To the LMV:

1. Creation of the simplified issuer category. The monetary thresholds to qualify as a simplified issuer will be determined by the National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores or "CNBV") through the general provisions issued for such purpose.
2. The dissemination of information to promote the issuance does not require CNBV approval if done through a brokerage firm.
3. The Ministry of Finance and Public Credit (Secretaría de Hacienda y Crédito Público or "SHCP") will issue ESG provisions for entities of the stock market.
4. Greater flexibility for the inclusion of anti-takeover provisions in the by-laws of publicly traded companies ("SABs").
5. SAB may issue special series of shares and new capital integration disclosure obligations are included.
6. In certain scenarios, the subscription of shares of an SAB will not require an offering prospectus (prospecto de colocación).
7. The stock exchanges -and not the regulator- will carry out the prior analysis to qualify whether a simplified issuer meets the legal requirements.
8. To obtain registration as a simplified issuer, companies have to prepare an abridged, preliminary and definitive placement prospectus or information supplement.
9. Only the favorable opinion of a stock exchange will be required for registration in the National Securities Registry.
10. The CNBV will issue general provisions with specific and simpler regulations for simplified issuers.
11. The public tender offers of simplified registration securities are subject to the mechanisms provided in the simplified issuers’ by-laws and the LMV will not apply.
12. The stock exchanges will set in their internal regulations the disclosure and delivery of information obligations to which simplified issuers will be subject. The CNBV will issue general provisions providing more guidelines.
13. The CNBV may cancel the securities registration if the issuer is not up to date with its obligations and has not disclosed information in the same fiscal year.
14. At the request of the simplified issuer or the stock exchange, the CNBV may cancel the registration of securities.
15. Specific obligations are included for brokerage when dealing with simplified issuances.
16. Brokerage firms can invest in financial technology institutions.
17. Increased requirements for registration as an investment advisor before the CNBV are included. The CNBV will issue general provisions with greater regulation.
18. Restrictions on the free circulation of shares of investment advisors are included.
19. With prior authorization from the CNBV, investment advisors can be founding partners of hedge funds. Advisors may provide asset and portfolio management services. The CNBV will issue general provisions with the minimum capitalization level required.
20. The process for the incorporation of investment advisors that are founding partners of hedge funds is set.
21. Rating agencies must establish specific rating processes for securities subject to simplified registration. The CNBV will issue general provisions with further regulation.
22. External auditors of simplified issuers must submit reports to the stock exchange and warn of irregularities in the issuer.
23. The CNBV will not have supervisory, audit or inspection authority on simplified issuers.

Simplified Registration vs. Regular Process Comparison Table

To the LFI:

1. Change the name of certain funds the funds from “limited purpose” to “hedge”.
2. Increase the assets in which hedge funds can invest.
3. Investment fund operating companies that provide asset management services to the funds will be required at least once each year to evaluate their service providers and their investments, as well as to notify investors.
4. The CNBV and Mexican Central Bank (Banco de México) will issue general provisions regarding maximum transaction limits.
5. Hedge fund shares may only be offered to qualified or institutional investors. These funds are not required to have maximum individual shareholding limits.
6. New distribution of authority and responsibilities among the shareholders’ meeting, the board of directors and stator auditor of the investment advisors acting as founding partners of such investment funds.
7. The CNBV will issue general provisions regarding the approval of the financial statements of hedge funds and their disclosure to the general public.

Next steps:

1. Wait for the issuance of the various general provisions to be issued by the SHCP, the CNBV and Mexican Central Bank (Banco de México) within the next year.
2. Begin a process of institutionalization of the entities that want to become simplified issuers.

Authors: Federico de Noriega and Manuel Valdez