MEXICO
GENERAL LAW OF INSURANCE INSTITUTIONS AND MUTUAL COMPANIES

Originally published in the "Diario Oficial" of August 31, 1935, amended by Decrees published in Diarios Oficiales of the Federation of August 31, 1936, July 3, 1937, June 30, 1938, February 14, 1940, April 16, 1946, December 31, 1947, February 16, 1949, December 30, 1950, January 5, 1952, December 31, 1953, December 28, 1954, December 31, 1956, January 5, 1961, December 30, 1963, December 30 and 31, 1965, November 19, 20 and December 23, 1974, January 2, 1975, December 29, 1978, January 7 and 14 and December 31, 1981, December 27, 1983, January 14, 1985, January 3 and July 18, 1990, July 14 and December 23, 1993, November 17, 1995, May 23, 1996, January 3 and May 7, 1997, January 18, May 17 and December 31, 1999 and June 5, 2000. Many thanks to Marsha McFadden Quick, Assistant Editor, NLCIFT (http://www.natlaw.com), for helping with the compilation of this Law.

Compiled July 2001
by Foreign Tax Law, Inc.
PO Box 2189
Ormond Beach, Florida 32175-2189 USA
tel. (904) 253-5785
fax (904) 257-3003
e-mail: ftlp@foreignlaw.com
Website: http://www.foreignlaw.com

DISCLAIMER: Though every effort has been made to present the legal texts and information accurately, due to the nature and scope of the material, we cannot be liable for errors, omissions or other problems in the texts. The material offered herein is not a substitute for competent legal assistance by a licensed attorney of the jurisdiction in question.

PRELIMINARY TITLE. GENERAL PROVISIONS

SOLE CHAPTER

ARTICLE 1. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 2. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 2 BIS. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 2 BIS 1. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 2. BIS 2. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 2. BIS 3. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 2. BIS 4. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 2. BIS 5. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 3. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 4. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 5. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 6. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 7. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 8. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 9. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 10. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 11. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 12. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 13. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 14. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 15. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 16. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 16 bis. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 17. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 18. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 19. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 20. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 21. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 22. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 23. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 24. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 25. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 26. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 27. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 28. (General Law of Insurance Institutions and Mutual Companies)

FIRST TITLE. INSURANCE INSTITUTIONS

CHAPTER I. ORGANIZATION

ARTICLE 29. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 29 BIS. REPEALED. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 30. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 31. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 32. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 32 BIS. REPEALED. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 33. (General Law of Insurance Institutions and Mutual Companies)

CHAPTER I-BIS. Branches of Foreign Financial Institutions

ARTICLE 33-A. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 33-B. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 33-C. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 33-D. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 33-E. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 33-F. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 33-G. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 33-H. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 33-I. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 33-J. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 33-K. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 33-L. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 33-M. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 33-N. (General Law of Insurance Institutions and Mutual Companies)

CHAPTER II. FUNCTIONING

ARTICLE 34. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 35. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 36. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 36-A. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 36-B. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 36-C. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 37. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 38. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 39. Repealed by Decree of July 12, 1983, effective July 15, 1993. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 40. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 41. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 42. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 43. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 44. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 45. Repealed by Decree of July 12, 1993. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 45 BIS. REPEALED. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 46. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 47. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 48. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 49. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 50. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 51. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 52. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 52 Bis. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 52 Bis-1. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 52 Bis 2. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 53. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 54. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 55. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 56. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 57. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 58. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 59. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 60. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 61. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 62. (General Law of Insurance Institutions and Mutual Companies)

CHAPTER III. GENERAL PROVISIONS

ARTICLE 63. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 64. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 65. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 66. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 67. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 68. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 69. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 69 Bis. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 70. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 71. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 72. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 73. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 74. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 75. (General Law of Insurance Institutions and Mutual Companies)

CHAPTER IV. REINSURERS

ARTICLE 76. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 76-A. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 77. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 77 BIS. REPEALED. (General Law of Insurance Institutions and Mutual Companies)

SECOND TITLE. MUTUAL INSURANCE COMPANIES

CHAPTER I. ORGANIZATION (Mutual Insurance Companies)

ARTICLE 78. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 79. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 80. (General Law of Insurance Institutions and Mutual Companies)

CHAPTER II. FUNCTIONING (Mutual Insurance Companies)

ARTICLE 81. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 82. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 83. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 84. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 85. Repealed by Decree of July 12, 1993. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 85 BIS. REPEALED. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 86. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 87. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 88. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 89. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 90. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 91. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 92. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 93. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 94. (General Law of Insurance Institutions and Mutual Companies)

CHAPTER III. GENERAL PROVISIONS (Mutual Insurance Companies)

ARTICLE 95. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 96. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 97. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 98. (General Law of Insurance Institutions and Mutual Companies)

THIRD TITLE. ACCOUNTING, INSPECTION OR AUDIT

CHAPTER I. ACCOUNTING

ARTICLE 99. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 100. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 101. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 102. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 103. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 104. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 105. (General Law of Insurance Institutions and Mutual Companies)

CHAPTER II. INSPECTION AND AUDIT

ARTICLE 106. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 107. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 108. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 108 A. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 108 B. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 108 C. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 109. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 110. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 111. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 112. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 113. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 114. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 115. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 116. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 117. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 118. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 118 BIS. REPEALED. (General Law of Insurance Institutions and Mutual Companies)

FOURTH TITLE. WINDING UP OF INSURANCE INSTITUTIONS

SOLE CHAPTER

ARTICLE 119. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 120. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 121. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 122. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 123. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 124. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 125. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 126. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 127. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 128. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 129. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 130. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 131. (General Law of Insurance Institutions and Mutual Companies)

FIFTH TITLE. FACULTIES OF THE AUTHORITIES, PROCEDURES AND SANCTIONS

CHAPTER I. FACULTIES OF THE AUTHORITIES

ARTICLE 132. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 133. REPEALED. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 134. Repealed by Decree of Dec. 20, 1984. (General Law of Insurance Institutions and Mutual Companies)

CHAPTER II. PROCEDURES

ARTICLE 135. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 135 bis. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 136. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 137. (General Law of Insurance Institutions and Mutual Companies)

CHAPTER III. INFRACTIONS AND OFFENSES

ARTICLE 138. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 139. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 139 BIS. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 140. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 141. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 142. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 143. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 144. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 145. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 146. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 146 Bis. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 147. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 147 Bis. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 147 Bis-1. (General Law of Insurance Institutions and Mutual Companies)

ARTICLE 147 Bis-2. (General Law of Insurance Institutions and Mutual Companies)

TRANSITORY ARTICLES

Transitory Article 1. (General Law of Insurance Institutions and Mutual Companies)

Transitory Article 2. (General Law of Insurance Institutions and Mutual Companies)

Transitory Article 3. (General Law of Insurance Institutions and Mutual Companies)

Transitory Article 4. (General Law of Insurance Institutions and Mutual Companies)

Transitory Article 5. (General Law of Insurance Institutions and Mutual Companies)

Transitory Article 6. (General Law of Insurance Institutions and Mutual Companies)

Transitory Article 7. (General Law of Insurance Institutions and Mutual Companies)

Transitory Article 8. (General Law of Insurance Institutions and Mutual Companies)

Transitory Article 9. (General Law of Insurance Institutions and Mutual Companies)

PRELIMINARY TITLE. GENERAL PROVISIONS
SOLE CHAPTER
ARTICLE 1. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees of April 16, 1946, December 31, 1956, January 7, 1981, December 31, 1999) This Law is of public interest and its object is to regulate the organization and functioning of insurance institutions and mutual insurance companies; the activities and operations that they may carry out; as well as well as the activities and operations of insurance agents and other persons related to the insurance activity, in protection of the interests of the public that uses the corresponding services.

National insurance institutions shall be regulated by their special laws and, in the absence of the latter, or if there is lack of a provision, by the present statute.

ARTICLE 2. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decree of December 28, 1989, effective January 4, 1990) The Secretary of Finance and Public Credit shall be the competent organ to interpret, apply and resolve for administrative purposes anything related to the precepts of this Law, and in general for anything in reference to insurance institutions and mutual companies. For these purposes it may request the opinion of the National Insurance and Bonds Commission of the Bank of Mexico or any other organization or office when deemed necessary due to the nature of the cases which so merit.

