 | 2007 | 2006 |
Overall Score: | 60 | 54 |
Regional Ranking: | 4th | 3rd |
Mexico is the third largest recipient of VC/PE in the region but problems in its investing environment have held back growth – particularly of a vibrant local industry. The government has undertaken various reforms targeted to industry development, and positive momentum is underway to increasingly capitalize on Mexico’s promise.
Strengths: Corporate governance and minority shareholder rights have significantly improved through creation of new Sociedad Anonima Promotora de Inversion (SAPI) under the revised Securities Market Law. A legal vehicle with tax transparency now exists in the form of a trust, and there is a growing convergence on international accounting standards.
Challenges: Mexican pension funds are not permitted to invest in venture capital and private equity. Perceived corruption and a weak judicial system remain underlying problems, as do inadequate creditors’ rights and bankruptcy proceedings. The issue of a local vehicle for fund formation may also still be unresolved, as the market has yet to utilize the new trust mechanism, and all activity continues to be through off shore funds.
| Score | Change |
| Overall score | 60 | ▲ 6 |
| Laws on VC/PE fund formation and operation | 3 | |
| Tax treatment of VC/PE funds & investments | 3 | ▲ 1 |
| Protection of minority shareholder rights | 3 | ▲ 1 |
| Restrictions on institutional investors investing in VC/PE | 2 | |
| Protection of intellectual property rights | 2 | |
| Bankruptcy procedures/creditors' rights/partner liability | 1 | |
| Capital markets development and feasibility of exits | 2 | ▼ 1 |
| Registration/reserve requirements on inward investments | 3 | |
| Corporate governance requirements | 3 | ▲ 1 |
| Strength of the judicial system | 2 | |
| Perceived corruption | 1 | |
| Quality of local accounting/use of international standards | 3 | |
Indicators are scored from 0-4 where 4=best score.
Overall score ranges from 0-100 where 100=best score. |
