Organic Law Of Sociedad Hipotecaria Federal

Original Language Title: Ley Orgánica de Sociedad Hipotecaria Federal

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Federal Mortgage Society Act

FEDERAL MORTGAGE SOCIETY LAW

Official Journal of the Federation on 11 October 2001

Last reform published in the DOF 10 January 2014

On the sidelines a seal with the National Shield, which reads: United Mexican States.-Presidency of the Republic.

VICENTE FOX QUESADA, President of the United Mexican States, to its inhabitants known:

That the Honorable Congress of the Union, has served to address the following

DECREE

"THE MEXICAN UNITED STATES CONGRESS DECREES:

FEDERAL MORTGAGE SOCIETY LAW

FIRST CHAPTER

Nature, object, and address

Article 1o.- This Law is a regulation of the fifth paragraph of Article 4. It is a constitutional and has the purpose of regulating the organization and functioning of the Federal Mortgage Society, the National Credit Society, the Institution of Development Banking.

Article 2o.- Federal Mortgage Company, National Credit Company, will aim to boost the development of primary and secondary credit markets to housing, through the granting of credit and guarantees for the construction, acquisition and improvement of housing, preferably of social interest in the terms of this Law, as well as the increase of productive capacity and development technology, related to housing.

You will also be able to guarantee financing related to the equipment of housing units.

The Federal Mortgage Society will develop programs that promote the construction of housing in indigenous areas and communities in the national territory with the resources to be approved for this purpose in the expenditure budget.

For the purposes of this Law, secondary credit market shall be understood, all transactions by means of which the sale of the mortgage portfolio is carried out, trust or securities issued with the guarantee of such a portfolio to third parties.

Article 3o.- The domicile of the Federal Mortgage Company will be the one that, within the national territory, determines its Organic Regulation. The duration of the Company will be indefinite.

CHAPTER SECOND

Operations

Article 4o.- The Society may perform the following acts:

I.          Accept loans and credits;

II.        Issue bank bonds;

III.        Constitute deposits in credit institutions and financial institutions outside the country;

IV.         Operate with currency and securities, including those backed by securities granted by the Company or insurance granted by insurers in which the latter participates;

V.          Guarantee loans and securities related to housing finance, granted or issued by financial institutions, and invest in those securities;

V Bis. Grant credits related to your object in order to boost development of a segment of primary and secondary credit markets to housing or to seek the stability of such markets in accordance with the criteria to be defined by its Board of Directors;

V Ter. Render Consulting Services;

VI. Celebrate contracts to cover, in whole or in part, the risks assumed by the Company for the operations referred to in the previous fractions V and V Bis;

VII.       Promote schemes to constitute initial payments or hooks intended for the acquisition of housing;

VIII.      Make sure that they will have the same evidentiary force as the laws assign to those made by public or expert corridor;

IX.         Practise trust operations and carry out mandates and commissions relating to its purpose, when the Company is assigned by law to that task; in the case of acts that contribute to the achievement of its objective or when the The Company itself constitutes a trust to fulfil employment obligations;

X.          Act as a common representative of holders of representative housing finance receivables;

X Bis. Make contributions to the constitution of insurance institutions of the branches of credit to the housing and financial guarantee or to invest in the social capital of these, in the terms of the article 24 Bis of this Law;

X Ter. Investing, with the prior authorization of the Secretariat of Finance and Credit Public, in the social capital of undertakings which provide it with complementary or ancillary services in the administration or in the performance of the object of the Company itself or to make contributions for the formation of such enterprises, in which The case will not be considered as state participation and therefore not be subject to the provisions applicable to entities of the Federal Public Administration ParaState, as well as to contract its services without the applicable Law on Procurement, Leases and Services of the Sector Public;

X Quater. Make the investments provided for in Articles 75, 88 and 89 of the Law of Credit Institutions;

XI. Encourage the implementation of supplementary assurance programs to the loans to housing, which allow for the extension of risk cover and the release of the obligations, charges or limitations of the domain by the accredited or its beneficiaries, where adverse economic conditions are not present imputable to them, which affect their situation in a relevant way assets, in order to protect the assets of the accredited, and

XII.      The other operations referred to in the Credit Institutions Act, as well as the analogous and related operations authorized by the Secretariat of Finance and Public Credit.

