June 14, 2018
To: Clients and friends
From: Alfonso García-Mingo, Carlos Acle and Sergio Buenrostro
On June 14, 2018 the General Law of Commercial Companies (Ley General de Sociedades Mercantiles) was amended to add a publicity requirement to the transfer of shares in Stock Corporations (Sociedades Anónimas) and capital quotas in Limited Liability Companies (Sociedades de Responsabilidad Limitada). The amendment will become effective six months from the next day of its publication in the Official Gazette of the Federation (Diario Oficial de la Federación); that is, December 15, 2018. Currently, any transfer of shares and capital quotas must be recorded in the corresponding ledger to be effective vis-à-vis third parties and the issuer will only recognize as owner of the shares or capital quotas the entity or individual duly recorded in the ledger. The amendment provides that any such transfers must also be published in the electronic system operated by the Ministry of Economy, which is a platform for public consultation created a couple of years ago to give publicity to certain corporate events, including calls for shareholders meetings. The amendment raises a number of questions that unfortunately will go unanswered for the time being, including the information to be included in the notice. We will have to wait until it becomes effective to understand its consequences. First, the amendment does not set a timeframe within which the publication should be made and what the sanction or penalty will be for lack of publication. Moreover, it is not clear if lack of publication will prevent any transfer of shares or capital quotas to become effective vis-à-vis third parties and the issuer, despite having recorded such transfers in the ledger. Second, the amendment includes a provision stating that the Ministry of Economy, who is in charge of the electronic system, will maintain as confidential the name, domicile and nationality of the shareholder, except as ordered by judicial or administrative authorities. The idea of keeping such information confidential seems good at glance but it fails to consider the fact that the electronic system –as it now exists- is available for public consultation, thus defeating the essence of making the publication. In addition, the confidentiality provision only applies to transfers in Stock Corporations but not in Limited Liability Companies.
About the authors: Alfonso García-Mingo and Carlos Acle are partners and Sergio Buenrostro is an associate in the Corporate and M&A practice group of GarcíaMingo & Tejedo, S.C. They have long-standing experience in representing a variety of foreign and domestic companies in international business transactions including mergers and acquisitions involving multiple jurisdictions. They can be contacted at: