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

DOF: 10/19/2016

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 says: 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 85, fraction II, and 86 of the Securities Market Law in relation to article 28, second paragraph, of the Financial Discipline Law of the Federal Entities and Municipalities, as well as articles 4, fractions XXXVI and XXXVIII, and 16, fraction I, of the National Banking and Securities Commission Law, and

CONSIDERING

That with the publication in the Official Gazette of the Federation on April 27, 2016, of the "Decree establishing the Financial Discipline Law of the Federal Entities and Municipalities, and reforming, adding, and repealing various provisions of the Fiscal Coordination Law, the General Public Debt Law, and the General Governmental Accounting Law," the National Banking and Securities Commission was granted the authority to issue general provisions establishing disclosure requirements regarding expenses related to the offering of securities to be issued, which must be complied with by the public entities referred to in said law. Therefore, it is necessary to make various adjustments to the information that must be contained in the corresponding placement prospectus, so that investors have the necessary information to make adequate decisions to protect their interests and in accordance with the principle of market disclosure of relevant information, it has resolved to issue the following:

RESOLUTION MODIFYING THE GENERAL PROVISIONS APPLICABLE TO

SECURITIES ISSUERS AND OTHER PARTICIPANTS IN THE

SECURITIES MARKET

SOLE.- Annex L 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 amended through Resolutions published in said 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, and December 26, 2014, January 12 and 30, March 26, and May 13, August 27, September 28, October 20, December 31, 2015, and May 6, 2016, is REPLACED to read as follows:

TITLES FIRST TO EIGHTH

...

ANNEXES A to K

...

ANNEX L

Instruction for the preparation of placement prospectuses for the registration of securities issued by federal entities and municipalities.

ANNEXES M to AA

...

TRANSITIONAL

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

Respectfully,

Mexico City, October 7, 2016. - The President of the National Banking and Securities Commission, Jaime González Aguadé.- Signature.

ANNEX L

INSTRUCTION FOR THE PREPARATION OF PLACEMENT PROSPECTUSES FOR THE REGISTRATION OF

SECURITIES ISSUED BY FEDERAL ENTITIES AND MUNICIPALITIES

The placement prospectus for the registration of securities issued by federal entities and municipalities shall comply, where applicable, with the provisions of Annex H of these provisions, regarding the instruction for the preparation of placement prospectuses, informative brochures, and informative supplements, except for what is provided in chapters 2) The Offering, subsection d) Expenses related to the offering, 3) The Issuer, 4) Financial Information, 5) Administration, 6) Responsible Persons, and 7) Annexes, in which case the following shall be included instead:

2)

THE OFFERING

d)

Expenses related to the offering

i)

The reasons why financing through the stock market is more adequate than bank financing shall be described, including a general perspective of the economic and market conditions at the time of the evaluation of both sources of financing, as well as the main economic assumptions defined for its preparation.

ii)

Estimated figures of the effective resources of the placement and all expenses related to the offering shall be included in the preliminary prospectus, breaking down each concept and participating entities according to the following table, as well as the effective net resources of the placement and the expenses actually incurred in the definitive prospectus:

TABLE 1 Expenses related to the offering

Concept

Amount

% on amount placed

Effective resources of the placement

(a)

Expenses:

Study and procedure (CNBV)

Registration in the RNV (CNBV)

Listing on any stock exchange

Common representative

Securities rating agencies

Commissions for intermediation and placement

Legal advisors

External auditors

Printing and publication of the prospectus or supplement

Promotion (stock events, per diems, etc.)

Others (break down, if applicable)

Total Expenses (b)

Effective net resources of the placement

(a - b)

iii)

A comparison regarding the costs incurred by other federal entities or municipalities in similar issuances in the last 36 months prior to the date of the application shall be included. By similar issuances shall be understood those that share with the respective issuance at least two of the following characteristics: type of security, type of guarantee, or risk grade. The comparison shall be made with respect to at least three issuances or fewer, if such number does not exist in the referred period. Its content shall comply with the following table, whose first row shall contain the estimated characteristics of the issuer's own offering and shall be updated with effective data in the definitive prospectus:

TABLE 2 Stock market financing of other federal entities or municipalities

Issuer 1

Guarantor 2

Type of

Security

Board

Key

Risk

Grade 3

Amount of the

Placement

Date of

Issuance

Term 4

Rate 5

Expenses 6

Expense Ratio 7

1.

Denomination of the issuer.

2.

If applicable, denomination of the guarantor, description of the guarantee, or mention of being unsecured.

3.

Risk grade indicated in the correspondence tables of ratings and risk grades, long-term and short-term as applicable, for the Mexico scale, included in Annex 1-B of the "General Provisions applicable to credit institutions" published in the Official Gazette of the Federation on December 2, 2005, and its respective modifications. Indicate the highest risk grade in the case of having two or more ratings with different risk grades.

4.

Term of the issuance in days.

5.

Agreed interest rate (e.g., 7% or TIIE + 200 bps)

6.

Total expenses related to the offering, disclosed in the definitive prospectus or supplement.

7.

Total expenses related to the offering / amount placed.

iv)

A comparative analysis with the results of the competitive process of other financing options contemplated by the issuer in accordance with the guidelines referred to in article 26, fraction IV, of the Financial Discipline Law of the Federal Entities and Municipalities, for the calculation of the effective rate, shall be included.

3)

DESCRIPTION OF THE FEDERAL ENTITY OR MUNICIPALITY

a)

Description and development of the federal entity or municipality

In this chapter, the following information shall be provided:

• Denomination of the state or municipality.

