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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
INDUSTRIAS BACHOCO, S.A. DE C.V.
(Exact name of registrant as specified in its charter)
The United Mexican States Not Applicable
(State of incorporation or organization) (I.R.S. Employer Identification No.)
Avenida Tecnologica No. 401
Ciudad Industrial C.P. 38010
Celaya, Guanajuato, Mexico Not Applicable
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered: each class is to be registered:
*Series B Common Shares, without par value New York Stock Exchange
If this form relates to the registration of a class of securities
pursuant to Section 12(b) of the Exchange Act and is effective pursuant to
General Instruction A.(c), check the following box. [X]
If this form relates to the registration of a class of securities
pursuant to Section 12(g) of the Exchange Act and is effective pursuant to
General Instruction A.(d), check the following box. [ ]
Securities Act registration statement file number to which this form
relates: 333-7472
Securities to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
* Listed only in the form of American Depositary Shares
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
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Currently, each American Depositary Share (the "Old ADSs") represents
six Units (the "Units"). Each Unit consists of one series L share (the "Series L
Shares") and one series B share (the "Series B Shares") which units are
registered with the Securities and Exchange Commission (the "SEC"). The Series L
Shares underlying the Old ADSs and all other Series L Shares of Industrias
Bachoco, S.A. de C.V. and its consolidated subsidiaries as a whole (the
"Company" or the "Registrant"), which total 150,000,000, will be converted by
operation of Mexican law into Series B Shares of the Company to be registered
hereunder. The Units will be dissolved. The American Depositary Shares (the
"ADS") will represent twelve Series B Shares directly and will replace the Old
ADSs on a one-to-one basis. The ADSs will be listed on the New York Stock
Exchange (the "NYSE"). References herein to "Bachoco," "we," "us," "our" or
"its" also refer to Industrias Bachoco, S.A. de C.V. and its consolidated
subsidiaries as a whole.
CAPITAL STOCK
DIVIDEND AND DISTRIBUTIONS
At the annual ordinary general stockholders' meeting, the board of
directors submits our financial statements for the previous fiscal year,
together with a report thereon by the board, to the holders of Series B Shares
for their consideration. The holders of Series B Shares, once they have approved
the financial statements, determine the allocation of our net profits, if any,
for the preceding year. They are required by law to allocate 5% of such net
profits to a legal reserve, which is not thereafter available for distribution
until the amount of the legal reserve equals 20% of our historical capital stock
(before giving effect to the restatement thereof in constant pesos). As of June
30, 2006, our legal reserve fund was equal to at least 20% of our paid-in
capital stock. Amounts in excess of those allocated to the legal reserve fund
may be allocated to other reserve funds as the stockholders determine, including
a reserve for the repurchase of our Shares. The remaining balance of net
profits, if any, is available for distribution as dividends. No dividends may be
paid, however, unless losses for prior fiscal years have been paid or absorbed.
Holders of Series B Shares and, accordingly, holders of ADSs will have
equal rights, on a per Share basis, to dividends and other distributions,
including any distributions we make upon liquidation. Partially paid Series B
Shares participate in any distribution to the extent that such Series B Shares
have been paid at the time of the distribution or, if not paid, only with
respect to the proportion paid.
Certain members of the Robinson Bours family (the "Robinson Bours
Stockholders") hold the power to elect a majority of the members of our board of
directors and have the power to determine the outcome of certain other actions
requiring the approval of our stockholders, including whether or not dividends
are to be paid and the amount of such dividends. The Robinson Bours Stockholders
have established two Mexican trusts, which they control ("Control Trust"), that
together hold 496,500,000 Shares outstanding on June 30, 2006 representing
82.75% of the total Shares of the Company.
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VOTING RIGHTS AND SHAREHOLDERS' MEETINGS
Each Series B Share entitles the holder thereof to one vote at any
general meeting of the stockholders. Upon conversion of the Series L Shares,
holders of Series B Shares will be entitled to elect all members of the board of
directors. Our bylaws provide that the board of directors shall consist of an
odd number of directors, never fewer than five members. The holders of Series B
Shares may elect directors and alternate directors at the general ordinary
stockholder's meeting. Our board was reformed in April 2003, and now consists of
seven proprietary shareholder Directors and three independent Directors. The
stockholders also appointed four alternate Directors to the board of directors,
three of whom are proprietary and one of whom is independent. The term of all
directors is one year.
General stockholders' meetings may be ordinary or extraordinary
meetings. Extraordinary general meetings are meetings called to consider the
matters specified in Article 182 of the Mexican Companies Law and the bylaws,
including changes in the fixed portion of the capital stock and other amendments
to the bylaws, liquidation, merger, transformation from one type of corporate
form to another, change in nationality or change of corporate purpose. General
meetings called to consider all other matters, including election of directors
and the statutory auditor, are ordinary meetings. An ordinary general meeting of
the Company must be held at least annually during the four months following the
end of the preceding fiscal year to consider certain matters specified in
Article 181 of the Mexican Companies Law, including, principally, the election
of directors and the statutory auditor, the approval of the report of the board
of directors regarding the Company's performance, the Company's financial
statements for the preceding fiscal year and the allocation of the profits and
losses of the preceding year.
Under our bylaws, the quorum on first call for a general ordinary
meeting is at least 50% of the outstanding Series B Shares, and action may be
taken by a majority of the Series B Shares present. If a quorum is not available
on first call, a second meeting may be called at which action may be taken by a
majority of the Series B Shares present, regardless of the number of such Series
B Shares. The quorum on first call for a general extraordinary meeting or a
special meeting is 75% of the outstanding Series B Shares. If a quorum is not
available on first call, a second meeting may be called, provided that at least
50% of the outstanding Series B Shares are represented.
Whether on first or subsequent call, adoption of a resolution at a
general extraordinary meeting requires the favorable vote of the holders of at
least 50% of the outstanding Series B Shares with voting rights on the matters
to be addressed by that extraordinary meeting. In addition, any action taken at
an extraordinary general meeting, on first or subsequent call, requires the
favorable vote of the holders of the majority of the outstanding Series B
Shares. Whether on a first or subsequent call, for a special meeting to take
action, the favorable vote of at least 50% of the outstanding Series B Shares is
required.
Our bylaws require the approval of holders of at least 75% of the
outstanding Series B Shares and the approval of the Comision Nacional Bancaria y
de Valores (Mexican Banking and Securities Commission, or "CNBV") for the
amendment of the controlling stockholders' obligation under the bylaws to
repurchase Series B Shares and certain other provisions in the event of
delisting. See "--Other Provisions--Repurchase in the Event of Delisting" below.
According to our bylaws, stockholders with a right to vote, and who
hold at least 10% of the Series B Shares represented in a stockholders' meeting
may ask to postpone a vote on any matters on which they believe they do not have
enough information as defined by Article 199 of the Mexican Companies Law.
Stockholders with a right to vote and who hold at least 20% of the capital
stock, may legally object to the decisions of a general stockholders' meeting,
with respect to matters in which they have rights, as defined by Articles 201
and 202 of the Mexican Companies Law.
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In addition, stockholders representing at least 10% of the
stockholders' equity can appoint a Commissary. They can revoke the Commissary
they appointed, but only when all other commissaries are revoked.
The board of directors, the Chairman of the board of directors, the
Secretary of the board of directors, the statutory auditor or any Mexican court
of competent jurisdiction may call a stockholders' meeting. The board of
directors or the statutory auditor may be required to call a meeting of
stockholders by holders of at least 10% of the Series B Shares. In addition, the
board of directors or the statutory auditor must call a stockholders' meeting at
the written request of any holder of Series B Shares if no ordinary general
stockholders' meeting has been held for two consecutive years or if in any
meetings held during such a period the stockholders have not considered the
items mentioned in Article 181 of the Mexican Companies Law, discussed above.
From the moment that a call for a stockholders' meeting is made public,
all the information related to the meeting must be available to the
stockholders. In order to attend a stockholders' meeting, a stockholder must
request and obtain an admission card by furnishing, at least 24 hours before the
time set for holding the stockholders' meeting, appropriate evidence of
ownership of Series B Shares in the Company and depositing such Series B Shares
with our corporate secretary or with an institution authorized to accept such
deposit. If so entitled to attend the meeting, a stockholder may be represented
by proxy signed before two witnesses. Additionally, the stockholder may be
represented at the stockholders' meetings by a person named by proxy, on a
printed form that we issue, which, under Mexican law, must identify the Company
and indicate clearly the matters to be addressed in the meeting, with enough
space for the instructions that the stockholder specifies. We are obliged to
make information on the upcoming meeting available to the intermediaries in the
stock market, for the time specified in Article 173 of the Mexican Companies
Law, in order to give the intermediaries time to send it to the stockholders
they represent. The Secretary of the board of directors must verify that this
requirement is met and report on this matter at the stockholders' meeting.
