Law and regulation of private placement of common stock in Mexico

• Public Offering, being an offer with or without price by mass communication to the general public to subscribe, acquire, sell or transfer securities.

Key exemptions

For private offerings of Non-Registered Securities 3 Registered securities are, those that, according to Mexican Law, have to be registered with the National Registry of Securities including shares of companies to be offered in the Capital Markets.

Private offerings are those that are:

• Not made via mass media i.e. TV, radio or the Internet.
• Including only securities which are not registered (non-registered securities).
• Targeted/sent exclusively at Qualified Investors 4 Qualified Investors means: (i) Basic: the person who maintains an average, during the last 12 months, investments in securities for an amount equal to or greater than 1,500,000 investment units (known in Mexico as UDI’s) or that have been obtained in each of the last 2 years, annual gross income equal to or great than 500,000 UDI’s (ii) Sophisticated: to the person who maintains an average during the last 12 months, investments in securities in one or more financial entities, for an amount equal to or greater than 3,000,000 UDI’s or that has obtained in each of the last two years gross income annually equal to or greater than 1,000,000 UDI’s and registered as sophisticated qualified investors (iii) to be able to participate in restricted public offers; to natural or legal persons who kept an average over the last year investments in securities equivalent in national currency to at least 20,000,000 UDI’s. or institutions.
• Targeted/sent to less than a 100 people, regardless of whether there is one or more classes or series of shares.
• It is carried out under plans or programs generally applicable to employees or groups of employees of the company that issues the securities or by legal entities that control it or that is controlled by it.
• Offered to shareholders or partners of legal entities that carries out its legal purpose exclusively or predominantly with such non-registered securities.

For restricted public offerings

• Can only be offered to institutional or Qualified Investors.
• Any unaudited financial statements must be compared with those corresponding to the period of the previous financial year, and the most recent audited financial statements must not be older than 6 months.

For inscription of securities without an offer to the Public, for example, as a preliminary registration prior to a public offering when only an Informative Brochure is required containing certain prescribed information.

Yes, as long as they can be considered as institutional or Qualified Investors.

Yes, as long as they can be considered as Qualified Investors.

Yes, if one of the following applies:

• Offered to shareholders or partners of legal entities that carries out its legal purpose exclusively or predominantly with such non-registered securities.
• Offered under plans or programmes generally applicable to employees or groups of employees of the company that issues the securities or by legal entities that controls it or that is controlled by it.

Yes, only for private offering of non-registered securities.

Yes, only for private offering of non-registered securities.

No.