Resolution modifying the General Provisions applicable to securities issuers and other participants in the securities market

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DOF: 06/05/2016

RESOLUTION modifying the General Provisions applicable to securities issuers and other participants in the securities market

At the margin, a seal with the National Coat of Arms, which reads: United Mexican States.- Ministry of Finance and Public Credit.- National Banking and Securities Commission.

The National Banking and Securities Commission, based on the provisions of Articles 104, fraction III and the last paragraph of the Securities Market Law; Second, fraction X, of the "Decree by which the Hydrocarbons Revenue Law is issued, various provisions of the Federal Rights Law and the Fiscal Coordination Law are reformed, added and repealed, and the Mexican Oil Stabilization and Development Fund Law is issued", published in the Official Gazette of the Federation on August 11, 2014, and 4, fractions XXXVI and XXXVIII and 16, fractions I and XVII of the National Banking and Securities Commission Law, and

CONSIDERING

That it is necessary to make certain clarifications in the disclosure of information that issuers participating in one or more contracts for the exploration and extraction of hydrocarbons or assignments must effect, consisting of that they must observe what is provided by the guidelines issued by the National Hydrocarbons Commission for such purposes; that such information must be disclosed in an aggregated manner, while establishing that independent experts who participate in the certification of reserves must be registered in the register of independent third parties that the National Hydrocarbons Commission keeps for such effect, which will facilitate compliance with the provisions, safeguarding the proper disclosure of information to investor public, and

That it is indispensable to grant an extension in the deadline for issuers to deliver for the first time the information regarding the economic interest they maintain in one or more contracts for the exploration and extraction of hydrocarbons or assignments, in order to have sufficient time to prepare and present the corresponding information, has resolved to issue the following:

RESOLUTION MODIFYING THE GENERAL PROVISIONS APPLICABLE TO SECURITIES ISSUERS AND OTHER PARTICIPANTS IN THE SECURITIES MARKET

FIRST.- Articles 1, fraction IX, subsection b) and 33, second paragraph, are REFORMED, and Annexes N and N Ter of the "General Provisions applicable to securities issuers and other participants in the securities market", published in the Official Gazette of the Federation on March 19, 2003 and modified through resolutions published in the same Gazette on October 7, 2003, September 6, 2004, September 22, 2006, September 19, 2008, January 27, July 22 and December 29, 2009, December 10 and 20, 2010, March 16, July 27, August 31 and December 28, 2011, February 16 and October 12, 2012, April 30 and July 15, 2013, January 30, June 17, September 24, December 26, 2014, May 12, January 30, March 26, May 13, August 27, September 28, October 20 and December 31, 2015, are SUBSTITUTED, to read as follows:

Titles First to Eighth

ANNEX A to M

...

ANNEX N

Instruction for the preparation of the annual report.

ANNEX N Bis 1 to N Bis 5

...

ANNEX N Ter

Economic interest on contracts and assignments that issuers participating in hydrocarbon productive activities must disclose.

ANNEX O to AA

...

"Article 1.-

...

I. to VIII.

...

IX.

...

a)

...

b)

Hydrocarbon reserves estimated in accordance with the guidelines on reserve regulation issued by the National Hydrocarbons Commission used to determine the economic interest reported by an issuer participating in one or more contracts for the exploration and extraction of hydrocarbons or assignments, as well as regarding the appropriateness of the methodologies used, the suitability and quality of the data on which they are based, the information presented, the depth and rigor of the reserve estimation process and its classification based on the relevant definitions used.

X to XXV. . . .

...

"Article 33.-

...

I. to III.

...

The information referred to in fractions I to III of this provision must be delivered by the issuers to the stock exchange through the SEDI and subsequently on the same date to the Commission through the STIV-2. Such information must, if applicable, be signed by the persons responsible in accordance with what is provided in this article. Likewise, regarding issuers participating in exploration and extraction activities of hydrocarbons through contracts or assignments, they must send to the Executive Coordination of the Mexican Oil Fund, as well as to the Deputy General Directorate of Supervision of Operations of Hydrocarbons Revenue belonging to the Unit of Hydrocarbons Revenue, attached to the Undersecretariat of Revenue of the Ministry of Finance and Public Credit, Annex N Ter on the same date that they send to the Commission the information referred to in subsection b), fraction I of this article. The information regarding hydrocarbon reserves on the basis of which Annex N Ter is prepared must consider what is provided in the Guidelines that regulate the procedure for quantification and certification of the Nation's reserves and the report on contingent resources related, issued by the National Hydrocarbons Commission and have the certifications required by the aforementioned guidelines.

...

...

...

...

...

...

...

...

...

...

"

SECOND.- Article TRANSITIONAL ONLY of the "Resolution modifying the General Provisions applicable to securities issuers and other participants in the securities market" published in the Official Gazette of the Federation on August 27, 2015, is REFORMED, to read as follows:

" FIRST.- This Resolution will enter into force the day following its publication in the Official Gazette of the Federation, except for what is provided in the following Transitional Article.

SECOND.- Issuers must present to the National Banking and Securities Commission Annex N Ter added to the "General Provisions applicable to securities issuers and other participants in the securities market" for the first time starting from the year 2017, as an integral part of the annual report referred to in numeral 1., of subsection b) of fraction I of article 33 of such Provisions. "

TRANSITIONAL

ONLY.- This Resolution will enter into force the day following its publication in the Official Gazette of the Federation.

Respectfully,

Mexico City, April 27, 2016. - The President of the National Banking and Securities Commission, Jaime González Aguadé.- Rubric.

ANNEX N

INSTRUCTION FOR THE PREPARATION OF THE ANNUAL REPORT

I. GENERAL GUIDELINES

This instruction includes the annual information disclosure requirements to which issuers must adhere to maintain their Registration in the Registry.

Issuers that have only obtained the Registration of debt instruments with a term less than or equal to one year will not have the obligation to present this report.

The annual report must include the information known as of the date closest possible to its presentation, except in cases where a specific date or period is specified.

In case certain requirements are not applicable to the specific business of the issuer, it will not be necessary to present information on that requirement in particular, however, depending on the case, equivalent information must be provided.

Likewise, if certain information required in any numeral of this instruction has been included in another chapter of the annual report, it will not be necessary to include it again, only a reference to the chapter where it is found must be made.

When the issuer has securities listed in other foreign markets and in those markets requires the presentation of a report similar to that described in this instruction, the order in which the annual report is presented may be the same as that of the report presented in those markets, provided that all the information required in this instruction is included.

In this latter case, a table indicating the chapters where the requirements contained in this annex are incorporated must be included.

In the preparation of the annual report, clear and easy-to-understand language must always be used, avoiding technical terms or complicated legal formalisms that cannot be easily understood by a person who does not have specialized knowledge in the subject matter.

Likewise, superlative terms and value judgments must be avoided, however, if considered necessary, they must be adequately justified.

A) Principle of relevance

In addition to the information explicitly required in the various subsections contained in this instruction, all relevant information must be provided.

This principle must be taken into account when determining the depth and breadth with which the various topics established in this instruction must be developed.

It will be the responsibility of the issuer, as well as the persons who sign the annual report, to determine what information is relevant according to the context of the particular characteristics of each issuer.

When determining what information is relevant, both quantitative and qualitative factors must be taken into account.

The Commission may require the inclusion of information in addition to or in substitution of the information required in this instruction when the disclosure of the same to investors is considered necessary.

B) External information sources and expert declarations

When a report, statistics or other information contained in the annual report has been obtained from a public information source, it must be cited; and when the information comes from an expert, a declaration indicating that such information has been included with the consent of the latter must be included.

C) Currency denomination

All figures presented must be expressed in the same currency as the financial statements, unless otherwise indicated in the prospectus or supplement. Regarding figures denominated in foreign currency, when the issuer considers it convenient to present a conversion of such figures to Mexican pesos, the exchange rate of the date of the last period presented or that which corresponds in accordance with the applicable accounting regulations must be used.

In any case, the exchange rate used to convert the figures to Mexican pesos must be indicated.

Likewise, the date of the exchange rate(s) used must be indicated, as well as the official source and the technical specifications of the same (for example, closing exchange rate, average, etc.).