MEMBERS OF THE BOARD
Under the Mexican Companies Law, a board of directors must conform to
the following requirements:
(i) The board must have at least five and no more than 20
proprietary shareholder directors;
(ii) At least 25% of the members of the board must be independent
according to the Article 14, Bis 3 of the Ley del Mercado de
Valores.
(iii) For every member of the board, an alternate member of the
board must be named; and
(iv) The report of the Audit Committee shall be present at the
shareholder's meeting.
Notwithstanding the obligation of the Company to comply with the
principles established in the fourth paragraph and its sections, of Article
Twenty-Seventh of the present bylaws, and while such Article remains in effect,
failure to follow the provisions in such paragraph and its sections, for any
reason, shall not cause or grant a right to third parties to challenge the lack
of validity, in terms of legal acts, contracts, resolutions, agreements or any
other act entered into by the Company by means of or through its Board of
Directors or any other intermediate organ, delegate, mandatory or agent, nor
shall they be deemed requirements for the validity or existence of such acts.
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The board of directors must meet at least once every three months at
our address or any other place in Mexico and on the dates that the board
determines. Meetings previously planned in accordance with a schedule
pre-approved by the board do not need to be called. Meetings must be called by
at least 25% of the members of the board of directors, the Chairman of the board
of directors, the Vice-Chairman of the board of directors or, in the case of a
Commissary, the Secretary or the alternate Secretary of the board. Members of
the board must be notified via e-mail or in writing at least five calendar days
in advance of a meeting. The Commissaries must be called to every meeting of the
board, where they have the right to speak, but not the right to vote.
STATUTORY AUDITOR
As determined by Mexican law, the statutory auditor's role is to verify
information provided by the Company, to audit its operations and to report on
the Company to stockholders at the annual stockholders' meeting. Any stockholder
with at least 10% of our capital stock has the right to designate a statutory
auditor. In the case of a statutory auditor appointed by a minority of
stockholders, the majority may revoke that appointment provided that it revokes
the appointment of all other statutory auditors as well. A statutory auditor,
who does not need to be a stockholder, maintains his or her position for one
year, but may continue to fulfill his or her duties until a replacement takes
over the position. A statutory auditor may be reelected. A substitute statutory
auditor may assume the duties of any statutory auditor who, for any reason,
cannot perform his or her duties.
CHANGES IN CAPITAL STOCK
An increase of capital stock may generally be affected through the
issuance of new Series B Shares for payment in cash or in kind, by
capitalization of indebtedness or by capitalization of certain items of
stockholders' equity. An increase of capital stock generally may not be realized
until all previously issued and subscribed Series B Shares have been fully paid.
Generally, a reduction of capital stock may be effected to absorb losses, to
redeem Series B Shares, or to release stockholders from payments not made. A
reduction of capital stock to redeem Series B Shares is effected by reimbursing
holders of Series B Shares pro rata or by lot. Stockholders may also approve the
redemption of fully paid Series B Shares with retained earnings. Such a
redemption would be affected by a repurchase of Series B Shares on the Mexican
Stock Exchange (in the case of Series B Shares listed thereon).
The fixed portion of our capital stock may only be increased or
decreased by resolution of a general extraordinary meeting and an amendment to
the bylaws, whereas the variable portion of our capital stock may be increased
or decreased by resolution of a general ordinary meeting. See "--Other
Provisions--Fixed and Variable Capital" below.
No resolution by the stockholders is required for decreases in capital
stock resulting from the exercise of our right to withdraw variable shares or
from our repurchase of our own Series B Shares or for increases in capital stock
resulting from our sale of Series B Shares we previously purchased. See "--Other
Provisions--Purchase by the Company of its Shares" and "--Other
Provisions--Appraisal Rights" below.
PREEMPTIVE RIGHTS
Except in certain limited circumstances, in the event of a capital
increase through the issuance of new Series B Shares for payment in cash or in
kind, a holder of existing Series B Shares at the time of the capital increase
has a preferential right to subscribe for a sufficient number of new Series B
Shares to maintain the holder's existing proportionate holdings of Series B
Shares or, in the event of a capital increase through the issuance of
limited-voting or non-voting stock only, to subscribe for a sufficient number of
the shares to be issued to maintain the holder's existing proportionate holdings
of our capital stock.
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Preemptive rights must be exercised within 15 days following the publication of
notice of the capital increase in the Diario Oficial de la Federacion (Official
Gazette) or following the date of the stockholders' meeting at which the capital
increase was approved if all stockholders were represented at such meeting;
otherwise, such rights will lapse. Under Mexican law, preemptive rights cannot
be waived in advance by a stockholder, except under limited circumstances, and
cannot be represented by an instrument that is negotiable separately from the
corresponding share. The Robinson Bours Stockholders have waived all preemptive
rights with respect to the Series B Shares underlying the ADSs. Holders of
American Depositary Receipts (the "ADRs") that are U.S. citizens or are located
in the United States may be restricted in their ability to participate in the
exercise of preemptive rights. See "American Depositary Receipts--Dividends,
Other Distributions and Rights" below.
FOREIGN INVESTMENT LEGISLATION
Ownership by foreigners of shares of Mexican companies is regulated by
the Ley de Inversion Extranjera ("Foreign Investment Law") and by the Reglamento
de la Ley para Promover la Inversion Mexicana y Regular la Inversion Extranjera
("Foreign Investment Regulations"). The Ministry of Commerce and Industrial
Development and the Foreign Investment Commission are responsible for the
administration of the Foreign Investment Law.
The Foreign Investment Law reserves certain economic activities
exclusively for the Mexican state and certain other activities exclusively for
Mexican individuals or Mexican corporations, and limits the participation of
foreign investors to certain percentages in regard to enterprises engaged in
activities specified therein. Foreign investors may own up to 100% of the
capital stock of Mexican companies or entities, except for companies (i) engaged
in reserved activities as referred to above or (ii) with assets exceeding an
amount to be established annually by the Foreign Investment Commission (which
has been set at Ps.407.0 million), in which case an approval from the Foreign
Investment Commission will be necessary in order for foreign investment to
exceed 49% of the capital stock. Mexican and non-Mexican nationals will be
entitled to hold and to exercise the rights of a holder of the Series B Shares.
The Robinson Bours Stockholders have advised us that they intend to maintain a
control position directly in the Series B Shares. Pursuant to our bylaws,
foreigners may only own Series B Shares up to 49% of such series.
OTHER PROVISIONS
Fixed and Variable Capital. As a sociedad anonima de capital variable,
we are permitted to issue shares constituting fixed capital and shares
constituting variable capital. The issuance of variable capital shares, unlike
the issuance of fixed capital shares, does not require an amendment of the
bylaws, although it does require approval at a general ordinary stockholders'
meeting.
No shares representing variable capital are currently outstanding. The
outstanding variable capital shares, if any, may be fully withdrawn by the
holders thereof. Except as otherwise provided under "--Appraisal Rights" below,
the Minimum Capital cannot be withdrawn. A holder of variable capital stock that
wishes to affect a total or partial withdrawal of such stock is required to
notify us in an authenticated written notice to that effect. If notice of
withdrawal is received prior to the last quarter of the fiscal year, the
withdrawal becomes effective at the end of the fiscal year in which the notice
was given. Otherwise, the withdrawal becomes effective at the end of the
following fiscal year.
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Redemption of our variable capital stock is made at the lower of (i)
95% of the average share price quoted on the Mexican Stock Exchange during the
30 business days prior to the date on which the withdrawal is to become
effective, or, if the number of the days that the shares were negotiated is less
than 30 days, we will consider only the days in when the shares were effectively
negotiated and (ii) the book value per variable capital share as calculated from
our consolidated balance sheets (as approved at a general ordinary stockholders'
meeting) for the previous fiscal year in which the withdrawal became effective.
Any such amount to be paid by us would become due on the day following the
general ordinary stockholders' meeting referred to in clause (ii) above.
