Introduction to Simplified Emissions Regime
In the context of secondary regulation under Mexico’s Securities and Funds of Investment Law (LMV), companies not registered in the National Registry of Securities (RNV) can now opt for a simplified emission procedure, according to Leonardo Molina, Director of Emissions at the Comisión Nacional Bancaria y de Valores (CNBV).
Role of Brokerage Firms and Stock Exchanges
Molina emphasized the crucial role of financial intermediaries and stock exchanges in assisting companies to implement this alternative, differentiated regime that reduces costs, time, and requirements for accessing financing sources.
Regulated Securities under Simplified Emissions
The secondary regulation outlines the securities subject to simplified emissions, which primarily include shares, ordinary participation certificates, debt, asset-backed securities, and structured securities.
Potential and Challenges
Molina acknowledged the significant potential of this simplified emissions regime but highlighted that its success hinges on addressing certain short-term challenges. These include maintaining investor confidence and adapting communication and dissemination of the regime’s benefits by all market participants, including authorities.
CNBV’s Role in Simplified Emissions
Under the simplified regime, the CNBV will no longer supervise these issuers. Instead, it will rely on the documentation issued by the companies, in collaboration with their financial intermediaries, to stock exchanges and brokerage firms. These entities will then provide a favorable opinion to the CNBV, enabling the issuer to begin trading almost immediately.
Importance of Capacitation
Molina stressed the need for companies considering simplified emissions to receive proper training on the implications of becoming a simplified public company, including professionalizing their corporate governance and operational, legal, and accounting areas.
He also mentioned the necessity for a thorough risk analysis of simplified emission issuers, considering the distinct information available to investors compared to traditional emission regimes.
Incentives for More Emission
Molina discussed potential incentives to attract more issuers to the simplified regime. Some proposals include allowing subsidiaries or associated companies of issuers with values in the ordinary regime to also issue simplified securities. Another proposal is evaluating the feasibility of unregulated Multiple-Purpose Financial Companies (Sofomes) issuing simplified debt securities without needing to become regulated, as currently mandated by law.
ASG Disclosure Priority
Molina highlighted the growing importance of Environmental, Social, and Governance (ASG) disclosures for investors. Consequently, the CNBV aims to promote measures that mitigate the environmental impact. Starting from 2027, detailed annual ASG reports audited by external parties will be mandatory.
Key Questions and Answers
- What is the simplified emissions regime? It’s an alternative, differentiated regime under Mexico’s Securities and Funds of Investment Law (LMV) that reduces costs, time, and requirements for accessing financing sources.
- What securities are subject to simplified emissions? Primarily shares, ordinary participation certificates, debt, asset-backed securities, and structured securities.
- What challenges does the simplified emissions regime face? Maintaining investor confidence and adapting communication of the regime’s benefits are key challenges.
- What is the CNBV’s role in simplified emissions? The CNBV relies on documentation from companies, their intermediaries, stock exchanges, and brokerage firms for favorable opinions before issuers can begin trading.
- Why is capacitation important for simplified emissions? Proper training ensures companies understand the implications of becoming a simplified public company, including professionalizing corporate governance and operational areas.
- What incentives are being considered to attract more issuers? Allowing subsidiaries or associated companies of ordinary regime issuers to issue simplified securities and evaluating unregulated Sofomes issuing simplified debt securities are among the proposals.
- Why are ASG disclosures important? Investors increasingly prioritize Environmental, Social, and Governance (ASG) disclosures. The CNBV aims to promote measures that mitigate environmental impact, with detailed annual ASG reports audited by external parties becoming mandatory from 2027.
