III) To be advisors of the business
      association or partners or employees of firms that act as advisors or
      consultants of the business association or its affiliates and that its income
      depend in a significant** **2**  **manner
      of this contractual relationship; (IV) To be clients, suppliers, debtors or
      creditors of the business association, or partners or employees of a business
      association that is a client, supplier, important** **3**  **debtor
      or creditor; (V) To e employees of a foundation, university, civil association,
      civil association that receives important donations** **4** **from
      the business association; (VI) To be a President or high level officer of a
      business association in whose Board of Directors participates the President
      or a
      high level officer of the business association; and (VII) To be
      relatives** **5**  **of
      an of the persons referred to in sections (I) through (VI)
      hereinabove.**




2
        An income is considered significant if it represents more than 10% of the
        income
        of the advisor or the firm.
  3 A
        client or supplier is considered important when the sales from or to the
        business association represent more than 10% of the total sales of the client
        or
        the supplier, respectively. Also,
        a
        debtor or creditor is considered important when the amount of the credit
        is
        greater than 15% of the assets of the business association or its counterpart.
  4 Donations
        are considered important when they represent more than 15% of the total
        donations received by the institution.
  5
        This reference applies to the spouse and up
        to the third degree in the cases of blood relation and relatives by marriage,
        for the cases set forth in sections (I) and II); to the spouse and until
        the
        first degree in the cases of blood relatives and by marriage relatives, for
        the
        cases referred to in sections (III) through (VI).


CODE OF BETTER CORPORATE PRACTICES





It
      is
      also important to include the concept of a patrimonial member of the Board
      of
      Directors. This member of the Board of Directors is characterized by assuming
      the risk that having a significant ownership on the equity of a business
      association implies. His/her participation is convenient, since by maintaining
      a
      permanent monitoring on his/her investment, it benefits all of the business
      association.





**Patrimonial
      Members of the Board of Directors: Are those appointed due to their character
      as
      significant shareholders** **6** **,
      or those that act as persons receiving power of attorney from the first.
      Depending on whether the significant shareholder and the person receiving power
      of attorney comply or not with the characteristics of an independent member
      of
      the Board of Directors, they may be independent patrimonial members of the
      Board
      of Directors or related patrimonial members of the Board of
      Directors.**




6 A
        shareholder is considered significant when he/she directly or indirectly
        is
        entitled to a percentage of the corporate equity that is equal or greater
        than
        2%.




CODE OF BETTER CORPORATE PRACTICES


**Related
      Members of the Board of Directors: Are those that are not placed in any of
      the
      situations listed in the prior definitions.**





With
      the
      objective that the independent and patrimonial members of the Board of Directors
      comply with their purpose, it is necessary that they have a percentage of
      representation that is sufficient within the administration organism.





**It
      is recommended that the independent and patrimonial members of the Board of
      Directors jointly constitute at least 40% of the Board of Directors. It is
      also
      suggested that the independent members of the Board of Directors represent
      at
      least 20% of the total number of members of the Board.**





With
      the
      purpose that the market be in conditions to evaluate the integration of the
      Board of Directors, it is necessary for the business association to provide
      information on the profile and category to which its members pertain to.





**It
      is recommended that at the annual report presented by the Board of Directors,
      it
      be mentioned which of the members of the Board of Directors have the quality
      of
      being independent and which are patrimonial, indicating for the latter, their
      category.**


CODE OF BETTER CORPORATE
            PRACTICES


**It
      is suggested that the main present positions of each member of the Board of
      Directors, on the date of the report, be indicated at the annual report filed
      by
      the Board of Directors.**





**1.3**  **Structure.**




The
      Committee considers that there are at least three specific areas in which the
      Board of Directors must take important determinations for the business
      association. These are evaluation and compensation; audit; and finances and
      planning. In consequence, the Board of Directors requires of mechanisms that
      guarantee an adequate taking of decisions in such areas.





The
      Committee recommends the creation of one or several intermediate corporate
      bodies as mechanisms to support the Board of Directors in its functions.
      Structurally, such bodies are formed by members of the Board of Directors and
      functionally, they serve as an extension of the Board of Director to provide
      it
      with support in the taking of decisions on several matters.





