Executive Summary:
- On March 26, the Decree was published amending, adding to and repealing various provisions of the General Law on Credit Securities and Operations and the General Law on Auxiliary Credit Organizations and Activities.
- In general terms, the reform is a first step towards the dematerialisation of securities.
- As this is a pilot legislation, more profound changes are anticipated in the future.
On Friday, March 26, 2024, the Decree amending, adding to, and repealing various provisions of the General Law on Credit Instruments and Operations (“LGTOC”) and the General Law on Auxiliary Credit Organizations and Activities (“LGOAAC”) (the “Decree”) was published in the Official Gazette of the Federation. In general terms, the reform is a first step towards the dematerialization of credit instruments.
Article 5 of the LGTOC now defines negotiable instruments as “the documents necessary to exercise the literal right stated therein, regardless of whether they are issued by written or electronic means.” Electronic instruments will be considered data messages under the terms of the Commercial Code, so they must be issued using technological means that allow such issuance, as well as their transmission, reception, delivery or processing.
In turn, the above must be carried out in an electronic system that allows to know, reliably, the identity of the parties involved, the information contained in the title, and in the case of transfers, the continuity of endorsements and the existence and circulation of the same. For the purposes of delivery of the title, it will be considered made through said system; and in the case of the signature, this requirement will be considered fulfilled when it is attributable to the signatory according to the Commercial Code itself.
As this is a pilot legislation, anticipating more profound changes in the future, the first institution to be homogenized is the one related to general deposit warehouses and their deposit certificates, which must now also be issued through the electronic systems that each warehouse determines, complying with the requirements contained in the LGTOC and the LGOAAC.
In addition, the Decree provides for the creation of the RUCAM (Single Register of Certificates, Warehouses and Merchandise) as a new register in which general warehouses must record the issuance and cancellation of deposit certificates, as well as the merchandise they cover. In addition, sales notices and other annotations indicated by the LGOAAC and other applicable laws will be registered in the RUCAM.
Pursuant to the Transitory Articles of the Decree, the Federal Executive and the National Banking and Securities Commission (“CNBV”) have 180 business days from the date of entry into force of the Decree to adjust all secondary regulations (circulars, regulations, provisions) in accordance with it. Additionally, the CNBV must issue the relevant rules in light of the content of the Decree within the same period.
For their part, general deposit warehouses have a period of 18 months from the date of entry into force of the Decree to adjust their operation and issue electronic deposit certificates. They may continue issuing physical certificates only until they begin to issue electronic certificates or the aforementioned period is met, at which time they may not continue issuing physical certificates.
