On December 28, 2023, the President of Mexico published in the Federal Official Gazette (Diario Oficial de la Federación) a decree (the “Decree”) that amends the Securities Market Law (LMV) and the Investment Funds Law (LFI). The Decree amends, adds and repeals several sections and provisions of said laws.
This amendment intends to improve access to the stock market for small and medium-sized companies (PyMES), providing them with accessible financing alternatives.
To review the official Decree in detail, you can click here (in Spanish).
The main changes to the LMV and the LFI are listed below
Securities Market Law
Simplified Securities Registration
This new procedure will allow PyMES to access the stock market through public offerings of securities, either of debt or stock. This new modality simplifies the process of listing on the stock market, making it faster and at a lower cost.
According to the Decree, the National Banking and Securities Commission (CNBV) will have the authority to determine the requirements that must be met to adopt this simplified regime, as well as the capacity to withdraw the simplified registration in accordance with the provisions set forth in the LMV.
The stock exchanges will be the supervisors of the issuers under this regime.
Corporate Regime
With the Decree, the requirement for Investment Promotion Corporations (commonly referred to by their acronym in Spanish as “SAPI”) that wish to register their shares or debt securities in the National Securities Registry to adopt the Public Stock Corporation regime (S.A.B.) within 10 years is revoked. Likewise, the requirement to develop a program for the gradual adoption of the S.A.B. corporate governance is also revoked.
Delegation of Authority to the Board of Directors
The shareholders of a S.A.B. and of the Public Stock Investment Promotion Corporations (S.A.P.I.B.) are allowed to delegate to the board of directors the authority to increase the capital stock and to set the terms of the subscription of shares, including the exclusion of the preemptive subscription right in connection with the issuance of shares regarding the delegation.
Takeover Protection in S.A.B.’s.
Through an extraordinary (i.e., high quorum required) shareholder resolution, the shareholders may adopt bylaws provisions that prevent the acquisition of shares that grant control of the company to third parties or to the shareholders themselves. For this purpose, 20% or more of the capital stock present at the respective meeting must not vote against these provisions. Prior to the Decree, it was 5% or more.
Investment Funds Law
Regarding the amendments to the LFI, important innovations are introduced in the investment funds field, especially with the incorporation of hedge funds, which are designed to dynamize the capital market, offering new investment and financing options.
Hedge Funds
Shareholders
The shareholders of hedge funds are limited to qualified investors (authorized by the CNBV) and institutional investors (financial institutions or those with such status under applicable laws).
This provision encourages only investors with the necessary experience and financial capacity to engage in this type of investment.
No limit on Share Holding
Hedge funds will not be required to adopt the maximum shareholding limits per shareholder that apply to other investment funds under the LFI.
Authorized Advisors
Hedge funds can be established and operated by investment advisors authorized pursuant to the provisions of the LMV, without the need to have an investment fund operating company, as is the case with other funds regulated in the LFI.
Transactions with Various Assets
Hedge funds will have the ability to trade in a wide range of investible assets, as defined in their informative brochures
What’s next?
What’s next?
That the CNBV and the Mexico’s Central Bank issue the corresponding secondary regulation within 365 calendar days from December 29, 2023, so that stock exchanges, companies and funds to be listed under the new modalities have clear and specific rules to be able to apply the provisions of the Decree.
For more information, please contact us by e-mail: luis.armendariz@dha.mx