Forfeiture of Shares. As required by Mexican law, our bylaws provide
that our current and future foreign stockholders are formally bound to the
Mexican Secretaria de Relaciones Exteriores ("Ministry of Foreign Relations") to
consider themselves as Mexican nationals with respect to our Series B Shares
that they may acquire or of which they may be owners, with respect to the
property, rights, concessions, participations or interests that we may own or
rights and obligations that are based on contracts to which we are party with
the Mexican authorities, and not to invoke the protection of their government
under penalty, should they do so, of forfeiting to the Mexican State the
corporate participation that they may have acquired. In the opinion of Franck,
Galicia, Duclaud & Robles, S.C., our special Mexican counsel, under this
provision a non-Mexican stockholder (including a non-Mexican holder of ADSs) is
deemed to have agreed not to invoke the protection of his own government by
requesting such government to interpose a diplomatic claim against the Mexican
government with respect to the stockholder's rights as a stockholder, but is not
deemed to have waived any other rights it may have with respect to its
investment in us, including any rights under U.S. securities laws. If the
stockholder should invoke such governmental protection in violation of the above
agreement, its Series B Shares could be forfeited to the Mexican State. Mexican
law requires that such a provision be included in the bylaws of all Mexican
corporations unless such bylaws prohibit ownership of capital stock by foreign
investors.
Exclusive Jurisdiction. Our bylaws provide that legal actions relating
to any conflict between our stockholders and us, or among the stockholders in
connection with matters related to us, may be brought only in courts in Mexico
City. Therefore, our stockholders are restricted to the courts of Mexico City.
Duration. The duration of our existence under our bylaws is indefinite.
Repurchase of our own Shares. We may repurchase our Series B Shares on
the Mexican Stock Exchange at any time at the then prevailing market price. Any
repurchases of Series B Shares will be charged to Stockholders Equity, or to
Capital stock in the event that we convert these shares to treasury stock, and
in this last case no resolution of the stockholders' meeting is required. At
each annual ordinary stockholders' meeting, the maximum amount of resources that
may be used to repurchase shares will be expressly defined. The board of
directors will name the persons responsible for the operation of the repurchase
process. The shares that belong to Treasury Stock or us can be resold among the
public stockholders; in the latter case, no resolution of a stockholders meeting
is necessary for an increase in capital. The economic and voting rights
corresponding to such repurchased Series B Shares may not be exercised during
the period in which such Series B Shares are owned by us, and such Series B
Shares are not deemed to be outstanding for purposes of calculating any quorum
or vote at any stockholders' meeting during such period.
Repurchase in the Event of Delisting. Our Series B Shares are
registered with the National Registry for Securities, as required under the
Securities Market Law and regulations issued by the CNBV. If we wish to cancel
our registration, or if it is cancelled by the CNBV, the stockholders having the
majority of the ordinary shares or that may, on any basis, impose decisions at
stockholders' meetings, or appoint the majority of the board of directors of the
Company at that time, will be required to make a public offer to purchase all
outstanding shares prior to such cancellation. Under our bylaws, if after the
public offer is concluded there are still outstanding shares held by the general
public, the stockholders that control the Company will be required to create a
trust for a minimum period of six months, into which such controlling
stockholders will be required to contribute funds in an amount sufficient to
purchase, at the same price as the offer price, the number of outstanding shares
held by the general public.
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Non-Subscribed Shares. With prior authorization of the CNBV, we may
issue non-subscribed shares provided that such shares will be held by a
depositary institution and are in compliance with the conditions of Article 81
of the Ley del Mercado de Valores ("Mexican Securities Law"). In any
extraordinary stockholders' meeting at which the issuance of non-subscribed
shares is approved, the preference rights established by Article 132 of the
Mexican Companies Law must be respected. With a quorum at the meeting, the
approval of the issuance will take effect, even with respect to stockholders
that were not present at the meeting, such that we will be free to issue these
shares with no prior publication. When a minority of stockholders representing
at least 25% of the voting capital stock, vote against the issuance of these
shares, such issuance cannot be made. Any stockholder that votes against this
issuance at the stockholders' meeting will have the right to request that we
sell its shares before issuing the new non-subscribed shares. In such event, we
will have the obligation to sell first the shares belonging to such
stockholders, at the same price that the non-subscribed shares are to be offered
to the public.
Stockholder Conflicts of Interest. Under Mexican law, any stockholder
that has a conflict of interest with respect to any transaction must abstain
from voting thereon at the relevant stockholders' meeting. A stockholder that
votes on a business transaction in which its interest conflicts with that of
ours may be liable for damages if the transaction would not have been approved
without such stockholder's vote.
Board Member Conflicts of Interest. Under Mexican law, any member of
the board of directors who has a conflict of interest with us in any transaction
must disclose such fact to the other members of the board of directors and
abstain from voting. Any member of the board of directors who violates such
provision may be liable for damages caused to us. Additionally, members of the
board of directors and statutory auditors may not represent other stockholders
at any stockholders' meeting.
Appraisal Rights. Whenever the stockholders approve a change of
corporate purpose, a change in our nationality or transformation from one type
of corporate form to another, any stockholder entitled to vote on such change or
transformation who has voted against it has the right to withdraw from us and
receive the amount calculated as specified under Mexican law attributable to its
shares, provided such stockholder exercises its right to withdraw within 15 days
following the adjournment of the meeting at which the change or transformation
was approved. Under Mexican law, the amount that a withdrawing stockholder is
entitled to receive is equal to its proportionate interest in our capital stock
according to the most recent balance sheet that has been approved by an ordinary
general meeting of stockholders.
Actions Against Directors. Under Mexican law, an action for civil
liabilities against members of the board of directors may be initiated by
resolution of an ordinary stockholders' meeting. In the event the ordinary
stockholders' meeting decides to bring such an action, the persons against whom
such action is brought will immediately cease to be members of the board of
directors. Additionally, stockholders representing at least 15% of the capital
stock may directly take such action against members of the board of directors,
provided that requirements established in Article 163 of the General Law of
Mercantile Stock Corporations, are satisfied. Such action may also be taken with
respect to the Trustee and members of the Audit Committee, in accordance with
the aforementioned legal percept.
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AMERICAN DEPOSITARY RECEIPTS
The following is a summary of the material provisions of the Deposit
Agreement (the "Deposit Agreement") to be entered into by the Company, The Bank
of New York, as depositary (the "Depositary") and the registered holders
("Owners") and beneficial owners ("Beneficial Owners") of ADSs.
This summary does not purport to be complete and is subject to and
qualified in its entirety by reference to the Deposit Agreement, including the
form of ADRs. Capitalized terms used herein and not otherwise defined will have
the meanings set forth in the Deposit Agreement. Copies of the Deposit Agreement
and the bylaws of the Company will be available for inspection at the Corporate
Trust Office of the Depositary, currently located at 101 Barclay Street, New
York, New York 10286, and at the principal office of the agent of the Depositary
(the "Custodian"), currently the Mexico City, Mexico office of Bancomer, S.A.
The Depositary's principal executive office is located at 101 Barclay Street,
New York, New York 10286.
ADRs evidencing ADSs are issuable pursuant to the Deposit Agreement.
Each ADS represents, as of the date hereof, the right to receive twelve Series B
Shares, in each case deposited under the Deposit Agreement with the Custodian.
Such deposited Series B Shares, together with any additional Series B Shares
deposited under the Deposit Agreement and all other securities, property and
cash received and held thereunder in respect of or in lieu of such deposited
Series B Shares, are referred to as the "Deposited Securities." An ADR may
evidence any number of ADSs. Only persons in whose names ADRs are registered on
the books of the Depositary will be treated by the Depositary and the Company as
Owners.
DEPOSIT, TRANSFER AND WITHDRAWAL
The Depositary has agreed, subject to the terms and conditions of the
Deposit Agreement, that upon delivery to the Custodian of Series B Shares (or
evidence of rights to receive Series B Shares) accompanied by appropriate
instruments of transfer in a form satisfactory to the Custodian, the Depositary
will, upon payment of the fees, charges and taxes provided in the Deposit
Agreement, execute and deliver at its Corporate Trust Office to, or upon the
written order of, the person or persons named in the notice of the Custodian
delivered to the Depositary or requested by the person depositing such Series B
Shares with the Depositary, an ADR or ADRs, registered in the name or names of
such person or persons, and evidencing the number of ADSs representing such
Series B Shares.