Adoption of all measures relative to the creation and the functioning of national insurance institutions shall be exclusively the competence of the above- mentioned Secretary of Finance and Public Credit.

In the application of the present Law, the Secretary of Finance and Public Credit with the intervention, as the case may be, of the National Banking and Insurance Commission, must provide a balanced development of the insurance system, and a healthy competition among the insurance institutions which make it up.

ARTICLE 2 BIS. (General Law of Insurance Institutions and Mutual Companies)
(Added by Decree of December 31, 1999) Unless another period is established in specific dispositions, the period for the administrative authorities to resolve whatever may correspond, may not exceed 8 months. Once the applicable period has elapsed, decisions shall be understood by the promoter as negative, unless the contrary prevails in the applicable dispositions. Upon petition of the interested party, the latter must be issued verification of that circumstance within the two working days following the filing of the respective application before the competent authority that must resolve, pursuant to the respective Internal Regulation; verification for the same purpose must be issued when the specific dispositions provide that once the applicable period has elapsed the decision must be understood as positive. If the verification mentioned is not issued in the cited period, the resulting liability shall be awarded, if applicable.

When the initial application did not contain the data or did not comply with the requirements provided in the applicable dispositions, the authority must caution the interested party in writing, once only, that he must correct the omission within a term that may not be less than ten working days. Unless another period is established in specific dispositions, that caution must be made no later than within one-half of the period of reply of the authority and, when the latter is not expressed, within the 20 working days following the filing of the initial application.

If the authorities do not make the requirement for information within the corresponding period, they may not reject the initial application for being incomplete.

Unless there exists an express disposition to the contrary, the periods within which the authorities shall reply shall commence to run the working day immediately following the filing of the corresponding application.

ARTICLE 2 BIS 1. (General Law of Insurance Institutions and Mutual Companies)
(Added by Decree of December 31, 1999) Notifications, summons, citations, requirements, request for reports or documents and final administrative decisions may be carried out:

I. Personally to whomever the proceeding is intended, at the domicile of the interested party;

II. By means of an official letter delivered by messenger or certified post, with acknowledgment of receipt, telefax or any other method by which the receipt thereof can be authentically verified.

III. When the interested party or his legal representative goes to the domicile of the authority and acknowledges receipt of the respective official letter; and

IV. By edict, when the domicile of the interested party is unknown or in the case in which the person who must be notified has disappeared, his domicile is unknown or is abroad without having a legal representative.

In the case of acts other than those stipulated above, the notifications may be carried out by ordinary mail, messenger, telegram or, through telefax, after a written application of the interested party..

Unless a legal impediment exists to do so, the final administrative decision must be notified to the interested party by means of certified mail or messenger, with acknowledgment of receipt in both cases, provided and when the petitioners have attached the payment voucher for the respective service upon filing the procedure.

ARTICLE 2. BIS 2. (General Law of Insurance Institutions and Mutual Companies)
(Added by Decree of December 31, 1999) In the procedures to which article 3, item III, No. 2, articles 11, 20, 27, 28, 29 except the procedures of constitution of insurance institutions and mutual companies and enlargement of operations and branches, 33H, 35, item VIII, 44, 62, items X and XI, 65, and 105, penultimate paragraph, refer, the period for the administrative authorities to decide upon the case may not exceed four months, the other rules to which article 2 Bis of this Law refers being applicable.

ARTICLE 2. BIS 3. (General Law of Insurance Institutions and Mutual Companies)
(Added by Decree of December 31, 1999) The administrative authorities competent to attend to the procedures established in this Law, or in the provisions deriving therefrom, may, by means of general rulings published in the Diario Oficial of the Federation, decrease the periods established therein.

ARTICLE 2. BIS 4. (General Law of Insurance Institutions and Mutual Companies)
(Added by Decree of December 31, 1999) Upon petition of an interested party, the competent administrative authorities may increase the periods established in this Law, provided that said increase shall not in any case exceed one-half of the period originally provided in the applicable provisions, when the matter thus requires it and there is no knowledge that the rights of third parties would be prejudiced.

ARTICLE 2. BIS 5. (General Law of Insurance Institutions and Mutual Companies)
(Added by Decree of December 31, 1999) That which is established in articles 2 Bis, 2 Bis3 and 2 Bis 4, shall not be applied to the provisions to which the sole Chapter of the Fourth Title and Chapters II and III of the Fifth Title of this Law refer, as well as articles 75, 97, 112, 113, 114, 115, 116, 117 and 118.

ARTICLE 3. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees of Apr. 16, 1946, May 1, 1952, Dec. 31, 1953, Dec. 31, 1956, Jan. 7, 1981, Jan. 14, 1985, July 12, 1993, December 23, 1993, Jan. 3, 1997, Dec. 31, 1999) In insurance activity:

I. The practice of any insurance operation in Mexican territory shall be prohibited to any individual or legal entity other than those set forth in Article 1 of this Law;

For the purposes of this Law, an active insurance operation shall be considered as being carried on when, in case a future uncertain event occurs, a person is obligated to cover damages for another, directly or indirectly or to pay a sum of money thereto in exchange for payment of a quantity of money.

The marketing of future goods or services shall not be considered an active insurance operation, when the fulfillment of the obligation agreed upon will be satisfied by resources and installations belonging to whoever offers the good or the service, notwithstanding that it depends upon the realization of a future uncertain event, provided that no damage or payment of a cash sum was promised as compensation. Nevertheless, even when they are satisfied through their own resources and installations, if the rendering of services are directed to caution or restore safety through actions that are carried out in benefit of the insured, by means of the payment of an amount of money, pursuant to that which is established in articles 7, item II, letter c) and 8, item V, of this Law, it shall be considered as an active insurance operation.

II. It is prohibited to contract with foreign enterprises:

1. Personal insurance when the insured is in the Republic at the execution of the contract;

2. Repealed by Decree of December 15, 1993, published in Diario Oficial of December 23, 1993.

3. Insurance on the hulks of ships or airplanes, and any kind of vehicles, against maritime and transport risks, provided that those ships, airplanes or vehicles are of Mexican registration or owned by persons domiciled in the Republic;

4. Credit insurance, when the insured is subject to Mexican legislation;

5. Civil liability insurance on risks derived from events which might occur in the Republic; and

6. Other insurance against risks which might occur in Mexican territory. Insurance that non-residents contract outside of Mexican territory for themselves or for their vehicles to cover risks during possible internments shall not be considered as such insurance.

III. The Minister of Finance and Public Credit may exempt the following cases from that which is provided in the preceding items:

1. Foreign enterprises that, with the prior authorization of the aforementioned Minister and in compliance with the requirements established thereby, conclude insurance contracts in national territory protecting against those risks that may only occur in the foreign countries in which they are authorized to furnish insurance services.

The Minister of Finance and Public Credit, with the prior opinion of the National Insurance and Bonds Commission, may revoke the authorization granted in the terms of the preceding paragraph when it considers that the interest of users of insurance services are in danger, after hearing the enterprise in question; and

2. A person who proves that none of the insurance enterprises authorized to operate in the country can or deem it convenient to carry on a certain insurance transaction that had been proposed to them. In this case, a specific authorization may be granted discretionally for the person to contract with a foreign enterprise either directly or through an insurance institution of the country; and

IV. All persons shall be prohibited from offering directly or as an intermediary, within the national territory, by any public or private means, the operations to which the first paragraph of item I and item II of this article refer, as well as from offering insurance on property which shall be transported from Mexican territory to a foreign territory and vice versa.

Contracts concluded against the prohibitions of this article shall not produce any legal effect, without prejudice to the right of the contracting party or insured to claim refund of the premiums paid and, regardless of the liabilities which the person or entity in question shall incur in good faith before the contracting party, insured or beneficiary or their successors, and of the sanctions to which said person or entity shall be subject to in the terms of this Law.

The provision of the preceding paragraph shall not be applicable to insurance contracted with the specific authorization of the Secretary of Finance and Public Credit, to which this article refers.

ARTICLE 4. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees effective April 16, 1946, January 7, 1981 and Jan. 3, 1997) Insurance operations which are executed in national territory shall be considered subject to the provisions of Mexican Laws.

The operations provided in No. 1 of item III of the preceding article shall not be subject to the system established thereby for mutual insurance institutions and societies.

