Markets
Mexico: Article 55 Bis and the par floor on convertibles
Mexican convertible obligations may not be placed below par and their conversion bases must be fixed in the acuerdo de emisión, so a conversion price that refixes against future market prices is untested rather than routine. A subscription facility became conceivable in 2023, when Article 55 Bis of the Ley del Mercado de Valores let the board issue shares with the preemptive right excluded.
Key takeaways
- No placement below par. LGTOC Article 210 Bis fraction IV: “Las obligaciones convertibles no podrán colocarse abajo de la par.” Fraction VI bars any resolution prejudicing the rights derived from the conversion bases.
- Article 55 Bis is the new fact. Added by the reform published in the DOF on 28 December 2023, it lets the meeting of a sociedad anónima bursátil delegate to the board the power to increase capital and set subscription terms, including exclusion of the preemptive right.
- Institutional-only, and no prospectus. Where those shares go exclusively to institutional and qualified investors, or to shareholders exercising preemption, placement needs neither a prospecto de colocación nor a prior update of the Registro, and disclosure runs through the exchange same-day.
- Registration comes last, and that is the risk. After placing, the issuer applies to update its Registro inscription within periods the CNBV sets. Model that as a gating item, never a timeline.
obligaciones convertibles en acciones, and the older statute
Mexican convertible debt is not governed by the securities law at all. It sits in Article 210 Bis of the Ley General de Títulos y Operaciones de Crédito, a general commercial-paper statute, and the drafting shows its age. A company issuing obligaciones convertibles en acciones must hold treasury shares against the conversion; the general companies law's preemptive right is disapplied for that purpose; the acuerdo de emisión must state the period within which the conversion right is exercised; the obligations may not be placed below par; conversion happens only on the obligationist's application; and while the issue is outstanding the issuer may take no resolution prejudicing the rights derived from the conversion bases. Where capital autorizado is used, the statute requires the words para conversión de obligaciones en acciones alongside it.
None of that forbids a variable conversion basis in terms. What it does is require the bases to exist in the founding resolution and then freeze them, and fraction VI would be the point of argument. The separate floor comes from the general companies law, which prohibits a sociedad anónima from issuing shares for a sum lower than their nominal value — the same shape of constraint that drives the Colombian analysis, reached there through a subscription document rather than a credit-instruments statute.
Article 55 Bis: what the 2023 reform opened
The interesting development is on the equity side. The Ley del Mercado de Valores gained Article 55 Bis in the reform published on 28 December 2023, and the old Article 55 was repealed in the same instrument. The new article lets the meeting of a SAB or a sociedad anónima promotora de inversión bursátil delegate to the board the power to increase share capital and determine the terms of subscription, expressly including exclusion of the derecho de suscripción preferente for the delegated issues.
Read against the older Article 53 the change is stark. Article 53 lets a SAB hold unsubscribed treasury shares for later subscription by the public, but only by public offering with prior inscription in the Registro; a negotiated placement with one designated investor does not fit. Article 55 Bis does not require a public offering. It requires the right audience.
| Feature | Article 53 | Article 55 Bis |
|---|---|---|
| Who decides each issue | The extraordinary meeting approves the maximum and the conditions | The board, under a delegation from the meeting |
| How it must be placed | By public offering, with prior inscription in the Registro | No public offering required |
| Preemptive right | Disapplied for capital increases made by public offering | May be excluded in the delegation itself |
| Who may buy | The public | Institutional and qualified investors, or preempting shareholders |
| Registro update | Before the offering | After the placement |
| Structural comparison only. Not an offer, a quote, or a rate card. | ||
Preemption, and the fifteen days that still apply elsewhere
Outside those two routes the default is the general companies law: shareholders have a preferential right, in proportion to their shares, to subscribe shares issued on a capital increase, exercisable within the 15 days following publication of the resolution in the Ministry of Economy's electronic system. Fifteen days is short by regional standards — Chile's window is 30 days and cannot be shortened — but a drawdown still cannot live inside it, which is why Article 55 Bis matters here.
What we could not establish, and why it decides the tier
Article 55 Bis leaves the post-placement registration step to CNBV general provisions, and the secondary regulation implementing it could not be located. Until it is read, nobody should describe the Article 55 Bis route as usable: the conditions, any caps and the length of the registration update are all unknown, and until the inscription is updated the investor holds shares not yet quotable on the Bolsa Mexicana de Valores or BIVA. No Mexican listed issuer was found to have run either a floating-conversion convertible or a standby equity facility. That absence of precedent, not a prohibition, is what keeps Mexico constrained rather than open.
General information, not legal advice. The statutory texts here were read from the Camara de Diputados consolidations of the LMV, LGTOC and LGSM rather than the Diario Oficial originals. The CNBV secondary regulation under Article 55 Bis was not located, and BMV and BIVA internal rules were not examined. Take advice from qualified Mexican counsel before acting.
Testing the Article 55 Bis route starts with the bylaws and the share class.
Primary sources
- Cámara de Diputados — Ley del Mercado de Valores
- Cámara de Diputados — Ley General de Títulos y Operaciones de Crédito
- Cámara de Diputados — Ley General de Sociedades Mercantiles
Mexican listed issuers: frequently asked questions
Can a Mexican convertible be priced at a discount to a future VWAP?
Nothing in Article 210 Bis says in terms that it cannot, but two things stand in the way. The conversion bases must be established in the acuerdo de emision, and fraction VI stops the issuer taking any resolution prejudicing the rights derived from them. The obligations also may not be placed below par. Treat a refixing conversion price in Mexico as novel, not as market practice.
What actually changed in December 2023?
Article 55 Bis was added to the Ley del Mercado de Valores and the old Article 55 was repealed, both by the reform published in the Diario Oficial on 28 December 2023. The new article lets the shareholders meeting of a listed or investment-promotion listed company delegate to the board the power to increase capital and set the terms of subscription, expressly including exclusion of the preemptive right for the delegated issues.
Does the par-value floor bite if the shares have no nominal value?
It has much less to bite on. The general companies law prohibits a sociedad anonima from issuing shares for a sum lower than their nominal value, but it also allows the nominal value to be omitted where the bylaws so provide. Whether a given Mexican issuer has shares sin expresion de valor nominal is a question for its bylaws, and it comes before any pricing work.
Is there a Mexican equivalent of the Rule 144 holding period?
No. Mexico gates tradability on registration rather than elapsed time. Shares become quotable once inscribed in the Registro Nacional de Valores and listed, and under Article 55 Bis that update is applied for after the placement. The risk to model is a registration step of uncertain length, not a holding period, and it should never be presented as a timeline.
If this is about a live situation
Article 55 Bis made a subscription arrangement conceivable for a sociedad anónima bursátil in 2023; it did not make one routine, and the par floor on obligaciones convertibles is unmoved. If the bylaws already carry the delegation, the instrument comparison is where the workable shapes are, and the eligibility criteria set out the rest.