Upon surrender at the Corporate Trust Office of the Depositary of an
ADR for the purpose of withdrawal of the Deposited Securities represented by the
ADSs evidenced by such ADR, and upon payment of the fees of the Depositary for
the surrender of ADRs, governmental charges and taxes provided in the Deposit
Agreement, and subject to the terms and conditions of the Deposit Agreement, the
Owner of such ADR will be entitled to prompt delivery, to him or upon his order,
of the amount of Deposited Securities at the time represented by the ADS or ADSs
evidenced by such ADR. The forwarding of certificates, other securities,
property, cash and other documents of title for such delivery will be at the
risk and expense of the Owner.
Subject to the terms and conditions of the Deposit Agreement and any
limitations established by the Depositary and unless requested by the Company to
cease doing so, the Depositary may deliver ADRs prior to the receipt of Series B
Shares ("Pre-Release") and deliver Series B Shares upon the receipt and
cancellation of ADRs which have been Pre-Released, whether or not such
cancellation is prior to the termination of such Pre-Release or the Depositary
knows that such ADR has been Pre-Released. The Depositary may receive ADRs in
lieu of Series B Shares in satisfaction of a Pre-Release. Each Pre-Release must
be (a) preceded or accompanied by a written representation and agreement from
the
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person to whom ADRs are to be delivered ("Pre-Releasee") that the Pre-Releasee,
or its customer, (i) owns the Series B Shares or ADRs to be remitted, as the
case may be, (ii) assigns all beneficial rights, title and interest in such
Series B Shares or ADRs, as the case may be, to the Depositary in its capacity
as such and for the benefit of the Owners, and (iii) will not take any action
with respect to such Series B Shares or ADRs, as the case may be, that is
inconsistent with the transfer of beneficial ownership (including, without the
consent of the Depositary, disposing of such Series B Shares or ADRs, as the
case may be, other than in satisfaction of such Pre-Release), (b) at all times
fully collateralized with cash, U.S. government securities or such other
collateral as the Depositary determines, in good faith, will provide
substantially similar liquidity and security, (c) terminable by the Depositary
on not more than five business days' notice, and (d) subject to such further
indemnities and credit regulations as the Depositary deems appropriate. The
number of Series B Shares not deposited but represented by ADSs outstanding at
any time as a result of Pre-Releases will not normally exceed thirty percent of
the Series B Shares deposited hereunder; provided, however, that the Depositary
reserves the right to disregard such limit from time to time as it reasonably
deems appropriate, and may, with the prior written consent of the Company,
change such limit for purposes of general application. The Depositary will also
set dollar limits with respect to Pre-Release transactions to be entered
hereunder with any particular Pre-Releasee on a case-by-case basis as the
Depositary deems appropriate. For purposes of enabling the Depositary to fulfill
its obligations to the Owners under the Deposit Agreement, the collateral
referred to in clause (b) above shall be held by the Depositary as security for
the performance of the Pre-Releasee's obligations to the Depositary in
connection with a Pre-Release transaction, including the Pre-Releasee's
obligation to deliver Series B Shares or ADRs upon termination of the
Pre-Release transaction.
DIVIDENDS, OTHER DISTRIBUTIONS AND RIGHTS
Subject to any restrictions imposed by Mexican law, regulations or
applicable permits, the Depositary is required to convert or cause to be
converted into dollars, as promptly as practicable, to the extent that it can in
its reasonable judgment do so on a reasonable basis pursuant to applicable law
and regulation and can transfer the resulting dollars to the United States, all
cash dividends and other cash distributions denominated in a currency other than
dollars, including Mexican pesos ("Foreign Currency"), that it receives in
respect of the Deposited Securities, and to distribute the resulting dollar
amount (net of the fees of the Depositary and reasonable and customary expenses
incurred by the Depositary in converting such Foreign Currency), as promptly as
practicable, to the Owners entitled thereto, in proportion to the number of ADSs
representing such Deposited Securities evidenced by ADRs held by them,
respectively. Such distribution may be made upon an averaged or other
practicable basis without regard to any distinctions among Owners on account of
exchange restrictions or the date of delivery of any ADR or ADRs or otherwise.
The amount distributed to the Owners of ADRs will be reduced by any amount on
account of taxes to be withheld by the Company or the Depositary. See
"--Liability of Owner for Taxes" below.
If the Depositary, pursuant to applicable law or regulation and its
reasonable judgment, determines that any Foreign Currency received by the
Depositary or the Custodian cannot be converted on a reasonable basis into
dollars transferable to the United States, or if any approval or license of any
government or agency thereof which is required for such conversion is denied or
in the reasonable judgment of the Depositary is not obtainable, or if any such
approval or license is not obtained within a reasonable period as reasonably
determined by the Depositary, the Depositary may distribute the Foreign Currency
received by the Depositary or the Custodian to, or in its discretion, after
consultation with the Company, if practicable, may hold such Foreign Currency
uninvested and without liability for interest thereon for the respective
accounts of, the Owners entitled to receive the same. If any such conversion of
Foreign Currency, in whole or in part, cannot be effected for distribution to
some of the Owners entitled thereto, the Depositary may in its discretion, after
consultation with the Company, if practicable, make such conversion and
distribution in U.S. dollars to the extent permissible to the Owners entitled
thereto, and may distribute the balance of the Foreign Currency received by the
Depositary to, or hold such balance uninvested and without liability for
interest thereon for the respective accounts of, the Owners entitled thereto.
9
If the Company declares a dividend in, or free distribution of, Series
B Shares, the Depositary may, and will if the Company so requests, distribute as
promptly as practicable to the Owners of outstanding ADRs entitled thereto, in
proportion to the number of ADSs evidenced by the ADRs held by them,
respectively, additional ADRs evidencing an aggregate number of ADSs that
represents the amount of Series B Shares received as such dividend or free
distribution, subject to the terms and conditions of the Deposit Agreement with
respect to the deposit of Series B Shares and the issuance of ADSs evidenced by
ADRs, including the withholding of any tax or other governmental charge and the
payment of fees of the Depositary. The Depositary may withhold any such
distribution of ADRs if it has not received reasonable assurances from the
Company that such distribution is not subject to, or is exempt from, the
registration requirements of the Securities Act. In lieu of delivering ADRs for
fractional ADSs in the event of any such dividend or free distribution, the
Depositary will sell the amount of Series B Shares represented by the aggregate
of such fractions and distribute the net proceeds in accordance with the Deposit
Agreement. If additional ADRs are not so distributed, each ADS will thenceforth
also represent the additional Series B Shares distributed upon the Deposited
Securities represented thereby.
If the Company offers or causes to be offered to the holders of any
Deposited Securities any rights to subscribe for additional Series B Shares or
any rights of any other nature, the Depositary, after consultation with the
Company, if practicable, will have discretion as to the procedure to be followed
in making such rights available to any Owners of ADRs or in disposing of such
rights for the benefit of any Owners and making the net proceeds available in
dollars to such Owners as promptly as practicable or, if by the terms of such
rights offering or for any other reason, the Depositary may not either make such
rights available to any Owners or dispose of such rights and make the net
proceeds available to such Owners, then the Depositary shall allow the rights to
lapse; provided, however, that if at the time of the offering of any rights the
Depositary reasonably determines that it is lawful and feasible to make such
rights available to all Owners or to certain Owners but not to other Owners, the
Depositary after consultation with the Company may, and at the request of the
Company will, distribute to any Owner to whom it determines the distribution to
be lawful and feasible, in proportion to the number of ADSs held by such Owner,
warrants or other instruments therefor in such form as it deems appropriate. If
the Depositary reasonably determines that it is not lawful and feasible to make
such rights available to certain Owners, it may, and at the request of the
Company will, use reasonable efforts to sell the rights, warrants or other
instruments in proportion to the number of ADSs held by the Owners to whom it
has determined it may not lawfully or feasibly make such rights available, and,
after deduction or upon payment of the fees and expenses of the Depositary,
allocate the net proceeds of such sales for the account of such Owners otherwise
entitled to such rights, warrants or other instruments, upon an averaged or
other practical basis without regard to any distinctions among such Owners
because of exchange restrictions or the date of delivery of any ADR or ADRs, or
otherwise. The Depositary will not be responsible for any failure to determine
that it may be lawful or feasible to make such rights available to Owners in
general or any Owner or Owners in particular. See "Capital Stock--Preemptive
Rights" above.