Likewise, the conversion type used must be indicated and, in case the exchange rate in effect on the date of the last period presented has been opted for, clarify that such conversion was made with the sole purpose of facilitating reading and understanding by investors, mentioning that these should not be interpreted as statements that the amounts in the currency used to prepare the financial statements really equate to those amounts in Mexican pesos or that they can be converted to Mexican pesos according to the indicated exchange rate.

D) Restricted public offerings

In the case of annual reports of securities placed through a restricted public offering, the issuer may omit the information referred to in fraction II, subsection B), numerals 1), subsection d); 2) subsection b), sub-subsections ii), iii), iv), v), vi), vii) and xiii); 3), subsections b), c) and e), provided that the notes to the financial statements that form part of the annual report contain equivalent information; and 4), subsections a) and d).

Likewise, the issuer may present the financial information and the corresponding to fraction II, subsection B), numeral 2), subsection b) (in the sub-subsections where applicable), only for the last two fiscal years and the most recent quarter for which information is available.

II. INFORMATION REQUIRED IN THE ANNUAL REPORT

A) Cover of the annual report

· The cover of the annual report must contain the following information:

· Issuer's logo

· Issuer's name

· Issuer's address

· Specification of the characteristics of the securities in circulation (class, series, type, the name of the exchanges where they are registered, etc.)

· Quotation key

· The mention that the issuer's securities are registered in the Registry

· The legend referred to in the penultimate paragraph of Article 86 of the Securities Market Law

· The legend "Annual report presented in accordance with the general provisions applicable to securities issuers and other market participants" and what period is being presented (e.g.: year ended December 31, 2002).

Regarding debt issuers, the following must also be included:

· Number of series into which the issuance is divided, if applicable

· Issuance date

· Maturity date

· Term of the issuance

· Interest and calculation procedure

· Frequency of interest payments

· Place and method of payment of interest and principal

· Subordination of the securities, if applicable

· Amortization and early amortization, if applicable

· Guarantee, if applicable

· Trustee, if applicable

· Rating granted by a rating agency (the meaning given by the rating must be included)

· Common representative

· Depository

· Fiscal regime

· The policy the issuer will follow in decision-making regarding changes of control during the term of the issuance, considering the participation of holders, if applicable.

· The policy the issuer will follow in decision-making regarding corporate restructurings, including acquisitions, mergers and spin-offs during the term of the issuance, considering the participation of holders, if applicable.

· The policy the issuer will follow in decision-making regarding the sale or constitution of liens on essential assets, specifying what such concept will include during the term of the issuance, considering the participation of holders, if applicable.

Regarding structured instruments, in addition to what is stated above, except for the rating granted by a rating agency, the following must be included:

· Yield and calculation procedure

· Early maturity, if applicable

· Guaranteed capital

· Underlying asset

· Calculation agent, if applicable

· Multiplier, if applicable

B) Index

On the first page of the annual report, an index of its content must be incorporated, according to the following:

1. GENERAL INFORMATION

a) Glossary of terms and definitions

b) Executive summary

c) Risk factors

d) Other securities

e) Significant changes to the rights of securities registered in the Registry

f) Use of proceeds, if applicable

g) Public documents

2. THE ISSUER

a) History and development of the issuer

b) Business description

i) Main activity

ii) Distribution channels

iii) Patents, licenses, trademarks and other contracts

iv) Main customers

v) Applicable legislation and tax situation

vi) Human resources

vii) Environmental performance

viii) Market information

ix) Corporate structure

x) Description of its main assets

xi) Judicial, administrative or arbitral proceedings

xii) Shares representing social capital

xiii) Dividends

Regarding foreign issuers, additionally:

xiv) Exchange controls and other limitations affecting holders of the securities

3. FINANCIAL INFORMATION

a) Selected financial information

b) Financial information by business line, geographic zone and export sales

c) Report on relevant credits

d) Comments and analysis of management regarding the operating results and financial situation of the issuer

i) Operating results

ii) Financial situation, liquidity and capital resources

iii) Internal control

e) Critical accounting estimates, provisions or reserves

4. ADMINISTRATION

a) External auditors

b) Transactions with related parties and conflicts of interest

c) Administrators and shareholders

d) Bylaws and other agreements

Regarding foreign issuers, additionally:

e) Other corporate governance practices

5. CAPITAL MARKET (only for issuers of shares and other equity securities)

a) Shareholder structure

b) Stock behavior in the securities market

c) Market maker

6. UNDERLYING ASSETS (only for issuers of structured securities)

a) Description of underlying assets

b) Historical behavior of underlying assets

c) Exercises that quantify the possible yields or losses that could be generated under different scenarios

d) Other information

7. RESPONSIBLE PERSONS

8. ANNEXES

Audited financial statements and opinions of the audit committee and trustee reports, if applicable.

Additionally, regarding issuers participating in hydrocarbon productive activities through contracts or assignments, the report regarding the economic interest of the contracts and assignments on hydrocarbon exploration and extraction activities, in terms of Annex N Ter of these provisions, as well as the certifications required in the Guidelines that regulate the procedure for quantification and certification of the Nation's reserves and the report on contingent resources issued by the National Hydrocarbons Commission.

C) Information that the chapters of the annual report must contain

1. GENERAL INFORMATION

a) Glossary of terms and definitions

In case considered appropriate, a glossary of terms and definitions must be included.

b) Executive summary

An executive summary of the issuer, its financial situation (including a summary of financial information), and the behavior of its securities in the securities market must be presented.

Likewise, those issuers that present the simplified annual report must mention any relevant situation that describes the issuer.

c) Risk factors

The issuer must explain the factors that may significantly affect the performance and profitability of the company, as well as those capable of influencing the price of its securities.

It is recommended that they be ordered based on the importance they represent for the issuer.

Likewise, the issuer must not present risk factors that may apply to any issuer or to any offering.

In this sense, the information provided must refer to factors such as the following: risks of the current strategy, situations related to the countries in which it operates, absence of profitable operations in recent periods, financial position of the issuer, dependence or expiration of patents, registered trademarks or contracts, acquisition of assets other than those in the normal course of business of the issuer, expiration of supply contracts, defaults on the payment of bank and stock liabilities or restructurings thereof, possible entry of new competitors, possible over-demand or oversupply in the market or markets where the issuer participates, vulnerability of the company to changes in interest rates or exchange rates, use of different financial information standards than those required by these provisions, off-balance sheet operations, dependence on key personnel (administrators), dependence on a single business segment, impact of changes in government regulations, possible volatility in the price of shares, possible non-compliance with listing maintenance requirements and/or registration in the Registry, absence of a market for the registered securities, environmental issues related to its assets, inputs, products or services, impact of changes in regulation and international agreements on environmental matters, existence of credits that oblige the issuer to maintain certain proportions in its financial structure, etc.

Likewise, regarding shares without voting rights, restricted voting rights or any other mechanism through which corporate rights are limited, the rights being limited or affected must be indicated as a risk factor, as well as the mention that holders of these securities are at a disadvantage compared to shareholders holding shares with full voting rights, due to the fact that they will only have influence on matters submitted to the general shareholders' meeting as stipulated in the company's bylaws.

In the case of holders whose asset is represented solely by the shares of their subsidiaries, it must be revealed as a risk factor that the issuer does not have its own assets to operate.

In the case of structured securities, risk factors related to the underlying assets and their market of origin must be disclosed.

The information appearing in this section is presented by way of example, and is in no way limiting.

The objective of this section is to summarize important factors that may be exposed in greater detail elsewhere in the annual report.

d) Other securities

The issuer must disclose if

account

or

not

with

other

securities

registered

in

the

Registry

or

listed

in

other

markets,

as

well

as

the

type

of

public

reports

sent

to

the

regulatory

authorities

and

to

the

corresponding

stock

exchanges,

on

a

periodic

and

continuous

basis.

Similarly,

the

periodicity

with

which

the

above-mentioned

information

is

delivered

to

the

regulatory

authority

or

to

the

stock

exchanges

where

the

securities

trade

must

be

mentioned,

as

well

as

the

reported

periods

(for

example,

current

quarter

versus

previous

quarter,

current

quarter

versus

the

same

quarter

of

the

previous

year,

etc.).

