This Legal Update addresses recent amendments ("Amendments") to the Mexican General Law of Commercial Companies ("LGSM") published in the Federal Official Gazette on June 14, 2018, which will become effective on December 15, 2018 ("Effective Date"). The Amendments impose an obligation on stock corporations (sociedades anónimas) ("SAs") and limited liability companies (sociedades de responsabilidad limitada) ("SRLs") to publish notices regarding entries made in their corporate books reflecting their equity holdings and with the main purpose of complying with international recommendations to combat money laundering.
I. Disclosure of Equity Holding
A. LIMITED LIABILITY COMPANIES (SOCIEDADES DE RESPONSABILIDAD LIMITADA)
Under the LGSM, Mexican SRLs shall maintain a partners' special registry ledger (libro especial de socios) to register the name and address of their partners and to indicate their contributions, as well as any transfers of equity interests.
Due to the Amendments, SRLs shall publish a notice in the electronic system of the Mexican Ministry of Economy ("Ministry") in the event they make an entry in their partners' special registry ledgers regarding contributions made by partners and/or transfers of equity interests.
Any individual who certifies holding a legitimate interest (interés legítimo) may consult the partners' special registry ledger of a SRL, which will be under the surveillance of the managers of the corresponding SRL, who will be personally and jointly liable for the existence of such ledger and the accuracy of information reflected therein.
B. STOCK CORPORATIONS (SOCIEDADES ANÓNIMAS)
Under the LGSM, Mexican SAs shall maintain a stock registry ledger (libro de registro de acciones) in which they shall register their shareholders and their corresponding addresses, equity holdings and taxpayers' registry numbers, if applicable.
Due to the Amendments, Mexican SAs shall publish a notice in the electronic system of the Ministry in the event they register share transfers in their stock registry ledgers.
The Ministry shall ensure that the name, citizenship and address of the shareholder reflected in the corresponding notices are kept confidential, unless requested by judicial or administrative authorities needing such information to fulfill their duties.
II. Implications of the Amendments
(i) Current Equity Holding and Content of Notices. Although the Amendments set forth obligations to publish notices of future equity holding of SRLs and SAs, no obligations to publicize equity holdings prior to the Effective Date were set forth within the Amendments.
In addition, it should be noted that for SAs, the amended LGSM sets forth an obligation to publish share transfers; thus, it is not clear whether the Amendments are intended to impose an obligation for SAs to publish other kinds of equity contributions (e.g., capital stock increases).
(ii) Confidentiality for SRLs. The amended LGSM does not include an obligation for the Ministry to ensure the confidentiality of SRLs' information in notices published within its electronic system, which is provided for SAs.(iii) Consequences of a Breach. It should be noted that the Amendments do not contain specific sanctions in cases in which the obligation to publish notices in connection with equity holdings is breached.
(iv) Term. The Amendments fail to provide a mandatory term for the notices to be published.
(v) Certifying an Interest. The amended LGSM does not clarify which individuals or entities may access the notices to be published by SAs, as it does for access to SRLs' notices.
(vi) Responsibility for Managers/Directors. The Amendments contain a personal and joint obligation for managers of SRLs regarding the existence of partners' special registry ledgers and the accuracy of the information reflected in the entries of such ledgers; however, for SAs, such obligations were not made explicit.
III. Going Forward
We understand that during the upcoming weeks/months, the Ministry will release standard forms to create the publications, which may clarify the uncertainties mentioned above.