MEXICO Law and Practice Contributed by: Carlo Cannizzo, Marco Cannizzo, Stefano Amato, Enrique García and Paloma Iglesias, Cannizzo
have prompted investors to consider alternative dis - pute resolution mechanisms, such as arbitration, to safeguard their interests in M&A transactions. Opening New Markets Notable recent legal developments relevant to the M&A transactions market in Mexico include those that involve the opening of various markets or industries at the national level – for example, the fintech market, including crowdfunding and electronic payment fund institutions and, in general, other players in the fintech ecosystem, such as insurtech and regtech. The USMCA, which will be renegotiated this year, has managed to consolidate a legal framework for trade among the three countries and has provided addi - tional incentives for companies looking to move their operations to Mexico. The upcoming negotiation is expected to be complex; however, it is anticipated that it will ultimately provide greater legal certainty, particularly in areas that have undergone significant constitutional changes, including the judicial reform introducing the popular election of federal judges. Additionally, there is a trend in M&A transactions of European and US companies that have operations in Asian markets acquiring existing Mexican companies with the intention of moving their manufacturing activ - ity to the USMCA area. Shareholder Rights The General Law of Commercial Companies ( Ley General de Sociedades Mercantiles or LGSM) allows shareholders of corporations ( sociedades anónimas ) to enter into agreements that were previously associ - ated with stock investment promotion corporations ( sociedades anónimas promotoras de inversión or SAPIs) under the Securities Market Law ( Ley del Mer - cado de Valores or LMV). Thus, shareholders may agree on mechanisms that modify voting rights, such as issuing non-voting or lim - ited-voting shares, granting specific corporate rights, or establishing veto powers and special approval requirements. They may also enter into arrangements such as drag-along and tag-along rights, call and put options, subscription obligations, transfer restrictions,
dispute-resolution mechanisms, and limitations on directors’ and officers’ liability. Supreme Court Decisions There are few judicial decisions that have been resolved and that have had an impact on M&A trans - actions. In the last decade, there has only been one decision that has been issued by the Mexican courts in this regard, namely the jurisprudence with digital registry number 2004913 dated 2013 regarding the moment at which the merger of commercial com - panies takes place with regard to tax matters. This decision sets forth that the merger – as a complex and contractual corporate business operation, devel - oped in several successive stages and producing tax effects, among which are the early termination of the merged companies’ fiscal year – does not depend on the registration of the merger agreement in the RPC but is complete from the moment the merger contract or agreement is signed (except when there has been judicial opposition in the summary proceeding by any creditor, provided that it has been declared founded). 3.2 Significant Changes to Takeover Law Originally, takeover law for private companies was provided for in the LMV applicable to SAPIs; howev - er, the amended LGSM includes provisions that grant shareholders the possibility of agreeing, among them - selves, rights and obligations that set forth purchase or sale options of the shares representing the capital stock of the company. These include: • that one or several shareholders may only dispose of all or part of their shares, when the acquirer is also obliged to acquire a proportion or all of the shares of another or other shareholders, under the same conditions; • that one or more shareholders may require another shareholder or shareholders to dispose of all or part of their shares, when the former accepts an offer of acquisition, under the same conditions; • that one or more shareholders have the right to dis - pose of or acquire from another shareholder, who shall dispose of or acquire, as the case may be, all or part of the shares that are the object of the transaction, at a determined or determinable price; • that one or more shareholders be obliged to subscribe and pay for a certain number of shares
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