Likewise,

it

must

be

reported

whether

complete

and

timely

reports

have

been

delivered

in

the

last

3

fiscal

years

regarding

material

events

and

periodic

information

as

required

by

Mexican

and

foreign

legislation.

e)

Significant Changes to the Rights of Securities Registered in the Registry

The general effect of any significant modification that has been made to the rights of any class of securities that the issuer has registered in the Registry must be described, including that derived from the issuance or modification of any other class of securities.

In the event that any significant asset that has been used to guarantee the issuance of any security registered in the Registry has been withdrawn, substituted, or replaced, the following information must be provided:

·

Name of the issuance.

·

Brief description of the assets withdrawn, substituted, or replaced.

·

Indicate the clause in the issuance deed that allows for the modification, substitution, or replacement.

f)

Destination of Funds, if applicable

In the first annual report presented after the registration of the issuer's securities in the Registry, the application that has been made up to that moment of the resources derived from the public offering must be provided.

In the event that resources remain to be applied, these must be detailed in the next annual reports, until all resources are applied.

In the event that the destination of the funds has varied from that specified in the placement prospectus, an explanation regarding this must be provided.

g)

Public Documents

The issuer must mention whether copies of this document will be granted at the investor's request, providing the name, address, and telephone number of the person to whom investors should direct their requests.

It must also indicate the public information that was delivered to the stock exchanges and that is available to investors, as well as the name, telephone, and email address of the person responsible at the issuer for investor and analyst relations.

If applicable, the necessary information to access the issuer's website on the World Wide Web (Internet) must be provided.

In the case of foreign issuers, the address and telephone number of the offices in Mexico for making notifications must be provided.

THE ISSUER

a)

History and Development of the Issuer

·

In this chapter, the following information must be provided:

·

Corporate name and trade name of the issuer.

·

Date, place of incorporation, and duration of the issuer.

·

Address and telephone numbers of its main offices.

·

Description of the evolution that the issuer and its subsidiaries, if any, have undergone, emphasizing events of the last year, providing information such as the general business strategy followed, most important historical events such as mergers, acquisitions, or sales of assets, changes in the way the business is managed, changes in the products and services offered, changes in the corporate name, bankruptcy proceedings or insolvency, judicial, administrative, or arbitral proceedings that have had any significant effect on the financial situation of the issuer, effect of laws and government provisions on the development of the business, and events of a similar nature.

·

Schematic and numerical description of the main investments that have been made, including participations in other companies for the last 3 fiscal years.

·

Indicate any offer made publicly to take control of the issuer, or made by the issuer to take control of other companies, during the last fiscal year. The price and conditions of the offer, as well as the final result, must be established.

In the case of foreign issuers, the legal form of incorporation and the legislation under which the issuer operates must be included, identifying whether it is subject to the supervision of any regulatory body.

b)

Description of the Business

The business in which the issuer participates, as well as the business strategies it has followed, must be described.

When describing the business, the following topics must be included to the extent considered relevant for understanding it.

i)

Main Activity

A description of the issuer's main activities must be included, showing the various categories of products sold and/or services provided, as well as a general description of the industrial processes.

In the event that the issuer has made public the launch of a new product that requires considerable investment, the stage of development in which it is located must be described.

Likewise, the source and availability of raw materials by business line must be revealed, including the name of the main suppliers and an explanation of whether the prices of the main raw materials are volatile or if there is dependence on a particular supplier.

On the other hand, a description of the cyclical or seasonal behavior of the issuer's main businesses must be provided, if it exists.

Similarly, in the event that there has been a variation in the ordinary course of business with respect to working capital, the issuer's practices must be described (e.g., when the issuer requires maintaining high inventory levels to satisfy rapid delivery requirements or when the company has granted extensions in payment terms to its customers).

Categories of similar products or services, or individual products that represent 10% or more of the issuer's total consolidated revenues, must be presented for each of the last 3 fiscal years, indicating the amount and percentage of such revenues.

Finally, a description of the risks or effects that climate change may have on the issuer's business must be included, such as: a decrease in demand associated with products that require significant greenhouse gas emissions, an increase in demand for other products that require lower emissions, among others. Likewise, current or potential indirect consequences on market trends that the issuer may face derived from climate change must be revealed.

ii)

Distribution Channels

A description of the issuer's distribution and marketing channels, including an explanation of any special sales method (e.g., installment sales).

iii)

Patents, Licenses, Trademarks, and Other Contracts

Information must be provided regarding patents, licenses, trademarks, franchises, industrial or commercial contracts, or financial service contracts, and other rights owned by the issuer that are considered important, mentioning their duration and why they are important for the development of the issuer.

Information must also be provided regarding all those that are about to expire and regarding policies concerning product research and development in the last 3 fiscal years, identifying, when relevant, the amount invested in these activities.

Likewise, a summary of relevant contracts, other than those related to the normal course of business, that the issuer has signed in the last 3 fiscal years must be presented, mentioning the expiration date, the possibility of renewing them, and indicating to what extent the renewal of such contracts may be affected.

iv)

Main Customers

It must be mentioned whether the issuer is dependent on one or several customers, understanding that dependence exists when the loss of them would adversely affect the operating results or the financial situation of the issuer.

Similarly, the name of any customer and their relationship, if any, with the issuer and its subsidiaries must be incorporated, provided that sales to that customer represent 10% or more of the issuer's total consolidated sales.

v)

Applicable Legislation and Tax Situation

Description of the effect of laws and government provisions on the development of the business, as well as of the special tax benefits (subsidies, exemptions, and others) enjoyed by the issuer or if it is subject to any special tax.

In the case of foreign issuers, information must also be provided regarding taxes (including tax withholding) to which non-resident or foreign shareholders will be subject under the law of their country of origin.

It must be indicated whether the issuer will be responsible or not for the withholding of taxes, if there are treaties between its country of origin and Mexico to avoid double taxation, or a declaration that no such treaties exist.

Likewise, the relevant, current, or potential impact of any law or government provision related to climate change must be indicated.

vi)

Human Resources

Provide the number of people employed as of the date of the last financial statements and, in the event that the number varied considerably during the period, an explanation of why the mentioned variation occurred.

The percentage of employees between management and unionized workers must also be presented, and a description of the relationship with the union.

If the issuer hires a significant number of temporary employees, the number of people hired under this system at the end of the last fiscal year must be indicated.

vii)

Environmental Performance

It must be mentioned whether the issuer has an environmental policy, if it has or intends to install an environmental management system, if it has any environmental certificate or recognition from the competent authority or a duly accredited entity, and if there is any program or project for the protection, defense, or restoration of the environment and natural resources.

Likewise, it must be explained whether the issuer's own activities represent a considerable environmental risk.

Additionally, the relevant, current, or potential impacts derived from climate change on the issuer's business must be revealed.

viii)

Market Information

A description of the main markets in which the issuer participates, including its market share, its main competitors, as well as the positive and negative aspects of its competitive position. In this sense, any statement regarding this must be substantiated.

ix)

Corporate Structure

If the issuer is part of a business group, it must present its integration by indicating the activities of significant Subsidiaries and its position within the same.

Similarly, in the case of holding companies, the name, percentage of capital held, and, if different, the proportion of voting shares must be provided, as well as the business relationships that exist with significant subsidiaries that appear in the exercise being presented (e.g., asset rental, technical and financial support, transactions between both, etc.). When it is considered that the subsidiaries are not significant and there is a large number of them, the issuer may report only the total number of them.

Likewise, similar information must be presented for the case of associated companies and the participation of said company in the issuer's consolidated net result when it is greater than 10%.

A subsidiary will be considered significant when it meets any of the following conditions: when the total assets of the subsidiary in question exceed 10% of the total assets presented in the consolidated financial statements for the last fiscal year, or when the revenues of the subsidiaries exceed 10% of total consolidated revenues.

x)

Description of Main Assets

Information regarding any important fixed asset of the issuer and its subsidiaries must be presented, mentioning their size, use, location, products manufactured in them, condition, age, installed and used capacity, whether they are insured, whether they are owned or rented to third parties, dimensions, environmental measures affecting the use of these goods, etc.

The issuer must also mention if any asset has been granted as collateral for obtaining credit, the type of asset designated, the procedure to execute said collateral, and the general characteristics of the credit (amount, rate, term, etc.).