Article 5o.- The operations referred to in Article 4 shall be contracted in terms that are consistent with the achievement of the object of the Company and with the sound administration of its heritage. For this purpose, the financing provided by the Company must be guaranteed and meet the criteria defined by its Board of Directors.

Article 6o.- The Secretariat of Finance and Public Credit, as an exception to the provisions of Articles 48 of the Law on Credit Institutions and 26 of the Law of the Bank of Mexico shall determine by general provisions the characteristics of the active, passive operations that do not involve the collection of resources from the public and services, except for trusts, mandates and commissions, To perform the Society to fulfill the objective and to exercise the faculties that they have been entrusted with their character of development banking in this Law.

It is for the Bank of Mexico, in the terms of its Law to regulate by means of general provisions, the characteristics of passive operations involving Collection of public resources, trusts, mandates and commissions, money market operations, as well as financial operations known as derivatives held by the Company.

Article 7o.- In the trust contracts held by the Company, the Company may act in the same business as a trustee and as a trustee. It may also conduct operations with the Company itself in the performance of trusts, mandates or commissions, where they do not involve a conflict of interest.

Article 8o.- The total nominal amount of the emissions of certificates of participation relating to real estate for the construction of housing, may to be set by an opinion to be formulated by the Company, subject to expert advice on the fideicomial assets subject to that issue.

The Company in formulating its opinion and fixing the total nominal amount of an issue will take as a basis the commercial value of the goods, and if it will be certified amorzables will estimate a prudent margin of security for the investment of the corresponding holders. The opinion that the Company will make will be final.

Article 8 Bis.- The Federal Government will respond at all times, from the passive operations arranged by the Federal Mortgage Society, National Society of Credit, Development Banking Institution:

I. With national physical or moral persons; and

II.       With private, governmental, and intergovernmental foreign institutions.

THIRD CHAPTER

Social Capital

Article 9o.- The capital of the Company will be represented by equity certificates in sixty-six percent of the "A" series and in thirty and four percent of the "B" series. The nominal value of these securities shall be determined in their Organic Regulation.

The "A" series will only be signed by the Federal Government, will be issued in a title that will not carry coupons, which will be untransmittable and at no time will be able to change its nature or rights conferred on it by the Federal Government itself.

The series "B" may be subscribed by the Federal Government, by the governments of the federal entities and by the municipalities and by Mexican natural and moral persons, attached to the provisions of Article 33 of the Credit Institutions Act.

The Secretariat of Finance and Public Credit may authorize entities of the federal public administration, governments of the federal entities and municipalities, can acquire certificates of the said series "B" in a larger proportion than that set out in Article 33 of the Credit Institutions Act.

Article 10.- The net capital referred to in Article 50 of the Credit Institutions Act shall be the one set by the Secretariat of Finance and Public Credit hearing the opinion of the Bank of Mexico and the National Banking and Securities Commission.

Article 11.- At no time will they be able to participate in any form in the capital of the Company, foreign natural or moral persons, or Mexican companies in whose statutes do not include a direct and indirect exclusion clause from foreigners.

Persons who contravene the provisions of this Article shall lose the participation of the Federal Government in favour of the Federal Government.

Article 12.- The Secretariat of Finance and Public Credit will establish the form, proportions and other conditions applicable to subscription, tenure and circulation of the "B" string certificates.

CHAPTER FOURTH

Administration and surveillance

Article 13.- The management of the Company will be entrusted to a Board of Directors and a Director General, in their respective spheres of competence.

Article 14.- The Board of Directors will be composed of ten counselors, distributed as follows:

I.     Six councillors will represent the "A" series of the Company's equity certificates, which will be:

a) The Secretary of Finance and Public Credit, who will chair the Council Manager;

b) The Undersecretary of Finance and Public Credit;

c) A Deputy Governor of the Bank of Mexico, appointed by his own Governor;

d) A representative appointed by the Governor of the Bank of Mexico within the 3 higher hierarchical levels of the central institute;

e) The Secretary of Agrarian, Territorial and Urban Development, and

f) The National Housing Commission Holder, and

II.   Four external advisers shall represent the "B" series of the Company's certificates of financial contribution; they shall be designated by the holder or holders of those certificates representing at least 51% of those certificates and, in the case of the holder is the Federal Government, the corresponding designation shall be made by the Secretary of Finance and Public Credit.

