Mexican lawmakers pass law aimed at improving corporate governance

Mexico's lower house of Congress voted unanimously Tuesday for a new stock market law aimed at improving corporate governance and at boosting the number of companies that trade on the local market. The measure must be sent back to the Senate because it was modified after initial approval in the upper house.

Under the changes, regulators would be held responsible if they exaggerate the seriousness of an alleged securities violation and regulators would have to publish a notice exonerating a company if it was fined by had its penalty overturned by a court. The bill expands the definition of data that listed companies must report to the stock market to include anything that could affect their share price.

The new law should make it easier for medium-size companies to list on the local stock market since it allows them to tap into money from institutional investors in exchange for adopting higher corporate governance standards that offer greater protection to minority holders.

The securities law also is expected to increase Mexico's share of the risk capital that flows into Latin America, a region that receives a small fraction of global risk capital flows. The law was passed without changes sought by businessman Ricardo Salinas Pliego, who controls Mexico's No. 2 broadcasting concern, TV Azteca SA, and retail and telecommunications companies, the AP reports.

The Salinas group opposed a measure to bar company representative from independent audit committees, and one that allows regulators to publish names of companies and individuals under investigation for securities law violations before a case is completed. P.L.