It
      is
      important to highlight that the intermediate bodies do not intervene in the
      operation of the business association. Therefore, in order to fulfill their
      functions, they may support in the work of the administrative structures. In
      this manner, the intermediate bodies do not constitute an executive organism
      nor
      fulfill functions that correspond to the Board of Directors and to the operative
      areas of the business association.


CODE OF BETTER CORPORATE
            PRACTICES


**It
      is recommended that, with the objective of taking more informed decisions,
      the
      Board of Directors undertake the functions of Evaluation and Compensation,
      Audit
      and Finance and Planning, that are latter defined in the Code, through one
      or
      more intermediate corporate bodies.**





Notwithstanding
      that the Board of Directors recognizes that it must be flexible in the
      organization structures of the different business associations, international
      practice uses the Committees to fulfill with such specific functions. What
      is of
      special relevance is that the Board of Directors take informed decisions on
      important subjects.





For
      example, it is deemed important that the patrimonial members of the Board of
      Directors and the independent members thereof participate in the works of the
      intermediate bodies. The latter, because they were chosen due to their
      professional prestige and experience, and the patrimonial members, because
      they
      have the incentives to become involved and solve the matters of such
      bodies.





**It
      is recommended that the following principles be complied with, regarding the
      intermediate bodies:**




|**·** | **One
              or more may be created, insofar as they have a clear objective and
              their
              membership avoids conflicts of
              interest;**
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|**·** | **They
              must be formed solely by principal members of the Board of
              Directors;**
|----- | ----------------------------------------------------------------------------------------------------------








CODE OF BETTER CORPORATE PRACTICES




|**·** | **It
              is suggested that they be formed by three members as minimum and seven
              as
              maximum;**
|----- | -----------------------------------------------------------------------------------------------------------------------------------



|**·** | **It
              is recommended that they regularly inform of their activities to the
              Board
              of Directors;**
|----- | -----------------------------------------------------------------------------------------------------------------------------------------



|**·** | **The
              Chairman of each intermediate body may invite to its sessions officers
              of
              the business association, whose responsibilities are related with the
              functions of the intermediate
              body;**
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|**·** | **It
              is suggested that each independent member of the Board of Director,
              in
              addition to fulfilling his/her functions at the Board, participates
              in at
              least one intermediate body;**
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|**·** | **It
              is recommended that the intermediate body in charge of the audit function
              be chaired by an independent member of the Board of
              Directors.**
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




1.4  Operation




The
      Board
      of Directors must meet from time to time with the frequency that insures the
      adequate and permanent fulfillment of the matters related to the business
      association.





**It
      is suggested that the Board of Directors meet at least 4 times per year, t
      is
      also recommended that one of its meetings be dedicated to the definition of
      a
      strategy in a medium and long term for the business
      association.**


CODE OF BETTER CORPORATE PRACTICES


It
      is
      also important that business associations have mechanisms that guarantee
      openness within the Board of Directors, in order for its functioning not to
      depend of a single person.





**It
      is suggested that a process exist through which, in agreement with at least
      25%
      of the number of members of the Board of Directors, a session thereof may be
      convoked.**





The
      active participation and responsibility of the members of the Board of Directors
      is translated into a greater institutionalization of this body.





To
      support this, it is important to provide beforehand to the information of the
      members of the Board of Directors in order for them to have the sufficient
      elements to comply with their duties.





**It
      is recommended that the members of the Board of Directors have access with
      an
      anticipation of at least five labor days prior to the meeting, to the
      information that is relevant for the taking of decisions in accordance with
      the
      Order of the Day contained in the notice. This shall not be applicable with
      regards to strategic matters that require confidentiality; however, in this
      case, the necessary mechanisms must be established in order for the members
      of
      the Board of Directors to be able to adequately evaluate the proposals regarding
      such strategic matters.**


CODE OF BETTER CORPORATE PRACTICES


The
      member of the Board of Directors appointed for the first time must have the
      necessary information to duly fulfill his/her position. With such purpose,
      it is
      necessary that he/she have a broad knowledge of the business; among other
      aspects, he/she must know the position that the business association occupies
      within its sector, and who are their main competitors, clients and
      suppliers.