ARTICLE 5. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees effective Apr. 16, 1946, Dec. 31, 1956, Dec. 23, 1974, Jan. 7, 1981 and January 3, 1990) In order to organize and function as an insurance institution or mutual insurance company, authorization of the Federal Government is required, the latter being competent to grant such decision to the Secretary of Finance and Public Credit.

ARTICLE 6. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees effective Jan. 7, 1981 and January 3, 1990) The Federal Government through the Secretary of Finance and Public Credit may grant authorizations for insurance institutions to carry on re-bonding transactions, at his discretion.

ARTICLE 7. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees of Jan. 7, 1981, Jan. 3, 1990, July 14, 1993, May 23, 1996, Jan. 3, 1997, Dec. 31, 1999) The authorizations to be organized and function as an insurance institution or mutual company are by their own nature non- transferable, and shall refer to one or more of the following insurance operations:

I. Life;

II. Accidents and Sickness in any one or more of the following classes:

(a) Personal accidents;

(b) Medical expenses; and

(c) Health;

III. Damages, in any one or more of the following fields:

(a) Civil Liability and occupational risks;

(b) Maritime and transport;

(c) Fire;

(d) Agriculture and livestock;

(e) Automobiles;

(f) Credit;

(g) Miscellaneous;

(h) Earthquakes and other catastrophic risks; and

(i) Special fields as declared by the Secretary of Finance and Public Credit, in accordance with the provision in Article 9 of this Law.

Authorizations may also be granted to practice reinsurance exclusively, in any one or more of the operations mentioned in this article or in accordance with that which is stipulated in Article 76-A of this Law.

In the case of insurance related to insurance contracts based on pension or survivors' plans derived from the social security laws and those referred to in the second paragraph of item I of article 8 of this Law, the authorizations shall be granted only to insurance institutions that work exclusively with such plans, provided that they may not be authorized for any other operation among those stipulated in this article.

The branch of health insurance to which letter c), item II of this article and item V of article 8 of this Law refer, must only be practiced by insurance institutions authorized exclusively for that purpose, which additionally only may be authorized to practice in the branch of medical expenses. The operation and development of the branch of health insurance shall be subject to the general provisions issued by the Minister of Finance and Public Credit, with a prior opinion of the National Commission of Insurance and Bonds and of the Minister of Health, as the case may be.

Authorizations granted to insurance institutions may include the practice of the transactions of re-bonding, in the terms of the preceding article.

ARTICLE 8. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees of Aug. 31, 1936, Apr. 16, 1946, Dec. 31, 1947, Dec. 23, 1974, July 1, 1981, July 14, 1993, May 23, 1996, Jan. 3, 1997) The insurance contained within the list of operations and fields in the preceding article, are the following;

I. For life insurance transactions, those whose contract is based on risks which might affect the person of the insured in his existence. The additional benefits which, based on health or personal accidents, are included in regular life insurance policies, shall be considered as included within these transactions.

Also, insurance contracts which are based on pension or survivorship plans related to the age, pension or retirement of persons, as well as those under private schemes or derived from the social security laws, shall be considered as included within these operations;

II. For pension insurance derived from the social security laws, the payment of the periodic revenue during the life of the insured party or the lives of his beneficiaries in accordance with the insurance contracts concluded in the terms of the applicable law;

III. For personal accidents, insurance contracts which are based upon the injury or incapacity which affects personal wholeness, health, vigor or vitality of the insured, as a consequence of an external violent, sudden and fortuitous event;

IV. For medical expenses, insurance contracts whose object is to cover expenses of doctors, hospitals and others necessary for the recovery of health or vitality of the insured;

V. For health insurance, insurance contracts whose object is the furnishing of services directed to the prevention of illness or restoration of health, through actions that are carried out in benefit of the insured;

VI. For the field of civil liability and occupational risks, the payment of the indemnification which the insured owes to a third party as a consequence of an act which caused a damage provided in the insurance contract;

VII. For the maritime and transportation field, the payment of the indemnification for damages and losses suffered by personal property and movables which are being transported. The hulks of ships and airplanes may also be insured, in order to obtain payment of the indemnification for damages or loss of one or the other, or for the damages and losses caused to the property of another or to the functioning of third persons. In such cases, the additional benefit of civil liability may be included in the regular policies issued;

VIII. For the field of fire insurance, those which are based on the indemnification of all the damages and losses caused by fire, explosion, lightning or accidents of a similar nature;

IX. For the field of agricultural and livestock insurance, the payment of indemnification or compensation of investments, for damages or losses which the insured sustains through the partial or total loss of profits expected from the land or through the death, loss or damages to their animals;

X. For the field of automobile insurance, the payment of the indemnification corresponding to the damages or loss of the automobile, and the damages or losses caused to the property of another or to third persons through the use of the automobile. The insurance institutions and mutual companies which carry out activities in this field, may consequently, include the additional benefit of civil liability in the regular policies which they issue;

XI. For the field of credit insurance, the payment of the indemnification of a proportional part of the losses which the insured suffered as a consequence of the total or partial insolvency of his clients who are commercial loan debtors;

XII. For the field of miscellaneous insurance, the payment of the indemnification due for damages and losses occasioned by persons or things for any other eventuality; and

XIII. For the field of earthquake and other catastrophic risks insurance, the insurance contracts that cover damages and losses occasioned to persons or things as a consequence of unpredictable events of such periodicity and severity that they generally produce an accumulation of liabilities for insurance enterprises by their coverage.

ARTICLE 9. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees of Jan. 7, 1981, January 3, 1990) The Secretary of Finance and Public Credit shall be enabled to resolve which risks may be covered within each one of the operations or fields mentioned in the preceding article, provided that the risks not listed have the technical characteristics of those consigned for each operation or field; as also to set forth the fields in which the additional benefit of civil liability may be included.

When any class of risk of those contained in the fields to which the preceding article refers, acquires an importance which might result in its being considered as an independent field, the Secretary of Finance and Public Credit may declare that class as a special field for the purposes of Articles 7 and 8 of this Law.

ARTICLE 10. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decree of Jan. 7, 1981) For the purposes of this Law the following shall be understood:

I. Coinsurance: the participation of two or more insurance enterprises in the same risk, by virtue of direct contracts carried out by each one of them with the insured;

II. Reinsurance: a contract by virtue of which an insurance enterprise takes upon itself, totally or partially, a risk already covered by another, or the remnant of damages which exceed the amount insured by the direct insurer; and

III. Counter- insurance: the agreement by virtue of which an insurance enterprise is obliged to restore to the contracting party the premiums or quotas paid or covered, when certain determined conditions are met.

ARTICLE 11. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees of Apr. 16, 1946, Dec. 31, 1956, Dec. 20, 1974, Jan. 7, 1981, Jan. 3, 1990) Societies formed by insurance institutions authorized for the purpose of rendering an insurance service to a certain sector of economic activity in a habitual manner, in the name of and for the account of such insurance institutions, or to execute in representation of the same, contracts of reinsurance or coinsurance necessary for the greater distribution of risks, are auxiliary insurance organizations.

The societies to which the preceding paragraph refers shall be organized as companies, upon authorization of the Secretary of Finance and Public Credit, and their operations shall be regulated by the provisions of this Law which are applicable, and by general rules to that effect handed down by the mentioned Secretary.

The societies' sole object shall be to act as auxiliary insurance organizations in the terms of the first paragraph of this article and shall be subject to the inspection and auditing of the National Banking and Insurance Commission.

The insurance institutions which form a society (consorcio) shall be obligated in the terms and proportions agreed upon.

ARTICLE 12. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees of Apr. 16, 1946, Dec. 31, 1956, Jan. 7, 1981) Group insurance or enterprise and popular insurance, as well as that which the Law establishes as obligatory, shall be carried by the insurance institutions and mutual companies in accordance with this Law and other respective legal and administrative provisions.

ARTICLE 13. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees of Apr. 16, 1946, Jan. 5, 1961, Dec. 30, 1965, Jan. 7, 1981, Jan. 14, 1985, Jan. 3, 1990) Associations, which without issuing policies or contracts, grant insurance to their members in case of death, benefits in case of accidents or sickness or indemnifications for damages, excepting coverages of catastrophic nature or of high risk by amount or accumulations, may operate without being subject to the requirements demanded by the present Law, but must submit to the general rules which are issued by the Secretary of Finance and Public Credit, which shall fix the bases which shall provide that when the number of associates, the frequency and importance of the insurance that they grant and the indemnities paid warrant it, the same Secretary shall order that such associations shall adjust themselves to the present Law, being converted into mutual insurance companies.