External advisors will have no alternates. The other members shall appoint their alternates, who shall preferably have a Director-General level in the Centralised Federal Public Administration or their equivalent.

In the absence of the Secretary of Finance and Public Credit, the Undersecretary of Finance and Public Credit will have the character of president of the Board of Directors, in the absence of the latter, will have the character of the president the alternate of the Secretary of Finance and Public Credit and in the absence of all the previous ones, who appoint the members present from among the councilors of the series "A".

The Board of Directors may invite persons whose activities are related to the topics to be addressed to their sessions.

Article 15.- The Board of Directors shall meet, at least, quarterly and shall validly meet with the assistance of at least six of its members, provided that two of the members of the "A" series of the assets and two external advisors are among them.

The resolutions will be taken by a majority of the votes of the members present, with the president having a vote of quality in case of a tie.

On the agenda of the sessions of the Board of Directors, the matters to be dealt with in these sessions must be listed, without including general matters.

Article 16.- The external counsel charge will last for four years. The periods of the external advisers shall be staggered and shall be completed each year.

People holding the office of external advisors may be designated with that character more than once.

The vacancy that occurs in an external counselor position will be covered by the new member designated to integrate the Board of Directors and will last in his position only for the time to be taken for the replacement.

External advisors will not be part of the Company's staff, so they will not be considered public servants.

The Board of Directors of the Company will have the inselectable ability to set the remuneration of the external advisors, on a proposal of the Committee noted in the article 31 of this Law, without these being subject to any authorization by administrative authorities. In order to adopt the resolutions referred to in this paragraph, in the respective session of the Board of Directors, the external advisors may not participate and the latter shall consider the remuneration existing for the staff of the Company, as well as the the evolution of remuneration in the country's financial system. In addition, as a guiding criterion, the Board of Directors should ensure that the Company has adequate and qualified external advisors in terms of the applicable provisions and based on the conditions of the labour market. Payments shall be made from the Company's authorised budget.

Article 17.- The designations of external advisors must be placed on persons of Mexican nationality who have experience in financial matters, legal, administrative or accounting, and with professional capacity and prestige to enable them to perform their functions free of conflicts of interest, without being subject to personal, economic or economic interests. In addition, they shall cover the following requirements:

I. Be in full enjoyment of your rights;

II. aber busy, for at least five years, high level financial, legal, administrative or accounting charges;

III. Not to be a shareholder, official, proxy or company agent engaged in the construction, marketing or financing of housing, or first-degree relative, by consanguinity or affinity, of persons having any character of the mentioned in this fraction;

IV.   Do not exercise office, employment or commission in public service on the day of designation;

V.    Do not have important heritage links, pending litigation, professional ties, labor ties or conflicts of interest with the Company, nor with the insurance institutions or companies in whose capital the company participates;

VI.   Do not have, in any form, the representation of associations, associations, federations, confederations of workers or employers or of sectors of attention that relate to the object of the Society, of the institutions of insurance or of companies in whose capital they participate, and

VII.             Other than determine the Credit Institutions Act and other applicable provisions.

The external advisors shall communicate to the Board of Directors any situation that may result in a conflict of interest, as well as to refrain from participating in the Respective deliberation and vote. They shall also maintain absolute confidentiality in respect of all acts, events or events of the Company, as well as of the insurance institutions or undertakings in whose share capital it participates, including the deliberations of the Board of directors of those who are knowledgeable about their character as a counselor, while such information has not been made of the public's knowledge.

For the purposes of this Article, an external counsellor shall be deemed to have important economic ties when, by itself or through undertakings in whose capital (a) to participate, to make sales, for the equivalent of more than 10% of the total annual sales of the company or of such undertakings, in the last two fiscal years, to the Company or to the companies referred to in the X Bis and X Ter fractions Article 4 of this Law.

The Director General of the Company and the directors shall refrain from participating, with the representation of the Company or the insurance institutions in which participate, in partisan political acts.