Also,
      the
      members of the Board of Directors have the legal obligation to be liable for
      the
      exercise of their duties. Lack of knowledge of their responsibilities does
      not
      deprive them from their duties. Therefore, it is important that it be made
      of
      the knowledge of the new members of the Board of Directors, the legal and
      statute reach and consequences of their position.





**It
      is suggested that when members of the Board of Directors be appointed for the
      first time, an adequate induction be given to them regarding their new
      responsibility. As a minimum, the business association must provide information
      regarding itself and its surroundings, as well as with regards to the
      obligations, responsibilities and attributions that being a member of the Board
      of Directors of the business associations implies.**





1.5 Duties
      of
      the members of the Board of Directors.




The
      members of the Board of Directors take upon themselves obligations and
      responsibilities on accepting the position. For this reason, it is considered
      important that the business association have a generic frame of action that
      establishes the rules of conduct to which the members of the Board of Directors
      must abide by.


CODE OF BETTER CORPORATE PRACTICES


**It
      is recommended that six principles be complied with in such
      regard:**




|**·** | **Communicate
              with the Chairman and Secretary of the Board of Directors any situation
              from which a conflict of interests may derive from and to refrain from
              participating in the corresponding
              deliberation;**
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|**·** | **To
              use the assets and services of the business association only for the
              fulfillment of the corporate objective and to define clear policies
              when
              exceptionally, such assets are used for personal
              matters;**
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|**·** | **To
              dedicate to his/her function the necessary time and attention, being
              present at least in 70% of the meetings to which he/she is summoned
              (it
              only applies for principal members of the Board of
              Directors);**
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|**·** | **Maintain
              absolute confidentiality over all information that may affect the
              operation of the business association, as well as the deliberations
              that
              are undertaken at the Board of
              Directors;**
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|**·** | **The
              principal members of the Board of Directors and, in its case, their
              corresponding substitutes must maintain themselves respectively informed
              regarding the matters dealt within the meetings of the Board of Directors
              to which they are present; and**
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|**·** | **Support
              the Board of Directors by means of opinions, recommendations and
              orientations that derive from the analysis of the performing of the
              business association, in order so that the decisions that it adopts,
              be
              duly supported in professional criteria and qualified personnel that
              has a
              broader and more independent scope regarding the operation of the business
              association.**
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

CODE OF BETTER CORPORATE PRACTICES





**2.**  **EVALUATION
      AND COMPENSATION FUNCTION.**





The
      Committee recommends that a mechanism exist that supports the Board of Directors
      in compliance with the evaluation and compensation function of the President
      and
      the high level officers of the business association. To comply with this
      function, it may support itself in the internal structures of the business
      association, such as the human resources area.





The
      Committee considers that what is essential is that the mechanism that is chosen
      ensures that the proposals be taken to the Board of Directors in order for
      it to
      take the corresponding decisions. Also, the existence of the mechanism must
      be
      revealed and its operation must be transparent to increase trust of the
      investors in the administration.





2.1  Generic
      Functions.





The
      following functions are directed to the business association having human
      resources and compensation policies that are adequate.





**It
      is recommended that the following functions be complied with: (I) Suggest to
      the
      Board of Directors procedures to propose the President and high level officers;
      (II) Propose to the Board of Directors the criteria for the evaluation of the
      President and the high level officers, in accordance with the general references
      that are established by the Board of Directors; and (III) Review and take to
      the
      Board of Directors the proposal made by the President regarding the structure
      and amount of the Compensation of the main executive officers of the business
      association.**


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**2.2.**  **Operative
      Aspects.**




The
      Board
      of Directors must be assisted in the evaluation of the policies to determine
      the
      compensation of the President and the high level officers of the business
      association. It is important that such policies consider aspects such as the
      goals previously set, individual performance and performance of the business
      association. The Committee considers that the compensation policies that the
      Board of Directors implements must be revealed to the market.





In
      order
      to protect the patrimony of the business association, it is important to assist
      the Board of Directors to avoid excessive payments to the main officers due
      to
      indemnities, through the review of the hiring conditions of the
      officers.





**It
      is suggested that the Board of Directors be assisted in reviewing the conditions
      of hiring the President and the high level officers and their probable severance
      due to separation of the business association is consistent with the policies
      that have been approved by the Board of Directors.**


CODE OF BETTER CORPORATE PRACTICES
  **It
          is suggested that at the annual report filed by the Board of Directors,
          the
          policies used and the components that form the compensation packages of
          the
          members of the Board of Director, of the President and high level officers
          of
          the business associations be revealed.**


CODE OF BETTER CORPORATE PRACTICES




**3.** **Audit
      Function.**





The
      Committee recommends that a mechanism exist that supports the Board of Directors
      with the verification of fulfillment of the audit function, insuring that the
      internal and external audit that are undertaken be with the greater possible
      objectivity and that the financial information be useful, timely and
      trustworthy; that is, that the information that reaches the Board of Director,
      the shareholders and the general public be transparent, sufficient and reflects
      adequately the financial information of the business association. To comply
      with
      such function, it may be supported in the internal structures of the business
      associations, such as by the internal audit area and by the external
      auditors.





**3.1**  **Generic
      Functions.**




It
      is
      important that a coordination exist throughout all of the stages of the audit
      process between the external auditor, internal auditor and Corporate officer
      in
      charge of supervision of the Board of Directors (“Comisario”).





**It
      is suggested that the following functions be complied with: (I) Recommend to
      the
      Board of Directors the candidates to be external auditors of the business
      association; (II) Recommend to the Board of Directors, the conditions of hiring
      and the reach of the professional powers of attorney granted to the external
      auditors; (III) Support the Board of Directors supervising compliance of the
      audit contracts; (IV) Serving as a channel of communication between the Board
      of
      Directors and the external auditors, as well as ensuring the independence and
      objectivity of the latter; (V) reviewing the work program, the observation
      letters and the audit reports and informing the Board of Directors on the
      results; (VI) Recommend to the Board of Directors the basis for the preparation
      of the financial information; (VII) assist the Board of Directors with the
      review of the financial information and the process through which it is issued;
      (VIII) contribute in the definition of the general policies of the internal
      control system and evaluating its effectiveness; (IX) assisting the Board of
      Directors in the coordination and evaluation of the internal audit programs;
      (X)
      Coordinate the duties of the external auditor, internal auditor and the
      Corporate Officer in Charge of Supervision of the Board of Directors
      (“Comisario”); and (XI) Verify that the necessary mechanisms are in place in
      order to allow to verify that the business association complies with the
      different provisions to which it is subject to.**


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          PRACTICES


**3.2.-**  **Selection
      of the auditors.**




In
      the
      selection process, both the technical capacity of the auditors, as well as
      their
      independence must be taken into consideration. In such process, attention must
      be paid o those circumstances that may affect the objectivity of the auditor,
      such as could be the fact that the income of the firm depend in a significant
      manner on the business association.





In
      case
      the auditors provide the business association with services other than the
      specified audit, it is important that the nature and extension of such services
      be kept under supervision, in order to ensure that the objectivity of the
      auditors is not affected.


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          PRACTICES


**Both
      for the external auditor of the financial statements, as well as for any other
      external review, it is suggested that it abstain from recommending to the Board
      of Directors to hire those firms in which the fees received for all of the
      services provided to the business association represent a percentage greater
      than 20% of the total income of such firms.**





The
      audit
      report provides the opinion of an independent third party on the reasonableness
      of the financial statements. If the person that issues the report, is in charge
      of this function for a prolonged period, there may be a risk that it looses
      objectivity upon issuing its opinion. For this reason, the Committee considers
      it important that the business association seeks for a rotation in the person
      in
      charge of issuing the report on the financial statements.





**It
      is suggested that the Board of Directors be recommended to establish a rotation
      mechanism of the partner that issues the report to the business association,
      in
      order to ensure objectivity of the reports, it is suggested that such rotation
      take place at least every 6 years.**





As
      it is
      set forth in the General Business Association Act (“Ley General de Sociedades
      Mercantiles”), the Corporate Officer in Charge of Supervision of the Board of
      Directors (“Comisario”) of a business association is appointed by the
      shareholders and is in charge, among other aspects, of reviewing both the
      financial statements and the application of the accounting policies. On the
      other hand, the auditor is appointed by the administration of the business
      association to give its opinion on the financial statements. Even though some
      of
      the functions of the Corporate Officer in Charge of Supervision of the Board
      of
      Directors (“Comisario”) and of the auditor are similar, those who appoint them
      do so for different purposes, and therefore, to request from the Corporate
      Officer in Charge of Supervision of the Board of Directors (“Comisario”) with
      the undertaking of the audit generates a conflict of interests.


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**It
      is recommended that the person that signs the audit report to the annual
      financial statements of the business association be different from that that
      acts as the Corporate Officer in Charge of Supervision of the Board of Directors
      (“Comisario”). However, both persons may be partners of the same
      firm.**





**It
      is recommended to take care that the professional profile of the person
      appointed as Corporate Officer in Charge of Supervision of the Board of
      Directors (“Comisario”) of the business association, allows him/her to fulfill
      his/her legal obligations. It is also recommended that the annual report filed
      by the Board of Directors reveals such profile.**





**3.3.-**  **Financial
      Information.**




The
      financial information that is presented by the President to the Board of
      Directors during the fiscal year contains amounts that are not audited. To
      guarantee that the Board of Directors takes decisions with trustworthy
      information, it may be assisted by the internal structures of the business
      association, in order to be able to issue an opinion on the validation processes
      of such information.


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The
      internal audit constitutes a support tool for the administration of the business
      association that allows it to value the financial information that is generated,
      as well as the effectiveness of the internal controls.





**It
      is suggested that the business association have an area of internal
      audit.**





The
      Board
      of Directors must be informed regarding the general accounting policies that
      shall be applied in the preparation of the financial statements. This guarantees
      its users that the information of the business association is conforming with
      those accounting policies that better satisfy its needs.





**It
      is suggested that the accounting policies for the financial preparation of
      the
      business association be submitted to the approval of the Board of
      Directors.**





To
      maintain the same accounting policy ensures consistency in the financial
      information and facilitates the formation of expectations on the future of
      the
      business association. It is considered that when exceptionally, it is decided
      to
      change an accounting policy, it be informed with the due opportunity and
      justification, in order for the users to be able to evaluate the impacts of
      such
      change.


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**When
      changes on the accounting policies are submitted to the approval of the Board
      of
      Directors, the motive for such changes must be justified.**





With
      the
      purpose of promoting trust and certitude in the information on the part of
      the
      investors, it is important that the basis of preparation of the annual report
      be
      consistent with those used during the fiscal year.





**It
      is recommended that the Board of Directors make sure that the intermediate
      financial information is drafted with the same policies, criteria and practices
      with which the annual information shall be prepared.** In **the process, it may be assisted by the internal auditors, external auditors
      and
      the Corporate Officer in Charge of Supervision of the Board of Directors
      (“Comisario”) of the business association.**





**It
      is suggested that the approval of mechanisms that are necessary to ensure a
      good
      quality in the financial information that is presented to the Board of Directors
      be proposed to the Board of Directors. In the process may participate the
      internal auditors, external auditors and the Corporate Officer in Charge of
      Supervision of the Board of Directors (“Comisario”) of the business
      association.**


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**3.4.-**  **Internal
      Controls.**




The
      internal control 7 system
      constitutes the means through which the Board of Directors ensures that the
      business association operates in a general control environment. Such system
      provides greater certitude that the decisions that are being agreed by the
      Board
      of Directors is being fulfilled in an adequate manner.





