MEXICO Law and Practice Contributed by: Eduardo Triulzi, Eric Silberstein and Ana Jáuregui, Ritch Mueller
7. Regulation 7.1 Securities Offerings
ment team and advisers. The decision is based on a number of factors, including the stage of the company’s development, the market con - ditions at the time, and the preferences of the shareholders. 6.2 IPO Exits Mexico’s securities market is relatively illiquid. The lack of penetration of financial services in the general population, coupled with a limited number of institutional and qualified investors, low valuations and significant delays in the review process by Mexican regulators, has rel - egated the Mexican securities market as a viable exit strategy or even an attractive alternative for venture capital funds. No primary IPOs from Mexican issuers have taken place since 2020, and the most recent IPO by a Mexican com - pany was registered in the USA exclusively, not in Mexico. 6.3 Pre-IPO Liquidity There is very limited liquidity and the few options would be among venture capital funds or pri - vate equity funds that have begun to do venture capital investments and are looking to obtain control. Although it is not very common, employ - ees sometimes have the option to participate in buybacks. The main challenge is that all distribu - tions, including buybacks, are made pro rata; if there is the intention to distribute them non-pro rata, different series of shares would need to be created so that such non-pro rata distributions are a special right of a particular series.
Any public offering of securities in Mexico requires the prior registration of the securities with the National Securities Registry maintained by the Mexican Banking and Securities Commis - sion ( Comision Nacional Bancaria y de Valores , or CNBV). However, the recently enacted reform to the Mexican Securities Market Law enables a company to conduct a public offer pursuant to an expedited process, known as a simplified registration process – in which case, the CNBV’s review and approval are not required. However, only institutional and qualified investors are enti - tled to purchase stock issued pursuant to a sim - plified registration process, which may limit the liquidity. Both traditional and simplified registra - tion processes require the preparation of a pro - spectus or supplement and filing for registration with the CNBV or the corresponding Mexican stock exchange, respectively. 7.2 Restrictions Foreign (and national) venture capital investors may be restricted from investing in certain sec - tors of the Mexican economy, which are regu - lated. There may be foreign investment restric - tions, as is the case in transportation, mining and telecommunications, and/or the need to obtain prior approval to invest, as is the case in insur - ance companies, fintech or banking. Depending on the sector in which the target company oper - ates, applicable restrictions may apply.
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