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Publication of the preliminary draft of the Technical Criteria of the Federal Commission of Economic Competition for the handling of information derived from legal advice provided to economic agents.

On December 11th, 2018, an extract of the preliminary draft of the Technical Criteria of the Federal Commission of Economic Competition for the handling of information derived from legal advice provided to economic agents (“Technical Criteria”) was published in the Official Gazette of the Federation.

The origin and motive of the aforementioned Technical Criteria arises from the importance of professional secrecy, which is a requirement that exists in certain professional activities, such as the legal profession, which demand total trust on the part of the individual with the service provider.

The Declaration of Perugia on deontological principles of the Advocacy of the European Community of the year 1977 emphasizes the importance of the respect and confidentiality that must maintain attorneys with their clients, likewise, it indicates that the professional secret is in such a way, a right and elemental duty of the profession, forming part of the pure essence of the profession of attorney, based on the unavoidable confidentiality between the client and this one . Although it is recommended that attorneys get into the habit of inserting a confidentiality clause in their communications, such clause is not necessary, the warning of “confidentiality” of the communication is understood per se.

In Mexico, the regulation of professional secrecy, as it is in the rest of the field concerning professional practice, is scarce and deficient. The most relevant regulations are scattered in civil and criminal legislation. It is an imperfect norm that lacks sanction.

The objective of these Technical Criteria is that the information obtained by the Federal Economic Competition Commission (“the Commission”) will not be considered nor will it obtain evidentiary value, when this information is contained in communications whose purpose is to obtain legal advice.

The foregoing, between any person and his attorney, in which, in a writ and in order with the Technical Criteria, it is stated that the information that has been provided or obtained by the Commission in a visit or investigation procedure is susceptible of being protected (the “Request for Qualification”). In the event that the attorney or the economic agent does not know these Technical Criteria, the public servant processing the investigation shall proceed ex officio in accordance with their application, informing its General Director so that he may conduct himself in accordance with the procedure for processing the Request for Qualification.

Once the Request for Qualification has been entered, the relevant safeguard and protection measures will be taken, until the nature of the protected information is resolved. The procedure for processing the Request for Qualification is as follows:

I. Five days after the Request for Qualification has been received, the General Director in charge of the procedure will send it to the Head of the Unit;

II. Subsequently, within the following five days, the Holder of the Investigating Authority will issue an agreement designating the members of the Qualifying Committee, said committee is the only one empowered to analyze the referred information.

In addition, the Request for Qualification will be ordered in turn and the applicant will be personally notified;

III. The instructor, member of the Qualifying Committee will analyze the Request for Qualification and within the following ten days will dictate an agreement in which: i) admits the Request for Qualification and convokes the Qualifying Committee so that, in agreed hour, the corresponding session is carried out, or ii) prevents by only occasion, when the writ omits some form requirement, a maximum term of five days will be granted to correct;

IV. Once the Request for Qualification has been analyzed, the Qualifying Committee, in a collegiate manner, will deliberate and decide whether the request is founded or unfounded.

In case it is declared founded, the necessary measures of safeguard will be ordered, if the information is physical, its return will be ordered, if it is an electronic file, the exclusion will be ordered, and it will be stated in a record. Otherwise, it will be ordered to be forwarded to the Directorate-General for information to be made available; and

V. Finally, the determination issued by the Qualifying Committee will be personally notified to the applicant.

It is important to mention that these Technical Criteria have the character of a preliminary draft, therefore, a period of public consultation is opened for thirty working days counted from the publication of the present, in order for any interested party to present opinions to the Commission. If approved, these Technical Criteria shall enter into force on the day of their publication in the Official Journal of the Federation.

Sources consulted:

● Official Journal of the Federation. (2018, December 11). EXTRACT of the preliminary draft of the Technical Criteria of the Federal Commission of Economic Competition for the management of information derived from legal advice provided to economic agents. From the website: http://www.dof.gob.mx/nota_detalle.php?codigo=5546197&date=11/12/2018

● Barney, O. C. (2018). El secreto profesional del abogado en México (1st ed.). México: Universidad Nacional Autónoma de México, Instituto de Investigaciones Jurídicas, Ilustre y Nacional Colegio de Abogados de México.

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Amendment to the General Law of Commercial Companies: Transfer Notice of shares and equity participations.

On December 15, 2018, a decree published in the Federal Official Gazette on June 14 of this year came into force, by which various provisions were added to the General Law of Commercial Companies (“GLCC“), particularly in articles 73 and 129 of such legislation, in order to comply with recommendation number twenty-four of the Financial Action Task Force on Money Laundering (“FATF“).