**It
      is suggested that the general policies of the internal control system be
      submitted to the approval of the Board of Directors.**





It
      is
      important that the shareholders have information on the existence of processes
      defined within which the business association operates, that it counts with
      an
      ordered administrative procedure and that it has an adequate asset control.
      In
      order to comply with this, the reports issued by the external and internal
      auditors may serve as support to verify the effectiveness of the control
      system.




It
      is suggested that the Board of Directors
      be supported in evaluating the effectiveness of the internal control system
      and
      an opinion be issued regarding the financial and operational
      controls.




7 Internal
        control means the operational controls that are established with the purpose
        of
        the business association advance in accordance with the general principles
        established by the Board of Directors. Among other aspects, these controls
        cover
        policies and procedures, segregation of functions, operation manuals and
        safeguard of assets.
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**It
      is suggested that the external auditors validate the effectiveness of the
      internal control system and issue a report regarding such
      controls.**





**3.5.-**  **Review
      of compliance with provisions.**




The
      Committee considers important that business associations have a mechanism to
      allow the Board of Directors to be informed on the compliance with the
      provisions that are applicable to it.





In
      order
      to comply with what is aforementioned, it is necessary that information exist
      from time to time regarding all of the aspects referred to in this field. With
      this information, it shall be in conditions to issue an opinion on the level
      of
      compliance with the provisions and that there is no legal contingency for the
      business association. With this process, the possibility of unexpected costs
      occurring is reduced and grants the market with certitude on the legal situation
      of the business association.





**It
      is suggested that it be ensured that there are mechanisms that allow to
      determine if the business associations duly comply with the legal provisions
      that are applicable for such purposes. It is recommended that a review be
      undertaken at least once a year.**


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**It
      is recommended that the Board of Directors be informed from time to time
      regarding the legal situation of the business association.**








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**4.-**  **Finance
      and Planning Function.**





The
      Committee recommends that a mechanism exist that supports the Board of Directors
      in the finance and planning function, specially in the evaluation of the long
      term strategy of the business and the main policies regarding investment and
      financing. To comply with such function, it may be supported by the internal
      structures of the business association, such as the finance area.





The
      Committee considers that what is essential is that the chosen mechanism be
      in
      charge of fulfilling the functions established herein, and ensures that the
      proposals be taken to the Board of Directors for it to take the corresponding
      decisions. Also, the chosen mechanism must ensure that the investment and
      financing policies are consistent with the strategic vision.





**4.1**  **Generic
      Functions.**




The
      following functions are focused to the support for the Board of Directors in
      the
      definition of policies and strategies.





**It
      is suggested that the following functions be complied with: (I) Evaluate, and,
      in its case, suggest the investment policies of the business association
      proposed by the President, to then submit them to the approval of the Board
      of
      Directors; (II) Evaluate and in its case, suggest the policies for the financing
      (equity or debt) of the business association suggested by the President, to
      latter submit them to the approval of the Board of Directors; (III) Evaluate
      and, in its case, suggest the general policies for the determination of the
      strategic planning of the business association; (IV) Comment on the annual
      budget components and propose them to the Board of Directors for their approval;
      (V) Follow up on the application of the budget and the Strategic Planning;
      and
      (VI) Identify the risk factors to which the business association is subject
      to
      and evaluate the policies for their administration.**


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**4.2.-**  **Operative
      Aspects.**




With
      the
      purpose of supporting the Board of Directors in its process of decision making,
      it is considered important that it receive opinions regarding the different
      investment and financing transactions that are planning to be undertaken. In
      this matter, the priorities and policies established by the Board of Directors
      must be taken into consideration.





**It
      is suggested that an evaluation be presented to the Board of Directors regarding
      the viability of the main investments and transactions of the business
      association, in accordance with the established policies.**





The
      strategic planning does not only imply the definition of objectives, but also
      the establishment of processes that supervise the strategies and plans that
      are
      implemented to fulfill such objectives.


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**It
      is recommended that the strategic position of the business association be
      evaluated from time to time, in accordance with the provisions of the strategic
      planning.**





A
      link
      must exist between the investment and financing policies of the business
      association, with its long term objectives. If such policies are not defined,
      taking into consideration the strategic vision of the business association,
      the
      objectives that are drawn may not be attained. Therefore, the consistency of
      such policies with the strategic vision of the business association must be
      verified, and it must also be reviewed that these are included in the different
      documentation that is prepared by the business association.





