MEXICO Law and Practice Contributed by: Allan Kaye Trueba, Rebeca Sánchez and Mariana Santillán, Aziz & Kaye Business Law
6.7 Minority Protection and Control Rights In corporate JVs, minority rights will also depend on the type of legal entity formed or incorporated by the JV parties. In Mexican corporations (SAs), minority shareholders gain protective rights when they hold certain owner - ship stakes. Those owning 25% or more of the com - pany can appoint board members or statutory audi - tors when the board has three or more members. They can also pursue legal action against directors, delay voting on matters, and challenge shareholder meet - ing decisions in court. Shareholders with at least 33% ownership can request the convening of shareholder meetings. SAPIs provide more favourable terms for minority investors compared to regular corporations. SAPI shareholders enjoy expanded rights at reduced own - ership levels. For instance, they can appoint board members or statutory auditors with 10% ownership, approve liability actions against directors with 15% ownership, and legally oppose shareholders’ resolu - tions with 20% ownership. Minority investors often request the following control rights, even when the law does not afford them the corresponding right: • board representation and committee seats; • reserved-matter vetoes (super-majority or unani - mous consent) on sensitive matters such as changes to business scope, annual budget, major capital expenditure (capex), and external debt, among others; • enhanced information access, beyond the General Business Companies Law baseline; • anti-dilution protections; and • exit rights tailored to minority needs, such as tag- along rights. 6.8 Applicable Law and Dispute Resolution in International JVs When structuring an international joint venture (JV) with Mexican parties or assets, the choice of substan - tive and procedural law is a critical strategic decision.
statutory minimums apply, but partners may negotiate enhanced information rights. Participation in governance Depending on the structure, partners may have rights to appoint board members, participate in key deci - sion-making, and vote on reserved matters. (See 6.2 Governance and Decision-Making and 6.7 Minority Protection and Control Rights ). Exit and transfer rights Rights to transfer interests, exercise tag-along or drag-along rights, or trigger buy-sell mechanisms are often included to provide flexibility and protection. Protection of minority interests Minority partners may negotiate veto rights, anti-dilu - tion and other protections. See 6.7 Minority Protec- tion and Control Rights . Obligations of JV Partners Capital and resource contributions Partners are generally obliged to make agreed capital contributions or provide other resources as speci - fied in the JV agreement or by-laws. Mechanisms for additional funding or capital calls should be clearly defined. See 6.3 Funding . Compliance with JV agreements and applicable law Partners must comply with the terms of the JV agree - ment, by-laws, and all applicable laws and regulations. Confidentiality and non-compete Partners are typically required to maintain confidenti - ality regarding JV information and may be subject to non-compete obligations during and after their par - ticipation in the JV. Liability for debts and obligations In corporate JVs, shareholders’ liability is generally limited to the amount of capital contributed, unless otherwise agreed, or in cases of fraud or breach of fiduciary duty. In contractual JVs, liability is deter - mined by the terms of the agreement and may be joint and several, or several only.
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