04 / 25 / 24
Reform to the General Law of Negotiable Instruments and Credit Transactions and the General Law of Credit Organizations and Auxiliary Activities
MEXICO CITY, MEXICO, April 25th, 2024 – On March 26, 2024, a Decree was published in the Official Gazette of the Federation amending, adding and repealing several provisions of the General Law of Negotiable Instruments and Credit Transactions (the “LGTOC” for its acronym in Spanish) and the General Law of Credit Organizations and Auxiliary Activities (the “LGOAAC” for its acronym in Spanish), which became effective on March 27, 2024 (the “Reform”).
The main objective of this Reform is to update the regulation on negotiable instruments to allow their electronic issuance and transmission, ensuring their integrity and legal validity, and establishing specific procedures for their management through technological information systems. In addition, the Reform contemplates the modernization of the processes related to the expedition of certificates of deposit, allowing their issuance through a cryptographic system. Likewise, it adds as a function of the Single Registry of Certificates, Warehouses and Merchandise (“RUCAM” for its acronym in Spanish), the possibility of interconnection with the cryptographic systems used for the issuance of certificates of deposit.
In general terms, the Reform covers the following aspects:
I. General Law of Negotiable Instruments and Credit Transactions
A. Provisions on Electronic Negotiable Instruments:
1. The term “pledge bond” is replaced by “certificate of deposit”. Provisions related to pledge bonds are removed and the use of certificates of deposit in electronic media is emphasized.
2. The issuance of negotiable instruments in electronic or optical format or any other technology through an information system to be used to generate, transmit, receive, deliver, or otherwise process data messages (“Information System”) is permitted. These instruments shall be considered data messages and the legal effects, validity, and enforceability of the rights consigned in such instruments shall be recognized since they are contained in an Information System.
3. Several articles are added and amended to establish requirements for deeds, their conservation, accessibility and exhibition of negotiable instruments by means of Information Systems.
4. The electronic modality for the transmission of negotiable instruments is added. Likewise, the provisions on the transmission of negotiable instruments by typical assignment are extended, including the use of technologies for their delivery. Its transmission by endorsement made through the Information Systems is allowed.
5. The figure of the guarantor is included for electronic securities.
B. Enforcement Procedure for Electronic Receivables:
1. Provisions are established to verify the identity of the holders of electronic negotiable instruments and the continuity of the endorsements through the Information System.
2. The opposition procedure is specified.
3. It includes the consultation to the Information System for payment claims.
4. A new procedure is established for the retention of assets backed by certificates of deposit, including cases of cybercrimes and force majeure.
II. General Law of Credit Organizations and Auxiliary Activities.
A. Updating of the regulation of bonded warehouses and certificates of deposit:
1. References to pledge bonds throughout the LGOAAC are removed.
2. As part of the exclusive power to issue certificates held by the general deposit warehouses, the obligation to do so by means of a cryptographic system is established.
3. Emphasis is placed on the obligation to ensure that legitimate holders, pledgees, supervisory authorities and other intervening parties have access to the cryptographic system used to issue the certificates of deposit, at the risk of being subject to civil liability.
4. It establishes the responsibility of the warehouse in the issuance of certificates of deposit, ensuring that they coincide with the terms, amounts, characteristics and other conditions set forth in the certificate of deposit, eliminating provisions related to the issuance of certificates of deposit and pledge bonds.
5. The inclusion of repurchase transactions is added as a valid option for granting financing, expanding the financing possibilities for general deposit warehouses.
6. It includes the possibility of having premises on gratuitous bailment, in addition to leasing or habilitation, extending this possibility to premises abroad and various forms of tenancy.
7. The guidelines for the supervision and control of deposited goods or merchandise are expanded, applicable to both the owned general deposit warehouses and those leased, on gratuitous bailment or authorized.
8. It is specified that general deposit warehouses may acquire land or warehouses, as well as lease, and the Reform also includes in gratuitous bailment, the plants required to carry out the transformation of the deposited merchandise.
B. Registration and functions of RUCAM:
1. The items that must be registered in the RUCAM are expanded, including the obligation to register notices of sale at public auction of deposited goods or merchandise, certificates of deposit, their cancellations, and other annotations established by applicable laws.
2. The functions of the RUCAM have been expanded, allowing interconnection with the cryptographic systems through which certificates of deposit are issued, and the list of documents that may be recorded in the RUCAM has been extended.
3. The registration process is simplified by allowing it to be carried out through interconnection with the cryptographic system that satisfy the technical and security requirements of RUCAM.
4. It is clarified that the issuer of the certificate of deposit is responsible for rectifying errors in the registry.
5. Provisions related to the interconnection of cryptographic systems through which certificates of deposit are issued with RUCAM are included.
6. A new article is added to establish that the Secretariat of Economy will determine the technical and security requirements necessary for the cryptographic systems of the bonded warehouses to be interconnected with the RUCAM, in order to comply with their registration and advertising obligations.