Mexican lawmakers pass stock market law aimed at improving corporate governance
MEXICO CITY – Mexico’s lower house of Congress voted unanimously Tuesday in favor of a new stock market law aimed at improving corporate governance and boosting the number of companies that trade on the local market. The lower house voted 395-0 in favor of the bill, which was approved by the finance committee last Thursday. The bill has to be returned to the Senate, since several modifications were made to obtain the support of the opposition Institutional Revolutionary Party, or PRI.Under the changes, regulators would be held responsible in the event that the seriousness of an alleged securities violation turned out to be exaggerated, and regulators would have to publish an exoneration if a company was fined and then had the penalty overturned by a court.The bill also expands the definition of “relevant events” that listed companies are required to report to the stock market to include anything that could have an effect on the share price. It calls for the National Banking and Securities Commission to set out criteria for companies to follow.The new law should make it easier for medium-size companies to list on the local stock market, since it allows them to tap into money from institutional investors in exchange for adopting higher corporate governance standards that offer greater protection to minority holders.”This will give investors the tranquility that they will be able to participate with the correct information and mechanisms,” lower house Finance Committee President Gustavo Madero said last week in a telephone interview.The securities law also is expected to increase Mexico’s share of the risk capital that flows into Latin America, which as a region receives only a small fraction of global risk capital flows.The law was passed without changes lobbied for by businessman Ricardo Salinas Pliego, who controls Mexico’s No. 2 broadcasting concern TV Azteca SA and retail and telecommunications companies.The two main items opposed by the Salinas group were one that excludes a company representative from independent audit committees, and one that allows regulators to publish names of companies and individuals under investigation for securities law violations before a case is completed.—Eds: Anthony Harrup is a correspondent of Dow Jones Newswires.