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Corporate Governance

Ternium Argentina has steel operations in Argentina and additionally holds non-controlling stakes in the steel companies Ternium México, with operations in Mexico, and Usiminas, with operations in Brazil. Ternium Argentina is a subsidiary of Ternium S.A. of Luxembourg. Additionally, Ternium S.A. holds a controlling interest in Ternium México and in other steel companies with operations in Latin America and the southern United States, and a non-controlling interest in Usiminas.

Ternium Argentina’s shares are listed in Bolsas y Mercados Argentinos, Argentine Stock Exchanges and Markets (BYMA). The company's board of directors, the management and administrative body of the company, is composed of a minimum of eleven and a maximum of twenty directors as stated in the articles of association. The board of directors is currently composed of eleven directors, seven of whom are independent directors, and four substitute directors. The management of the company is in charge of an executive president, to whom reports a team of managers with specific responsibility over different business areas. Operational decisions are taken by the presidency together with its management team, while decisions of strategic nature or those inherent to the company's management body are subject to the approval of the board of directors. Likewise, for the management of the company, the officers periodically monitor the current internal control system considering the implications on it of changes in processes or systems.

The supervisory board is composed of three members and three substitute members, all of whom are independent. The company has an audit committee, whose members are appointed by the board of directors, consisting of three directors, all of whom are independent directors, and a substitute director. The performance and functioning of the audit committee is in accordance with articles 109 and 110 of chapter V, section IV of law #26,831 and by title II, chapter III, section V of the 2013 ordered text of the Rules of the Comisión Nacional de Valores the Argentine equity markets regulator. The articles of association of the audit committee establish, among other matters, the purpose and responsibilities of the audit committee, which include the responsibility to review the relevant acts or contracts that the company holds with related parties, in order to determine whether the conditions of the transaction can reasonably be considered adequate to the normal and usual market conditions. Additionally, the audit committee assists and informs the board of directors regarding the integrity of the company's financial statements and the internal control system over financial reporting.

Ternium Argentina has a Code of Conduct that includes guidelines and standards of integrity and transparency for all its employees. Likewise, the company has a Code of Ethics for Senior Financial Officers, a Transparency Policy in the Relationship with Third Parties, a Policy on Business Conduct, a Code of Conduct for Suppliers, an Anti-Fraud Policy and a Policy on Equity Transactions. Ternium Argentina's internal audit management reports to the chairman of the board of directors and, regarding internal control over financial reporting, to the audit committee. Ternium Argentina ́s internal audit management evaluates and ensures the effectiveness of control processes, risk management and corporate governance. The company established and encourages the use of a web-based transparency line to enable anonymous reports of situations contrary to the Code of Conduct.

Corporate Governance AR

Ternium Argentina has an internal control and business conduct compliance manager who reports to the executive president of the company. This management has the responsibility of identifying and mitigating corruption risks and encouraging a culture of ethical and transparent behaviour, and of designing norms aligned with national and international laws against corruption and bribery. The Company's Code of Conduct for Suppliers includes issues such as ethical behavior, compliance with law, care for the environment, promotion of health and safety, and respect for human rights applicable to commercial activities. The acceptance and systematic compliance of such code regulations are integrated into the management and evaluation procedure of Ternium Argentina’s suppliers.

The company does not have options plans for the remuneration of directors or managers. The remuneration of board members and of the supervisory board has been set according to responsibilities assumed, time dedicated, professional competence and reputation and the value of their services in the market. The compensation of officials has a fixed component and a performance component, and is aligned with market remunerations. Ternium Argentina has implemented a retirement plan under the non-funded defined benefits methodology for certain high-ranked employees. The liability recognized in the statement of financial position for these employee benefits is recorded at the current value of the defined obligations at the end of the year. The remeasurements of post-employment benefits derived from changes in actuarial assumptions are recognized in other comprehensive results in the period in which they are generated and the costs for services rendered in the past are immediately recognized in results.

The company does not have a formal policy that regulates the amount and distribution of dividends. The distribution of dividends depends on the economic results, the financial situation, the economic prospects, the investment plans and other factors influencing the progress of the company, which determine the criteria of the board of directors for the proposal to be made to the shareholders’ meeting. Subsequently, the shareholders meeting is the one that analyzes the proposal received by the board of directors and approves or modifies it.

Read Ternium Argentina’s By-laws (in Spanish) and its Audit Committee´s Internal Regulations (in Spanish).