June 2021

  • A new dictator in Mexico?
    by Gerardo Reyes
  • May NEWS on Mexican Commercial Law

Our second digital publication which covers a few more earthly topics such as rail, commercial law, corporate law, litigation and other relevant aspects of Mexican law that we hope can be of interest to both our non-aviation related readers as much as to our current aviation constituents.






    April 2021

    • Mexico: back to the 1940’s. An electric reform back to the mid XXth century in violation of treaty obligations.
      by Miguel Ruelas
    • March NEWS on Mexican Commercial Law



    March 2021

    • Mexico’s Energy Industry: advancement or recession.
      by Arturo Fragoso
    • February NEWS on Mexican Commercial Law
  • TERRUM FEB 2021



    February 2021

    • Reform Project to Banco de México - Mexico´s Central Bank- Capacities.
      by Julio Vargas
    • January NEWS on Mexican Commercial Law
  • Dissolution and liquidation of companies. 
    by Femín Aramburu.
    Provisions from Articles 229 to 249 Bis1 of the General Law of Mercantile Corporations (the Law), regulate the dissolution and liquidation of mercantile corporations in Mexico.
    Notwithstanding the different assumptions that the Law establishes for which a company can be dissolved, an agreement between the partners shall be reached in an Extraordinary Shareholders Meeting. Once the meeting has been held, the caption "in liquidation" must be added at the end of the company name, which shall be notarized before a Public Notary, and later registered in the Public Registry of Property and Commerce of the company's domicile.
    “It is important to mention that the Board of Directors will cease in their functions solely until the Dissolution Assembly is registered in the Public Registry of Property and Commerce, and once the liquidator(s) accepts their position and start their functions.”
    In such an assembly, one or more liquidators must be appointed, who must be granted all needed authority to be able to execute their role and comply with their obligations. Once the appointment has been accepted by the liquidator(s), the following duties shall be performed: (i) to register in the Public Registry of Commerce of the company’s domicile the resolution of dissolution adopted by the Assembly; (ii) to request and obtain from the Board of Directors the corporate books of the company; (iii) to conclude with the corporate operations pending as of that date; (iv) to collect all the amounts owed to the company and, if applicable, sell its assets; (v) to pay to the company's personnel all the amounts to which they are entitled, in accordance with the current Federal Labor Law; (vi) to pay all creditors the amounts owed; (vii) in due course and in the event of a holdover, to distribute it among the shareholders, in the proportion that corresponds to them; (viii) to make the publications referred to in the Law; (ix) to file all respective notices before the Tax Administration Service (Servicio de Administración Tributaria, SAT); and, (x) once such publications have been made, to call a General Extraordinary Shareholders meeting for the approval of the final liquidation balance.
    It is important to mention that the Board of Directors will cease in their functions solely until the Dissolution shareholders meeting is registered in the Public Registry of Property and Commerce, and once the liquidator(s) accepts their position and start their functions. At this time, the Board of Directors must serve to the liquidator(s) all assets, books, and documents of the company, for which an inventory of the company’s assets and liabilities must be made.
    Once the final liquidation balance has been published in the electronic system established by the Ministry of Economy, and once the 15-day term has expired, the liquidator(s) must summon all shareholders to a General Extraordinary meeting to proceed with the liquidation.
    At this Extraordinary shareholders meeting, the shareholders must (i) agree on the liquidation of the company; (ii) approve and ratify each and every operation and action executed by the liquidator(s); (iii) approve the financial and accounting statements of the liquidation; (iv) approve the final liquidation balance; (v) instruct the liquidator(s) of the company to proceed with the notarization of the Assembly’s minutes before a Notary Public and to arrange before the Public Registry of Property and Commerce of the domicile of the company its registration; (vi) instruct the liquidator(s) to store the corporate books of the company for a 10-year period from the date of the liquidation’s registration in the Public Registry of Property and Commerce.