In circumstances in which rights would not otherwise be distributed, if
an Owner of ADRs requests the distribution of warrants or other instruments in
order to exercise the rights allocable to the ADSs of such Owner, the Depositary
will make such rights available to such Owner upon written notice from the
Company to the Depositary that (a) the Company has elected in its sole
discretion to permit such rights to be exercised and (b) such Owner has executed
such documents as the Company has determined in its sole discretion are
reasonably required under applicable law.
10
Upon instruction pursuant to such warrants or other instruments to the
Depositary from such Owner to exercise such rights, upon payment by such Owner
to the Depositary for the account of such Owner of an amount equal to the
purchase price of the Series B Shares to be received in exercise of the rights,
and upon payment of the fees of the Depositary as set forth in such warrants or
other instruments, the Depositary will, on behalf of such Owner, exercise the
rights and purchase the Series B Shares, and the Company shall cause the Series
B Shares so purchased to be delivered to the Depositary on behalf of such Owner.
As agent for such Owner, the Depositary will cause the Series B Shares so
purchased to be deposited, and will execute and deliver ADRs to such Owner,
pursuant to the Deposit Agreement. In the case of a distribution pursuant to the
immediately preceding paragraph, the Depositary shall cause such Series B Shares
to be deposited and depositary receipts to be executed and delivered under a
separate deposit agreement to be entered into between the Company and the
Depositary providing for issuance of depositary receipts subject to appropriate
restrictions on deposit and withdrawal of Series B Shares and transfer of
depositary shares as required by United States securities laws.
The Depositary will not offer rights to Owners unless both the rights
and the securities to which such rights relate are either not subject to, or
exempt from, the registration requirements of the Securities Act with respect to
a distribution to all Owners or are registered under the provisions of the
Securities Act; provided that nothing in the Deposit Agreement will create, or
be construed to create, any obligation on the part of the Company to file a
registration statement with respect to such rights or underlying securities or
to endeavor to have such a registration statement declared effective. If an
Owner of ADRs requests the distribution of warrants or other instruments,
notwithstanding that there has been no such registration under the Securities
Act, the Depositary will not effect such distribution unless it has received an
opinion from recognized United States counsel for the Company upon which the
Depositary may rely that such distribution to such Owner is exempt from such
registration. The Depositary will not be responsible for any failure to
determine that it may be lawful or feasible to make such rights available to
Owners in general or any Owner in particular.
Whenever the Depositary receives any distribution other than cash,
Series B Shares or rights in respect of the Deposited Securities, the Depositary
will cause the securities or property received by it to be distributed to the
Owners entitled thereto, after deduction or upon payment of any fees and
expenses of the Depositary and any taxes or other governmental charges, in
proportion to their holdings, respectively, in any manner that the Depositary
reasonably may deem equitable and practicable for accomplishing such
distribution; provided, however, that if in the reasonable opinion of the
Depositary such distribution cannot be made proportionately among the Owners
entitled thereto, or if for any other reason (including, but not limited to, any
requirement that the Company or the Depositary withhold an amount on account of
taxes or other governmental charges or that such securities must be registered
under the Securities Act in order to be distributed to Owners or Beneficial
Owners) the Depositary reasonably deems such distribution not to be feasible,
the Depositary may, after consultation with the Company, if practicable, adopt
such method as it reasonably may deem equitable and practicable for the purpose
of effecting such distribution as promptly as practicable, including, but not
limited to, the public or private sale of the securities or property thus
received, or any part thereof, and the net proceeds of any such sale (net of the
fees of the Depositary) will be distributed by the Depositary to the Owners
entitled thereto as in the case of a distribution received in cash.
If the Depositary reasonably determines that any distribution of
property (including Series B Shares and rights to subscribe therefor) is subject
to any taxes or other governmental charges which the Depositary is obligated to
withhold, the Depositary may, by public or private sale, dispose of all or a
portion of such property in such amount and in such manner as the Depositary
reasonably deems necessary and practicable to pay such taxes or charges and the
Depositary will distribute the net proceeds of any such sale after deduction of
such taxes or charges to the Owners entitled thereto in proportion to the number
of ADSs held by them, respectively.
11
Upon any change in nominal or par value, split-up, consolidation or any
other reclassification of Deposited Securities, or upon any recapitalization,
reorganization, merger or consolidation or sale of assets affecting the Company
or to which it is a party, any securities which shall be received by the
Depositary or Custodian in exchange for, in conversion of, or in respect of
Deposited Securities will be treated as new Deposited Securities under the
Deposit Agreement, and the ADSs will thenceforth represent, in addition to the
existing Deposited Securities, the right to receive the new Deposited Securities
so received in exchange or conversion, unless additional ADRs are delivered
pursuant to the following sentence. In any such case the Depositary may, and at
the request of the Company will, execute and deliver additional ADRs as in the
case of a distribution in Series B Shares, or call for the surrender of
outstanding ADRs to be exchanged for new ADRs specifically describing such new
Deposited Securities.
RECORD DATES
Whenever any cash dividend or other cash distribution shall become
payable or any distribution other than cash shall be made, or whenever rights
shall be issued with respect to the Deposited Securities, or whenever for any
reason the Depositary causes a change in the number of Series B Shares that are
represented by each ADS, or whenever the Depositary shall receive notice of any
meeting of holders of Series B Shares or other Deposited Securities, or whenever
the Depositary shall find it necessary or convenient, the Depositary, after
consultation with the Company, if practicable, will fix a record date, (a) for
the determination of the Owners who will be (i) entitled to receive such
dividend, distribution or rights, or the net proceeds of the sale thereof, or
(ii) entitled to give instructions for the exercise of voting rights at any such
meeting, or (b) on or after which each ADS will represent the changed number of
Series B Shares, all subject to the provisions of the Deposit Agreement. To the
extent practicable, the record date fixed by the Depositary for the
determination of the Owners who will be entitled to receive such dividend,
distribution, rights, or proceeds, or entitled to give instructions for the
exercise of such voting rights, will be the same as the record date fixed by the
Company for such determination with respect to the Series B Shares.
VOTING OF DEPOSITED SECURITIES
Upon receipt of notice from the Company of any meeting or solicitation
of consents or proxies of holders of Series B Shares or other Deposited
Securities, the Depositary will, as soon as practicable thereafter, mail to all
Owners a notice, the form of which notice will be in the reasonable discretion
of the Depositary, containing (a) the information included in such notice of
meeting received by the Depositary from the Company, (b) a statement that the
Owners as of the close of business on a specified record date will be entitled,
subject to any applicable provision of Mexican law and of the bylaws of the
Company, to instruct the Depositary as to the exercise of the voting rights, if
any, pertaining to the amount of or other Deposited Securities represented by
their respective ADSs and (c) a statement as to the manner in which such
instructions may be given, including an express indication that instructions may
be given or deemed given in accordance with the last sentence of this paragraph
if no instruction is received, to the Depositary to give a discretionary proxy
to a person designated by the Company. Upon the written request of an Owner on
such record date, received on or before the date established by the Depositary
for such purpose, the Depositary will endeavor, insofar as practicable, to vote
or cause to be voted the Series B Shares or other Deposited Securities
represented by the ADSs evidenced by such ADRs in accordance with the
nondiscretionary instructions set forth in such request. The Depositary will not
vote or attempt to exercise the right to vote that attaches to the Series B
Shares or other Deposited Securities, other than in accordance with such
instructions or deemed instructions. If no instructions are received by the
Depositary from any Owner with respect to any of the Deposited Securities
represented by the ADSs evidenced by such Owner's ADRs on or before the date
established by the Depositary for such purpose, the Depositary, subject to any
applicable provision of Mexican law and of the bylaws of the Company,
12
will deem such Owner to have instructed the Depositary to give a discretionary
proxy to a person designated by the Company with respect to such Deposited
Securities and the Depositary will give a discretionary proxy to a person
designated by the Company to vote such Deposited Securities, provided that no
such instruction will be deemed given and no such discretionary proxy will be
given with respect to any matter as to which the Company informs the Depositary
(and the Company agrees to provide such information as promptly as practicable
in writing) that (x) the Company does not wish such proxy given, (y) substantial
opposition exists or (z) such matter materially and adversely affects the rights
of holders of Series B Shares.
There can be no assurance that the Owners generally or any Owner in
particular will receive the notice described in this paragraph sufficiently
prior to the date established by the Depositary for the receipt of instructions
to ensure that the Depositary will in fact receive such instructions on or
before such date.