ARTICLE 14. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees of Apr. 16, 1946, Jan. 7, 1981) As long as the insurance institutions and mutual companies are not in liquidation or declared in bankruptcy, they shall be considered as accredited solvent, and shall not be obligated to make deposits or take out legal bonds or guaranties, with the exception of the liabilities which they may derive from labor judgments, sequestration or from fiscal debts.

ARTICLE 15. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees of Apr. 16, 1946, Jan. 7, 1981, Jan. 14, 1985, Jan. 3, 1990) Acquisition of control of 10% or more of stock representative of the paid in capital of an insurance institution, or of one of the companies to which letter b) of item II of article 29 of this Law refers, by means of one or more operations of any nature, simultaneous or successive, must be submitted to prior authorization of the Secretary of Finance and Public Credit, which shall be granted or refused at its discretion.

ARTICLE 16. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees of Apr. 16, 1946, Jan. 7, 1981, January 3, 1990, Dec. 31, 1999) The request for authorization must be accompanied by the Articles of Association or the Partnership Contract; a plan of activities which as a minimum, contemplates the initial capital or partnership assets, geographical area to be covered and programs of technical operation, employment of insurance and administrative organization; as well as proof of having made a deposit in national currency or in State securities, for their market value, equal to 10% of the minimum capital with which it must operate, in accordance with this Law, in Nacional Financiera, S.A. The respective authorization shall be subject to the condition that the insurance enterprise shall be organized and shall commence operation within the periods to which item I of Article 75 and item I of Article 97 of this Law refer. This deposit shall be refunded at the commencement of the operations or at the refusal of the or authorization, but shall be applied to the federal treasury if granted the same, the referred condition is not fulfilled. In the case in which the authorization is refused, the authority may withhold up to 10% of the deposit from the petitioner, and apply it to the federal treasury by reason of the expenses of the procedure.

In order to form an insurance institution to operate in the health insurance sector, the request for authorization, in addition to the provisions in the first paragraph of this article, must be accompanied by a provisional report issued by the Minister of Health, after payment of the corresponding duties, which must not be more than 60 calendar days after expedition thereof, in which it shall be recorded that the institution has the necessary elements to be able to render the services that are the matter of the insurance policies to which article 8, item V, of this Law refers, or that it can sub-contract those services. The final decision issued by the Minister of Health, after the payment of the corresponding duties, must be filed in accordance with article 75, item II Bis, letter a).

The deposit dealt with in this article shall not be required when an operating insurance institution or mutual company requests to extend its purpose in order to practice operations or fields different from those for which it has already obtained concession or authorization in the terms of this Law.

ARTICLE 16 bis. (General Law of Insurance Institutions and Mutual Companies)
(Added by Decree of June 6, 2000) The reports to which the preceding article and article 105 of this Law refer must contain at least the following requirements:

I. That the material and human resources, whether those of the company or contracted with third parties, shall be sufficient to comply with the plans offered to the people who the institution seeks to insure, in accordance with the plans and coverages that it seeks to offer or operate.

II. That the manuals of organization and procedure in respect to the furnishing of health services that it offers are available.

III. That the institution, upon rendering its services, complies with the requirements established in the Official Mexican Standards applicable to health matters, derived from the General Health Law.

IV. That the health professionals, contracted by the institution, who render the services to the contracting parties or insured parties or their beneficiaries, are legally certified to possess the technical medical knowledge.

V. That the freedom of clinical judgment of the doctor is safeguarded at all times in the health plans that the institution markets, provided and when such clinical judgment is applied with a foundation in medical practice recognized by the scientific academies and based on medical ethics.

VI. That the institution possesses plans that consider and give incentives for services of health promotion and preventive attention of its insureds, attending to the Official Mexican Standards in the matter derived from the General Health Law.

VII. That the institution possesses a responsive and opportune mechanism to carry out the procedure and follow-up on the receipt and attention to complaints and claims of its insureds.

VIII. That the institution possesses a program for the continuous improvement in the rendering of services.

ARTICLE 17. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees of Apr. 16, 1946, Dec. 31, 1956, Dec. 30, 1965, Jan. 7, 1981, Jan. 3, 1990) Authorizations to be organized and function as insurance institutions or mutual companies shall be published in the "Diario Oficial" of the Federation; also to be published therein are the modifications to the same. Agreements of revocation shall be published without cost to the corresponding institution or mutual company.

ARTICLE 18. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees of Apr. 16, 1946, Jan. 7, 1981) The negative of micro-photographic copies made by insurance enterprises from the documents in their possession, for the purpose or in relation with the acts of the enterprise, which the National Banking and Insurance Commission requires, shall have the same evidentiary value in court as microfilmed documents.

ARTICLE 19. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees of Apr. 16, 1946, Jan. 7, 1981) The powers which insurance institutions and mutual or partnership agreement concedes to the council on the particular and to the verification of the nomination of the members of the board, shall not require insertions other than those relative to the agreement of the council which has authorized the granting of the mandate.

ARTICLE 20. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees of Apr. 16, 1946, Dec. 31, 1956, Jan. 7, 1981) The words "insurance", "reinsurance", "assurance" or others which express similar ideas in any language, may only be used in the name or firm name of the enterprises to which Articles I and II of this Law refer.

Intermediaries, adjustors and other persons or enterprises whose activities are subject to this Law or to the administrative provisions which derive from the same, are excepted from the application of the preceding paragraph; when they are accredited with the corresponding authorization, as well as with the associations of insurance institutions or other persons which are authorized by the Secretary of Finance and Public Credit for those purposes, provided that they do not carry out active insurance operations.

The use of the word "national" is prohibited in the trade name of insurance enterprises which do not have that character.

ARTICLE 21. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees of Apr. 16, 1946, Dec. 31, 1956, Dec. 20, 1974, Jan. 7, 1981, Jan. 3, 1990) Articles of association or their amendments of companies in whose name, firm name or trade name any of the words to which the preceding article refers, are used, may not be inscribed on the Public Property and Commerce Registry; neither may those whose object is the operation of an insurance business of any kind be inscribed, if the official documents substantiating the existence of the authorization required by this Law are not inserted.

It must also be substantiated that the articles of association or their amendments of insurance institutions or the partnership agreement or its amendments of mutual insurance companies, have been approved by the Secretary of Finance and Public Credit in the terms of Articles 29, item IX and 78, item XVI, of this Law, without which such registrations shall not produce legal effects.

ARTICLE 22. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decree of Jan. 7, 1981) The Secretary of Finance and Public Credit, at any time, may request certificates with respect to the assets or credits of insurance institutions or mutual companies, from the Public Property and Commercial Registry.

ARTICLE 23. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees of Jan. 7, 1981, Jan. 3, 1990, Dec. 31, 1999) For the purposes of this Law, individuals or legal entities which intervene in the contracting of insurance by means of the interchange of proposals and acceptances, and in the advising of the execution of contracts, their conservation or modification, for the greater convenience of the contracting parties, shall be considered insurance agents.

Intermediation of insurance policies that are not of the nature of adhesion contracts, is reserved exclusively to insurance agents; intermediation of those that are of the nature of adhesion contracts may also be carried out through the legal persons provided in the last paragraph of article 41 of this Law.

In order to carry out the activity of an insurance agent, authorization of the national Banking and Insurance Commission is required, which shall grant it or refuse it at its discretion and, after hearing the interested party, may suspend it for up to two years or revoke, in addition to applying admonitions and fines to such agents, in the terms of this Law and the respective Regulation. The authorizations shall be for one or more operations or fields; nevertheless, in the case of intermediation in pension insurance derived from the social security laws, authorizations shall only be granted for intermediating such insurance in respect of only one insurance institution, in addition to which they may be granted authorizations to carry out their activities in other operations or fields, with various institutions.

Authorizations shall be non- transferable and may be granted to the following persons when they satisfy the requirements which are established in the respective Regulation:

(a) Individuals who are employees of insurance institutions in order to carry out that activity;

(b) Individuals who shall be carrying out that activity through mercantile contracts; and

(c) Legal entities which are to be constituted in order to operate that activity.

The activities which insurance agents carry out shall be subject to the provisions of this Law and to the respective Regulation, to the general policy orientations set forth by the Secretary of Finance and Public Credit in insurance matters, and to the inspection and auditing of the National Banking and Insurance Commission. The provision of Article 71 of this Law shall also be applicable to them.