With respect to plans to build, expand, or carry out improvements in facilities, the nature and reason for carrying out such plans must be described, the way the project will be financed, and the expected increase in productive capacity.

xi)

Judicial, Administrative, or Arbitral Proceedings

It must be briefly described if there is currently, or if there is a high probability that there may be in the future, any relevant judicial, administrative, or arbitral proceeding, other than those that are part of the normal course of business, in which the issuer or persons related to it is or may be involved, provided that such proceeding has had or may have a significant impact on the operating results and the financial position of the issuer.

Likewise, the court or administrative instance where such proceeding is taking place, the date it was instituted, and whether the result of said proceeding has had or may have a relevant adverse effect on the operating results and the financial position of the issuer must be mentioned.

If there is more than one judicial proceeding regarding the normal course of the issuer's businesses that individually may not have a relevant adverse effect, but analyzed together with other similar cases it may, the relevant information regarding this must be provided.

Additionally, the issuer must reveal if it is in any of the circumstances established in articles 9 and 10 of the Commercial Bankruptcy Law, or if it could be declared or has been declared in commercial bankruptcy.

A judicial, administrative, or arbitral proceeding is considered relevant if it is estimated it could represent a cost or benefit of at least 10% of the issuer's assets.

xii)

Shares Representing Capital

The amount of subscribed and paid capital, the number and class of shares representing it, the detail of their characteristics, and, if applicable, information on unpaid, fixed, and variable capital must be described.

If a significant proportion of the capital has been paid in kind in the last 3 fiscal years, this fact must be revealed.

In cases where there is authorized but unsubscribed capital, its amount and the reason why it was authorized must be indicated.

Likewise, the amount of any value in circulation related to the capital and the conditions and procedures for its conversion, exercise, exchange, or subscription must be revealed.

Events that have occurred over the last 3 fiscal years that have modified the amount of capital, the number, and classes of shares that compose it must be identified.

Likewise, the price and conditions of each new issuance of shares must be specified for that same period, including any discount or special condition granted to shareholders who subscribed to the shares. In the event that no issuance has been made, a mention regarding this must be made.

Likewise, the reasons why the capital amount was reduced, if applicable, must be indicated.

Additionally, the issuer must disclose the open positions it maintains in derivative instruments liquidable in kind whose underlying is shares of the issuer or ordinary participation certificates on said shares.

In the case of foreign issuers, it must be indicated whether the legislation of the country in which the issuer was incorporated allows for the repurchase of shares by it, and in the event that this is permitted, the number of shares that have been repurchased in the last 3 fiscal years, as well as the proportion of capital that such shares represent and if there are limitations to carry out such repurchases.

xiii)

Dividends

The frequency with which the issuer has declared dividends in the last 3 fiscal years must be mentioned, as well as the amount of the dividend declared per share (foreign issuers must take the exchange rate on the date the dividend was paid). In the event that there are restrictions that limit the issuer in the payment of dividends or that may limit its future payment capacity, these must be described.

Likewise, when the issuer has not paid cash dividends despite having had the capacity to pay them according to its profits, it must explain why.

Similarly, the dividend policy that the board of directors intends to follow in the future and the general shareholders' meeting in which said policy was established must be explained.

In the case of foreign issuers, the manner in which the dividend declaration will be notified or the procedure that non-resident holders must follow to collect them must be described.

Regarding foreign issuers, additionally, the following information must be presented:

xiv)

Exchange Controls and Other Limitations Affecting Holders of the Securities

In this section, it must be indicated if in the country in which the issuer was incorporated there are laws or regulations that restrict the export or import of capital, including exchange controls, or that may affect the transparency of dividends, interest, or other payments to non-resident holders of the issuer's securities.

Similarly, any limitation imposed by foreign laws, by the issuer's articles of incorporation, or any other document regarding the rights associated with the securities that non-resident foreigners may exercise must be mentioned.

Likewise, any limitation or difficulty that these individuals may face in enforcing their rights must be mentioned.

In the event that there is no limitation regarding this, a declaration to that effect must be included.

FINANCIAL INFORMATION

a)

Selected Financial Information

Selected financial information in comparative columns for the last 3 fiscal years must be presented.

This information must be provided for a longer period when considered as relevant information.

The purpose of this information is to highlight, through an easy-to-read format, certain trends in the issuer's financial situation and in its operating results.

It is important to mention that the information presented in the selected financial information table must be adjusted to the particular characteristics of the issuer.

In this sense, information such as the following must be included:

net sales or operating revenues, gross, operating, and net profit (loss), profit (loss) per share, acquisition of properties and equipment, depreciation and amortization of the year, total assets, total long-term liabilities, accounts receivable turnover, accounts payable turnover, inventory turnover, equity, and cash dividends declared per share.

On the other hand, those factors that significantly affect the comparability of the data presented in the selected financial information table, such as changes in accounting, mergers, sale of companies, etc., must be briefly mentioned, or, if applicable, the section where they are explained must be indicated.

Likewise, those factors or uncertain events that may cause the information presented not to be indicative of the issuer's future performance must be explained or the section where they are explained must be indicated.

In the event that it is considered relevant for understanding the business, selected quarterly financial information corresponding to the last reported period must be provided.

This information must include accounts such as the following:

net sales, profit (loss) before taxes, net profit (loss), and net profit (loss) per share, as well as a

General explanation of the information presented.

Additionally, in the case of issuances backed by subsidiaries of the issuer, the total assets, equity capital, sales, and operating profit of each must be disclosed, in accordance with the latest financial statements audited by an external auditor, except when all subsidiaries have signed as guarantors.

The presentation of financial projections is not recommended; however, an issuer that decides to present them must adequately justify them by providing an explanation of how the projections were determined, the assumptions used to prepare them, and the risk that they may not be met.

b) Financial information by business line, geographic zone, and export sales

Financial information for each business line and geographic area must be identified for the last 3 fiscal years, in accordance with applicable financial reporting standards.

Additionally, export sales must be disclosed in a consolidated manner or by geographic zone when considered relevant information, indicating the amount and percentage participation of such exports relative to total sales for the last 3 fiscal years.

If considered relevant, such information must cover the first quarter of the year in which it is being presented and the same comparable period of the previous fiscal year.

c) Report on relevant credits

A report on relevant credits or contingencies and their priority in payment must be provided, including those credits or debts of a fiscal nature.

At least those credits representing 10% or more of the total liabilities of the issuer's consolidated financial statements for the last fiscal year must be included.

Likewise, it must be indicated whether the issuer is current in the payment of principal and interest on said credits.

Regarding the aforementioned relevant credits, a summary must be included regarding the obligations to do or not do that the issuers are subject to under said credits, in relation to relevant matters, such as changes of control, corporate restructurings, including acquisitions, mergers, and spin-offs, sale or creation of liens on strategic assets.

Additionally, any additional benefit or agreement, as well as causes for early maturity, granted to any debt security issued abroad or credit of any nature, that differs from those established in issuances made in the national market, must be disclosed.

d) Management comments and analysis on the issuer's operational results and financial situation

In this section, all information that facilitates the analysis and understanding of significant changes in the issuer's operational results and financial situation and its subsidiaries must be provided. It should be noted that the information to be included in this section is that which does not appear clearly in the issuer's financial statements (e.g., it is not only necessary to mention how much sales or costs grew or decreased, but the reason for these movements), as well as those events known by management that may cause the reported information to not be indicative of the issuer's future operational results and future situation.

In the case of foreign issuers and issuances made by federal entities and municipalities, in order to facilitate the understanding of variations in the issuer's operational results and financial situation, they must point out the main differences between International Financial Reporting Standards ("International Financial Reporting Standards") issued by the International Accounting Standards Board ("International Accounting Standards Board") and those used to prepare the financial statements. Likewise, the fiscal cycle used in the country of origin and the possible repercussions on the comparability of the issuer's information with that of other Mexican companies must be indicated.

It must also briefly describe any economic, fiscal, monetary policy or political and social factors that have affected or may come to directly or indirectly affect the operation of the issuer or the investments of non-resident holders.

Likewise, any known trend, commitment, or event that may or will significantly affect the issuer's liquidity, operational results, or financial situation must be identified (e.g., future salary increases, raw materials or product prices, changes in market share, entry of new competitors, possibility of renewing a relevant contract, changes in legislation, etc.).