**It
      is suggested that the Board of Directors be supported in the supervision of
      the
      congruence between the financing and investment policies, with the strategic
      vision of the business association.**





**It
      is recommended that the Board of Directors be supported in the review of the
      financial projections of the business association, ensuring their congruence
      with the strategic plan.**


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**5.-**  **Revealing
      of information to the Shareholders.**





To
      facilitate to business associations access to funds in better conditions, it
      is
      necessary that these provide the market with adequate information. It may be
      stated that the recommendations that are made hereafter apply both to ordinary
      and extraordinary shareholder meetings.





**5.1.-**  **Information
      and Order of the Day of the Shareholders Meeting.**




It
      is
      considered important that in the notice to the Shareholders Meeting, the items
      of the order of the day indicate and determine in a precise and clear manner,
      the matters to be dealt with therein. In the actual practice, several matters
      may be included in one item of the order of the day: However, the discussion
      of
      each subject separately facilitates its analysis and avoids the joint resolution
      of subjects on which a different opinion may be held. The same occurs when
      a
      subject is included in the order of the day as “Various Matters”:





On
      the
      other hand, it is important that the shareholders have access with the adequate
      anticipation to all of the necessary information for the adequate taking of
      decisions at the Shareholders Meeting.





**It
      is suggested not to include in the order of the day the subject regarding
“Various Matters”, nor to group matters related with different subjects in one
      item. This, with the objective of the shareholders being able to vote each
      matter separately and being informed of the subjects to be dealt with at the
      meeting.**


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**It
      is suggested that all of the information regarding each item of the order of
      the
      day of the shareholders meeting be available with 15 days of
      anticipation.**





**It
      is recommended that through a form that contains in detail the information
      and
      possible alternatives of voting on the matters of the order of the day, the
      shareholders may issue instructions to the persons receiving proxies, on the
      sense in which they must exercise the right to vote, that correspond in each
      item of the order of the day of the meeting.**





In
      such
      manner, for example, it is important that the shareholders receive all such
      information regarding the candidates to become members of the Board of Directors
      of the business association; and specifically a brief curriculum vitae, in
      order
      that they may value their profiles and proceed to vote in a more informed
      manner.





**It
      is suggested that within the information that is delivered to the shareholders,
      be included the proposal of integration of the Board of Directors, as well
      as
      the professional profile of the candidates.**





**5.2.-**  **Information
      and communication between the Board of Directors and the
      Shareholders.**





It
      is the
      responsibility of the Board of Directors to guarantee an effective communication
      between the business association and the shareholders. The purpose of providing
      an annual report to the Shareholders Meeting is to show the financial position
      that the business association has, as well as the plans and activities that
      the
      business association has undertaken and pretends to undertake. With the purpose
      of enriching the information generated by the business association, it is
      recommendable that the shareholders have access to the information regarding
      the
      activities of the intermediate bodies.


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**It
      is suggested that the Board of Directors includes in its annual report to the
      Shareholders Meeting relevant aspects of the works of each intermediate body.
      It
      is suggested that the reports of each body filed to the Board of Director be
      available to the shareholders jointly with the material for the meeting, except
      such information which confidentiality may affect the competitiveness of the
      business association. Also, it is recommended that the annual report include
      the
      names of the members of each intermediate corporate body.**





Lack
      of
      participation of all of the shareholders at the Meetings and the limitations
      of
      these as a communication forum of the business association with its investors,
      justify the additional efforts to create other instruments of communication
      that
      allow that such investors and the general public, may have access to the desired
      information regarding the business association.


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**It
      is suggested that each business association has policies, mechanisms, and
      persons responsible to inform the shareholders, in order to maintain means
      of
      communication between the shareholders and potential investors. Also, it is
      recommended that in the annual report, be included the names of the persons
      that
      are members of each of the intermediate corporate bodies.**