Insurance agents must meet the requirements demanded by the Respective Regulation, but in no case may persons who by their position or through any other circumstance exercise coercion in the contracting of insurance, be authorized.

Agents of insurance institutions shall give notice to the National Commission of Insurance and Bonds at least 10 days in advance of the change of location of the establishment or close of their offices. They shall likewise give the notice to their insureds.

ARTICLE 24. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees of Apr. 16, 1946, Dec. 31, 1956, Jan. 7, 1981, Jan. 3, 1990, July 14, 1993) Insurance agents must inform in writing and fully in detail whoever desires to contract insurance, on the actual balance of its coverage and the conditions of keeping it or of terminating it. They shall furnish the insurance institution with the authentic information in their possession relative to the risk whose coverage is proposed, in order that the institution might form a judgment on its characteristics and to fix adequate premiums and conditions in accordance with the respective norms. In carrying out their functions they must assign the rates, policies, endorsements, insurance plans and other circumstances utilized by the insurance institutions in the terms of Articles 36, 36-A and 36-B of this Law.

Insurance agents may not intervene in the contracting of insurance as determined in the respective Regulation, when their intervention may implicate situations of coercion or default of generally accepted professional practices in the development of the activity.

Insurance agents shall not furnish false data to the insurance institutions, which might in any way be detrimental or adverse to the latter.

ARTICLE 25. (General Law of Insurance Institutions and Mutual Companies)
In order to carry out the activity of insurance adjuster, authorization of the National Banking and Insurance Commission shall be required, which shall grant or refuse at its discretion, and which may revoke, after hearing the interested party, in the terms of the respective Regulation.

The activities which insurance adjustors carry out shall be subject to the provisions of this Law and of the respective Regulation, to the general policy orientations set forth by the Secretary of Finance and Public Credit in insurance matters, and to the inspection and auditing of the National Banking and Insurance Commission. The provision of Article 71 of this Law shall also be applicable to them.

Insurance adjustors must meet the requirements which the respective Regulation demands, but in no case may persons who by their position or through any other circumstance may exercise their position or through any other circumstance may exercise coercion or act against generally accepted professional practices affecting the results of the adjustment, be authorized.

ARTICLE 26. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees of Jan. 7, 1981, Jan. 3, 1990, July 14, 1993, Jan. 3, 1997) With the exceptions established in applicable international treaties and agreements, insurance institutions and mutual companies may only use the services of intermediaries domiciled in the country for the execution of the operations of reinsurance, provided and when said intermediaries have the authorization of the National Commission of Insurance and Bonds, which shall grant it or refuse it discretionally, in the terms of the general rules handed down by the Minister of Finance and Public Credit. The Commission may revoke said authorization after a hearing of the interested party.

Intermediaries to which this article refers shall adjust their activities to the rules mentioned above, submitting to the inspection and supervision of the National Commission of Insurance and Bonds and that which is provided by articles 71 and 100 of this Law shall also be applicable to them.

In no case may anyone be authorized whose position or any circumstance might put him in a position to exercise coercion in the contracting of insurance.

ARTICLE 27. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees of Jan. 7, 1981, December 20, 1986, effective January 15, 1985, Decree of December 28, 1989, effective January 4, 1990; Decree of Dec. 27, 1996, published and effective Jan. 3, 1997) The Secretary of Finance and Public Credit shall keep the General Register of Foreign Reinsurance, in accordance with the provision of this Law and in the general rules pronounced by the same Secretary for that purpose.

Inscription in the Register shall be granted or refused at the discretion of the Secretary of Finance and Public Credit to first class foreign reinsurers, which in its judgment meet the requirements of solvency and stability in order to effect the operations and fulfill the objectives referred to in Article 37 of this Law.

For the purposes of that which is provided in the preceding paragraph, the interested parties must file the documentation with the Secretary of Finance and Public Credit that accredits the fulfillment of the requirements that the law of the country of their domicile requires in order to operate with Mexican insurance institutions, as well as to accredit that they have the minimum qualification as determined by the same Secretary, authorized by a party of a specialized qualifying enterprise, and file the reports which it requests with respect to their financial situation and other necessary data to verify the requirements set forth in the preceding paragraph.

Registered reinsurers must be subject to the directions of general policy set forth by the Secretary of Finance and Public Credit in insurance matters.

Inscription in the Register may be cancelled at the discretion of the Secretary of Finance and Public Credit, after a hearing of the interested party, when the reinsurer fails to satisfy or comply with the requirements or obligations established by the legal and administrative provisions applicable.

In order that an insurance institution might conclude a reinsurance contract with any foreign reinsurer, it shall be necessary that the latter be recorded in the General Register to which this article refers.

ARTICLE 28. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees effective Jan. 7, 1981, Jan. 3, 1990, July 14, 1993) The Secretary of Finance and Public Credit may authorize the establishment of representation offices in the Republic of foreign reinsurers. Such offices may only act in the name and on behalf of those whom they represent in the acceptance or transfer of reinsurance liabilities and insofar as they abstain from acting, directly or through an interposed person, in any transaction set forth in Article 3 of this Law, whether on their own behalf or on behalf of another, as well as furnishing information or managing or taking any steps in this type of operations.

The activities which the representative offices in question carry out shall be subject to the rules which the Secretary of Finance and Public Credit issues, to the general policy directions which the same Secretary sets forth in insurance matters, and to the inspection and auditing of the National Banking and Insurance Commission. The provision of Article 71 of this Law is also applicable to them.

The Secretary of Finance and Public Credit may revoke the corresponding authorizations at its discretion, without prejudice to the sanctions established in the present Law and in other legal orders, as well as to the civil and penal liabilities incurred by the officials or the institutions, as the case may be.

FIRST TITLE. INSURANCE INSTITUTIONS
CHAPTER I. ORGANIZATION
ARTICLE 29. (General Law of Insurance Institutions and Mutual Companies)
(Amended by Decrees effective Dec. 31, 1956, Jan. 7, 1981, Jan. 3, 1990, July 14, 1993, Dec. 23, 1993, Nov. 17, 1995, May 23, 1996, Oct. 3, 1997, Dec. 31, 1999) Insurance institutions must be constituted as corporations (sociedades anonimas) with fixed or variable capital, subject to the General Law of Mercantile Companies in matters not provided in this Law, particularly the following:

I. The institutions shall have a minimum paid-in capital, expressed in Investment Units, for each authorized operation or branch, which capital shall be covered, in national currency, in the time period specified in this subsection and which shall be determined by the Secretariat of Finance and Public Credit during the first quarter of every year, which determination shall be made considering, among other things, the resources that are necessary to support the adequate rendering of services that the insured activity requires, the amount of paid-in capitals and capital reserves with which the group of institutions that comprise the system of insurers operates, the country’s economic situation and the principle of promoting the healthy, equilibrated development of the system and adequate competition.

The minimum capital must be totally subscribed and paid up no later than June 30 of the year in which the Secretary of Finance and Public Credit had established it. When the capital stock exceeds the minimum at least 50% of it must be paid up, provided that this percentage is not less than the minimum established.

When the financial situation of an insurance institution so merits, the Secretary of Finance and Public Credit may extend the period to which the preceding refers up to 6 more months, without prejudice to that which is established in Article 74 of this Law.

Except as provided in the preceding paragraph, the value of the shares must be entirely covered in cash in the act of being subscribed.

The capitalizations derived from profits and surplus due to the revaluation of real property shall be subject to the general provisions the National Commission of Insurance and Finances issues for such purpose.

In the case of companies with variable capital, the obligatory minimum capital shall be composed of shares without withdrawal rights. The amount of the capital with withdrawal rights may in no case be greater than the paid up capital without withdrawal rights.

Shares that are subscribed must be fully paid up.

The institutions may issue shares without par value, as well as preference shares or shares with limited voting rights. If more than one series of shares exist, the percentage of the capital stock which may correspond to each series must be expressly indicated.

The capital stock of insurance institutions may be composed of a portion represented by shares with limited voting rights up to an amount equivalent to 30% of paid up capital, with prior authorization of the Secretary of Finance and Public Credit. The acquisition of stock with limited voting rights shall not be subject to the limits established by article 15 and No. 2 of item II of this article. These stocks shall not be counted for the purpose of the limit established in the third paragraph of No. 1, item II of this article.