REPORTS AND OTHER COMMUNICATIONS
The Depositary will make available for inspection by Owners, at its
Corporate Trust Office, any reports and communications, including any proxy
soliciting material, received from the Company, which are both (a) received by
the Depositary as the holder of the Deposited Securities and (b) made generally
available to the holders of such Deposited Securities by the Company. The
Depositary will also send to the Owners copies of such reports when furnished by
the Company pursuant to the Deposit Agreement. Any such reports and
communications, including any proxy soliciting material, furnished to the
Depositary by the Company will be furnished in English as provided in the
Deposit Agreement or when so required pursuant to any regulations of the
Commission.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of ADRs and any provisions of the Deposit Agreement may at any
time and from time to time be amended by agreement between the Company and the
Depositary in any respect which they may deem necessary or desirable without the
consent of the Owners of ADRs; provided, however, that any amendment that
imposes or increases any fees or charges (other than taxes and other
governmental charges, registration fees, cable, telex or facsimile transmission
costs, delivery costs or other such expenses), or which otherwise prejudices any
substantial existing right of ADR Owners, will not take effect as to outstanding
ADRs until the expiration of 30 days after notice of any amendment has been
given to the Owners of outstanding ADRs. Every Owner and Beneficial Owner of an
ADR or any interest therein, at the time any amendment so becomes effective,
will be deemed, by continuing to hold such ADR, to consent and agree to such
amendment and to be bound by the Deposit Agreement as amended thereby. In no
event will any amendment impair the right of the Owner of any ADR to surrender
such ADR and receive therefor the Deposited Securities represented thereby,
except to comply with mandatory provisions of applicable law.
The Depositary will at any time at the direction of the Company
terminate the Deposit Agreement by mailing notice of such termination to the
Owners of the ADRs then outstanding at least 30 days prior to the effective date
fixed in such notice for such termination. The Depositary may likewise terminate
the Deposit Agreement by mailing notice of such termination to the Company and
the Owners of all ADRs then outstanding not less than 30 days prior to the
effective date of such termination if, any time after 30 days have expired after
the Depositary shall have delivered to the Company a written notice of its
election to resign, a successor depositary has not been appointed and accepted
its appointment, in accordance with the terms of the Deposit Agreement. If any
ADRs remain outstanding after the effective date of termination of the Deposit
Agreement, the Depositary thereafter will discontinue the registration of
transfers of ADRs, will suspend the distribution of dividends to the Owners
thereof and will not give any
13
further notices or perform any further acts under the Deposit Agreement, except
the collection of dividends and other distributions pertaining to the Deposited
Securities, the sale of rights and other property and the delivery of underlying
Series B Shares, together with any dividends or other distributions received
with respect thereto and the net proceeds of the sale of any rights or other
property, in exchange for surrendered ADRs (after deducting, in each case, the
fees of the Depositary for the surrender of an ADR and other expenses set forth
in the Deposit Agreement and any applicable taxes or governmental charges). At
any time after the expiration of one year from the effective date of
termination, the Depositary may sell the Deposited Securities then held
thereunder and hold uninvested the net proceeds of such sale, together with any
other cash, unsegregated and without liability for interest, for the pro rata
benefit of the Owners that have not theretofore surrendered their ADRs, such
Owners thereupon becoming general creditors of the Depositary with respect to
such net proceeds. After making such sale, the Depositary will be discharged
from all obligations under the Deposit Agreement, except to account for net
proceeds and other cash (after deducting, in each case, the fee of the
Depositary and other expenses set forth in the Deposit Agreement for the
surrender of an ADR and any applicable taxes or other governmental charges).
CHARGES OF DEPOSITARY
The Depositary will charge any party depositing Series B Shares or
withdrawing Deposited Securities or any party surrendering ADRs or to whom ADRs
are issued (including, without limitation, issuance pursuant to a stock dividend
or stock split declared by the Company or an exchange of stock regarding the
ADRs or Deposited Securities or a distribution of ADRs pursuant to the Deposit
Agreement) where applicable: (1) taxes and other governmental charges; (2) such
registration fees as may from time to time be in effect for the registration of
transfers of Series B Shares generally on the register of the Company or the
appointed agent of the Company for transfer and registration of Series B Shares
and applicable to transfers of Series B Shares to or from the name of the
Depositary or its nominee or the Custodian or its nominee on the making of
deposits or withdrawals; (3) such cable, telex and facsimile transmission
expenses as are expressly provided in the Deposit Agreement to be at the expense
of persons depositing Series B Shares or Owners; (4) such expenses as are
incurred by the Depositary in the conversion of Foreign Currency pursuant to the
Deposit Agreement; (5) a fee not in excess of $5.00 per 100 ADSs (or portion
thereof) for the issuance and surrender, respectively, of ADRs pursuant to the
Deposit Agreement; (6) to the extent permitted by any securities exchange on
which the ADSs may be listed for trading a fee not in excess of $.02 per ADS (or
portion thereof) for any cash distribution made pursuant to the Deposit
Agreement; and (7) a fee for the distribution of securities pursuant to the
Deposit Agreement, such fee being in an amount equal to the fee for the
execution and delivery of ADSs referred to above which would have been charged
as a result of the deposit of such securities (for purposes of this clause (7)
treating all such securities as if they were Series B Shares), but which
securities are instead distributed by the Depositary to Owners.
The Depositary, pursuant to the Deposit Agreement, may own and deal in
any class of securities of the Company and its affiliates and in ADRs.
LIABILITY OF OWNER FOR TAXES
If any tax or other governmental charge shall become payable by the
Custodian or the Depositary with respect to any ADR or any Deposited Securities
represented by the ADSs evidenced by such ADR, such tax or other governmental
charge will be payable by the Owner or Beneficial Owner of such ADR to the
Depositary. The Depositary may refuse to effect any transfer of such ADR or any
combination or split-up thereof or any withdrawal of Deposited Securities
underlying such ADR until such payment is made, and may withhold any dividends
or other distributions, or may sell for the account of the Owner or Beneficial
Owner thereof any part or all of the Deposited Securities underlying such ADR
and may apply such dividends, distributions or the proceeds of any such sale to
pay any such tax or other governmental charge and the Owner or Beneficial Owner
of such ADR will remain liable for any deficiency.
14
GENERAL
Neither the Depositary nor the Company nor any of their respective
directors, employees, agents or affiliates will be liable to any Owner or
Beneficial Owner of ADRs, if by reason of any provision of any present or future
law or regulation of the United States, Mexico or any other country, or of any
other governmental or regulatory authority or stock exchange, or by reason of
any provision, present or future, of the bylaws of the Company, or by reason of
any provision of any securities issued or distributed by the Company, or any
offering or distribution thereof, or by reason of any act of God or war or other
circumstances beyond its control, the Depositary or the Company or any of their
respective directors, employees, agents, or affiliates shall be prevented,
delayed or forbidden from, or be subject to any civil or criminal penalty on
account of, doing or performing any act or thing which by the terms of the
Deposit Agreement or the Deposited Securities it is provided will be done or
performed; nor will the Depositary or the Company incur any liability to any
Owner or Beneficial Owner of any ADR by reason of any nonperformance or delay,
caused as aforesaid, in the performance of any act or thing which by the terms
of the Deposit Agreement it is provided will or may be done or performed, or by
reason of any exercise of, or failure to exercise, any discretion provided for
under the Deposit Agreement. Where, by the terms of a distribution pursuant to
the Deposit Agreement, or an offering or distribution pursuant to the Deposit
Agreement, or for any other reason, such distribution or offering may not be
made available to Owners, and the Depositary may not dispose of such
distribution or offering on behalf of such Owners and make the net proceeds
available to such Owners, then the Depositary will not make such distribution or
offering, and will not allow the rights, if applicable, to lapse.
The Company and the Depositary assume no obligation nor will they be
subject to any liability under the Deposit Agreement to Owners or Beneficial
Owners of ADRs, except that they agree to perform their respective obligations
specifically set forth under the Deposit Agreement without negligence or bad
faith.