Additionally, the issuer must identify recent behavior in production, sales, inventory levels, value of unfilled orders (backlog), as well as the behavior of its costs and sales prices.

On the other hand, the issuer must report the items in the financial statements that were restated using indices other than the National Consumer Price Index of Mexico for the last 2 years; in such case, it must be mentioned what index or reference factor was employed.

The analysis and comments on the financial information must refer to the following topics:

i) Operational results

Significant changes in sales, cost of sales, operating expenses, total cost of financing, taxes, and net income corresponding to the last fiscal year must be explained, as well as a general explanation of the trend these accounts have shown over the last 3 fiscal years and the factors that have influenced these changes. Explain to what extent increases in sales (assuming they have occurred) are attributable to price increases and to what extent they are attributable to volume increases or the sale of new products.

If considered relevant, the impact of inflation and fluctuations in the exchange rate must be explained, as well as the manner in which loans or investments in foreign currency are covered with export sales and other foreign exchange hedging instruments.

ii) Financial situation, liquidity, and capital resources

In this section, the issuer must provide the following information:

· Description of internal and external sources of liquidity, as well as a brief description of any important source of resources not yet used, including the nature of any restriction agreed with subsidiaries to transfer resources to the issuer.

· Information on the level of indebtedness at the end of the last 3 fiscal years, as well as the seasonality of credit requirements and available credit lines. In this regard, information on the profile of debt incurred must be provided, indicating whether it is at a fixed or variable rate, as well as the financial instruments used, periodicity, and method of amortization of the securities, and, if applicable, causes and treatment of early amortization, additionally considering whether the following aspects could be considered causes thereof:

• Default in the payment of principal or interest.
• Cross-default and cross-acceleration with any other debt of the issuer.
• Breach of obligations to do or not do.
• Declaration or request for bankruptcy, liquidation, or commercial insolvency.
• Delivery of significant false or incorrect information.
• Changes of control in the issuer.

· Description of the policies governing the issuer's treasury, as well as the currencies in which the issuer's cash or temporary investments are held as of the most recent date.

· To the extent considered relevant, information on fiscal credits or debts that the issuer holds at the end of the last fiscal year must be provided, indicating whether they are current in payment.

· Information regarding relevant capital investments that were committed at the end of the last fiscal year, as well as the details associated with such investments and the source of financing necessary to carry them out.

To the extent considered relevant, the issuer must explain the changes that occurred in the main balance sheet accounts of the last fiscal year, as well as a general explanation of the trend of the same over the last 3 fiscal years. In this regard, the use of financial ratios is recommended to achieve a better understanding of changes in the financial situation.

Additionally, the issuer must indicate if there are relevant transactions not recorded in the balance sheet or income statement, mentioning the basis for not registering such operations, and revealing the risk and future effect they might represent for its financial situation or results.

iii) Internal control

The issuer must disclose if it has an internal control system and, if so, include a brief description of the same and of the body or official responsible for establishing it.

Internal control is understood as the system that provides reasonable assurance that transactions are carried out and recorded in accordance with what is established by management, as well as with the general guidelines, criteria, and applicable financial reporting standards.

e) Critical accounting estimates, provisions, or reserves

The issuer must mention critical accounting estimates, provisions, or reserves, understanding by critical accounting estimate, provision, or reserve any approximation made by the management of an element, item, or account in the financial statements, which requires the issuer to establish assumptions about aspects that are likely to be reasonably estimated.

Additionally, it must be reported if the financial statements will be significantly affected by changes in estimates, provisions, or reserves that may occur.

For each critical estimate, provision, or reserve, at minimum the following must be presented:

· A description of the estimate, provision, or reserve. · Description of the methodology used to determine them. · Description of the assumptions supporting them. · Description of events that may occur and that could significantly affect the methodology or assumptions used.

4. MANAGEMENT

a) External auditors

Any change of external auditors that has occurred in the last 3 fiscal years must be mentioned, indicating if they resigned or were removed by the issuer, as well as the reason for such resignation or dismissal. On the other hand, it must be specified if in the last 3 fiscal years the external auditors have issued a modified or unfavorable opinion, that is, opinion with qualifications, adverse opinion, or disclaimer of opinion regarding the issuer's financial statements.

Likewise, the procedure followed to appoint external auditors must be disclosed, and the services that would have been provided to the issuer for concepts other than auditing during the fiscal year being presented, the amount paid for said services, and the percentage that represents of the total expenditures made to the audit firm where the external auditor works, must be briefly described.

b) Transactions with related parties and conflicts of interest

In this section, those relevant transactions or credits that have been carried out in the last 3 fiscal years and up to the date of presentation of this report, between the issuer and related parties, must be described, indicating if they were carried out under market conditions.

In addition, operations that are celebrated with companies in which the issuer holds 10% or more of the shares with voting rights, or shareholders who hold said percentage in the issuer, must be made known.

Likewise, any other transaction that, in terms of International Financial Reporting Standards ("International Financial Reporting Standards") issued by the International Accounting Standards Board ("International Accounting Standards Board"), is considered as transactions with related parties, must be included.

c) Administrators and shareholders

Regarding the board of directors, the number of members that compose it (owners and alternates), the type of directors, their names, the manner in which they are designated, functions, and the powers of the board of directors must be mentioned. Likewise, the dates and types of general shareholder meetings in which they were designated and the period for which they were elected must be mentioned.

Additionally, the following information must be provided, both for directors and for relevant executives: name, position, time working at the issuer, companies where they are collaborating as main executives or as members of the board of directors, indicating if such companies have any type of relationship with the issuer and any other information necessary to know their professional capacity.

Furthermore, the following information must be provided if considered relevant: age, maximum level of education, and companies where they have collaborated as relevant executives or as members of the board of directors.

In case there is kinship by consanguinity or affinity up to the fourth degree or civil, including their spouses, concubines or concubinaries, between any director or relevant executives, this must be explained.

The name, denomination, or trade name of the following natural or legal persons must be provided, identifying the circumstance in which they fall:

a) Shareholders benefiting from more than 10% of the issuer's share capital.

b) Shareholders who exercise significant influence.

c) Shareholders who exercise control or command power.

If through a group of persons, in terms of the Securities Market Law, any of the aforementioned circumstances is reached, said group must be identified as well as the natural person considered as the main beneficial shareholder who is part of it.

Additionally, the name and aggregated share participation of directors and relevant executives in the issuer who have an individual holding greater than 1% and less than 10% must be disclosed.

When the information on the ownership of the aforementioned shares does not present any change, its disclosure in the annual report may be omitted, provided that, in substitution, a reference to the public document in which such information can be consulted is included.

In case significant changes have been presented in the last 3 years, in the ownership percentage maintained by the current main shareholders, this fact must also be revealed.

On the other hand, it must be indicated if the issuing society is controlled, directly or indirectly, by another company, by a foreign government, or by any other natural or legal person, and, if so, provide the names, as well as a brief description of the nature of such control, command power, or significant influence, including the amount and proportion of capital with voting rights. Likewise, it is necessary to describe any commitment, known by the issuer, that could signify a change of control in its shares.

For the purposes of what is stipulated in this section, a beneficial shareholder is understood as any person who, regardless of whether they are registered as a holder of the shares, enjoys the rights conferred by them. These benefits include the power to exercise voting rights, the sale of the shares, or receiving the economic benefits thereof.

Likewise, those shares that the natural or legal person may acquire in a period of less than 60 days by some agreement or option must be considered.

Likewise, beneficial shareholders must be considered those persons who hold their values through 1 or more trusts, brokerage houses, legal advisors, or other intermediaries, or through companies over which they exercise control, which means the direct or indirect power to direct the administration and policies of the society.

The total amount that represents together the benefits of any nature that the persons who make up the board of directors, relevant executives, and individuals having the character of related parties received from the issuer and subsidiaries during the last fiscal year must be made known.

On the other hand, the total amount expected, or accumulated by the issuer and its subsidiaries, for pension, retirement, or similar plans, for the aforementioned persons, must be provided.

Likewise, a description of the type of compensations and benefits that the aforementioned persons collectively receive from the issuer must be provided.