Article 18.- The external advisors who have been appointed by the holder of the Secretariat of Finance and Public Credit in accordance with the provided for in Article 14, fraction II, of this Law may only be removed by any of the following:

I.      Mental incapacity, as well as physical incapacity to prevent the correct exercise of their functions for more than six months;

I Bis. Stop gathering or contravening the requirements that are set in terms of this Act for designation;

I Ter. Stop attending, without justified cause for judgment of the Board of Directors, to the Thirty percent or more of the sessions that have been convened in the same exercise;

II.    To breach the agreements of the Board of Directors or to act deliberately, in excess or defect of its privileges or in contravention of the provisions of this Law;

III.   Use, for the benefit of yourself or third parties, the confidential information available to you on the basis of your charge, as well as disclose such information without the authorization of the Board of Directors;

IIIa. Participate and vote in those deliberations in which there is a conflict of interest, in contravention of the provisions of Article 17 of this Law;

IV.   Subject to the consideration of the Board of Directors, knowingly, false or misleading information;

V.    Make decisions that go against the provisions of Article 5 of this Law, and

VI.   For any other cause that is considered to be serious by the Board of Directors, by resolution taken by at least seven of its members.

The Board of Directors of the Company, at the request of its President or at least three of its members, resolve the existence of causes of removal of an external counsellor. The decision shall be made by agreement of the majority of its members, after granting the right of the hearing to the affected party, without being involved in the corresponding vote.

Based on the resolution of the Board of Directors, the appointment of the new counselor will proceed external in the terms of this Law.

In addition to the removal causes outlined in this precept, the "A" series counselors and the Director General will be removed from office when their responsibility by final judgment given by competent authority, to be placed in any of the cases contained in the Federal Law on Administrative Responsibilities of Public Servants.

The Director General of the Company and the Directors-General of the insurance institutions referred to in the X Bis fraction may be removed from his position. Article 4 of this Law, where the work plans are not justified without justification and where unjustified financial losses are incurred, without prejudice to the responsibilities to which there is a place.

Article 19.- The Board of Directors shall direct the Company in the terms provided for in Article 42 and other relative of the Credit Institutions Act.

The Council may agree to carry out the operations inherent in the object of the Company. Agreements which, in their case, may be made in respect of the operations provided for in Article 46 (VI) and (IX) of the Credit Institutions Act shall be considered by the Director-General's proposals.

Article 20.- The following are also the powers of the Board of Directors:

I.           Approve, on a proposal from the Director General, the broad lines of its active, passive and service operations, as well as the investments made by the Company, subject to the provisions of Articles 5 and 6 of this Law;

I Bis. Approve the long-term job plans of the Society that you submit to your consideration of the Director General;

I Ter.    Approve, on a proposal from the Committee on Human Resources and Institutional Development and within the framework of the applicable budgetary provisions, the remuneration of the external advisors, as well as the external members of the Committees which are constituted in terms of this Act;

II.         Approve the annual activity report presented to you by the Director General;

III.        Approve the proposal of the Organic Regulation of the Company, as well as the specific programmes and other internal regulations presented to it by the Director General, in order to submit them to the consideration and, if necessary, issue by the Secretary of Finance and Public Credit;

IV.         (Repealed)

IV Bis. Resolve the issues to be considered by the Audit Committee;

V.         Issue the rules and criteria to which the compilation and exercise of the Company's current expenditure and physical investment budget should be subject, as well as the adoption of such a budget and the corresponding amendments carry out during the financial year, subject to the annual global amounts authorised for this purpose by the Secretariat of Finance and Public Credit;

VI.        Approve, on a proposal from the human resources and institutional development committee, in accordance with the provisions of article 42, fraction XVIII of the Law of Credit Institutions, the organic structure, tabulators of salaries and benefits, salary policy and the granting of extraordinary perceptions for the fulfillment of goals that are subject to the performance evaluation, taking into account the conditions of the labor market prevailing in the Mexican financial system; promotion, promotion and retirement policies; guidelines for selection, recruitment and training; separation criteria; and other economic and social security benefits established for the benefit of the public servants working in the Company;

