MEXICO Law and Practice Contributed by: Allan Kaye Trueba, Rebeca Sánchez and Mariana Santillán, Aziz & Kaye Business Law
regime for directors of Mexican commercial compa - nies. The court determined that shareholders or part - ners may bring direct civil actions against directors if they suffer direct and personal damage, even if such damage does not derive from harm to the company itself. This decision broadens the potential liability of directors and enhances the protection of minor - ity shareholders and partners in JVs, as it recognises their right to seek judicial remedies for direct damages caused by directors’ acts or omissions. 5. Negotiating the Terms 5.1 Preliminary Negotiation Instruments and Practices In the negotiation stage of a JV transaction, parties typically begin by exchanging a mutual non-disclosure agreement (NDA) to facilitate the sharing of sensitive information. If the parties wish to proceed, they often draft a preliminary document outlining their intentions and the basic conditions for closing the transaction. This preliminary document usually takes the form of a letter of intent (LOI) or a memorandum of under - standing (MOU). While the specific contents may vary depending on the nature of the proposed JV, these documents generally include several key elements: • Identity of the parties – the document first identifies the parties involved in the potential transaction, clarifying the main stakeholders and their roles in the proposed venture. • Project – it then describes the project or transac - tion the parties intend to undertake, outlining the JV’s core purpose and setting the stage for further negotiations. • Contributions – the LOI or MOU typically specifies each party’s expected contributions, which may include financial investments, intellectual property, technical expertise, or other resources essential to the venture’s success. • Type of vehicle – the intended structure for the JV (either contractual or corporate) is usually speci - fied. If undecided, the document outlines the pro - cess or criteria for making this decision. • Corporate and economic rights – for corporate JVs, the preliminary document delineates the corporate
and economic rights of each party, such as vot - ing rights, approval of major items, appointment of management, and profit distribution. • Due diligence – if the JV vehicle already exists and a party is considering joining, the document outlines the due diligence process, allowing the incoming party to assess the business before com - mitting. • Conditions to closing – the document lists condi - tions required to close the transaction, which may include regulatory approvals, financial benchmarks, or other criteria that must be met before finalising the JV. • Exclusivity – an exclusivity clause is often included, establishing a period during which parties agree not to negotiate similar projects with third parties, ensuring focused, good-faith negotiations. • Applicable legislation and jurisdiction – while LOIs and MOUs are generally non-binding, certain provi - sions (such as exclusivity, confidentiality, notices, and applicable legislation or jurisdiction) are often explicitly made binding to address potential dis - putes. 5.2 Disclosure Obligations While there is no general regulatory requirement to disclose a JV transaction in Mexico, specific disclo - sure obligations may arise depending on various fac - tors. These factors include the nature and industry of the venture, the transaction value, the parties involved, and their respective market shares. For instance, compliance with the FECL may be nec - essary under certain circumstances. If the JV quali - fies as a merger under the FECL and exceeds the specified thresholds, the parties would be required to notify the relevant antitrust authorities before the transaction takes effect in Mexico. This notification process effectively serves as a form of disclosure, albeit to regulatory bodies rather than the public. See 3.4 Competition Law and Antitrust . Additionally, if any of the parties involved are pub - licly traded companies, they may be subject to additional transparency requirements mandated by securities laws. These obligations could require pub -
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