[ESTABLISHING A BUSINESS ENTITY IN MEXICO] 333
which the recommendation, the variable part of the capital is unlimited. (ii) Agreements among Shareholders is almost always Pursuant to recent amendments made to the LGSM, the SA can be considered as a very flexible vehicle since now you can incorporate in its by-laws all the shareholders agreements that were not permitted or questionable before such amendments entered into effect. Some examples of the provisions permitted to be incorporated in the by-laws of an SA are: (a) Restriction with respect to the transfer of shares of a same series or class representing its capital stock; (b) Exclusion causes for shareholders or the exercise of retirement or separation rights, or the right to redeem shares, as well as to establish the price of the shares or the method to determine such price; (c) Issuance of shares that (i) do not confer voting rights or limit such voting rights, (ii) grant non- economic rights or specifically grant only voting rights; (iii) limit or broaden the economic rights, or (iv) grant veto rights; (d) Implementation of mechanisms to be followed in the event of shareholders disagreements with respect to specific matters; (e) Broadening, limiting or denying their preemptive rights in the
event of capital stock increases, or even providing for publicity methods other than the ones provided in the LGSM; (f) Liability limitations for damages and losses arising from directors´ or officers´ actions in connection with the breach of the “duty of care” of such directors; and (g) Stock options to buy or sell shares (“put” or “call” options including “tag along” or “drag along” rights) or agreements to restrict, transfer or regulate the preemptive rights for capital stock increases, among the same shareholders or with third parties; and agreements to exercise voting rights in shareholders’ meetings.
(iii) Minority Rights
Regarding minority rights, the SA shareholders representing twenty- five percent (25%) of the shares of the capital stock with voting rights will have the right to appoint a member to the board of directors and an examiner ( comisario ). Similarly, the shareholders representing twenty-five percent (25%) of the shares representing the capital stock with voting rights of an SA may file a civil liability action in court against the directors in the benefit of the corporation pursuant to the terms of the LGSM. Shareholders representing thirty- three percent (33%) of the shares representing the capital stock are entitled to request the board of
ILN Corporate Group – Establishing a Business Entity Series
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