Amendment to the General Law of Commercial Companies: Transfer Notice of shares and equity participations.
On December 15, 2018, a decree published in the Federal Official Gazette on June 14 of this year came into force, by which various provisions were added to the General Law of Commercial Companies (“GLCC“), particularly in articles 73 and 129 of such legislation, in order to comply with recommendation number twenty-four of the Financial Action Task Force on Money Laundering (“FATF“).
In accordance with the Congressional Declaration of Purpose of such amendment, the aforementioned recommendation number twenty-four states that “the countries must take the necessary measures to prevent the misuse of legal entities, for money laundering or financing of terrorism, ensuring that there is an adequate, accurate and timely information on their control and the ultimate beneficiary, understanding the latter as the individual who obtains the benefits or exercises the control over the legal entity“.
Also, from such Congressional Declaration of Purpose it is understood that, prior to the entry in force of this amendment, Mexico did not have any legal provision establishing the obligation of the legal entities to inform the competent authorities of their ultimate beneficiary.
In this regard, the amendment basically consisted in the addition of a new “second” paragraph in article 73 – article that regulates the Partners’ Special Book for Limited Liability Companies – as well as two new paragraphs “second” and “third ” in article 129 – article that regulates the entry of the transfer of shares of the Limited Liability Stock Corporation- of the GLCC, in which it was established that, a notice must be published in the Electronic System established by the Ministry of Economy of the entries made in the Stock Registry Book or in the Partners’ Special Book, due to the transfer of shares or equity participations, as applicable.
Regrading the Limited Liability Stock Corporation, in addition to the aforementioned notice, the third paragraph added in article 129 of the GLCC included the obligation of the Ministry of Economy to keep the data -name, nationality and domicile- of the shareholder that appears in the notice made in the Electronic System as confidential, except in the event in which the information is requested by the judicial or administrative authorities; obligation of confidentiality that attends to the legal nature of Limited Liability Stock Corporation (legal entities of capital).
On the other hand, we identified certain legislative omissions in this amendment, since, among other issues, it lacks a term for the submission of such notice and any sanctions (i.e. fines, etc.) in the event of non-compliance with such obligation.
It is important to note that, as a result of this amendment, the Ministry of Economy, among other authorities, will have a greater control over the changes in the capital structures of the Limited Liability Stock Corporation and the Limited Liability Companies, identifying its ultimate beneficiary.