    Once the Liquidation shareholders meeting is registered in the Public Registry of Property and Commerce, the liquidator will proceed to file before the SAT, the notice of commencement the of liquidation, which must be filed within the following month from the day in which the liquidation begins. The annual statement for an irregular financial year due to dissolution must also be filed. Likewise, the notice of the end of liquidation and cancellation of the company’s Federal Taxpayers Registry (Registro Federal de Contribuyentes, RFC) by virtue of the total liquidation of its assets must be filed before the SAT within the following month in which the latest compulsory tax declaration was filed.
    Unfortunately, the SAT can sometimes be a bit reluctant in granting the aforementioned cancellations of the Federal Taxpayers Registries. Therefore, it has been common to effectively witness several visits to the SAT just to be able to definitively file the respective notices of cancellation, which many times originates oversights conducted by the SAT. This can lead to being able to conclude such a process not only with delay but several months or years after it has been initiated.
    “Once the final liquidation balance has been published in the electronic system established by the Ministry of Economy, and once the 15-day term has expired, the liquidator(s) must summon all shareholders to a General Extraordinary Assembly to proceed with the liquidation.”
    The foregoing constitutes the general procedure to dissolve and liquidate a company in Mexico. However, there is a simplified procedure to dissolve certain companies that meet certain features.
    Such conditions can be founded in article 249 Bis of the Law that establishes the requirements to liquidate and dissolve these companies. Among other requirements, it establishes that companies (i) must be formed exclusively by partners or shareholders who are natural persons; (ii) must have published in the electronic system the corresponding notice of registration in the special book of registration of shares the shareholding structure in force at least 15 business days prior to the date of the shareholders meeting by which the dilution was agreed; (iii) must not perform any operations, nor have issued electronic invoices during the last two years; (iv) must be up to date with the compliance of their tax, labor and social security obligations; (v) and that their legal representatives must not be subject to criminal proceedings for the possible commission of tax or patrimonial offenses.
    Furtherly, provision 249 Bis 1 of the same Law establishes the procedure that a company must follow to proceed with its liquidation and dissolution, that being: first, it must hold a General Extraordinary shareholders meeting where its dissolution and liquidation is agreed and the liquidator is appointed from among the partners or shareholders; this agreement must be signed by all the shareholders, and published in the electronic system established by the Ministry of Economy no later than 5 business days following the date of this assembly; second, and once the agreement is published, the Ministry of Economy will verify that its settlement of dissolution and liquidation duly complies with the Law, and, if applicable, will send it electronically for its registration in the Public Registry of Property and Commerce; third, the shareholders will deliver to the liquidator all assets, books and documents of the company; fourth, the liquidator will execute the distribution of the remaining corporate assets among the shareholders; fifth, and once the company has been liquidated, the liquidator will publish its final balance in the electronic system established by the Ministry of Economy within 60 business days following the date of the dissolution and liquidation assembly; and finally, the Ministry of Economy will register the cancellation of the company's folio in the Public Registry of Property and Commerce and will notify the SAT to cancel its RFC.

