|January 14, 2014|
Previously published on January 10, 2014
This GT Alert describes some of the most relevant aspects of the financial reform published in the Mexican Federal Official Gazette on January 10, 2014 (the “2014 Financial Reform”).
On January 10, 2014 the Financial Reform was published containing amendments to more than 30 statutes as well as the issuance of a new Financial Groups Law (Ley para Regular a las Agrupaciones Financieras).
Some of the most significant aspects of said reform are described below. We will distribute additional information shortly.
1. Strengthening of the Financial Authorities
- Additional powers are granted to the Mexican National Commission for the Defense of Users of the Financial System (Comisión Nacional para la Protección y Defensa de los Usuarios de Servicios Financieros or “Condusef”) including the issuance and publication of recommendations to financial institutions.
- The creation of a financial arbitration system, which purpose is to resolve conflicts among financial institutions and their clients.
- A Bureau for Financial Institutions supervised by the Condusef was created. Sanctions imposed by the authorities to financial institutions and client´s claims will be published therein.
2. Capital Markets
- The public offer of securities limited to certain type of investors will be regulated. Also, new rules are enacted in connection with the issuance of certain type of bonds such as certificados bursátiles fiduciarios and other securities.
- Additional obligations are imposed to brokerage firms when acting as securities underwriters.
- Mexican entities shall give notice to the Mexican National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores) of public offerings - and any other type of offering - of securities outside of Mexico.
3. New Operating Rules for Certain Financial Entities
- New operating rules are issued for the Credit Unions (Uniones de Crédito), People´s Finance Corporations (Sociedades Financieras Populares and Sociedades Financieras Comunitarias), and Saving and Lending Cooperative Companies (Sociedades Cooperativas de Ahorro y Préstamo).
4. Development Banking
- A more flexible legal framework for development banking is enacted which allows new financing alternatives.
- Development programs to broaden the access to financing opportunities are introduced.
5. Granting and Execution of Collateral and new rules governing Secured Loan Agreements
- Terms in several stages of commercial litigation proceedings are reduced for said trials to become more expeditious.
- The restriction consisting of the prohibition of a trust institution and a beneficiary of a guaranty trust agreement being the same person is eliminated.
- The execution of a cash collateral pledge agreement is simplified since there will be no need to follow an execution procedure or to obtain a court order to recover.
- A new flexible procedure for creditor substitution under a loan agreement is established.
6. Insolvency/Bankruptcy Procedure (Concursos Mercantiles)
- The insolvency/bankruptcy procedure (concurso mercantil) is shortened and the use of templates prepared by the Federal Institute of Specialists in Bankruptcy Procedures (Instituto Federal de Especialistas de Concursos Mercantiles) will be allowed.
- A joint concurso mercantil procedure for entities of a same corporate group is created.
- New creditor´s protection mechanisms are included, such as “inter-company” voting rights limitations, extension to the look back period under certain circumstances, and the addition of responsibilities of the board of directors of a debtor.
- Rules for a debtor to enter into an “emergency loan” within the concurso procedure were eased.
- A new liquidation procedure of credit institutions supervised by the Mexican Bank Savings Protection Institute (Instituto para la Protección al Ahorro Bancario) is created.
7. Multiple Purpose Financial Companies (Sofomes) and Special Purpose Financial Intermediaries
- Multiple Purpose Financial Companies (Sofomes) will need to be registered before a new registry supervised by the Condusef and said entities will need to file periodical notices.
- Additional rules to consider a Sofom as a regulated entity are included.
- Additional rules applicable to Special Purpose Financial Intermediaries such as public bonded warehouses, currency exchange companies and money transfer companies are enacted.
8. Mutual Funds
- The corporate structure and the incorporation procedure of mutual funds are modified.
- New corporate governance and operating rules are created for mutual funds operating companies (sociedades operadoras de fondos de inversión), mutual funds distribution companies (sociedades distribuidoras de acciones de fondos de inversión) and mutual funds valuation companies (sociedades valuadoras de acciones de fondos de inversión).
9. Financial Groups
- A new Financial Groups Law is enacted including a new type of financial company named “Holding Company”.