VII.       Issue the rules and bases to be followed for the disposal at the market price of movable or immovable property received in payment or awarded to the Company and to the insurance institutions in the capital of which the first capital is involved, the General Law of National Goods and the Law on Procurement, Leases and Services of the Public Sector are applicable to it;

VIII.      Approve the objectives, guidelines and policies regarding the origination and administration of the credit, as well as to establish, according to the V Bis fraction of the article 4. of this Law, the criteria for the granting of credits, which must include, at least:

a) The features to delimit the market segments that require develop without inhibiting the participation of the private sector in conditions of healthy competition in these segments.

b) The deadlines or goals to determine when the Company will be concluded with the granting credits to the respective market segment, for which it should consider that healthy competition practices have been developed and that sufficient and adequate private sector participation is available.

c) The criteria for authorizing the participation of the Company in the granting of loans during unusual circumstances in the markets, with the purpose of maintaining liquidity and healthy operation of the housing credit sector, and

IX.         Establish policies of a prudential nature that set limits on the exposure of the Company in its function as a liquidity provider to the market.

X.         Repeals

Article 21.- The Director General will be appointed by the Federal Executive through the Secretariat of Finance and Public Credit, which will be the responsibility of the Federal Executive. a person who is of good repute and who has extensive knowledge and experience in the financial system and in administrative matters. This person must also meet the requirements of Article 24 of the Credit Institutions Act.

Article 22.- The Director General shall be responsible for the administration and legal representation of the Company, without prejudice to the powers that correspond to the Board of Directors. You will have the following powers and functions:

I. In the exercise of its powers of legal representation, it may hold or to grant all kinds of acts and documents inherent in the object of the Society. For this purpose, it will have the most extensive powers to carry out acts of dominion, administration, litigation and collection, even those that require special authorization according to other laws or regulations. In such a virtue and in an enunciative and non-limiting manner, they may issue, endorse and negotiate evidence of credit, request and grant forgiveness, exercise and desist from judicial proceedings, including in the trial of amparo; (a) to provide general and special powers with all the powers which are responsible for it, even those requiring special provision, replacing them, revoking them and granting powers of substitution to the proxies; Board of directors when it comes to granting general powers for domain acts.

You may also represent the Company when it acts as a Responsible Authority in the judgment of amparo, the holder of the administrative unit in charge of the legal area of the Company;

I Bis.     Report to the Secretariat, prior to the authorization of the corresponding instances, the operations that may be linked to the object of the other development banking institutions;

II.         Run the Directing Council agreements;

II Bis.   Formulate the Company's long-term work plan of at least five years, to be submitted to the Board of Directors, which includes the financial, operational and strategies projections of the Institution. This strategic plan shall be reviewed at least every three years or before in case it is required to be adjusted;

IIa 1. formulating the annual strategy related to the strategy as well as the progress and follow-up of the long-term plan for submission to the Board of Directors in the first quarter of each year;

III.       To act with the status of proxy and as a general fiduciary delegate, as well as propose to the Board of Directors the designation of the public servants of the Society that occupy positions with the two immediate hierarchies inferior to that of their rank and file license requests, as well as their resignations;

IIIa. Issue certificates of constances of the files of the Society and determine the public servants of the Company that have this attribution;

IV.         Sign and publish the Company's monthly balance sheets according to the bases agreed by the Board of Directors;

V.          Manage the goods and businesses by celebrating the Society's conventions and by executing the acts that require the ordinary march of the same;

VI.         Be the liaison of the Society with the Federal Public Administration and the Congress of the Union;

VII.       To decide on the designation and hiring of the public servants of the Society, other than those mentioned in Article 42 of the Law on Credit Institutions, as well as the appointment and removal of trust delegates; staff as a whole, and establish and organise the offices of the institution;

VIII.      Present to the Board of Directors the proposed amendments to the Organic Regulation;

IX.         Set as per-tab approved by the Board of Directors, staff salaries, and approve programs to be applied for training and training, and

X.          The others entrusted to you by the Board of Directors or who correspond to you in accordance with this Law.

Article 23.- The supervision of the Company shall be carried out by the organs and in the terms indicated in the Law of Credit Institutions and the provisions of general character issued by the National Banking and Securities Commission.