The shares with limited voting rights shall grant a voting right only in matters relative to change of purpose, merger, spin-off, transformation, dissolution and liquidation, as well as cancellation of registration on any securities exchange.

Shares with limited voting rights may confer a right to receive a preferential and accumulative dividend, as well as higher dividend than that of common stocks, provided and when it is so established in the by-laws of the issuing institution. In no case may the dividends from this type of shares be less than those of other classes of shares.

The amounts which subscribers of shares pay on their nominal value for premiums or other similar payments, shall be kept in a special reserve fund, and may only be computed as capital for the purposes of determining the minimum capital required by this Law.

The accumulated losses registered by an insurance institution shall be applied directly, and in the order indicated, to the following concepts: profits to be applied at the close of the fiscal year, provided such profits are not derived from the revaluation of investments in variable income instruments; capital reserves; and paid-in capital. At no time shall the paid-in capital be less than the minimum determined by the Secretary of Finance and Public Credit; in the event it is, it shall be restored to such level or the provisions of Article 74 of this Law shall apply.

I bis. The institutions may be as follows as concerns the origin of the shareholders who subscribe their capital:

(a) With total Mexican capital or with a majority thereof; or

(b) With total foreign capital or with a majority thereof, in which case they shall be considered as Subsidiaries of Foreign Financial Institutions.

Insofar as is relative to their organization, the institutions to which letter (a) of this item refers shall be governed by that which is provided in this Chapter, whereas the institutions to which letter (b) thereof refers, shall be governed by that which is provided in this Chapter, insofar as is applicable, with exception of item II of this article, as well as by that which is established in Chapter I Bis of the First Title of this Law.

At no time may foreign governments or official departments thereof participate in the capital of insurance institutions, whether directly or through another person.

II. In the case of institutions to which letter (a) of item I bis of this Law refers:

1. Credit institutions, mutual insurance companies, securities exchanges, auxiliary credit organizations, companies operating investment companies or exchange houses may not participate in their paid in capital stock, whether directly or through another person.

Foreign insurance, reinsurance or bonding entities, as well as foreign individuals or legal persons, other than those excluded in the preceding paragraph, may acquire shares representative of the capital of these insurance institutions. The Mexican investment must always maintain the ability to determine the management of the institution and its effective control.

For that purpose, the foreign investment must be shown in a special series of shares representative of the capital of the corresponding company, but in no case may exceed 49% of the paid-in capital of the company.

2. No individual or legal person may own more than 20% of their capital stock, except:

(a) The Federal Public Administration.

(b) Companies which are or may become owners of shares of an insurance institution. These companies shall be subject to the inspection and auditing of the National Insurance and Bonds Commission, and that which is provided in this item, in item III of this article and in items III and IV of Article 139 of this Law, shall be equally applicable to their shareholders.

Persons who contribute stock of one or more insurance institutions to the capital of one of the companies to which this letter refers, may maintain the participation in the capital of the same which results, for the value of the shares which each one of them contributes.

Such companies may not be owners of shares of more than one insurance institution, except in the case of institutions authorized to carry out distinct transactions of direct insurance, in which case they may acquire one for each type of operation or branch, or in case of an institution which operates exclusively with reinsurance, or which shall try a merger in accordance with programs approved by the Secretary of Finance and Public Credit, after authorization which that office may grant temporarily.

Another company of the same type, credit, mutual insurance companies, credit or bond institutions; stock markets, limited purpose financial companies, companies operating investment companies, auxiliary credit organizations, exchange houses, as well as companies which the Secretary of Finance and Public Credit sets forth by means of provisions of a general nature as incompatible by reason of their activities, may not participate directly or indirectly in the capital of the companies stipulated above.

That which is provided in this item must be spread upon the record in the by- laws of the corresponding companies;

(c) Persons that acquire shares in accordance with that provided in programs approved by the Secretary of Finance and Public Credit, conducive to the merger of insurance institutions, to whoever, exceptionally, the mentioned Secretary may grant the relative authorization temporarily, for a period no greater than five years, unless the total participation of each one of them exceeds 30% of the paid in capital of the institution in question;

(d) Insurance institutions, when they acquire shares for their own account in accordance with that which is provided in programs approved by the Secretary of Finance and Public Credit, conducive to their merger;

(e) Credit institutions which with prior authorization of the Secretary of Finance and Public Credit, acquire shares, acting as fiduciaries in trusts which are not used as a method to violate the maximum percentages of ownership of shares permitted by this Law;

(f) The shareholders of merged insurance institutions, provided and when the participation of each one of them in the capital of the merged institution or in that which results from the merger, shall not exceed the percent of participation which those same shareholders hold in the consolidated capital of the institutions involved in the respective merger, in accordance with that which was agreed in the merger agreement for the valuation and the exchange of shares;

(g) Controlling companies to which the Law Regulating Financial Groups refers; and

(h) Persons who are authorized by the Secretary of Finance and Public Credit at its discretion, with the purpose of providing the technical development and marketing of insurance; of procuring an adequate diversification of risks and of strengthening the efficiency of withholding of premiums of the institutions.

(i) Foreign Financial Institutions, directly or indirectly, or Affiliated Controlling Companies that acquire stocks of any series, pursuant to programs approved by the Minister of Finance and Public Credit, for the purpose of converting to the respective insurance institution in an Affiliated Company;

III. In order to participate in shareholders' meetings of insurance institutions or of companies included in letters b) and g) of the preceding item, the following requirements must be fulfilled:

(a) Show in writing the character of the person who is to attend, whether that of shareholder, mandate, commission agent, fiduciary or any other. Mandates, commission agents or any other type of representatives may not, in any case, participate in meetings in their own name;

(b) Show in writing the name of the person or persons to whom the shares belong which they are representing, and set forth invariable the number of shares which belongs to each one, in the case of a mandate, commission agent or any other type of representative, as well as in other cases which the National Banking and Insurance Commission shall determine;

(c) Repealed.

Examiners are obligated to ascertain the observance of the provisions of this item and report thereon to the general meeting, which shall be recorded in the respective minutes.

The Secretary of Finance and Public Credit shall be enabled to hand down general rules for the purpose of procuring the strict compliance with the provision in this item and in the preceding item.

In the case of trusts and borrowing (reportos) on stock of insurance institutions or of companies included in letters b) and g) of the preceding item, the same Secretary shall determine through general rules, the manner in which such shares must be computed for purposes of the limits to which this article refers in item II, taking into account the rights which may be exercised in respect to such shares.

IV. The duration of the company may be stipulated to be indefinite; but may not be less than 30 years. The company may have only the purpose of functioning as an insurance institution in the t terms of this Law.

V. All the assemblies and meetings of the directors shall take place at the business domicile, which must always be within the territory of the Republic.

VI. An ordinary general meeting must be held each year at least, and the right of the members which represent at least 10% of the paid in capital to request the convocation of an extraordinary meeting shall be established in the articles of association. If the board does not issue the requested convocation, within a period of no more than one month from the date on which the petition for the meeting of the assembly was received, the auditor (comisario), upon a motion of the interested shareholders, shall issue the convocation under the same conditions as the board should have done.

In extraordinary general meetings of shareholders the decisions must be made by a majority of 80% of the paid in capital, at least, except in the case of a second convocation, in which case the resolutions shall be adopted by at least a vote of 30% of the paid in capital.

VII. The number of their directors which shall make up the board of directors may not be less than five.

Each shareholder or group of shareholders who represent at least 10% of the paid in capital of an insurance institution shall have a right to designate one member of the board. The appointment of those board members may only be revoked when that of all the others are also revoked, without prejudice to the provision in Article 31 of this Law.

VII bis. Directors appointed to boards of insurance institutions must be persons with recognized honor who have ample knowledge and experience in financial or administrative matters.

