[Last updated: 1 January 2025, unless otherwise noted]

2.1 Key regulatory bodies

The main regulatory body of the Mexican securities market is the National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores; or the “CNBV”). The CNBV must approve a public M&A transaction and has the powers and authority to enforce the regulatory framework applicable to takeover bids, including the imposition of fines. In addition, commercial litigation may be pursued by affected parties and criminal penalties may be imposed by the courts.

Depending on the value, antitrust or sector considerations, takeovers and M&A transactions in the Mexican securities market will also be subject to scrutiny by other regulatory bodies. For example, if the transaction exceeds the antitrust thresholds or is suspected of having anticompetitive effects, the Mexican Antitrust Commission’s (Comisión Federal de Competencia Económica) prior clearance will be required; if the transaction is in a specifically regulated sector, such as telecommunications, antitrust clearance would be required from the Federal Telecommunications Commission (Comisión Federal de Telecomunicaciones); and if the transaction entails an investment in excess of the yearly threshold defined for such purposes, or is effected in a sector of the economy which has not yet been liberalized, then approval by the Foreign Investment Commission (Comisión Nacional de Inversiones Extranjeras) will be required.

2.2 Legislation and rules

Pursuant to Mexican law, the regulation of securities issuers and markets, including public M&A transactions, is a reserved matter which may only be regulated by the federal legislature and, consequently, state legislatures cannot legislate on the subject.

The regulatory framework applicable to public M&A transactions (both voluntary and hostile) is as follows:

• The Securities Market Law (Ley del Mercado de Valores).
• The National Banking and Securities Commission Law (Ley de la Comisión Nacional Bancaria y de Valores).
• General rules applicable to the issuers of traded securities and other participants in the securities market (Disposiciones de carácter general aplicables a las emisoras de valores y a otros participantes del mercado de valores), issued by the CNBV.
• General rules applicable to the entities and issuers supervised by the CNBV that contract external audit services of basic financial statements (Disposiciones de carácter general aplicables a las entidades y emisoras supervisadas por la Comisión Nacional Bancaria y de Valores que contraten servicios de auditoría externa de estados financieros básicos).
• Internal rules of the Mexican Stock Exchange (Reglamento interior de la Bolsa Mexicana de Valores) and the Institutional Stock Exchange (Bolsa Institucional de Valores).
• Federal commercial and civil legislation, such as the General Law on Business Entities (Ley General de Sociedades Mercantiles), securities and commercial market practices (usos bursátiles y mercantiles) and the Federal Civil Code (Código Civil Federal).
• The Commerce Code (Código de Comercio).
• The General Law of Negotiable Instruments and Credit Operations (Ley General de Títulos y Operaciones de Crédito).
• Other specialized laws may apply to the transaction, such as the Federal Antitrust law (Ley Federal de Competencia Económica).

2.3 General principles

• Equal treatment: all security holders must be treated equally, regardless of the class or series of securities they hold.
• Continuity of minority protection rights: minority security holders are afforded a number of statutory minority protection rights (further discussed below) in connection with the appointment of directors, call for shareholders’ meetings, opposition and deferral of adoption of resolutions and responsibility of administrators. Additionally, the by-laws of the issuer can provide for additional rights. The statutory minority protection rights are not affected by a bid.
• Disclosure and information: all security holders must be equally and sufficiently informed in a timely fashion in order to make an educated decision on the bid, and are entitled to receive the offering memorandum, information related to previous arrangements or understandings, the board of directors’ opinion, the independent advisor’s opinion and any other information containing material terms and conditions of the offeror’s bid.
• Board and officers duty of loyalty and diligence: the members of the board of directors, those individuals appointed to participate in any of the committees of an issuer and the officers of the issuer have an absolute duty of loyalty and care, and shall act in the best interest of the issuer and its equity holders as a whole.
• Mandatory cash-out or squeeze-out: minority shareholders cannot be forced to sell their securities in the target company, even if the intent of the bidder is to acquire the control or the totality of the securities of the target.

2.4 Foreign investments

Foreign investments are not restricted in Mexico and are only subject to reporting upon completion (as opposed to prior authorization), unless they relate to certain specific activities.

The purchase by a foreign investor of a direct or indirect controlling interest in a Mexican public company conducting sensitive activities (as set out below),requires the prior approval of the Ministry of Economy and the National Commission of Foreign Investment, i.e., before final completion of the transaction. In relation to non-Mexican investors incorporated in Mexico, the requirement for prior approval is triggered by crossing a certain percentage threshold of the share capital or voting rights. The following are the foreign investment threshold percentages per sensitive activity:

• Up to 10% in cooperative production companies.
• Up to 49% in (i) companies that manufacture and commercialize or distribute explosives, firearms, cartridges, ammunitions and fireworks, not including the acquisition and use of explosives for industrial and extraction activities nor the preparation of explosive compounds for use in said activities; (ii) printing of newspapers for circulation solely throughout Mexico; (iii) series “T” shares in companies owning agricultural, ranching and forestry lands; (iv) fresh water, coastal and exclusive economic zone fishing not including fisheries; (v) integral port administration; (vi) port pilot services for inland navigation under the terms of the law governing the matter; (vii) shipping companies engaged in commercial exploitation of ships for inland and coastal navigation, excluding tourism cruises and exploitation of marine dredges and devices for port construction, conservation and operation; (viii) supply of fuel and lubricants for ships, airplanes and railway equipment; (ix) broadcasting (this maximum foreign investment will be subject to the reciprocity between each jurisdiction where the investor or economic agent who exercises control is from, directly or indirectly); and (x) regular and non-regular national air transport service, international air transport service, non-regular air taxi mode and specialized air transport service.

Foreign investment participation limits in the activities and companies mentioned above may not be exceeded directly nor through trusts, contracts, partnerships or by-law agreements, pyramid schemes or other mechanisms granting any control or a higher participation than the limit stated.

Foreign investment participation greater than 49% in port services in order to allow ships to conduct inland navigation operation, such as towing, mooring and barging; shipping companies engaged in the exploitation of ships solely for high-seas traffic; concessionaire or permissioned companies of air fields for public service; private education services for pre-school, elementary, middle school, high school, college or any combination; legal services; construction, operation and exploitation of general railways and provision of public railway transportation services are activities that require prior authorization from the National Commission of Foreign Investment.

The following the activities are reserved for the Mexican government: (i) exploration and extraction of oil and other hydrocarbons; notwithstanding the foregoing, the Federal Government through the National Hydrocarbons Commission (also known as CNH) is authorized to award and execute agreements with private entities for the exploration and extraction of hydrocarbons; (ii) planning and control of the national electric system, as well as the public services of transmission and distribution of electricity; (iii) generation of nuclear energy; (iv) radioactive minerals; (v) telegraph; (vi) radiotelegraphy; (vii) postal service; (viii) bank note issuing; (ix) mining of coins; (xi) control, supervision and surveillance of ports, airports and heliports; and (xii) any others as expressly provided by applicable law.

The following activities are reserved for Mexicans or Mexican companies with a foreigners’ exclusion clause: (i) domestic land transportation for passengers, tourism and freight, not including messenger or courier services; (ii) development banks; and (iii) rendering of professional and technical services as prescribed by applicable legal provisions.

Foreign investors may not participate directly in the activities and companies mentioned above nor through trusts, contracts, partnerships or by-law agreements, pyramid schemes or other mechanisms granting any control or participation.