  • TERRUM JAN 2021   

    January 2021

    • Essential aspects of the Constitutional Reform to the Federal Judicial Power in Mexico.
      by Wendy Montiel
    • December NEWS on Mexican Commercial Law
  • A new dictator in Mexico?
    by Gerardo Reyes
    How can we describe a dictator? A dictator is a person who exercises his power without any limit1, it is a man in the power that tries to collect the three branches of government in his own person. The opposite of a dictatorship or a totalitarian regime is a democratic system where the sovereignty is vested in the people and the people elect their leaders through a free and confidential voting system. Mexican Democracy has been developing through decades of blood, sweat and tears. Nevertheless, Mexican Democracy is now in danger because of current Mexican President, Andrés Manuel Lopez Obrador (AMLO).
    “In my opinion, many Mexicans are frightened because there is a feeling that AMLO is seeking to extend his six-year term of government (sexenio) in Mexico2.”
    In my opinion, many Mexicans are frightened because there is a feeling that AMLO is seeking to extend his six-year term of government (sexenio) in Mexico2. This presumption began when AMLO encouraged a local amendment, 351, to Baja California’s Constitution. The amendment sought to extend Baja California’s Governor, Mr. Jaime Bonilla’s term from two to five years. Bonilla, a candidate of the party MORENA, formed by AMLO, was granted the extension after a legislative decree was issued3.
    Despite the fact that AMLO’s right hand, the former Ms. Justice of the Mexican Supreme Court and current Minister of the Interior, Olga Sánchez Cordero, stated that amendment 351 is unconstitutional4, López Obrador’s position unwavered as he reiterated that he would not dispute the extension5 .
    Unsurprisingly, political parties PAN, MC, PRD, PRI and the National Human Right Commission (CNDH by its acronym in Spanish) decided to file an “Action of Unconstitutionality”6 to contest Bonilla’s term extension. The main arguments of the parties and the CNDH were:
    I. The amendment did not fulfill the legal terms because it was approved the same day it was proposed.
    II. Violation of the Principle of Retroactivity.
    III. Lack of legal basis and justification (foundation and motivation)
    IV. Violation of article 105 of the Mexican Constitution where it is regulated that any electoral provision that will apply to the voted period has to be done ninety days before the elections.
    V. Voting rights.
    During the May 11, 2020 session, Supreme Court Justice José Fernando Franco González Salas explained how the contested amendment violates voting rights, how the amendment could not be properly analyzed because the legal terms were not fulfilled and how harmful it could be to adopt an amendment that violates the rule of law7. Fortunately, the project was adopted unanimously by the eleven judges of the Mexican Supreme Court8.
    Notwithstanding the adoption by the Supreme Court, and luckily for AMLO, a law initiative was issued by the legislative branch to extend the mandate of the President of the Mexican Supreme Court. It is important to note that it has been a tendency of the judicial power to solve the President´s troubles in his favour, such as the reduction of salaries of the judiciary employees, where the separation of powers was broken9, the regrettable judicial resolutions regarding AMLO’s airport and the lack of defense of Zaldívar when Lopez directly attacked a District Judge for granting a suspension against the Electric Amendment10.
    Among other significant changes at the Judicial System that are not subject of this article, the new legal provision in its Transitory Article11 Thirteenth regulates that the President of the Supreme Court will increase the period in his chair from four to almost six years. The mentioned Transitory Article Thirteenth allows the current President of the Supreme Court to extend his mandate which is in direct violation of Article 97 of the Mexican Constitution. Article 93 explicitly states that the eleven Justices shall elect the President of the Supreme Court every four years.
    Mr. Justice Arturo Zaldívar was voted to hold the Presidency of the Mexican Supreme Court since January 02, 2019, according to the Mexican Constitution he should complete his chairmanship before the first labor day of 2023. However, the abrogation of the Organic Law of the Judiciary12 and the new legal provision named Organic Law of the Judiciary and Judicial Career13, where the mandate extension is established, were published in the Federal Official Gazette in June 07, 202114.
    The aforementioned amendments including the Transitory Article Thirteenth extending Zaldívar’s term were previously approved by the Senate, the House of Representatives and by AMLO. Same amendments that are subject to be challenged through the same Remedy filed against the period extension of Baja California Governor. According to Article 105, section II of the Mexican Constitution “The Action of Unconstitutionality” could be filed before the Mexican Supreme Court during the next 30 days of the publication of the unconstitutional amendment by:
    - 33% of the House of Representatives.
    - 33% of the Senate.
    - The Mexican President.
    - 33% of Local Congresses.
    - The Political Parties.
    - The National Human Right Commission (CNDH).
    The evident argument to plead is the contradiction between the Transitory Article Thirteenth and Article 97 of the Mexican Constitution. The first article orders that the current President of the Supreme Court end his mandate next November 30, 2024, while the second article establishes that the President of the Supreme Court will end his mandate every four years, meaning that Zaldívar must end his mandate before the first labor day of 2023.
    The day after the publication of the judicial amendment and the Transitory Article Thirteenth, the President of the Supreme Court revealed on his social media that in order to avoid the mistrust and “doubts of the judicial independence and the separation of powers”15 that exists in Mexico, he will file an “Extraordinary Query”16 to solve the contradiction between Transitory Article Thirteenth and Article 97 of the Mexican Constitution. This means that the controversy could be solved either in “The Action of Unconstitutionality” or the “Extraordinary Query”, but the first legal proceeding solved will set the precedent for the forthcoming one.
    Despite the fact that the President of the Supreme Court will intervene at “The Action of Unconstitutionality” or the “Extraordinary Query” that disputes his own mandate extension, the legal professionals in Mexico expect that the eleven Justices will respect the constitutional supremacy and revoke the unconstitutionally of the Transitory Article Thirteenth.
    Andrés Manuel López Obrador has become “Mexico´s False Messiah”19
    Nowadays, the trial-and-error process that López Obrador is doing in order to review the best strategy to extend his own mandate is still a huge concern. Notwithstanding, the President of Mexico has stated more than three times that he´s not going to reelect himself despite the fact that there are people “asking him for reelection”17. Each individual is entitled to believe AMLO or not, but what is undeniable is that Mexico currenly has a person in charge who lies between 80 to 85 times per day according independent sources18. A person who had promised to erradicate corruption in Mexico and yet has not done nothing to his corrupt relatives, a person who intervenes in the elections, a person who became all the things that he condemned before he was the President of Mexico. Andrés Manuel López Obrador has become “Mexico´s False Messiah”19.