Likewise, the agreements or programs in benefit of the members of the board of directors, relevant executives, or employees of the issuer that allow them to participate in its share capital must be mentioned, describing in detail their rights and obligations, including the mechanics for the distribution of shares and the determination of the prices at which they will be distributed.

Additionally, the issuer must mention the committee or committees constituted to assist the board of directors in its functions, briefly describing them.

Likewise, the names of the members that compose them must be cited, as well as whether such committee(s) has(have) at least one member who is a financial expert, and in case of not having the latter, the reasons must be reported. A financial expert is understood as a person who has extensive experience as an external auditor, accountant, finance director, comptroller, or person who performs similar functions.

Information relative to the possible existence of intermediate administrative bodies must also be provided, including the name of their members, their relationship with the issuer, and a summary of the operational bases of said bodies. In case the issuer does not have these bodies, a mention to this effect must be made.

Likewise, the issuer must disclose if it has codes of conduct applicable to the board of directors and relevant executives and, if so, include a summary of the main guidelines provided in said codes of conduct.

d) Bylaws and other agreements

The power of the board of directors to establish compensation plans for executives and directors, as well as to take decisions regarding any other matter where they may have a personal interest, must be indicated.

Likewise, any agreement that has the effect of delaying, preventing, deferring, or making more burdensome a change in the control of the issuer, as well as those indicated in article 16, fraction VI of the Securities Market Law, must be described.

On the other hand, the issuer must disclose if there are trusts or any other mechanism, under which the corporate rights conferred by the shares are limited.

Regarding shares, additionally, the following information must be presented:

In case modifications have been presented in the bylaws, a summary of such modifications must be presented, as well as those most relevant bylaw clauses such as those related to minority rights, corporate governance, share repurchase, among others.

On the other hand, the corporate rights that the different types of shares of the issuer grant regarding the exercise of voting in general shareholder meetings must be described, for example, restricted voting rights, no voting rights, full voting rights, preferential rights, minority rights, and quorum for the installation and validity of resolutions.

Likewise, the process that must be followed to change the rights associated with the shares and any limitation for the acquisition of the same by shareholders or a determined class of shareholders must be mentioned.

The issuer must disclose if there are bylaw clauses or agreements between shareholders that limit or restrict the administration of the issuer or its shareholders (for example, establishing a minimum quorum for general shareholder meetings above that established by the General Law of Commercial Societies, contracting liabilities, making investments, changing the compensations of relevant executives, selling assets, etc.).

Regarding financial entities:

That information referred to in article 86, fraction XI of the Securities Market Law.

Regarding foreign issuers, additionally, the following information must be presented:

e) Other corporate governance practices

In case that the

issuer

comply

with

some corporate governance code,

a brief description of the same must be included.

In the event that it does not comply with any, a declaration to that effect must be included. Likewise, other corporate governance practices considered relevant such as:

Possibility that substitute directors may substitute indistinctly for any principal director and under what conditions this may occur.

·

Minimum frequency and average of board of directors meetings.

·

Access to issuer information by directors for decision-making.

·

Existence of an external audit area.

CAPITAL MARKET (only for

share issuers and other variable income securities)

a) Shareholder structure

In the case of ordinary participation certificates on shares or of securities representative of 2 or more shares of one or more share series of the same society (linked units), indicate the number of shares that back them and in the case of convertible bonds, the conditions for the conversion of the bonds.

In the event of having registered American Depositary Receipts (ADR), indicate the number and type of shares that each ADR represents and the rights of the holders thereof.

If shares are registered in another foreign market, it will be necessary to specify this.

b) Share behavior in the securities market

It must be shown in an informative table how the issuer's shares behaved at the close of the last 5 fiscal years, each quarter for the last 2 fiscal years and monthly for the 6 months prior to the submission of this report, including the maximum and minimum price of the period, the volume traded by series, and the stock exchange in which it trades.

In the event of having or having had the services of a Market Maker in the periods previously mentioned, such situation must be indicated and explain in general terms the impact of the Market Maker's actions on the levels of operation and on the prices of the Issuer's shares, as well as on the maximum price differentials between the buy and sell quotes on said values to which the Market Maker was or is subject in accordance with what is established by the corresponding stock exchange.

In the case that the quotation of its values has been suspended in the exchanges in which it trades, explain the reasons for such suspension.

c) Market Maker

In the case of securities representing the social capital of legal entities or credit titles that represent them, contribution certificates, participation certificates on shares and optional titles, if market maker services were received, the following information must be provided:

·

The name of each market maker that has provided its services during the immediately preceding year.

·

The identification of the values with which each market maker operated: type of value, quotation key (issuer and series), ISIN / CUSIP Code, etc.

·

The start of validity, extension or renewal of the contract with the market maker in question, its duration and, if applicable, the termination or rescission of the corresponding contracts.

·

The description of the services provided by the market maker; as well as the general terms and conditions of contracting, in the case of valid contracts.

·

The general description of the impact of the market maker's actions on the levels of operation and on the prices of the issuer's values with which such intermediary operates.

UNDERLYING ASSETS (only for issuers of structured securities)

a) Description of underlying assets

Include a description of the underlying assets that allows their full identification, such as name, obtaining, integration, functioning.

If applicable, indicate the corporate name of the issuer of the underlying assets, as well as reveal that the documents and information of the issuer of the underlying assets can be consulted in the corresponding stock exchange or on the electronic page on the worldwide network (Internet) at the following address (include the address of the electronic page on the worldwide network (Internet)).

In the event that the underlying asset is a price index (reference index), reference must be made to the public sources of information containing the following:

background, determination of the index, graphical evolution, historical volatility and index levels.

Likewise, the stock exchanges and any other type of regulated market in which the underlying assets are traded must be revealed.

b) Historical behavior of underlying assets

It must be shown in a graph the historical behavior of the underlying asset at the close of the last 3 fiscal years and monthly for the 6 months prior to the submission of this report, including the stock exchange in which, if applicable, the underlying asset trades, as well as the electronic page on the worldwide network (Internet) of the issuer of the structured values, which will make available to the investing public, free of charge, in Spanish and with a frequency not less than quarterly, the information relating to the behavior of the underlying assets, as well as that which is considered relevant.

Likewise, it must be revealed if relevant suspensions occurred regarding the index, in the negotiation of the values of the issuer(s) that make up the index or underlying asset, in the last 3 fiscal years.

c) Exercises that quantify the returns or losses that under different scenarios could be generated

Include those exercises that quantify the possible returns or losses that under different scenarios could be generated with the issuance.

d) Other information

All that information regarding the underlying assets that is considered relevant to evaluate the risk of the issuance of the securities subject to registration must be included, such as:

·

Characteristics or general terms of the underlying assets, including, if applicable, the stock exchange in which said underlying assets trade.

·

Historical information for at least 5 years on the behavior of the underlying assets, indicating the electronic page on the worldwide network (Internet) of the issuer, which will make available to the investing public, free of charge, in Spanish and with a frequency not less than quarterly, the information relating to the behavior of the underlying assets.

Likewise, it must be included if the use license of the underlying asset is required, and indicate if there is or is not a risk for the issuance.

When the compliance with the obligations regarding the structured securities issued by trusts depends totally or partially on the counterparty or provider of the derivative financial instrument to which the return is linked or which serves as a payment source for the issuance or any other third party, the following information must be included at a minimum:

·

Corporate name and trade name or, if applicable, name of the natural person, as well as a description of the business in which it participates.

·

The financial statements referred to in article 2, fraction I, subsection f), 3, fraction VII and 4, fraction V of these provisions.

·

Any other information that is considered relevant to evaluate the credit risk of the counterparty or provider of the derivative financial instrument or third party.

The foregoing, without prejudice to this Commission requesting additional information from the counterparty or provider of the derivative financial instrument or third party, in cases it deems necessary.

Regarding structured securities with an obligation to pay principal or interest, additionally, the opinions or press releases on the credit quality of the debt instrument that forms part of the structure of the structured value or, if applicable, of the institution that issues and results as counterparty or provider of the derivative financial instrument that forms part of the structure of the value, issued by a securities rating agency, with an issuance date not greater than 90 business days from the placement date, must be included.

When it comes to ratings issued by entities abroad with functions equivalent to those of securities rating agencies, the equivalence of the rating in the local scale must be included, as well as a translation into Spanish by a sworn translator.

