MEXICO Law and Practice Contributed by: Carlo Cannizzo, Marco Cannizzo, Stefano Amato, Enrique García and Paloma Iglesias, Cannizzo
sation of the transaction by the CNA and the CNBV in the case of acquisitions of public companies. 6.5 Minimum Acceptance Conditions The control threshold in Mexico applicable to tender offers is that the person or group of bidders seeking to obtain control of an issuer by means of a tender offer for less than 100% of the capital stock when the bidder intends to obtain control of the company must complete their application to obtain the corresponding authorisation from the CNBV. On the other hand, those who, by making a tender offer for less than 100% of the capital stock, cause less than 12% of the paid-in capital stock of the issuer to remain among the investing public are required to extend the offer or to make a second tender offer with - in 30 days for up to 100% of the capital stock of the issuer on the same conditions on which the original tender offer was made. 6.6 Requirement to Obtain Financing There are no prohibitions under Mexican laws upon a business combination being conditional on the bidder obtaining financing. 6.7 Types of Deal Security Measures From a general perspective, there are no limitations with respect to the kinds of deal security measures that a bidder may request, including break-up fees, match rights, force-the-vote provisions and non-solic - itation provisions. However, there may be internal limi - tations provided in the by-laws of the target entity or legal limitations inherent to the security measures, for example, the impossibility of break-up fees that are established as a conventional penalty exceeding the value and amount of the main obligation. The Issuers’ Provisions provide that the prospectus to be filed with the CNBV may include a mention of the right to decline the offer in the event of amendments to the offer that are significant in the opinion of the CNBV. There have been certain changes, for instance, in relation to the interpretation of certain provisions, particularly with regard to material adverse changes, material adverse effects, force majeure, acts of God, etc. Parties should make the wording as concise and clear as possible in order to be able to identify pre -
cisely whether one of the clauses listed therein applies in a given case and to limit its effects depending on its duration, the percentage or part of the business that
is affected, and government directives. 6.8 Additional Governance Rights
If a bidder does not seek to acquire 100% owner - ship of a company in Mexico, it can negotiate addi - tional governance rights to protect its investment and influence key corporate decisions. These rights are typically formalised through amendments to the com - pany’s by-laws, shareholders’ agreements or other contractual arrangements, ensuring enforceability. Common governance rights include: • Board representation: The right to appoint a pro - portional or specific number of board members, including independent directors or key executives. • Veto rights: The ability to block certain corporate actions, such as mergers, asset sales, capital increases, dividend distributions, or amendments to the by-laws. • Supermajority requirements: The requirement that certain strategic decisions receive a higher percentage of shareholder approval, ensuring the bidder’s consent in major transactions. • Reserved matters: The obligation to obtain the bid - der’s prior approval for critical decisions, such as changes in business strategy, indebtedness above certain thresholds, or related-party transactions. • Tag-along and drag-along rights: The ability to join a sale of shares (tag-along) or force minority share - holders to sell (drag-along) in future exit scenarios. • Pre-emptive and anti-dilution rights: Protection against ownership dilution by securing preferential rights in future capital increases. These governance rights must comply with the LGSM and, in the case of public companies, the LMV. For publicly traded targets, any shareholder agreements affecting corporate control must be disclosed to the CNBV to ensure transparency and regulatory compli - ance. 6.9 Voting by Proxy The representation of the shareholders or partners of any company is possible and common through a
834 CHAMBERS.COM
Powered by FlippingBook