    1.- https://dle.rae.es/?w=dictador&origen=REDLE. Last consult May 27, 2021.
    2.- Article 83 of the Mexican Constitution.
    3.- Legislative decree 351 of Baja California Congress.
    4.- https://politica.expansion.mx/mexico/2019/10/12/la-scjn-decidira-periodo-de-bonilla-asegura-amlo-en-bc Last consult May 27, 2021.
    5.-https://www.elsoldetijuana.com.mx/local/ambigua-la-postura-de-amlo-sobre-ley-bonilla-4332401.html. Last consult May 27, 2021.
    6.- Acción de Inconstitucionalidad in Spanish founded in Article 105, Section II of the Mexican Constitution
    7.- Rule of law according with the Secretary-General of the United Nations is “a principle of governance in which all persons, institutions and entities, public and private, including the State itself, are accountable to laws that are publicly promulgated, equally enforced and independently adjudicated, and which are consistent with international human rights norms and standards.” https://www.un.org/ ruleoflaw/what-is-the-rule-of-law/ Last consult May 28, 2021.
    8.- Resolution issued by the Mexican Supreme Court at the Action of Unconstitutionally 112/2019, 113/2019, 114/2019, 115/2019, 119/2019 and 120/2019.
    9.- https://reflexionesjuridicas.com/2018/11/04/un-precedente-sobre-la-disminucion-de-salarios-a-jueces/ Last consult May 28, 2021.
    10.- https://www.animalpolitico.com/2021/03/juez-cuestionado-amlo-suspensiones-reforma-electrica/ Last consult May 28, 2021.
    11.- A transitory article also known as provisional article is a legal provision that regulates other legal provisions recently amended, such as temporary regulations, steps to follow to obtain a proper fulfillment of the amendments, among others.
    12.- Ley Orgánica del Poder Judicial de la Federación.
    13.- Ley Orgánica del Poder Judicial de la Federación y de la Carrera Judicial.
    14.- https://www.dof.gob.mx/nota_detalle.php?codigo=5620467&fecha=07/06/2021 Last consult June 07, 2021
    15.- https://twitter.com/ArturoZaldivarL/status/1402249061919514635?s=03
    16.- “Extraordinary Query” is a legal proceeding that solves the controversies of Articles 94, 97, 100 and 101 of the Mexican Constitution.
    17.- https://redfinancieramx.mx/la-gente-de-dos-bocas-me-pidio-reelegirme-pero-soy-maderista-amlo/ Last consult May 28, 2021. https://politica.expansion.mx/presidencia/2019/03/19/lamananera-amlo-se-dice-maderista-y-firma-su-compromiso-de-no-reeleccion Last consult May 28, 2021. https://www.eluniversal.com.mx/nacion/amlo-no-veo-reeleccion-soy-maderista Last consult May 28, 2021.
    18.- https://www.proceso.com.mx/nacional/2021/4/15/aseguran-que-amlo-miente-en-promedio-80-veces-en-sus-mananeras-262064. html Last consult May 28, 2021. https://latinus.us/2021/04/15/85-mentiras-diarias-durante-dos-anios-conferencias-duplican-dichastrump-administracion/Last consult May 28, 2021.
    19.- https://www.economist.com/leaders/2021/05/27/voters-should-curb-mexicos-power-hungry-president Last consult May 28, 2021

  • TERRUM MAY 2021



    May 2021

    • Dissolution and liquidation of companies.
      by Fermín Aramburu
    • April NEWS on Mexican Commercial Law
  • Terrum News | May 2021


    AMLO, false messiah and a danger to democracy: The Economist.
    The British magazine The Economist dedicated its cover to President Andrés Manuel López Obrador, whom it described as a "false messiah" and warned that he is a danger to Mexican democracy. “Mr López Obrador divides Mexicans into two groups: “the people”, by which he means those who support him; and the elite, whom he denounces, often by name, as crooks and traitors who are to blame for all Mexico’s problems.” The text highlights the importance for Mexicans to vote on June 6, 2021, given that the President -according to its analysis- does not follow the rules of the electoral process. The magazine also assurse that López Obrador suffers from what Venezuelan journalist Moises Naím calls "ideological necrophilia: a love of ideas that have been tried and tested and shown not to work."
    www.forbes.com.mx/amlo-falso-mesias-peligro-democracia-the-economist/ 26/05/2021.