In no case may the following be directors:

a) Officials or employees of the company, with exception of the director general or his equivalent and officers of the company who occupy posts with the two immediately lower administrative hierarchies therefrom, provided that such do not compose more than one third of the board of directors;

b) Spouses of directors or persons who are related to more than two directors up to the second degree;

c) Persons who have pending litigation with the insurance institution in question;

d) Persons convicted of intentional property crimes, those who are disqualified to carry on trade or to discharge an employment, office or commission in the public service, or in the Mexican financial system;

e) Persons who are bankrupt and insolvent persons who have not been rehabilitated;

f) Public servants of authorities in charge of the inspection and oversight of insurance institutions; or

g) Anyone who carries out functions of regulation of insurance institutions, except insofar as the Federal Government participates in the capital thereof;

h) Public servants of the Bank of Mexico, the Institute for the Protection of Bank Savings, National Commission of the Retirement Savings System, the National Banking and Securities Commission and the National Commission for the Protection and Defense of Users of Financial Services;

VII bis 1. The appointment of a director general of the insurance institution or his equivalent must be given to a person who is of recognized moral quality and who also meets the following requirements:

a) For at least five years to have rendered their services in posts of high level decision-making, where their functions required knowledge and experience in financial and administrative matters;

b) To not have any of the impediments to being a director which are stipulated in letters c) to f) and h) of the preceding item;

c) To not be carrying out functions of regulation of insurance institutions.

Officers who occupy posts with the two hierarchies below that of the director general or his equivalent must comply with the requirements provided in this item.

The acts of the general director and of the officials who hold positions within the hierarchy immediately below the general director, which acts are committed in fulfilling their duties, shall invariably obligate the insurance institution in question, notwithstanding the civil liabilities and penalties they may incur personally.

The appointment of the directors, auditors, director general and of officers who occupy posts within the hierarchy immediately below the latter, shall be the responsibility of the insurance institutions and require the ratification of the Governing Board of the National Commission of Insurance and Bonds. The application for ratification must be presented to the Commission within the five working days following that in which the respective appointment was made.

The provisions of the preceding three paragraphs must be transcribed in the by-laws of insurance institutions.

VII bis -2. The appointments of directors of national insurance institutions shall be made by the Federal Executive through the Minister of Finance and Public Credit, such appointments duly being made from among public servants of the federal public administration or independent professionals of recognized honorability, experience and prestige in economic and financial matters. The charge of director is personal and may not be fulfilled through representatives. In no case may the director general and the public servants of the institution who occupy offices within the two levels below the latter be directors, neither may the persons to whom letters b) to f) and h) of item VII Bis of this article be directors.

The director general of national insurance institutions shall be appointed by the Federal Executive through the Minister of Finance and Public Credit, that appointment duly being made from among the persons who meet the requirements stipulated in the first paragraph and letters a), b) and c) of item VII Bis-1 of this article.

The same requirements must be met by public servants of the institution who occupy posts within the two levels below the director general.

The requirement established in the third and fourth paragraphs of item VII Bis 1 of this article shall not be applicable to the appointment of the directors, auditors and director general or equivalent of the national insurance institutions.

The appointment of officials within the level immediately below that of the director general or equivalent thereof shall require the ratification to which the third paragraph of item VII Bis 1 of this article refers.

The National Commission of Insurance and Bonds, with the approval of its Governing Board, may determine that removal or suspension of the public servants who may obligate a national insurance institution with their signature, with the exception of the director general or equivalent, is proper when it considers that such persons do not possess the sufficient technical or moral quality to fulfill their duties or that they have not adjusted to the applicable legal and administrative dispositions in fulfilling them, proceeding, if applicable, in the terms of article 31 of this Law.

Likewise, the Commission itself may recommend the removal of the director general of the institution to the Federal Executive, through the aforementioned Minister, when it considers that such director general has not been adjusted to the applicable legal and administrative dispositions in the fulfillment of his duties.

The provisions of this item must be transcribed in the by-laws of national insurance institutions.

VIII. They shall separate at least 10% of their profits to constitute an ordinary reserve fund, until a sum equal to 75% of the amount of the paid in capital is reached.

IX. The Articles of Association and any amendment to them, must be submitted for the approval of the Secretary of Finance and Public Credit, which shall determine whether they comply with the requirements established by the Law. After the Secretary of Finance and Public Credit gives such approval, the Articles of Association or their amendments may be inscribed in the Public Commercial Register without a court order being necessary.

X. The merger of two or more insurance institutions, as well as the spin-off of an insurance institution, must be effected in accordance with the provision in Article 66 of this Law; and

XI. The winding-up and liquidation of the company must be effected in accordance with the provision in Title IV of this Law.

ARTICLE 29 BIS. REPEALED. (General Law of Insurance Institutions and Mutual Companies)
ARTICLE 30. (General Law of Insurance Institutions and Mutual Companies)
(Amended Apr. 16, 1946, Jan. 7, 1981, July 14, 1993) The reserve funds established by the eleventh paragraph of item I and by item VIII of Article 29 of this Law may be capitalized, but the institution must reconstitute the ordinary reserve fund as from the following fiscal year, in accordance with the new amount of the capital.

ARTICLE 31. (General Law of Insurance Institutions and Mutual Companies)
(Amended Apr. 16, 1946, Jan. 7, 1981, July 14, 1993) Insurance institutions shall carry out their business purpose through one or more officials which shall be specially designated for that purpose, and for whose acts the institution shall be directly and liable in an unlimited manner, without prejudice to the civil or penal liabilities which such officials shall personally incur. The National Commission of Insurance and Bonds, in accord with the Governing Board, with a prior hearing of the interested party and of the representative of the institution, may at any time determine the removal or suspension of the members of the Board of Directors, auditors (comisarios), directors general, directors and managers, as well as any officials who may obligate the institution through his signature, when it is considered that such persons do not have sufficient moral or technical quality for the performance of their functions, or do not meet the requirements established for the purpose, or are involved seriously or repetitively in violations to this Law or to the provisions of general nature which derive therefrom. In the last two cases, the Commission itself may also disqualify the cited persons from holding employment, an office or commission within the Mexican financial system, for a period of six months to 10 years, without prejudice to the penalties which shall be applicable in accordance with this or other legal ordinances.

In order to impose the removal or suspension, the National Commission of Insurance and Bonds must take the following into account:

I. The gravity of the violation and the desirability of avoiding these practices;

II. The hierarchical level, the antecedents, seniority and conditions of the offender;

III. The apparent conditions and methods of execution;

IV. Repeat violation; and

V. The amount of the economic benefit, damage or loss derived from the violation.

The resolutions of removal or suspension may be appealed before the Secretary of Finance and Public Credit, within the fifteen days following the date on which the same was announced. The Secretary of Finance and Public Credit may revoke, modify or confirm, the appealed resolution upon hearing the parties.

ARTICLE 32. (General Law of Insurance Institutions and Mutual Companies)
(Amended July 3, 1937, Apr. 16, 1946, Jan. 5, 1952, Dec. 31, 1956, Dec. 20, 1974, Jan. 7, 1981, Jan. 14, 1985, Jan. 3, 1990, May 23, 1996, Jan. 3, 1997) The following may not be proprietary auditors or deputy auditors of insurance institutions:

I. Their general directors or managers;

II. Members of the board of directors, whether proprietary or alternates;

III. Officials and employees of credit institutions, insurance institutions, bond institutions, stock exchanges, auxiliary credit organizations, foreign exchange houses, administrators of retirement funds and investment companies specializing in retirement funds or any other financial intermediary; and

IV. Members of the board of directors, whether proprietary or alternates, general directors, managers or external auditors of companies which control the insurance institution in question, or enterprises controlled by the majority shareholders thereof;

V. Accounting and actuarial auditors who are external from the insurance institution in question.

Only persons who meet the requirements established by the National Banking and Insurance Commission by means of general rules may be appointed as auditors.

ARTICLE 32 BIS. REPEALED. (General Law of Insurance Institutions and Mutual Companies)
ARTICLE 33. (General Law of Insurance Institutions and Mutual Companies)
(Amended Jan. 7, 1981, Jan. 3, 1990, July 14, 1993) When one institution carries out several of the operations to which Article 7 of this Law refers, it must carry out each one of them in specialized departments and allocate and record the technical reserves which are allocated to each of those operations in separate books.

Technical reserves and any other operation must also be recorded separately, in accordance with the preceding paragraph.

Technical reserves shall be allocated to each department, and in operations of damage insurance, to each field, and may not serve to guarantee obligations contracted through policies issued in other operations, or, as the case may be, other fields.

That which is provided in this article shall not be applicable to insurance institutions authorized to practice reinsurance exclusively.

