On December 15, 2018, the decree published in the Official Gazette of the Federation on June 14 of the current year entered into force, by which various provisions were added to the General Law of Commercial Companies (“LGSM”), particularly in Articles 73 and 129 of such law, in order to comply with recommendation number twenty-four of the Financial Action Task Force against Money Laundering (“FATF”), of which Mexico is a member.
In accordance with the explanatory memorandum of said reform, recommendation number twenty-four states that “countries should take the necessary measures to prevent the improper use of legal entities for money laundering or terrorist financing, ensuring that there is adequate, accurate and timely information on their control and the beneficial owner, the latter being understood as the natural person who obtains the benefits or exercises control over the legal entity”.
Likewise, it is clear from said statement of motives that, prior to the entry into force of this amendment, Mexico did not have any legal provision establishing the obligation of legal entities to inform the competent authorities of their beneficial owner.
In this sense, the reform basically consisted of the addition of a new “second” paragraph in Article 73 -article that regulates the Special Book of Partners in Limited Liability Companies- and two new “second” and “third” paragraphs in Article 129 -article that regulates the registration of the transfer of shares of Corporations- of the LGSM, These articles establish that a notice must be published in the Electronic System established by the Ministry of Economy regarding the registration of the transfer of shares or partnership interests in the Stock Registry Book or in the Special Book of Partners, as the case may be.
With respect to Corporations, in addition to the aforementioned notice, the third paragraph added to Article 129 of the LGSM includes the obligation of the Ministry of Economy to maintain as confidential the data – name, nationality and domicile – of the shareholder contained in the notice made in the Electronic System, except in those cases in which the information is requested by judicial or administrative authorities; this confidentiality obligation is based on the legal nature of the Corporations (capital companies).
On the other hand, we identified certain legislative omissions in this reform, since, among other issues, it does not provide for deadlines for the presentation of such notice, nor sanctions (i.e. fines) in the event of non-compliance with such obligation.
Notwithstanding the foregoing, it is important to note that, as a result of this reform, the Ministry of Economy, among other authorities, will have greater control over changes in the capital structures of Corporations and Limited Liability Companies, identifying their beneficial owner.