In accordance with the Congressional Declaration of Purpose of such amendment, the aforementioned recommendation number twenty-four states that “the countries must take the necessary measures to prevent the misuse of legal entities, for money laundering or financing of terrorism, ensuring that there is an adequate, accurate and timely information on their control and the ultimate beneficiary, understanding the latter as the individual who obtains the benefits or exercises the control over the legal entity“.

Also, from such Congressional Declaration of Purpose it is understood that, prior to the entry in force of this amendment, Mexico did not have any legal provision establishing the obligation of the legal entities to inform the competent authorities of their ultimate beneficiary.

In this regard, the amendment basically consisted in the addition of a new “second” paragraph in article 73 – article that regulates the Partners’ Special Book for Limited Liability Companies – as well as two new paragraphs “second” and “third ” in article 129 – article that regulates the entry of the transfer of shares of the Limited Liability Stock Corporation- of the GLCC, in which it was established that, a notice must be published in the Electronic System established by the Ministry of Economy of the entries made in the Stock Registry Book or in the Partners’ Special Book, due to the transfer of shares or equity participations, as applicable.

Regrading the Limited Liability Stock Corporation, in addition to the aforementioned notice, the third paragraph added in article 129 of the GLCC included the obligation of the Ministry of Economy to keep the data -name, nationality and domicile- of the shareholder that appears in the notice made in the Electronic System as confidential, except in the event in which the information is requested by the judicial or administrative authorities; obligation of confidentiality that attends to the legal nature of Limited Liability Stock Corporation (legal entities of capital).

On the other hand, we identified certain legislative omissions in this amendment, since, among other issues, it lacks a term for the submission of such notice and any sanctions (i.e. fines, etc.) in the event of non-compliance with such obligation.

It is important to note that, as a result of this amendment, the Ministry of Economy, among other authorities, will have a greater control over the changes in the capital structures of the Limited Liability Stock Corporation and the Limited Liability Companies, identifying its ultimate beneficiary.

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News

International Convention for Data Protection

On September 28, 2018, the decree promulgating the Convention for the Protection of Individuals whit regard to automatic processing of Personal Data, celebrated between Mexico and France, was published in the Official Journal of the Federation. It came into force last October 1st.

The objective of this convention is to guarantee to any individual, whatever its nationality or residence, the respect of their fundamental rights and freedoms of data protection, specifically the right to a private life, regarding the automatic processing of personal data of said individual in the territory of the contracting countries.

Regarding personal data management, the convention establishes fundamental principles concerned to the quality of the data, information security, complementary guarantees for the individual involved, as well as their exceptions and restrictions.

Regarding the border flows of personal data between the contracting countries, it establishes that this cannot be restricted unless that the domestic legislation rules it specifically.

The aforementioned convention became effective on October 1st, 2018 so it has become of mandatory compliance for the contracting countries.

In Acedo Santamarina we are ready to assist our clients in matters related with this convention. If you have any questions, please contact Andres Acedo at aacedo@acsan.mx.

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Initiative to amend the articles 108 and 111 of the Mexican Constitution

On December 4, the President of Mexico, through the Interior Ministry, presented before the Senate a constitutional reform initiative which seeks to reform Articles 108 and 111 of the Political Constitution of the United Mexican States (the “Constitution“) to modify the wording of the constitutional text in order to establish that the President can be criminally tried for the commission of a series of actions that the proposed Constitutional amendment mentions.

In this regard, the current text of article 108 of the Constitution provides that the President of Mexico, during his term of office, may be judged only for treason and for serious crimes against public order. On the other hand, the reform initiative proposes that the text of the aforementioned article be expanded so that the President can also be tried for acts of corruption, electoral crimes, as well as serious crimes in general, without the need for them to be committed against public order.

This initiative also seeks to amend article 111 of the Constitution so that it makes clear that it is possible to institute criminal proceedings against the President, as opposed to the previous wording in which the term was not mentioned.

By virtue of the foregoing, if the constitutional initiative presented by the President is approved, in the event that the President commits a crime of treason, corruption, electoral crimes or crimes that are considered serious, an indictment must be filed before the Senate, which will create a sentencing jury and pass a resolution that must be approved by at least two thirds of those present at the corresponding session.

Finally, in order for this initiative to be approved, it will be necessary for at least two thirds of the Congress of the Union to vote in favor and for a majority of the legislatures of the states of the Republic to approve it, which is very likely, considering the current political situation in Mexico.

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