Mexican Reform Regarding Electronic Negotiable Instruments - Financial Services

On March 26, 2024, the President of Mexico published the reform passed by the Mexican Congress to the General Law of Negotiable Instruments and Credit Transactions (Ley General de Títulos y Operaciones de Crédito, "LGTOC"), and to the General Law of Credit Auxiliary Activities and Organizations (Ley General de Organizaciones y Actividades Auxiliares del Crédito, "LGOAAC") which went into effect on March 27, 2024 (the "Reform").

This Reform modifies, supplements, and eliminates certain articles of the LGTOC and the LGOAAC, with the purpose of (i) implementing electronic negotiable instruments (títulos de crédito electrónicos); (ii) eliminating the pledge bond (bono de prenda)as a negotiable instrument; and (iii) modifying the regulation governing warehouse deposit certificates (certificados de depósito) and public bonded warehouses (almacenes generales de depósito).

ELECTRONIC NEGOTIABLE INSTRUMENTS

The Reform allows for the issuance, transfer, and endorsement (endoso) of negotiable instruments (títulos de crédito) (e.g., promissory notes, checks, convertible notes, certificates of ownership (certificados de participación), or warehouse deposit certificates) by electronic means, all which shall have the same validity and force as physical negotiable instrument. ¹

TECHNICAL REQUIREMENTS FOR THE ISSUANCE OF ELECTRONIC NEGOTIABLE INSTRUMENTS

The Reform aims to enhance flexibility in commerce by stating that electronic negotiable instruments will be treated as "data messages" (mensajes de datos) pursuant to the Mexican Code of Commerce (Código de Comercio, "CC"), thus allowing the use of any "electronic, optical or technological" means that guarantee the integrity and ensure the "availability" of such documents.
A negotiable instrument's integrity shall be deemed as having been preserved as long as (A) such document remains complete and unaltered since its issuance; or (B) any alteration made as a result of the ordinary trade, transfer, or delivery of such instrument has been recorded and remains traceable. Similarly, an instrument shall be deemed as "available" as long as it can be referenced through the same system used for its issuance.

It is worth noting that Mexican law recognizes different types of e-signatures (i.e., simple electronic signatures, and advanced or reliable electronic signatures), ² the latter of which may be issued by authorities or certification service providers ("CSP"). CSPs are individuals or public entities authorized by the Ministry of Economy (Secretaría de Economía) to certify and/or provide related services such as (i) the preservation of data messages; (ii) the issuance of digital time stamp; and (iii) the digitization of printed documents, in accordance to the terms provided in the Official Mexican Standard Rule on Digitization and Preservation of Data Messages (Norma Oficial Mexicana sobre Digitalización y Conservación de Mensajes de Datos, the "NOM-151").

The Reform does not specifically require the use of advance electronic signatures for the issuance of negotiable instruments by electronic means (other than the issuance of warehouse deposit certificates), nor does it require the use of the services provided by CSPs. However, pursuant to Article 97 of the CC, advance electronic signatures shall allow for the identification of any modifications made to the instrument they are embedded in, thereby enhancing the assurance of the document's integrity.

PLEDGE BONDS AND WAREHOUSE DEPOSIT CERTIFICATES

PLEDGE BONDS' LEGAL REMOVAL

The Reform provides for the legal removal of pledge bonds (bonos de prenda), which previously served as the instrument for formalizing pledges on goods that were stored at a regulated warehouse (almacén general de depósito). In its place, the Reform provides that the constitution of any pledges over goods evidenced by warehouse deposit certificates shall be reflected in the warehouse deposit certificates itself (issued by the regulated warehouse at the time the goods are deposited), rather than in a separate pledge bond.
Moreover, the Reform contains extensive provisions concerning how endorsements, transfers, and terminations of such pledges are to be documented in the corresponding warehouse deposit certificate (certificado de depósito). All pledge bonds issued before the Reform shall remain in full force and effect until their termination, and shall be governed by the applicable law at the time of issuance.

WAREHOUSE DEPOSIT CERTIFICATES

The Reform provides that, starting on September 26, 2025 (the "Effective Date"), all new warehouse deposit certificates shall be issued exclusively by electronic means, through cryptographic certificate of deposit systems of the public bonded warehouses. Such electronic warehouse deposit certificates (certificados de depósito) must (i) be registered before the Sole Registry of Certificates, Warehouses and Merchandises (Registro Único de Certificados, Almacenes y Mercancías, RUCAM) which is managed by the Ministry of Economy; and (ii) contain the advanced electronic signature of the issuing public bonded warehouse's legal representative.

If a public bonded warehouse decides to adopt electronic warehouse deposit certificates (certificados de depósito) prior to the Effective Date, such warehouse may not elect to revert to physical warehouse deposit certificates (certificados de depósito) in order to ensure a proper and complete transition to the implementation of the Reform. All physical warehouse deposit certificates issued before the Reform shall remain in full force and effect until their termination, and shall be governed by the applicable law at the time of issuance.

Footnote

1 In the case of securities listed on the stock market and subject to deposit in securities depository institutions, the Securities Market Law (Ley del Mercado de Valores) provides for electronic instrumentation, either in multiple securities or in a sole instrument, in the form of a data message with advanced electronic signature pursuant with the CC, and those securities issued as a physical instrument may be replaced by electronic instruments. Additionally, shares of Mexican corporations (sociedades anónimas) may be issued electronically in accordance with the CC.

2 For more information on electronic signatures and their validity, please refer to our Legal Update.

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