Mexico's new securities law, designed to bring corporate governance into line with international norms following the Sarbanes-Oxley legislation in the US, faces a lengthy delay. Congressional leaders decided to keep it off the agenda for their summer session.
Their decision means the bill, drawn up after more than a year of consultation, cannot become law at the beginning of next year. Several participants in the process said the decision to delay followed determined lobbying of congressmen by representatives of TV Azteca, which is facing insider-trading charges in both the US and Mexico.
Francisco Gil Diaz, Mexico's treasury secretary, said: “It seems incredible to me that something on which everyone is in agreement, except one issuer, and was approved by the Senate, and is of great benefit for the stock market, and allows the companies in the market to reduce their costs of financing, and improves access for medium-sized companies, has been delayed. The reasons for doing that are difficult to understand.”
The plan had been for the law to come into effect on January 1. But after the leaders of congressional delegations in the lower House of Deputies decided to exclude it from the agenda of their summer extraordinary session, it faces a delay of at least three months. The final session of the year is usually dominated by discussion of the federal budget, which has become highly politicised, and so it might not come to a vote this year.
While the measure passed in the Senate earlier this year, the chairman of the Senate treasury committee, Fauzi Hamdan, told Mexican reporters that the pressure from TV Azteca and other companies belonging to Mr Salinas Pliego was “strong”, and that the companies had produced numerous proposed amendments that had been halted for being “obviously unfeasible”.
TV Azteca denied it had any specific policy on the issue, and said it was in line with the positions of various trade associations on the issue. It has faced complaints over its treatment of minority investors and of creditors in recent years, although it has continued to pay out highdividends.
Main points in the law, intended to reassure foreign investors by tightening corporate governance rules, include improving publicity for sanctions by securities regulators, extending the reach of insider-trading rules, and changing the role of boards. It would also have expanded the powers of the National Banking and Securities Commission, making it similar to the US Securities and Exchange Commission. Another aim is to make it easier for companies to list on the market by creating an intermediate category.