• Address of the state or municipal executive office.

• Predominant economic activity of the municipality or state.

• Description of economic development in the last 3 years.

• Relevant macroeconomic figures.

• List the public services provided, describing those that generate revenue.

• Description of relevant contracts entered into, including concessions granted and received.

• Description of relevant administrative processes, such as purchases, bidding for works, tax collection.

• Description of the main revenue and expense items.

b)

Applicable legislation and tax situation

Brief explanation of the constitutional and legal provisions governing the municipality or federal entity, explicitly pointing out the requirements that must be met to approve the revenue and expense budget. Likewise, the legal and constitutional requirements that must be met to carry out the issuance of the securities subject to the public offering shall be described, as well as the manner in which they were complied with. Explain the local taxes incurred and the exemptions or tax benefits applicable.

c)

Human resources

Provide the number of people employed as of the date of the latest financial statements and in case the number had varied considerably during the period, an explanation of why this variation occurred. The percentage of employees between management and unionized shall 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 shall be indicated.

d)

Comparative information

Relevant comparative information with other states or municipalities shall be provided, such as: gross domestic product and per capita consumption, leverage level, unemployment level, etc.

e)

Description of main assets

Information on any relevant asset susceptible to alienation, relative to its size, use, location, condition, age, whether it is insured, dimensions, environmental measures affecting the use of these assets, etc., shall be presented. The issuer shall also mention if any asset has been granted as collateral for obtaining any credit, the type of asset destined, procedure to execute such guarantee, and the general characteristics of the credit (amount, rate, term, etc.).

f)

Investments

Description of the main public and private investments that have been made in the state or municipality and that predominantly affect its economy, as well as the investment project for the following year.

g)

Judicial, administrative, or arbitral processes

It shall be briefly described if there is currently or a high probability that there may be in the future, any relevant judicial, administrative, or arbitral process, other than those that are part of the normal course of administration, in which the entity, its decentralized or unattached bodies, and main officials are or may be involved, provided that such process has had or may have a significant impact on the operating results and financial position of the entity. Likewise, the court or administrative instance where the process is being carried out, the date it was instituted, and whether the result of said process has had or may have a relevant adverse effect on the operating results and financial position of the municipality or state shall be mentioned. If there is more than one judicial process that individually cannot have a relevant adverse effect, but analyzed together with other similar cases it does, the relevant information regarding this shall be provided.

4)

FINANCIAL INFORMATION

a)

Selected financial information

It shall comply, where applicable, with the provisions of fraction VII, subsection C), numeral 4), sub-subsection a) of Annex H of these provisions.

b)

Public debt

Break down the public debt, indicating if there is any other concept that represents a real or contingent liability.

For each debt, the amount, origin date, entity with which it is contracted, whether it is guaranteed and by whom, conditions and terms, as well as any change or restructuring carried out, shall be mentioned.

It shall be revealed if the federal entity or municipality is up to date in the payment of interest and capital of all its credits and debts, including bank loans, those contracted with the federation or with any other public or private entity or institution; otherwise, the causes and consequences of such defaults for the last 5 years shall be detailed.

If applicable, the amount of liabilities of decentralized or unattached bodies that constitute or may constitute a contingent liability on the institution and are not registered in its financial position statement shall be specified.

c)

Comments and analysis of the federal entity or municipality regarding its revenues and expenses and its financial position

It shall comply, where applicable, with the provisions of fraction VII, subsection C), numeral 4), sub-subsection d) of Annex H of these provisions.

d)

Estimates, provisions, or critical accounting reserves

It shall comply, where applicable, with the provisions of fraction VII, subsection C), numeral 4), sub-subsection e) of Annex H of these provisions.

5)

ADMINISTRATION

a)

External auditors

It shall comply, where applicable, with the provisions of fraction VII, subsection C), numeral 5), sub-subsection a) of Annex H of these provisions.

b)

Main officials

The name, position or post, age, and highest level of education of the Governor or Municipal President, Secretary of Finance or equivalent, if applicable, Treasurer, and the main officials responsible for the public finances of the state or municipality, and the main responsibilities of the same regarding the respective public finances, shall be provided.

In case there is kinship by blood or affinity up to the third degree or civil, including their spouses, concubines, or partners between any official, this shall be explained.

The total amount representing together the compensations and benefits of any type received by the main officials during the last fiscal year shall be disclosed.

6)

RESPONSIBLE PERSONS

Include the name, position, and institution represented by the persons who, in accordance with article 3, fraction X of these provisions, must sign the document; these data must appear at the foot of the legends established in said article.

7)

ANNEXES

a)

Financial information

The information indicated in article 3, fraction VII, first paragraph of these provisions shall be included, in the case of entities that already have securities registered in the Registry, provided they are up to date in the delivery of periodic information referred to in Title Fourth of these provisions; they shall include the latest financial position statements or balance sheets and revenue and expense statements that have been presented to the Commission and the corresponding stock exchange, in substitution of the information referred to in the second paragraph of said article.

b)

Legal opinion

A copy of the legal opinion indicated in article 3 fraction IX with respect to article 2, fraction I, subsection h) of these provisions shall be added.

c)

Title supporting the issuance

A copy of the title supporting the issuance indicated in article 3 fraction IX with respect to article 2, fraction I, subsection e) of these provisions shall be added.

d)

Credit risk rating of the issuance or program, if applicable

A copy of the report issued by at least one securities rating agency whose date of issuance is not more than 90 days prior to the placement shall be added.

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