    Lower investment and elections worry Banxico.
    The low levels of public investment that still prevail because the federal government has done nothing to clear uncertainty, and the environment of the electoral process, are some of the risks mentioned by the members of the governing board of the Bank of Mexico (Banxico). One of the members of the central bank's collegiate body warned of the danger derived from the upcoming electoral process due to the return of an environment of risk aversion. The majority mentioned, among other downside risks, those associated with the evolution of the pandemic and possible delays in the vaccination program. One added the possibility of higher remittance inflows. He added that higher external demand in combination with the T-MEC could stimulate investment. www.eluniversal.com.mx/cartera/menor-inversion-y-elecciones-preocupan-banxico 27/05/2021.


    Analysts raise to 5% their forecast for inflation in 2021; they expect a GDP of 5.15%.
    Private Sector specialists consulted by Banco de México (Banxico) estimate that inflation will register a variation of 5.02% at the end of the year, an expectation that incorporates an increase from the 4.58% forecast the previous month. According to the survey of expectations at the end of May, this forecast becomes the highest fluctuation expected for the general variation of prices, predicted by the experts consulted since January of last year. For the coming year, they foresee that the fluctuation of the National Consumer Price Index (INPC) will again be in the target range of 3.58%, a rate that also incorporates a fourth consecutive upward month.
    www.eleconomista.com.mx/economia/Analistas-suben-a-5-su-pronostico-para-la-inflacion-en-2021-esperan-un-PIB-de-5.15-20210601-0045.html 31/05/2021.

    In this month extract was prepared by A. Fragoso, A. De la Fuente, P. Arandia, R. Nerio, R. Mancilla, M. Costa, J. García

  • Terrum News | June 2021


    Foreign investors abandon their positions in Mexico during AMLO's administration.
    So far in Andrés Manuel López Obrador’s six-year term, foreign investors have liquidated 11.1% of their positions in Mexican debt securities. According to information from Banco de México, at the beginning of his term in office, non-resident securities holdings were equivalent to 30.8% of the total outstanding. After 30 months, assets in the hands of foreign investors represent 19.8% of outstanding bonds, as of the most recent cut-off on May 24. This disinvestment has accelerated since the pandemic began and has happened in all emerging markets, explained Luis Gonzali, vice president and senior portfolio manager at Franklin Templeton, in an interview.
    www.eleconomista.com.mx/economia/Extranjeros-deshacen-posiciones-en-Mexico-en-gobierno-de-AMLO-20210603-0123. html 03/06/2021.


    Is the third wave of COVID beginning in Mexico? Experts warn of possible resurgence.
    The country has recorded a 9 percent increase in the number of estimated cases of COVID-19 compared to the previous week, and in view of the increase in cases in different states, the Secretary of Health has once again called on the population to reinforce prevention measures. Some specialists believe that in states such as Quintana Roo, Baja California Sur and Tabasco, a third wave of infection is already underway, which if not halted could cause the pandemic to spread and reach a third national outbreak.
    www.elfinanciero.com.mx/nacional/2021/06/22/esta-iniciando-la-tercera-ola-covid-en-mexico-expertos-advierten-posible-rebrote/ 28/06/2021. .

    Mexico to decriminalize use of marijuana.
    A ruling by the Mexican Supreme Court legalizing the use of recreational marijuana has now deemed unconstitutional any prohibition to THC and non-medical marijuana. However, this decision by the Supreme Court has already been questioned by Mexican president AMLO. AMLO has stated that although he would respect the decision by the Supreme Court, he has not ruled out a future referendum should he decide that it is having negative effects on society. On the other hand, after this ruling, international companies are already eyeing Mexico as a potential producer of marijuana.
    www.reuters.com/article/us-mexico-cannabis/mexico-president-floats-referendum-option-on-recreational-marijuana-after-court-says-to-legalize-idUSKCN2E528S 29/06/2021.

     In this month extract was prepared by A. Fragoso, A. De la Fuente, P. Arandia, R. Nerio, R. Mancilla, J. García, S. Robles





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