The opinions or press releases must include the description of the meaning of such rating, as well as the reasons that motivated it and the conditions or considerations that, if applicable, have been established for the rating.

RESPONSIBLE PERSONS

Include the name and position of the persons who, in accordance with these provisions, must sign the document, these data must appear at the foot of the legends that the corresponding article of these provisions establishes.

ANNEXES

Audited financial statements and opinions of the audit committee and commissioner's reports, if applicable.

The opinion of the audit committee referred to in article 33, fraction I, subsection a), numeral 1 of these provisions must be included, as well as the commissioner's report, for the fiscal years in which said committee has not rendered its opinion and the audited financial statements by external auditor of the last 3 fiscal years, adhering to what these provisions establish for their preparation.

Additionally, regarding issuers that participate in hydrocarbon production activities through contracts or assignments, the report on the economic interest of the contracts and assignments on hydrocarbon exploration and extraction activities, prepared in accordance with what Annex N Ter of these provisions provides. Likewise, said issuers must attach the certifications required in the Guidelines that regulate the procedure for quantification and certification of the Nation's reserves and the report on contingent related resources issued by the National Hydrocarbons Commission.

III.

GUARANTEE OR GUARANTOR INFORMATION

In the case of guaranteed or secured issuances, the following information on the guarantee or guarantor must be included at a minimum, except regarding Subsidiaries of the issuer which will provide what is established in chapter 3), subsection a), penultimate paragraph of this instruction:

·

Corporate name and trade name or, if applicable, name of the natural person, as well as a description of the business in which it participates.

·

The financial statements referred to in article 33, fraction I, numeral 3 of these provisions.

·

Any other information that is considered relevant to evaluate the credit risk of the guarantee or guarantor in question.

ANNEX N TER

ECONOMIC INTEREST ON CONTRACTS FOR EXPLORATION AND EXTRACTION AND

ASSIGNMENTS THAT MUST BE DISCLOSED BY ISSUERS THAT PARTICIPATE IN HYDROCARBON PRODUCTION ACTIVITIES

I.

GENERAL GUIDELINES

This Annex establishes the disclosure rules applicable to the documentation that issuers participating in hydrocarbon exploration and extraction activities present before the National Banking and Securities Commission, the Mexican Petroleum Fund and the Ministry of Finance and Public Credit.

II.

DEFINITIONS

For the purposes of this Annex, the definitions provided in article 4 of the Hydrocarbons Law, article 3 of the Hydrocarbon Revenue Law, as well as in the guidelines on reserve regulation (the guidelines), issued by the National Hydrocarbons Commission, will apply, in singular or plural. Additionally, it will be understood as:

·

Reserve Certification, the process defined as such by the CNH in the guidelines.

·

CNH, the National Hydrocarbons Commission.

·

Economic Interest, the economic benefit, equivalent to the net cash flow calculated under existing economic conditions and attending to what is provided in this annex, to which the issuer will be entitled in terms of the exploration and extraction contract it has signed, or of the assignment granted to it, as applicable. The economic interest will be reported in monetary terms and in the corresponding volume.

·

Methodologies for the Evaluation of Hydrocarbon Reserves, the set of principles, criteria, methods, concepts and mathematical, technical and scientific procedures employed for the estimation, quantification, evaluation and verification of hydrocarbon reserves, in accordance with the guidelines.

·

Register of Independent Third Parties: Register of persons accredited by the CNH to perform Reserve Certification.

·

Current Price, that determined by the simple average of the market price corresponding to each type of hydrocarbon, observed on the first day of each month during the 12 months prior to the end date of the period covered by the report, unless prices are determined through contractual agreements.

·

Possible Reserves, the additional volume of hydrocarbons that has a lower certainty of being recovered than probable reserves, which is determined and certified as established by the CNH through the guidelines.

·

Proved Reserves, the volume of hydrocarbons used to estimate the economic interest of the issuer that will be recovered in future years from known reservoirs under existing economic and operating conditions at a specific date, determined and certified in accordance with the guidelines.

·

Proved Developed Reserves, the volume of hydrocarbons determined and certified in accordance with the guidelines, used to estimate the economic interest of the issuer, which can be extracted with current infrastructure through additional activities with moderate investment costs.

·

Proved Undeveloped Reserves, the volume of hydrocarbons, determined and certified in accordance with the guidelines, used to estimate the economic interest of the issuer that is expected to be recovered through new wells in un-drilled areas provided there is reasonable certainty regarding the obtaining of production in said areas and the respective development plan, approved by the CNH, establishes that drilling will take place in the following 5 years, or where a relatively large expense is required to complete existing wells and/or construct production and transportation facilities. In the case of fluid injection or other enhanced recovery techniques, the associated Reserves will be considered undeveloped proved when such techniques have been effectively proven in the area and in the same formation.

·

Probable Reserves, the additional volume of hydrocarbons that has a lower certainty of being recovered than proved reserves and which is determined and certified as established by the CNH through the guidelines.

III.

DISCLOSURE OF ECONOMIC INTERESTS DERIVED FROM PARTICIPATION IN

EXPLORATION AND EXTRACTION ACTIVITIES OF HYDROCARBONS

A. Standardized valuation of future cash flows representing the economic interest of the issuer

The issuer must accompany its annual report, in an aggregated manner, the standardized valuation of future cash flows representing the economic interest to which it is entitled for the exploration and extraction of hydrocarbons it carries out under the contracts for exploration and extraction or assignments in which it participates. To this effect, the following must be revealed:

Future cash inflows. These are the revenues the Issuer will receive for carrying out the exploration and extraction of hydrocarbons under a contract for exploration and extraction or an assignment. Future cash inflows must be calculated from the consideration or revenues to which the issuer is entitled under the contract for exploration and extraction or the assignment, as applicable, according to the conditions applicable in each case, considering for purposes of said calculation the current price and the volume of proved hydrocarbon reserves. Future changes in prices should only be considered to the extent they are provided for in contractual agreements for the marketing of hydrocarbons existing at the end of the year.

Future development and production costs. They must be calculated in accordance with what is established in the guidelines through the estimation of expenses to be incurred during the development and extraction of proved hydrocarbon reserves, based on costs at the end of the year and assuming continuity in existing economic conditions. If estimated development costs are significant in accordance with what is established in the guidelines, they must be presented separately from estimated production costs. In this item, royalties and contractual fees for the exploratory phase, as well as rights applicable to assignments whose definition base is different from profit, which the issuer must pay to the State in cash, must be included.

Future income tax payments. They must be calculated by applying the corresponding rate to future cash inflows minus future development and production costs. Future income tax payments could originate tax credits and provisions related to the reported economic interest. In this item, any right or consideration paid in cash to the State, whose definition base is profit, must be included.

Future payments of tax for the exploration and extraction activity of hydrocarbons. They must be calculated in the terms established in Title Four of the Hydrocarbon Revenue Law.

Net future cash flows representing the economic interest. They result from deducting from future cash inflows, future development and production costs, future income tax payments and future payments of tax for the exploration and extraction activity of hydrocarbons.

Discount. This amount will result from the application of a discount rate of 10 percent annually to reflect the present value of future cash flows representing the economic interest.

Standardized valuation of discounted future cash flows representing the economic interest. This amount represents the future cash flows representing the economic interest reduced by the calculated discount.

The calculation of the cash flows reported in accordance with this section must be carried out based on the values estimated by the reserve operator certified by the independent expert.

In the case of calculations corresponding to the second and third year of the certification cycle referred to in the guidelines, when preparing the information required in this section, issuers must consider the volume certified in accordance with the guidelines, deducted by the volume effectively extracted to the date of the report, that is, the remaining reserves on that date. In the case of those issuers that in addition to the certifications required in the guidelines, have annual certifications granted in accordance with what is provided in the guidelines, they may use such certifications in the determination of their economic interest.

The amounts that must be revealed in accordance with what is established in this section will result from the sum of the estimated future cash flows for each contract for exploration and extraction and each assignment in which the Issuer participates. The standardized valuation of future cash flows must represent the economic interest to which the issuer is entitled as consideration, in the case of contracts for exploration and extraction, or as income it expects to obtain, in the case of assignments.

