A shareholder wants to sell their stake and has already found a buyer. The price seems settled, but the parties still need to identify the shares being transferred and the steps the company needs to recognize the change.
Prepare the transaction with the company's documents available for review. A purchase proposal can start the negotiations while leaving matters that must be resolved before closing.
This article concerns Mexican variable-capital corporations, or S.A. de C.V., governed by the General Law of Commercial Companies (LGSM). Limited liability companies, SAPI entities and publicly traded issuers require a review of their particular rules.
Identify the shares being sold
Gather the current bylaws, available share certificates or provisional certificates and the share register. Check that the offer's description matches those documents. Record the shares' numbers, series, class and quantity, as well as the percentage they represent in the capital structure being used as the reference.
Article 128 of the LGSM requires the register to identify the shareholder by name, nationality and address. It must also state the numbers, series, classes and other particulars of the shares, payments made toward them and transfers [1]. If the documents differ, have those differences resolved before setting a closing date.
Also request information about restrictions or third-party rights that could affect the shares. The buyer needs to know which documents are missing and who will obtain them. A general statement that “everything is in order” leaves that check without an owner.
Read the restrictions in the bylaws
Article 91, section VII(a), allows restrictions of any nature on transfers of ownership or rights relating to shares of the same series or class. These are separate from the board authorization contemplated in article 130 [1].
Article 130 allows the bylaws to require board authorization for a transfer. The board may refuse authorization if it designates a buyer at the prevailing market price [1]. Review these rules before promising an unrestricted transfer or treating the selected buyer as definitive.
Also look for shareholder agreements and identify the obligations relevant to the transaction. If a document requires notice or authorization, prepare a list of steps and responsible parties. Review each requirement's scope and whom it binds.
The preemptive subscription right in article 132 concerns shares issued in a capital increase [1]. For a sale of shares that have already been issued, identify the transfer rules that actually apply.
Define the price and payment terms
Clarify whether the price is fixed or depends on a review of financial information. If adjustments are contemplated, describe the data to be used and how differences will be resolved. Avoid negotiating only a percentage without identifying the stake the buyer will receive.
When payments will remain outstanding after closing, review the protection each side needs with an adviser. Ask what happens if an installment is missed and which documents will be handed over at each stage. The sequence should allow the parties to check whether the agreed conditions were met.
Obtain tax advice before settling the final price. The seller's and buyer's circumstances may change the analysis. Understand the applicable documentation and payment obligations without importing percentages from another transaction.
Prepare a closing that can be documented
Shares are represented by registered certificates under article 111 of the LGSM [1]. Article 26 of the General Law of Negotiable Instruments and Credit Transactions (LGTOC) allows registered instruments to be transferred by endorsement and delivery, as well as by other lawful means [2].
If the transfer uses a means other than endorsement, such as a contract, article 131 of the LGSM requires it to be noted on the share certificate [1]. Identify the mechanism to be used and prepare the corresponding documents.
The closing checklist should include:
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The share purchase agreement and evidence of payment or the agreed conditions for settling the price.
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The certificates representing the shares, identified by their numbers, series, class and quantity. Depending on the chosen mechanism, include endorsement and delivery or a notation of the transfer completed by another lawful means.
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Authorizations or confirmations required by the bylaws and other rules applicable to that transaction.
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Entry of the transfer in the share register. Article 129 requires the company to record it at any holder's request and provides that the company recognizes the person entered in the register as the owner [1].
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Confirmation of the notice of that entry in the Ministry of Economy's Electronic System for Publications of Commercial Companies, known as PSM. This follows article 129 of the LGSM and article 50 Bis of the Commercial Code [1, 3, 4].
Assign a responsible party to each step and state what will happen if a condition remains outstanding on the planned date.
If the seller also manages or represents the company, review those roles separately. Prepare the decisions and documents needed if they will leave those positions. Include handover of access, records and open matters where that forms part of the agreed exit.
Keep the transaction file
At the end, obtain an organized copy of the agreement and closing documents. Include evidence of completed steps and identify matters requiring later follow-up. This file will help when reviewing corporate decisions or a subsequent transfer.
QP Abogados can review the corporate documents and sale terms to identify what remains to be resolved. Share the bylaws, share information and financial proposal before committing to the closing.
Legal sources
[2] General Law of Negotiable Instruments and Credit Transactions, article 26, Chamber of Deputies.
[3] Mexican Commercial Code, article 50 Bis, Chamber of Deputies.
General information. The transfer must be reviewed against the bylaws, agreements and circumstances of the particular company.