Item 23 Bis.- Repeated

Article 24.- The Directors, the Director General and the trust delegates of the Company and the Insurance Institutions in which the Company is involved of the X Bis fraction, of Article 4 of this Law, are only obliged to absolve positions or to testify in judgment on behalf of the Society or of those institutions, when the positions and the questions are formulated by means of trade, which will reply in writing within the term of the authorities respective.

CHAPTER FOURTH

Of Society Participation in Insurance Institutions

Article 24 Bis.- The participation of the Company in the social capital of the insurance institutions referred to in Article 4, fraction X Bis, of this Law Only one of the shares representing the capital of such institutions may be made in the entire least one and, as a result, they shall be majority state holding companies. The remaining action will be signed by the Federal Government, through the Federation's Treasury.

The investments referred to in this article will be subtracted from the Company's net capital.

Article 24 Ter.- The Company and each of the insurance institutions referred to in Article 24 Bis above shall be governed by the following:

I. The Company shall be obliged to respond in a subsidiary and unlimitedly, up to the amount of its assets, to the fulfilment of the obligations of the aforementioned insurance institutions;

II. The Company shall be obliged to respond unlimitedly, up to the amount of its assets, for the losses of each and every insurance institution in whose capital it participates, and

III. Insurance institutions shall not be liable for the losses of the Company, nor for those of the other institutions in whose capital the latter participates.

For the purposes of this Article, all those obligations that are subscribed or contracted by the aforementioned insurance institutions shall be excluded after the date on which the Company ceases to be the holder of the shares representative of its capital.

Article 24 Quater.- As an exception to the provisions of Article 29, fractions VII, VII Bis and VII Bis 2 of the General Law of Institutions and Societies Insurance mutualists, as regards the boards of directors of the insurance institutions in which this chapter deals, these will be integrated by the directors who make up the Board of Directors of the Company and will have the powers to be laid down by the applicable rules. The surveillance of the company shall be carried out by the organs and in the terms indicated in the General Law of Mutual Institutions and Societies of Insurance and the general provisions issued by the National Insurance and Association Commission.

The Director General of each insurance institution referred to in this Article shall be appointed by the Company, by agreement of its Board of Directors, on a proposal from the Secretary of Finance and Public Credit. The Director-General's appointment may be the Director-General of the Company.

The insurance institutions in whose registered capital the Company will participate shall be supported in the administrative structure of the Company for the exercise of its functions, in terms of the applicable provisions.

The operations which, in accordance with the provisions of the General Law of Insurance Institutions and Mutual Societies, perform the insurance institutions in which The Company will have to contract in terms that guarantee congruence with the achievement of the objective to promote the development of the primary and secondary markets of credit to the housing and with the healthy administration of its heritage.

CHAPTER QUINTO

General Provisions

Article 25.- The Federal Executive, through the Secretariat of Finance and Public Credit, may interpret the precepts of this Law.

Article 26.- The Credit Institutions Act, the Bank of Mexico Law, commercial law, banking and commercial practices and practices, as well as The Federal Civil Code, shall apply to the operations of the Company, in the order in which they are mentioned.

Article 27.- The exercise of the Company will begin on January 1 and will end on the thirty-day of December each year. The Company shall be required to publish in the Official Journal of the Federation the general balance sheet for the year.

Article 28.- The Company will annually formulate its financial programs, general expenditure and investment budgets, as well as its operational, agreement to the guidelines, measures and mechanisms that the Secretariat of Finance and Public Credit will establish.

The Secretariat of Finance and Public Credit is responsible for coordinating, evaluating and monitoring the actions of the Society, as well as authorizing the modalities in the allocation of resources, in the terms of Article 31 of the Credit Institutions Act.

The best use and the most appropriate channelling of the resources of the Society will be sought in the framework of the autonomy of management required for its effectiveness functioning in accordance with applicable legal provisions.

