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20 February 2007
Mexico's Securities Market Law seeks to facilitate access to the securities market for medium-sized companies and corporations by encouraging them to adopt sound corporate practices, including measures to protect the rights of minority shareholders.
Entities preparing for listing should initially be incorporated as investment promotion companies (sociedades anónimas promotoras de inversion (SAPIs)), at which stage they are not supervised by the National Banking and Securities Commission. They may then be converted into registered investment promotion companies (sociedades anónimas promotoras de inversion bursátil); their shares are registered with the commission and they have a three-year transition period in which to comply with most of the requirements of the law before becoming publicly listed registered companies (sociedades anónimas bursátils (SABs)), which are subject to the full range of regulations governing listed corporations.
One of the law's main aims is to make it easier for corporations to enter and invest in the stock market. Its measures are a response to a significant increase in the credit offerings of various financial entities, such as multi-purpose financial companies and entities operating in the debt market, and an overall decline in the credit offerings of Mexican banks, although 2006 saw an upturn. The law considers the market from a broad perspective and seeks to develop other types of investment vehicle which will encourage market growth and enable smaller corporations to participate.
In order to overcome certain legal limitations in the General Commercial Corporations Law, particularly those relating to shareholder rights, the Securities Law has created an intermediate entity between a traditional commercial company and a listed corporation. A SAPI is a company which is preparing to go public. The legal framework of the SAPI conforms to international capital market standards and is intended to ensure that SAPIs have an appropriate structure for the receipt of capital contributions.
The SAPI regime introduces certain exceptions to the provisions of the General Commercial Corporations Law, granting greater protection to minority shareholders and setting higher standards of corporate governance. A SAPI's corporate bylaws and articles of incorporation may include certain stipulations that are not permissible for traditional commercial corporations. They may:
SAPIs may also establish conditions to protect the interests of minority shareholders as follows:
Shareholders may enter into voting agreements which are otherwise prohibited under the law. Such agreements may cover:
A SAPI may adopt the corporate regime of a SAB in relation to administration and surveillance without having an independent member on the board of directors. The members of the board of directors and the general director will be subject to the organizational functions and liabilities of a SAB as set out in the Securities Market Law. SAPIs which choose to adopt this regime will not require an examiner; however, they will require an independent auditor and a audit committee to perform audit functions in place of an examiner.
A SAPI may acquire its own shares, subject to a decrease in its capital stock or their reclassification as treasury shares.
SAPIs will benefit:
For further information on this topic please contact José Salem, Miguel Angel Peralta or Isaac Beja at Basham Ringe y Correa by telephone (+52 55 5261 0602) or by fax (+52 55 5261 0557) or by e-mail (email@example.com or firstname.lastname@example.org or email@example.com).
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Jose Francisco Salem
Miguel Angel Peralta