M&A in Mexico are the following: General Law of Commercial Companies (LGSM): Regulates the incorporation of commercial companies, the obligations arising from the Articles of Incorporation and the structure of the company. Securities Market Law (LMV): Develops the securities market in a fair, efficient and transparent manner; protects the interests of the investing public; minimises systemic risk and promotes healthy competition, among others. Federal Law of Economic Competition (LFCE): Promotes, protects and guarantees free competition and economic competition, as well as prevents, investigates, fights, effectively prosecutes, severely punishes and eliminates monopolies, monopolistic practices, illicit concentrations, barriers to free competition and economic competition, and other restrictions to the efficient operation of markets. What significant legislative and regulatory changes have come to the Mexican M&A framework over the past five years? In corporate matters – meaning the Securities Market Law and the General Law of Commercial Companies – there has not been a significant change, but without a doubt the Federal Economic Competition Commission (COFECE) plays a more relevant role every day in regulation and surveillance to prevent unfair competition. We must always pay attention as, if life has taught us anything in recent years, it is that things can always change from one day to the next. Which sections of the Mexican economy are currently experiencing a greater number of mergers and acquisitions than most? Are there any areas where M&A activity is particularly lacking? The three main sectors of the Mexican economy where we have been able to notice a significant increase in M&A during 2021 were the mining industry, the financial sector and real estate. Although in recent years we have seen an increase in M&A, everything in life can always be improved, and in this case a particular point where we could improve on the issue of M&A is in the response times of the authority. The processes of the COFECE can take time and this represents an obstacle. Response times should be more efficient to keep motivating the increase of M&A in the country. Have there been any notable developments in foreign investment in M&A matters? The most remarkable thing is that despite the pandemic, according to information published by the Mexican government, Mexico reached a foreign direct investment of $31.6 billion dollars in 2021, with the manufacturing and mining industries being the main beneficiaries: By type of investment (source of financing): 38.6% through reinvestment of profits; 43.7% through new investments and 17.7% through intercompany accounts. By sector: 39.7% in manufacturing; 15.2% in mining; 15% in financial and insurance services; 8.8% in transportation; 8.5% in commerce and 5.2% in temporary housing services. The remaining sectors accounted for 7.6%. By country of origin: 47.5% in the United States; 13.7% in Spain; 6.5% in Canada; 5.7% in the United Kingdom; 5.2% in Germany and 5% in Japan, with other countries contributing the remaining 16.4%. Likewise, Transactional Track REcord (TTR) reported 394 deals, including mergers, acquisitions, asset acquisitions and private equity and venture capital transactions. This meant an increase of 8.7% compared to 2020, which makes it evident that M&A will continue to be more dynamic every day despite the complicated circumstances that may arise worldwide. What impact has the COVID-19 pandemic had on M&A in Mexico? Has this now been overcome, or are the effects ongoing? As we all know well, 2020 was a difficult year; situations occurred we did not believe possible and the world was put on pause. The pandemic affected all levels of society, and a situation with such a large scope would obviously have enormous consequences. In 2021 we started to move again and could see an improvement in foreign investment, direct investment and M&A. The industries in general suffered, but in 2021 we started to become optimistic again. The pandemic affected the M&A sector in Mexico as it did around the world, only this time we were all affected in the same way. Although in 2022 we see life returning to what it was before, the Russia-Ukraine conflict will impact the global market again. COVID-19 had such a strong impact that it is impossible to think the consequences will be resolved anytime soon. The pandemic affected every aspect of all industries and the obstacles it created cannot be solved from one day to the next. Today we 41 AUG 2022 | WWW.LAWYER-MONTHLY.COM EXPERT INSIGHT
RkJQdWJsaXNoZXIy Mjk3Mzkz