Article 29.- For the purposes of the provisions of Article 4 (V) and (V). of this Law, by financial institutions means multiple banking institutions, development banking institutions, insurance institutions, limited-object financial corporations, multi-object financial corporations, lessor finance, financial factoring companies, credit unions, cooperative savings and loan companies, popular financial corporations, as well as savings and loan companies, which are operating under the transitional regime. established in the " Decree for which various forms of reform are reformed and added provisions of the Law on People's Savings and Credit, published in the Official Journal of the Federation on 27 May 2005 and which in terms of that Decree have submitted their file to the National Banking and Securities Commission to operate as A People's Credit and Savings Entity, whether they act on their own account or, where applicable, in the form of a fiduciary, as well as to the economic promotion trusts that have the guarantee of the Federal Government in the operation in question.

The Board of Directors may determine other persons who may be considered as financial institutions, which shall be included in the assumptions of the paragraph previous.

Article 30.- The Company's operations may be entered in a private document which, without further formality, must be entered by the persons in charge of the corresponding public records, in the terms of Article 66 of the Credit Institutions Act. The provision of guarantees shall be subject to the formalities laid down by the applicable legislation.

Article 31.- The Society will have a Committee on Human Resources and Institutional Development, which will be integrated as follows: three representatives of the Secretary of Finance and Public Credit, who will be the Under-Secretary of State, the Undersecretary of Finance and Public Credit and the Holder of the Development Banking Unit; one of the Company's external advisors, appointed by its Board of Directors. Manager; a person other than the Society who, by his/her knowledge and professional development, have extensive experience in the area of human resources and appoint the aforementioned Board of Directors, on a proposal from the Director General of the Society, as well as the Director General of the Society. The decisions of the Committee shall be taken by a majority of votes. The Deputy Minister of Finance and Public Credit will serve as chairman of the Committee and will have a vote of quality in case of a tie. The Committee shall have a technical secretary, who shall have the right to express his opinion but not to vote.

The Director General shall refrain from taking part in the meetings of the Committee which are intended to issue opinions or recommendations regarding his salary, benefits economic and social security.

The Committee shall meet as many times as necessary at the request of its Chairman, the Director-General of the Society or external advisors. Those who request to hold a session of the Committee shall require the technical secretary to issue the relevant call to the members of the Committee, to which the order of the day must be accompanied, as well as the place and date for the conclusion of such a meeting. session.

This Committee will express and propose, the tabulators of salaries and benefits, wage policy and the granting of extraordinary perceptions for the fulfillment of targets subject to performance evaluation; promotion, promotion and retirement policies; selection, recruitment and training guidelines; separation criteria; and other economic and social security benefits established in the the benefit of the public servants working in the Society.

The Secretariat of Finance and Public Credit will establish criteria in terms of occupational structure, wage movements, extraordinary perceptions, and (a) benefits, which must be observed by the Committee. The Company shall also provide the Secretariat and the Secretariat with the information they request.

Except for the external counsellor and the person appointed by the Board of Directors in terms of the first paragraph of this Article, the other members of the Committee shall have their alternate members, who shall preferably be public servants of the immediate lower level following that of the owners and shall have at least the level of Director-General in the Centralised Federal Public Administration, or their equivalent.

In the event of the absence of the Deputy Secretary of Finance and Public Credit, without prejudice to the right to vote of his alternate, he shall preside over the Committee and shall exercise the vote of Holder of the Development Banking Unit.

Item 32.- (Repealed)

Article 33.- The Company shall provide the legal assistance and defense services to the members of its Board of Directors, committees established by it or provided for by legislation and to the public servants who work or have worked in the institution itself or in the insurance institutions in which the capital is involved, in respect of the acts which the persons referred to above carry out in the exercise of the functions entrusted to them by law and compliance with the guidelines issued by the Secretariat of Finance and Public Credit for this purpose.

Such legal assistance and defence shall be provided even if the persons indicated are no longer performing their duties or providing their services, as appropriate to the Company or to the insurance institutions, provided that they are acts performed in the performance of their functions or activities in the service of the Society or of the insurance institutions.

Legal assistance and defence will be provided from the resources available to the Company for these purposes, in which the assumption that the Company will be if the competent authority gives the subject of the legal aid final judgment which it causes to be enforceable against him, that subject shall reimburse the Company for the costs and any other charges incurred on the basis of the legal assistance and advocacy.

The provisions of this article shall apply without prejudice to the obligation of the subjects of legal assistance and defense to render the reports to them. required in terms of the applicable legal provisions as part of the performance of their duties.