CHAPTER I-BIS. Branches of Foreign Financial Institutions
(Added by Decree of December 15, 1993)

(Effective January 1, 1994)

ARTICLE 33-A. (General Law of Insurance Institutions and Mutual Companies)
(Added by Decree effective Jan. 1, 1994) For the purposes of this Law, the following shall be understood:

I. Branch: The Mexican corporation (sociedad anónima) authorized to be organized and to function, in accordance with this Law, as an insurance institution, in whose capital a Foreign Financial Institution or a Branch Controlling Company participates as a majority shareholder in the terms of this chapter;

II. Foreign Financial Institution: A financial entity constituted in a country with which Mexico has established an international treaty or agreement by virtue of which the establishment of Branches in national territory shall be permitted; and

III. Branch Controlling Company: A Mexican company authorized to be formed and to operate as a controlling company in the terms of the Law to Regulate Financial Groups, in whose capital a Foreign Financial Institution participates as a majority shareholder.

ARTICLE 33-B. (General Law of Insurance Institutions and Mutual Companies)
(Added by Decree effective Jan. 1, 1994) Branches shall be governed by that which is provided in the corresponding international treaties or agreements, this chapter, the provisions contained in this Law applicable to insurance institutions and the rules for the establishment of Branches which the Secretary of Finance and Public Credit shall issue for the purpose, after hearing the opinion of the National Commission of Insurance and Bonds.

For administrative purposes, the Secretary of Finance and Public Credit shall be empowered to interpret the provisions on financial services included in the international treaties or agreements to which the preceding paragraph makes mention, as well as to provide for their observance.

ARTICLE 33-C. (General Law of Insurance Institutions and Mutual Companies)
(Added by Decree effective Jan. 1, 1994) In order to be organized and to function as a Branch the authorization of the Federal Government shall be required, which shall be competent to grant the power on a discretional basis to the Secretary of Finance and Public Credit, after hearing the opinion of the National Commission of Insurance and Bonds. These authorizations shall be untransferable by their nature.

The authorizations which are granted for the purpose, as well as their amendments, shall be published in the Diario Oficial of the Federation.

ARTICLE 33-D. (General Law of Insurance Institutions and Mutual Companies)
(Added by Decree effective Jan. 1, 1994) The financial authorities, in the circumstances of their respective competencies, shall guarantee the fulfillment of the commitments of a national treaty which, if applicable, has been assumed by Mexico, in the terms established in the applicable international treaty or agreement.

Branches may carry out the same operations as Insurance Institutions, unless the applicable international treaty or agreement establishes some restriction.

ARTICLE 33-E. (General Law of Insurance Institutions and Mutual Companies)
(Added by Decree effective Jan. 1, 1994) In order to acquire a majority participation in the capital stock of a Branch, the Foreign Financial Institution must carry out the same type of operations in the country in which it is constituted, directly or indirectly, in accordance with the applicable legislation, that the branch in question is empowered to carry out in Mexico, in accordance with that which this Law stipulates and the rules to which the first paragraph of article 33-B refers.

Branches in whose capital a Branch Controlling Company participates as a majority shareholder shall be excepted from that which is provided in preceding paragraph, in accordance with the Law to Regulate Financial Groups and the rules mentioned in the preceding paragraph.

ARTICLE 33-F. (General Law of Insurance Institutions and Mutual Companies)
(Added by Decree effective Jan. 1, 1994) Petitions to be organized and to function as Branches must fulfill, in addition to that which is established in item I of article 29 of this Law, that which is established in the rules to which the first paragraph of article 33-B refers.

ARTICLE 33-G. (General Law of Insurance Institutions and Mutual Companies)
(Added by Decree effective Jan. 1, 1994; amended Nov. 17, 1995, Dec. 31, 1999) The capital stock of Branches may be represented by two series of shares. At least 51% of the capital stock of Branches shall be composed of Series "E". Branches may also issue shares of Series "M" stock provided that the latter do not exceed 49% of the capital stock.

All of the Series "E" shares of a Branch must be owned, directly or indirectly, at all times by a Foreign Financial Institution, or by a Branch Controlling Company. The Series "M" shares that are not owned by stated Foreign Financial Institution or Branch Controlling Company shall be subject to that which is provided in article 15 and item II of article 29 of this Law.

The shares must be fully paid up in the deed of subscription.

Affiliates may not issue shares with limited voting rights.

ARTICLE 33-H. (General Law of Insurance Institutions and Mutual Companies)
(Added by Decree effective Jan. 1, 1994) The Series "E" shares of a Branch may only be sold by prior authorization of the Secretary of Finance and Public Credit.

Except in the case in which the purchaser is a Foreign Financial Institution, a Branch Controlling Company or a Branch, and at least 51% of the capital represented by Series "E" shares is acquired, the company by-laws of the Branch whose Series "E" shares are the object of the transaction must be modified in order to carry out the preceding disposal, in order to comply with that which is provided in item II of article 29 of this Law.

When the purchaser is a Foreign Financial Institution, a Branch Controlling Company or a Branch, and acquires at least 51% of the Series "E" capital stock, that which is provided in items II and III of article 33-I must be observed.

After its constitution, the Series "E" shares of a Branch may be acquired by the Federal Government temporarily, in order to subsequently make it available to other investors after authorization by the Secretary of Finance and Public Credit.

ARTICLE 33-I. (General Law of Insurance Institutions and Mutual Companies)
(Added by Decree effective Jan. 1, 1994; amended Nov. 17, 1995) The Secretary of Finance and Public Credit may authorize Foreign Financial Institutions, Branch Controlling Companies or Branches to acquire shares representative of at least 51% of the capital stock of an insurance institution, provided and when the following requirements are fulfilled:

I. The company by-laws (estatutos sociales) of the insurance institution, whose shares are being disposed of, must be amended, in order to comply with that which is provided in this chapter;

II. When the purchaser is a Foreign Financial Institution or a Branch Controlling Company which already holds Series "E" shares of a Branch of the same operation or division, both insurance institutions must merge for the purpose of controlling only one Branch of the same division; and

III. When the purchaser is a Branch of the same operation or division, it must be merged with the insurance institution which has been acquired.

In the granting of the authorizations to which this article refers, the Minister of Finance and Public Credit must preserve the preponderance of the domestic investment over the foreign investment.

ARTICLE 33-J. (General Law of Insurance Institutions and Mutual Companies)
(Added by Decree effective Jan. 1, 1994) Branches may not establish branch offices or subsidiaries outside national territory.

ARTICLE 33-K. (General Law of Insurance Institutions and Mutual Companies)
(Added by Decree effective Jan. 1, 1994; amended Nov. 17, 1995) The board of directors of Branches shall be composed of at least five directors, the majority of which must reside in national territory. Their appointment must be made in a special meeting for each series of shares. The provisions for ordinary general meetings provided in the General Law of Mercantile Companies shall be applicable, so far as they extend thereto, to the meetings that come together for that purpose, as well as those with the purpose of appointing auditors (comisarios) for each series of shares.

Owners of Series "M" shares, if applicable, shall have the right to appoint at least one director. The appointment of directors of a minority may only be revoked when all the others of the same series are revoked.

The chairman of the board must be elected from the directors from the Series "E" shares, and shall have the tie-breaking vote in case of an impasse. Deputies shall be appointed by the directors, who may serve as a substitute for any of the regular directors, with the understanding that only one deputy may represent one regular director in each session.

ARTICLE 33-L. (General Law of Insurance Institutions and Mutual Companies)
(Added by Decree effective Jan. 1, 1994) The general managers of Branches must comply with the requirements provided in item VII bis-1 of article 29 of this Law and reside in national territory.

ARTICLE 33-M. (General Law of Insurance Institutions and Mutual Companies)
(Added by Decree effective Jan. 1, 1994) The auditing organ of Branches shall be composed of at least one auditor (comisario) from Series "E" shareholders and, as the case may be, by another from Series "M" shareholders, appointed by the shareholders of each one of the series, and their respective deputies.

ARTICLE 33-N. (General Law of Insurance Institutions and Mutual Companies)
(Added by Decree effective Jan. 1, 1994) With respect to Branches, the National Commission of Insurance and Bonds shall have all the faculties attributed to it by this Law in relation to insurance institutions. When supervisory authorities of the country of origin of the Foreign Financial Institution owning shares representative of the capital stock of a Branch or of a Branch Controlling Company, as the case may be, desire to make inspection visits, they must petition the National Commission of Insurance and Bonds. In every case the visits must be made through the conduct of said Commission which shall establish the terms on which the visits must be made.

The petition which the preceding paragraph makes mention must be made in writing, at least 30 calendar days in advance and must be accompanied with the following:

I. A description of the act