The ADRs are transferable on the books of the Depositary, provided that
the Depositary may close the transfer books, after consultation with the Company
to the extent practicable, at any time or from time to time, when reasonably
deemed expedient by it in connection with the performance of its duties or at
the written request of the Company. As a condition precedent to the execution
and delivery, registration of transfer, split-up, combination or surrender of
any ADR, the delivery of any distribution thereon or withdrawal of any Deposited
Securities, the Depositary, the Company, the Custodian or the Registrar may
require payment from the person presenting the ADR or the depositor of the
Series B Shares of a sum sufficient to reimburse it for any tax or other
governmental charge and any stock transfer or registration fee with respect
thereto (including any such tax or charge and fee with respect to Series B
Shares being deposited or withdrawn) and payment of any applicable fees payable
by the holders of ADRs. The Depositary may refuse to deliver ADRs, to register
the transfer of any ADR or to make any distribution on, or related to, Series B
Shares until it has received such proof of citizenship or residence, exchange
control approval or other information as it reasonably may deem necessary or
proper. The delivery, transfer, registration of transfer of outstanding ADRs and
surrender of ADRs generally may be suspended or refused during any period when
the transfer books of the Depositary, the Company or the Foreign Registrar are
closed or if any such action is reasonably deemed necessary or advisable by the
Depositary or the Company, at any time or from time to time. Notwithstanding
anything to the contrary in the Deposit Agreement or the ADRs, the surrender of
outstanding ADRs and withdrawal of Deposited Securities may not be suspended
subject only to (i) temporary delays caused by closing the transfer books of the
Depositary or the Company or the deposit of Series B Shares in connection with
voting at a shareholders' meeting, or the payment of dividends, (ii) the payment
of fees, taxes and similar charges, (iii) compliance with any U.S. or foreign
laws or governmental regulations relating to the ADRs or to the withdrawal of
the Deposited Securities or (iv) any other reason that may be specified in
paragraph I(A)(i) of the General Instructions to Form F-6 under the Securities
Act or any successor provision thereto.
15
To the extent that provisions of or governing any Deposited Securities
may require the disclosure of beneficial or other ownership of Deposited
Securities, other Series B Shares and other securities to the Company and may
provide for blocking transfer and voting or other rights to enforce such
disclosure or limit such ownership, the Depositary will use its reasonable
efforts to comply with Company instructions as to ADRs in respect of any such
enforcement or limitation, and Owners and Beneficial Owners agree to comply with
all such disclosure requirements and ownership limitations and shall cooperate
with the Depositary's compliance with such Company instructions.
The Depositary will keep books, at its Corporate Trust Office, for the
registration and transfer of ADRs, which at all reasonable times will be open
for inspection by the Owners, provided that such inspection will not be for the
purpose of communicating with Owners in the interest of a business or object
other than the business of the Company or a matter related to the Deposit
Agreement or the ADRs.
The Depositary may appoint one or more co-transfer agents for the
purpose of effecting transfers, combinations and split-ups of ADRs at designated
transfer offices on behalf of the Depositary. In carrying out its functions, a
co-transfer agent may require evidence of authority and compliance with
applicable laws and other requirements by Owners or persons entitled to ADRs and
will be entitled to protection and indemnity to the same extent as the
Depositary.
GOVERNING LAW
The Deposit Agreement will be governed by the laws of the State of New
York.
TAXATION
The following is a general summary of the principal U.S. federal tax
consequences and the principal Mexican federal tax consequences of the
conversion of the Series L Shares into Series B Shares and the conversion of the
Old ADSs into the ADSs and the consequences of the acquisition, ownership and
disposition of such Series B Shares and ADSs. This summary does not purport to
address all material tax consequences that may be relevant to holders of Series
L Shares or Old ADSs, and does not take into account the specific circumstances
of any particular investors, some of which (such as tax-exempt entities, banks,
insurance companies, broker-dealers, traders in securities that elect to use a
mark-to-market method of accounting for their securities holdings, regulated
investment companies, real estate investment trusts, partnerships and other
pass-through entities, investors liable for the U.S. alternative minimum tax,
investors that own or are treated as owning 10% or more of our voting stock,
investors that hold Series L Shares or Old ADSs as part of a straddle, hedge,
conversion transaction or other integrated transaction and U.S. Holders (as
defined below) whose functional currency is not the U.S. dollar) may be subject
to special tax rules. In addition, this summary is based in part upon the
representations of the Depositary and the assumption that each obligation in the
deposit agreement, and in any related agreement, will be performed in accordance
with its terms.
16
For purposes of this discussion, a "U.S. Holder" is any beneficial
owner of Series L Shares or Old ADSs that, for U.S. federal income tax purposes,
is:
1. an individual who is a citizen or resident of the United
States;
2. a corporation (or other entity taxable as a corporation for
U.S. federal income tax purposes) organized in or under the laws of the United
States, any state thereof, or the District of Columbia;
3. an estate the income of which is subject to U.S. federal
income tax without regard to its source; or
4. a trust that is subject to the primary supervision of a U.S.
court and the control of one or more U.S. persons, or that has a valid election
in effect under applicable Treasury regulations to be treated as a U.S. person.
This summary is based on the federal income tax laws and regulations of
the United States and Mexico, judicial decisions, published rulings and
administrative pronouncements, all as in effect on the date hereof, and all of
which are subject to change (which changes may have retroactive effect) and
different interpretations. Holders of Series L Shares or Old ADSs should consult
their own tax advisors as to the U.S., Mexican or other tax consequences of the
conversion of the Series L Shares into Series B Shares or Old ADSs into the
ADSs, and the acquisition, ownership and disposition of Series B Shares or ADSs,
including, in particular, the effect of any non-U.S., non-Mexican, state or
local tax laws.
A Convention for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with Respect to Taxes on Income, and a Protocol thereto, between
the United States and Mexico (the "Tax Treaty") took effect on January 1, 1994.
The Tax Treaty was amended by a second Protocol signed November 26, 2002, the
provisions of which took effect in part on September 1, 2003, and in part on
January 1, 2004. The United States and Mexico have also entered into an
agreement concerning the exchange of information with respect to tax matters.
In general, for U.S. federal income tax purposes, holders of ADRs
evidencing Old ADSs will be treated as the beneficial owners of the Series L
Shares represented by those Old ADSs.
U.S. FEDERAL INCOME TAXATION
U.S. HOLDERS
The following discussion is a summary of the principal U.S. federal
income tax consequences to holders of our Series L Shares or Old ADSs that are
U.S. Holders and that have held those Series L Shares or Old ADSs, and that will
hold the Class B Shares and ADSs as capital assets (generally, for investment
purposes). Except as expressly described below, this discussion assumes that we
are not a passive foreign investment company (a "PFIC") for U.S. federal income
tax purposes.
This summary is based upon laws, regulations, rulings and decisions now
in effect, all of which are subject to change (including retroactive changes in
effective dates) or to possible differing interpretations. No rulings have been
sought or are expected to be sought from the Internal Revenue Service (the
"IRS") with respect to any of the U.S. federal income tax consequences discussed
below. As a result, there is a possibility that the IRS will disagree with the
tax characterizations and the tax consequences described below, including the
classification of the conversion of Old ADSs to ADSs and Series L Shares to
Series B Shares.
17
TREATMENT OF THE CONVERSION
We believe that the exchange of Old ADSs for ADSs and the exchange of
Series B Shares for Series L Shares should constitute an exchange of "common
stock for common stock" within the meaning of Section 1036 of the Internal
Revenue Code of 1986, as amended (the "Code"). Consequently, (i) a U.S. Holder
generally should not recognize any gain or loss in the exchange, (ii) the U.S.
Holder's adjusted tax basis in the Series B Shares exchanged for Series L Shares
and the ADSs exchanged for Old ADSs generally should equal the U.S. Holder's
adjusted tax basis in the Series L Shares and Old ADSs, as applicable, and (iii)
the U.S. Holder's holding period in the ADSs or the new Series B Shares should
include the U.S. Holder's holding period in the Old ADSs and Series L Shares, as
applicable. The remainder of this discussion assumes such treatment.
TAXATION OF SERIES B SHARES OR ADSS
Dividends
---------
Cash dividends paid with respect to the Series B Shares or Series B
Shares represented by ADSs to the extent paid out of our earnings and profits
(as determined under U.S. federal income tax principles) will be included in the
gross income of a U.S. Holder as ordinary income on the day on which the
dividends are received by the U.S. Holder, in the case of Series B Shares, or
the Depositary, in the case of Series B Shares represented by ADSs, and will not
be eligible for the dividends-received deduction allowed to corporations under
the Internal Revenue Code of 1986, as amended (the "Code"). We do not currently
maintain calculations of our earnings and profits under U.S. federal income tax
principles. Because these calculations are not made, distributions should be
presumed to be taxable dividends for U.S. federal income tax purposes. Such
dividends generally will be treated as foreign source income for U.S. foreign
tax credit purposes.
