Doing Business

Doing Business in Mexico 2015

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55 Doing Business in Mexico 2015 Investment institutions Mexican mutual fund investment companies have been growing significantly in number of funds, their size and the volume of transactions. Three main types of funds are available: 1. Fixed-income funds, which direct their investments mainly to high-yield, fixed- income securities denominated in pesos, such as Mexican governmental treasury certificates (CETES) and corporate debentures or commercial paper. 2. Variable-income funds, which are authorized to invest a large proportion of their assets in shares of companies listed on the stock exchange. 3. Risk-equity capital funds. Investment and mutual funds are authorized by the Ministry of Finance and are usually operated by brokerage houses and banks. The Ministry authorization also contemplates the type of investor that may participate in the fund, e.g., individuals, corporate treasuries, nationals, foreigners, and employee savings and retirement funds. The investment institutions are regulated by the Investment Company Law (Ley de Sociedades de Inversión). Insurance and bonding companies are authorized by the National Insurance and Bonding Commission to invest their technical reserves in certain instruments. These entities commonly invest in the money market. Retirement fund managers (AFOREs) The Law for Retirement Savings Systems regulates retirement savings systems and their participants by means of retirement fund managers. These organizations, known as AFOREs (Administradoras de Fondos para el Retiro), are financial entities that as from July 1, 1997 are exclusively and continuously engaged in the management of individual savings accounts and channel the resources of the retirement subaccounts of which they are composed under the terms of the Social Security laws through companies specializing in the investment of retirement funds (SIEFOREs) (Sociedades de Inversión Especializadas de Fondos para el Retiro). The exclusive purpose of these SIEFOREs is to invest the resources of individual accounts entrusted to them, in accordance with the terms of the Social Security laws. Authorization is required from the National Commission for Retirement Savings Systems (Comisión Nacional del Sistema de Ahorro para el Retiro) to operate as an AFORE or as a SIEFORE. The capital of AFOREs is controlled to reduce potential conflicts of interest, to assure the security of the operation of the system and to have better control over the investment of pension funds. It should be composed of Series "A" shares, which must account for at least 51% of the capital. The remaining 49% can be composed of Series "A" and Series "B" shares. Series "A" shares may be acquired only by Mexican nationals and Mexican entities majority-owned by Mexicans and controlled by Mexicans. Series "B" shares are unrestricted. 7

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