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 Business News | June 2006 
Mexico's Beefed-Up Stock Market Rules Kick in Soon
 Reuters
| | The legal changes more explicitly define what corporate data is relevant to investors and stiffens penalties for company executives who hold back information. |
Mexico City - Mexican companies and businessmen who cheat investors will face stiffer penalties beginning on Wednesday as a new stock market law meant to attract more foreign investment goes into effect.
The changes to rules governing how corporations behave should raise Mexico's international ranking for corporate governance and transparency to 45th from 125, according to a World Bank study.
Penalties for defrauding investors will be up to 12 years in prison. Company owners that favor one group of shareholders over others during stock offers or share buybacks will face up to six years behind bars.
Mexican equities in recent years have become increasingly popular with foreign investors.
But the government says modernized market regulations that beef up minority shareholders rights and improve transparency are needed to attract more investment and to give small companies more reasons to list on the country's bourse.
"Obtaining (corporate) information in Mexico is extremely difficult, almost impossible," Alberto Saavedra, a lawyer on the Mexican Stock Exchange's ethics committee who helped draft the law, told reporters on Monday.
"It's very important that the new rules compel companies to inform, and inform sufficiently for investors," Saavedra said.
The law requires regulators to disclose when they are investigating companies that are listed on the stock market, and makes top executives personally accountable when their firms break rules.
The legal changes more explicitly define what corporate data is relevant to investors and stiffens penalties for company executives who hold back information. |
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