Additionally, if a significant portion of the future cash flows representing the discounted economic interest reported is attributable, directly or indirectly, to a non-controlling interest, this fact must be revealed, as well as the approximate portion corresponding to said non-controlling interest.

Likewise, if the financial statements include investments recognized through the equity method, the valuation of the future cash flows representing the economic interest of the investee resulting from the consideration or revenues derived from the extraction, as applicable, of a contract for exploration and extraction or an assignment, of proved hydrocarbon reserves, must not be included in the disclosure of the valuation of future cash flows representing the economic interest of the issuer.

Any change in the aggregate of the future cash flows representing the economic interest of the issuer must be revealed for the reporting year. The following sources of change must be presented separately if individually significant:

a.

Net change in sales and transfer prices, as well as in production costs related to future extraction.

b.

Changes in estimated future development costs.

c.

Sales and transfers of oil and gas produced during the period.

d.

Net change derived from extensions, discoveries and improvements in recovery.

e.

Net change derived from purchases and sales of hydrocarbons.

f.

Net change derived from revisions in estimated quantities.

g.

Previously estimated development costs and incurred during the period.

h.

Addition of the initial discount, which is the increase in the value of cash flows derived from the passage of time.

i.

Other unspecified changes.

j.

Net changes in income taxes.

When estimating the amounts for each of the above categories, the effects of changes in prices and costs must be calculated before estimating the effects of changes in the volume of proven reserves used for the calculation of the economic interest, in accordance with the guidelines established. As a result, changes in said volume must be determined at the costs and prices of the end of the year. The change in income taxes must reflect the effect of income taxes incurred during the period as well as the change in future expenses for income taxes. All changes, except for income taxes, must be reported before taxes.

Finally, such additional information necessary to prevent the disclosure of the standardized valuation of future cash flows representing the economic interest of the issuer, and its changes, from being misleading must be revealed.

If the issuer opts to disclose its economic interest derived from activities to develop and extract the volume of probable or possible reserves, it must determine the standardized valuation of the future cash flows representing its economic interest resulting from the consideration or income derived from extraction, depending on whether it is an exploration and extraction contract or an assignment, with respect to such categories of reserves.

The terms of consolidation, participation method, non-controlling interest, investee, subsidiary, as well as the term income taxes referred to in this section, shall be understood in the context of what is established in the International Financial Reporting Standards, issued by the International Accounting Standards Board, mandatory application in accordance with these provisions.

B.

Disclosure of economic interests that the issuer will have derived from the exploration and extraction of hydrocarbons under exploration and extraction contracts and assignments

The issuer must disclose in aggregate, the discounted economic interest, determined in accordance with Section A of this Annex, associated with future extraction to be carried out for each category of reserves corresponding to the exploration and extraction contracts or assignments in which it participates. Such disclosure must include both monetary and volume terms, according to the following table.

Economic interest by category of reserves

Millions of pesos

Thousands of barrels of crude oil equivalent

PROVEN (1)

Developed:

Undeveloped

PROBABLE (Optional)

POSSIBLE (Optional)

Additionally, issuers must disclose the determination of economic interest in volume measures for each type of hydrocarbon, according to the following table:

Economic interest by category of reserves

Oil and Condensates

Natural Gas

Thousands of barrels

Millions of cubic feet

PROVEN (2)

Developed:

Undeveloped

PROBABLE (Optional)

POSSIBLE (Optional)

For the purposes of the above, it must be calculated by dividing the discounted economic interest corresponding to each category of reserves by the current price, considering the proportion of each type of hydrocarbon in accordance with the following formula:

Additionally, in the event that the issuer opts to disclose its economic interest derived from activities to develop and extract the volume of probable and possible reserves, it must expose the uncertainty relative to such estimated reserves, as well as include it as a risk factor in the corresponding section of the annual report.

The issuer, when disclosing the economic interest to which it is entitled by the extraction of undeveloped proven reserves, in accordance with the above tables, must include the following disclosures:

·

The economic interest of the issuer, as well as the respective equivalent volume, resulting from the consideration, in the case of an exploration and extraction contract, or from the income, in the case of an assignment, to which it is entitled derived from the extraction of estimated undeveloped proven reserves at the end of the year. The economic interest for the extraction of undeveloped proven reserves must be estimated as the additional value to that to which the issuer is entitled for the extraction of developed proven reserves, such that the arithmetic sum of the economic interest derived from developed and undeveloped proven reserves coincides with the economic interest associated with the extraction of total proven reserves.

·

The significant changes in the economic interest, and in the respective equivalent volume, associated with the extraction of undeveloped proven reserves that have occurred during the year, including changes caused by the reclassification of undeveloped proven reserves to developed proven reserves.

·

The investments and progress made under the respective exploration and extraction contract or assignment during the year in order to reclassify undeveloped proven reserves into developed proven reserves.

·

The reasons why significant volumes of the undeveloped proven reserves category have remained undeveloped for 5 years or more, after having been disclosed as such.

On the other hand, the issuer must list all exploration and extraction contracts or assignments from which the reported economic interest is derived. Likewise, the issuer must include, both in monetary terms and in the volume of natural gas, oil, and condensates, the discounted economic interest for each category of reserves determined in accordance with Section A of this Annex, corresponding to the listed contracts and assignments. In the case of contracts, the issuer must disclose the economic interest for each contract, while in the case of assignments, the issuer must report the aggregated economic interest by type of region referred to in the Hydrocarbons Revenue Law.

Likewise, as a complement to the calculation of its economic interest, it may disclose the total reserve estimates associated with the exploration and extraction contracts and assignments, certified in accordance with the provisions of the guidelines.

In any disclosure disseminated by the issuer, it must be stated that the reserves in the subsurface are property of the Nation.

The first time the issuer discloses the economic interests derived from the exploration and extraction contract it has signed, or from the assignment granted to it, as well as when it discloses significant increases in its estimates, it must include a general explanation of the technologies used to establish an appropriate level of certainty to estimate its economic interest. It will not be necessary for the issuer to identify the fields in particular.

Likewise, it must disclose and describe the internal controls that the issuer applies when estimating its economic interests, as well as disclose the accreditations of the technical personnel primarily responsible for supervising that the preparation of reserve estimates is carried out in accordance with the guidelines.

With respect to the independent expert who prepares or conducts the certification of reserves in accordance with the guidelines, or any review process, the issuer must inform that the technical personnel responsible for such certification is registered in the CNH's register of independent third parties, and include a report from the independent expert containing those of the following disclosures that are applicable to the type of document:

·

The purpose of the report and who prepares it;

·

The effective date of the report and the date on which it was concluded;

·

The assumptions, data, methods, and procedures used, as well as a statement that all of these are appropriate for the purposes of the report;

·

The explanation of the main economic assumptions used in the quantification of reserves;

·

The explanation of the possible effects of regulation on the issuer's ability to recover the estimated reserves;

·

The explanation of the uncertainties inherent in the estimated reserves;

·

The statement that the independent expert certifying has used all methods and procedures considered necessary under the circumstances to prepare the report and consistent with the guidelines;

·

A brief summary of the independent expert's conclusions regarding the estimated reserves, and

·

The signature of the independent expert certifying.

Likewise, the changes that occurred during the year in the net equivalent volumes to the issuer's economic interest from activities carried out under an exploration and extraction contract or an assignment must be disclosed, which is determined, in each case, based on the proven hydrocarbon reserves associated with said exploration and extraction contracts or assignments.

The volumes disclosed must not include the issuer's participation as an independent buyer, intermediary, importer, or any other distinct from the exploration and extraction of hydrocarbons.

When reporting the volumes and the changes in them, oil, condensates, and natural gas liquids must be stated in barrels, and natural gas must be presented in cubic feet.

If significant economic events or significant uncertainties occur that affect particular components of the issuer's economic interests, an explanation thereof must be included.

The figures disclosed in accordance with this Annex must be consistent with the guidelines and comply with the conditions of the corresponding exploration and extraction contracts or assignments.

---

1

Must coincide with the sum of the economic interest derived from developed and undeveloped proven reserves. For this purpose, the economic interest for the extraction of undeveloped proven reserves disclosed must correspond to the additional economic interest to that to which one is entitled for the extraction of developed proven reserves.

2

Idem.

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