TRANSIENT

FIRST.- This Decree shall enter into force on the day following that of its publication in the Official Journal of the Federation.

SECOND.- The Federal Mortgage Company will be a substitute for the Operation Fund and Housing Banking Finance, starting from the day its Board Director will hold his first session. The Federal Government, through the Secretariat of Finance and Public Credit guarantees the obligations of the aforementioned Fund derived from financing operations contracted prior to the entry into force of this Decree.

The Federal Government grants additional guarantees to the aforementioned Fund, for the continuation of its guarantee programs in operation, for up to six billion units (a) to enable the Fund to absorb extraordinary losses which, if appropriate, may be incurred in respect of a quantity exceeding that of the reserves, which may not be withdrawn, and should be covered at any time by the Contingencies that support such programs. The Fund shall keep the Secretariat of Finance and Public Credit informed of the development of these reserves.

The Federal Government will respond at all times to the obligations of the Company to third parties until such commitments are concluded.

Fourth paragraph.-Repeated

THIRD.- The marginal entries and annotations of any nature made in the Public Records of Property and Commerce, as well as any Other Registry, relating to the Bank of Mexico as a trustee of the Fund for Operation and Bank Financing for Housing, in respect of real estate, contracts, agreements, debt securities, commissions of a commercial character and any other others, will be understood as referring to the Federal Mortgage Society, from that it serves as a substitute trustee of that Fund, as provided for in the second transitional article of this Decree.

Also, the Federal Mortgage Society, the actions, exceptions, defenses and resources of any nature deducted in the trials and procedures will correspond to the Administrative procedures in which the Bank of Mexico, as a trustee of that Fund, has been a party, as of the date referred to in the preceding paragraph.

FOURTH.- the entry into force of this Decree, the amount of ten billion pesos, from the Fund for Operation and Banking Finance, will be transferred to the Housing a Federal Mortgage Society, to integrate the social capital of the latter.

The movable and immovable property transferred from the Bank of Mexico as a trustee of the aforementioned Fund shall also be considered as part of that capital. Federal Mortgage Company in terms of the second transient article.

QUINTO.- The first Federal Mortgage Society exercise will conclude on December 31, 2001.

SIXTH.- The Federal Mortgage Society Organic Regulation must be issued within a period not greater than 180 calendar days from the date of entry. in force of this Decree.

SEVENTH.- People who provide a personal service to the Bank of Mexico, as a fiduciary in the Operation and Financing Fund Bank to the Housing, as well as the officials who perform some position in this trust, will be part of the staff to the Federal Mortgage Society service and will retain the remuneration and benefits of which they enjoy entering into This Law is applicable. The personnel who enter to work with the Federal Mortgage Company after the entry into force of this Law shall be subject to the provisions of this Law.

EIGHTH.- Federal Mortgage Company shall not distribute dividends or decrease its capital for a period of twelve years from the entry into force of the This Law, except in the case that its Board of Directors, with the favorable opinion of two prestigious companies, considers that the Company has sufficient capital and reserves to deal with all its obligations and liabilities quotas, as well as their financing and guarantee programs.

NINTH.- Repeals.

DECIMAL.- Prior to the start of operations, other than those currently being performed by the Housing, Mortgage Society, and Operation Fund. Federal will submit to the approval of the National Banking and Securities Commission, its operating systems, information processing and internal control, as well as its organization and operation manuals.

TENTH FIRST.- The provisions that are opposed to this Law are repealed.

Mexico, D.F., at 25 September 2001.-Dip. Beatriz Paredes Rangel, President.-Sen. Diego Fernandez de Cevallos Ramos, President.-Dip. Martha Silvia Sánchez González, Secretary.-Sen. Sara Isabel Castellanos Cortes, Secretary.-Rubicas".

In compliance with the provisions of Article 89 of the Political Constitution of the United Mexican States, and for their due publication and observance, I request this Decree in the Federal Executive Branch, in Mexico City, Federal District, on the nine days of October of two thousand one.- Vicente Fox Quesada.-Rubrias.-The Secretary of the Interior, Santiago Creel Miranda.-Heading.