Dividends paid in pesos will be included in the gross income of a U.S.
Holder in a U.S. dollar amount calculated by reference to the exchange rate in
effect on the day they are received by the U.S. Holder, in the case of Series B
Shares, or the Depositary, in the case of Series B Shares represented by ADSs
(regardless of whether such pesos are in fact converted into U.S. dollars on
such date). If such dividends are converted into U.S. dollars on the date of
receipt by the U.S. Holder or the Depositary, as the case may be, the U.S.
Holder generally should not be required to recognize foreign currency gain or
loss in respect of the dividends. U.S. Holders should consult their own tax
advisors regarding the treatment of foreign currency gain or loss, if any, on
any pesos received which are converted into U.S. dollars on a date subsequent to
receipt.
Subject to certain exceptions for short-term and hedged positions, and
provided that we are not a passive foreign investment company (as discussed
below), dividends received by certain U.S. Holders (including individuals) prior
to January 1, 2011 with respect to the Series B Shares or ADSs will be subject
to U.S. federal income taxation at a maximum rate of 15%. The U.S. Treasury
Department has announced its intention to promulgate rules pursuant to which
shareholders (and intermediaries) will be permitted to rely on certifications
from issuers to establish that dividends qualify for the reduced rate of U.S.
federal income taxation. Because such procedures have not yet been issued,
however, we are not certain that we will be able to comply with them. U.S.
Holders of Series B Shares or ADSs should consult their own tax advisors
regarding the availability of the reduced rate in the light of their own
particular circumstances.
Distributions to U.S. Holders of additional Series B Shares with
respect to their Series B Shares or ADSs that are made as part of a pro rata
distribution to all of our stockholders generally will not be subject to U.S.
federal income tax. If holders of the ADSs are restricted in their ability to
participate in the exercise of preemptive rights, the preemptive rights may give
rise to a deemed distribution to holders of the Series B Shares under Section
305 of the Code. Any deemed distributions will be taxable as a dividend in
accordance with the general rules of the income tax treatment of dividends
discussed above.
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Taxation of Capital Gains
-------------------------
Gain or loss recognized by a U.S. Holder on the sale or other taxable
disposition of Series B Shares or ADSs generally will be subject to U.S. federal
income taxation as capital gain or loss in an amount equal to the difference
between such U.S. Holder's adjusted tax basis in the Series B Shares or ADSs and
the amount realized on the disposition. A U.S. Holder generally will have an
adjusted tax basis in a Series B Share or an ADS equal to its U.S. dollar cost.
Gain or loss recognized by a U.S. Holder on the sale or other disposition of
Series B Shares or ADSs will generally be long-term gain or loss if, at the time
of disposition, the U.S. Holder has held the Series B Shares or ADSs for more
than one year.
Certain U.S. Holders, including individuals, are eligible for
preferential rates of U.S. federal income tax in respect of long-term capital
gains. The deduction of a capital loss is subject to limitations under the Code.
Gain realized by a U.S. Holder on a sale or other disposition of Series
B Shares or ADSs generally will be treated as U.S. source income for U.S.
foreign tax credit purposes. Consequently, if any Mexican withholding tax is
imposed on the sale or disposition of the Series B Shares, a U.S. holder that
does not receive significant foreign source income from other sources may not be
able to derive effective U.S. foreign tax credit benefits in respect of these
Mexican taxes. U.S. holders should consult their own tax advisors regarding the
application of the foreign tax credit rules to their investment in, and
disposition of, the Series B Shares or ADSs.
Deposits and withdrawals of Series B Shares by U.S. Holders in exchange
for ADSs will not result in the realization of gain or loss for U.S. federal
income tax purposes.
Passive Foreign Investment Company Rules
----------------------------------------
A non-U.S. corporation generally will be classified as a PFIC for U.S.
federal income tax purposes in any taxable year in which, after applying
look-through rules, either (1) at least 75% of its gross income is passive
income, or (2) on average at least 50% of the gross value of its assets is
attributable to assets that produce passive income or are held for the
production of passive income. Passive income for this purpose generally includes
dividends, interest, royalties, rents and gains from commodities and securities
transactions. The PFIC determination is made annually and generally is based on
the value of a non-U.S. corporation's assets (including goodwill) and
composition of its income.
We do not believe that we are a PFIC for U.S. federal income tax
purposes, and we intend to continue our operations in such a manner that we will
not become a PFIC in the future, although no assurances can be made regarding
determination of our PFIC status in the current or any future taxable year. If
we become a PFIC, U.S. Holders could be subject to additional U.S. federal
income taxes on gain recognized with respect to the Series B Shares or ADSs and
on certain distributions. In addition, an interest charge may apply to the
portion of the U.S. federal income tax liability on such gains or distributions
treated under the PFIC rules as having been deferred by the U.S. Holder.
Moreover, dividends that a U.S. Holder receives from us will not be eligible for
the reduced U.S. federal income tax rates described above if we are a PFIC
either in the taxable year of the distribution or the preceding taxable year
(and instead will be taxable at rates applicable to ordinary income).
Prospective investors should consult their own tax advisors regarding
the potential application of the PFIC rules to Series B Shares or ADSs.
19
U.S. Backup Withholding
-----------------------
A U.S. Holder of Series B Shares or ADSs may, under certain
circumstances, be subject to "backup withholding" with respect to certain
payments to such U.S. Holder, such as dividends paid by us or the proceeds of a
sale of Series B Shares or ADSs, unless such U.S. Holder (i) is a corporation or
comes within certain other exempt categories, and demonstrates this fact when so
required or (ii) provides a correct taxpayer identification number, certifies
that it is a U.S. person and that it is not subject to backup withholding and
otherwise complies with applicable requirements of the backup withholding rules.
Any amount withheld under these rules will be creditable against the U.S.
Holder's U.S. federal income tax liability provided that the U.S. Holder timely
files the appropriate forms with the U.S. Internal Revenue Service. While
Non-U.S. Holders generally are exempt from backup withholding, a Non-U.S. Holder
may, in certain circumstances, be required to comply with certain information
and identification procedures in order to prove this exemption.
MEXICAN TAXATION
The conversion will not trigger a taxable event under Mexican Law and
will not result in any change for Mexican tax purposes. The treatment of holders
of the Series B Shares and the ADSs will not change as a result of this
conversion from those discussed in the 20-F.
ITEM 2. EXHIBITS.
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The securities to be registered are to be listed on the NYSE, on which
other Series B Shares of the Registrant are already listed, in the form of ADRs.
Accordingly, the following exhibits also are being filed with the NYSE:
1.1 Copies of the Registrant's Registration Statement on Form F-1 (No.
333-7472) filed on August 22, 1997 relating to Series Class B common
shares with no par value of the Registrant.
1.2 Copies of the Registration Statement on Form F-6 (No. 333-7480) filed
on August 18, 2006 relating to American Depositary Shares (evidenced by
American Depositary Receipts) under the Securities Act of 1933, as
amended.
4.1* Bylaws of the Registrant as translated into English.
4.2 Form of Amended Depositary Agreement among the Registrant, The Bank of
New York, as Depositary, and the owners from time to time of American
Depositary Receipts, including the Form of American Depositary Receipt
(incorporated by reference to Exhibit 1 of the Registrant's
Registration Statement on Form F-6 (No. 333-7480) filed on August 18,
2006).
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* Filed herein.
20
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
INDUSTRIAS BACHOCO, S.A. de C.V.
Date: September 18, 2006
By: /s/ Daniel Salazar Ferrer
-------------------------
Name: Daniel Salazar Ferrer
Title: Chief Financial Officer
EXHIBITS
1.1 Copies of the Registrant's Registration Statement on Form F-1 (No.
333-7472) filed on August 22, 1997 relating to Series Class B common
shares with no par value of the Registrant.
1.2 Copies of the Registration Statement on Form F-6 (No. 333-7480) filed
on August 18, 2006 relating to American Depositary Shares (evidenced by
American Depositary Receipts) under the Securities Act of 1933, as
amended.
4.1* Bylaws of the Registrant dated December 9, 2003 as translated into
English.
4.2 Form of Amended Depositary Agreement among the Registrant, The Bank of
New York, as Depositary, and the owners from time to time of American
Depositary Receipts, including the Form of American Depositary Receipt
(incorporated by reference to Exhibit 1 of the Registrant's
Registration Statement on Form F-6 (No. 333-7480) filed on August 18,
2006).
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* Filed herein.