Corporate Governance

Board of Directors
The administration of the Company is the responsibility of a Board of Directors, which is currently made up of six (6) regular directors and no designated alternates. Telesites’ bylaws stipulate that the Board of Directors must have between five and twenty-one directors and up to an equal number of alternate directors. Directors need not be shareholders, but a majority of the directors and their alternates must be Mexican citizens and elected by Mexican shareholders.

Directors and their alternates are elected or reelected at each annual general shareholders’ meeting. In accordance with the Mexican Securities Market Act (LMV), the independence of Telesites’ directors is qualified by Telesites’ shareholders, though the Mexican Banking and Securities Commission (CNBV) may challenge this qualification. Pursuant to our bylaws and the Mexican Securities Market Act, at least 25% of Telesites’ directors must be independent. Currently 50% of our directors are independent, a proportion significantly higher than that required by law. Meetings of the Board of Directors may be legally called to order when a majority of its members are present.

Our bylaws also state that the members of the Board of Directors are elected for a term of one year. Pursuant to the General Law on Commercial Corporations (LGSM), however, members of the Board remain in their positions after the expiration of their terms for up to an additional thirty-day (30) period if new members are not elected and substitutes have either not been designated for the departing member, or have not yet assumed their duties. Furthermore, under certain circumstances provided for under the LMV, the Board of Directors may elect temporary directors who then may be ratified or replaced at the shareholders’ meetings.

The following is a list of the current members of the Board of Directors of Telesites, their position on the Board, their business experience and other board experience, appointed to serve for the period from April 2020 to April 2021. Shareholders ratified these board members’ positions in the General Ordinary Annual Shareholders’ Meeting of April 30, 2020.

For the moment, 100% of our Board Members are male.

Verónica Ramírez Villela and Eriván Urióstegui Hernández serve as secretary and secretary pro tem, respectively, of the Board of Directors of Telesites, but are not members of that board. We believe that the participation of a woman in these activities from the time of our founding promotes a philosophy of inclusiveness without distinction to gender in the formation of our governance bodies.

Audit and Corporate Practices Committee

The LMV obligates every publicly-traded company to have an audit committee made up of at least three independent members appointed by the Board of Directors (except for companies controlled by a single person or business group owning 50% or more of its capital stock, in which case a majority of the members of the Corporate Practices Committee must be independent). The Audit Committee (together with the Board of Directors, which has additional obligations) replaces the statutory auditor, a position formerly required under the terms of the General Law on Commercial Corporations.

The specific duties of the Audit and Corporate Practices Committee are:

• To provide an opinion to the Board of Directors on matters for which it is responsible under the LMV;
• To call shareholders’ meetings and incorporate matters onto the order of business that it considers pertinent;
• To inform the Board of Directors of the status of the internal control system, including aspects that require improvement;
• To select the Company’s auditors, review and preliminary approve the scope and terms of their engagement, and to determine their compensation;
• To supervise management of these auditors and review the terms of their engagement;
• To recommend procedures for the preparation of financial statements and internal controls;
• To oversee compliance with internal controls and the way certain entries are accounted for;
• To recommend procedures for preparing internal financial statements consistent with the published financial statements;
• To support the Board of Directors in preparing the reports stipulated in the LMV;
• To discuss with auditors the annual financial statements and accounting principles applied to them and on the financial statements for interim periods, and on the basis of these discussions, to recommend the approval of these financial statements by the Board of Directors;
• To settle differences of opinion between the Board of Directors and auditors regarding the financial statements;
• To request the opinion of independent experts in cases where it deems appropriate, or where required by law;
• To approve the services rendered by auditors, or to establish policies and procedures for preliminary approval of these services;
• To obtain from auditors a report that includes an explanation of the main accounting principles applied by the Company, of any optional treatment regarding the most significant line items that have been discussed by management with the auditors, and of any other written communications between the auditors and the Board of Directors;
• To present the Board of Directors a report on its activities;
• To develop procedures for receiving, channeling and addressing complaints regarding accounting, controls, and audit-related issues, including procedures for presenting confidential reports on these issues made by employees;
• To evaluate the performance of the external auditors;
• To review and discuss the Company’s financial statements and to communicate to the Board the Committee’s recommendations on approval of those financial statements;
• To receive and analyze observations supplied by shareholders, board members and key executives, and to take whatever action it deems appropriate to address them;
• To recommend to the Board of Directors procedures for selecting or replacing the Chief Executive Officer and other key Company executives;
• To propose criteria for evaluating the performance of key executives;
• To analyze the Chief Executive Officer’s proposals on the structure and amount of compensation paid to key executives;
• To review any new programs of compensation for key executives and the functioning of existing programs;
• To establish hiring policies that avoid excessive payments to key executives;
• To support the Board of Directors in developing appropriate personnel policies;
• To take any other action ordered by the Board of Directors.

The Audit and Corporate Practices Committee of the Company is made up of the following individuals (all of them independent board members according to the LMV definition).

All members of the Audit and Corporate Practices Committee have extensive experience and a long professional career either as entrepreneurs, public officials or in the private sector, and most of them are or have been board members of various companies in the financial or securities industry, and have served in federal public administration and de-centralized government agencies.