Mexico City, April 27, 2023 - On April 28, 2023, the Mexican Senate approved the initiative that amends, adds and repeals several provisions of the Securities Market Law ("LMV") and the Investment Funds Law ("LFI"), with the purpose of seeking alternatives for participation in the stock market that allow it to be a source of financing accessible to SMEs (the "Initiative").

Through the Initiative, the LMV seeks to eliminate the high monetary and regulatory costs of listing, as well as operating costs, the time required to authorize public offerings, the resistance of the owners to relinquish control of the companies, and the low interest of Mexican investors in investing. The most relevant changes are detailed below:

Simplified Registration of Securities

- Incorporate a new simplified securities registration procedure that allows small and medium-sized companies to participate in the stock market through public offerings of securities (debt or equity) in order to obtain the necessary financing and boost their growth.

- Empower the National Banking and Securities Commission ("CNBV") to determine the characteristics to be met by the companies that may participate in such procedure through the issuance of general provisions.

- It will be the responsibility of the brokerage firms to participate in the structuring of the operations of companies that intend to become simplified issuers.

- Establish limits defined by the CNBV for issuances that may be made by simplified issuers.

Amendments to the Securities Market Companies Regime

- Strengthen the autonomy of the shareholders' will by modifying the issuance, transfer and scope of the share certificates and certain restrictions in force.

- Eliminate the obligation to convert to a publicly traded company ("SAB") within 10 years or when stockholders' equity exceeds 250 million investment units (approximately 946 million pesos).

- The shareholders' meeting may delegate to the board of directors the power to increase the capital stock, as well as to determine the terms for the subscription of shares, including the exclusion of the preemptive subscription right.

- Make regulatory adjustments in line with the general principles of Corporate Governance of the OECD and the G20.

Strengthening the Principle of Disclosure

- Strengthen the principle of disclosure in order to clearly identify the inherent responsibility of each of the participants in the operations carried out in the stock market.

Hostile takeover protection clauses

- Establish new measures to prevent the undesired acquisition of shares to transfer control of the company to third parties; the quorum for voting against allowed in shareholders' meetings is relaxed from 5% to 20%.

Investment Funds Law

On the other hand, the Initiative seeks to expand the investment mechanisms within the LFI. The most relevant changes are detailed below:

- Modify the concept of limited purpose investment funds, incorporating the concept of hedge funds and regulate them with minimum requirements.

- That hedge funds may operate with any Investment Subject Asset, provided that they so define it in their prospectus of information to potential investors.

- Investments made in hedge funds must be subject to the regime established by the CNBV through general provisions.

- In order to have a transparent valuation process for hedge funds, it is foreseen that such funds may hire a price provider, a legal entity independent from the investment funds and founding partners, whose only activity is to value the instruments that make up their portfolios and in the special case that their assets are not securities or stock market securities.

The lawyers of the Banking and Financial areas are at your disposal to resolve any doubts regarding the above.

A T T E N T A M E N T,

Miguel Ángel Peralta García

Pedro Said Nader

Valeria Couttolenc Riba