BLOG

Sorry, this entry is only available in European Spanish.

Sorry, this entry is only available in European Spanish.

In an appeal for review filed in defense of the interests of a minority of shareholders of a certain corporation, Acedo Santamarina obtained a judgement where the First Chamber of the Supreme Court of Justice of the Nation made an interpretation of Article 163 of the General Law of Corporations, consistent with the human rights provided in the political constitution of the united mexican states.

As part of a commercial lawsuit filed by a group of shareholders of a corporation where the civil liability of the sole administrator of such corporation was claimed, Acedo Santamarina filed an appeal for review, which was resolved by the First Chamber of the Supreme Court of Justice of the Nation, in the sense of establishing that it is not an indispensable requirement for the exercise of the action provided in Article 163 of the General Law of Commercial Companies, to demonstrate the previous holding of a shareholders’ meeting where the liability of the administrative body was discussed.  

During the past year, shareholders owning more than 25% of the capital stock of a certain corporation filed an amparo lawsuit against the decision of a unitary circuit court to declare the civil liability action brought by such shareholders based on Article 163 of the General Law of Commercial Companies as inadmissible. In their amparo action, the shareholders argued that the decision of the unitary court violated their fundamental rights of legal certainty and access to judicial protection, by denying them the possibility to claim the payment of an indemnity to compensate the corporation for the damages caused by improper administration. However, the collegiate court denied the federal protection requested stating that it was necessary to prove the holding of a shareholders’ meeting in which the liability of the administrative body had been discussed as a prerequisite to exercise the corporate action.

Dissatisfied with the ruling of the collegiate court, the minority shareholders filed an appeal for review in which they argued that the court failed to interpret Article 163 of the General Law of Commercial Companies in accordance with the fundamental right to judicial protection and the principle of progressiveness in the interpretation of this human right, thus unreasonably and disproportionately hindering the exercise of the rights provided by the General Law of Commercial Companies in favor of the minority of shareholders to which they belong.

In the ruling of the appeal for review, the First Chamber of the Supreme Court of Justice of the Nation established that the rules of commercial law, as well as civil law, must be interpreted by the judicial bodies in accordance with the fundamental rights provided in the Constitution and in international treaties, without this being considered a violation of the procedural fairness of the parties.

Based on the foregoing, the First Chamber made a systematic, literal, authentic and teleological interpretation of Article 163 of the General Law of Commercial Companies, after which it concluded that the shareholders’ right to judicial protection had been violated, and that, in order to exercise the civil liability action against the administrative body of a corporation, it is not possible to expect the qualified minority to demonstrate having previously held a shareholders’ meeting, since such requirement does not provide legal certainty and makes the possibility of exercising the corporate action null and void.

In accordance with an interpretation of Article 163 of the General Law of Commercial Companies, consistent with the human rights provided in the Political Constitution, the First Chamber stated that the only requirements that the legislator contemplated in order to exercise the action foreseen in favor of minority shareholders are: (i) that those exercising it represent at least 25% of the capital stock; (ii) the action must be exercised in favor of the corporation and not in favor of particular interests of the shareholders; and (iii) the shareholders comprising this minority cannot have exonerated the administrator within a general meeting and that, in the event that a meeting has been held in which the non-liability of the administrator has been deliberated and agreed upon, the opposition of the minority shareholders to such determination must be recorded in the minutes.

The First Chamber considered that, in order to exercise the corporate action, it is not necessary in all cases to have previously held a shareholders’ meeting, since such requirement represents an undue obstacle to the access to judicial protection of the minority of shareholders.

Based on this analysis, by unanimous vote, the First Chamber reversed the challenged judgment and granted the protection to the complaining shareholders. 

The Supreme Court’s decision grants certainty to the qualified minority of a corporation that intends to demand from the administrative body the liability inherent to its mandate, by clarifying the requirements that must be met to exercise the corporate action, based on an interpretation of article 163 of the General Law of Commercial Companies that is in accordance with the fundamental right of judicial protection provided in our Political Constitution.

Mexican law provides several requirements intended to ensure the fundamental rights to an audience and due process recognized by the Political Constitution of the United Mexican States. In such manner, any person is prevented from being in a state of defenselessness in the face of legal proceedings involving the exercise of the punitive power of the State.

Service of process is the first essential formality of a legal proceeding. Through it, the authority notifies the defendant about (i) the existence of a lawsuit filed against him, (ii) the lawsuit and the documents attached to it, and (iii) the term granted to answer the claim.

Recently, the First Chamber of Mexico’s Supreme Court published a case law where it is evidenced the importance of conducting service of process in strict compliance with all the formalities foreseen in law.

In one of its most recent criteria, the First Chamber held that to ensure the defendant had the possibility to exercise fully his rights of defense, it is necessary that he had complete and certain knowledge of the claims filed against him and of the documents on which plaintiff bases his action. In that regard, the Supreme Court considered that service of process is legal only if the notifier certifies in the corresponding minute that the documents attached to the lawsuit were delivered to the defendant and describes each one of them. According to the First Chamber, if the notifier did not specify in the summons minute, the documents that were attached to the lawsuit, then, considering that the lack of service of process or its deficient realization is the most significant proceeding violation, the diligence must be annulled, and it must be repeated to prevent a state of defenselessness for any part of the proceeding.

In another case law, the First Chamber of Supreme Court considered that the fifth paragraph of Article 1070 of the Mexican Commercial Code was unconstitutional since it violates the guarantees of legality and due process. Article 1070 allows to carry out service of process of the defendant by publishing edicts in newspapers without prior investigation of its domicile, in the event that the service of process has been attempted at the domicile agreed in the document that supports the plaintiff’s claim, resulting such domicile wrong or incorrect. The Supreme Court pointed out that is the duty of the courts to investigate as far as possible the defendant’s correct domicile before ordering service of process by edicts since such alternative must be the last remedy to fulfill the obligation to communicate to the defendant, the existence of a legal proceeding filed against him.

Roberto Altamirano

Associate

We are honoured to announce that, for another year, the firm has been recognised in the Chambers & Partners Directory .

The results are as follows:

Acedo Santamarina – TMT (Telecoms, Media Technology) – Mexico – Band 1

Andrés Acedo – TMT (Telecoms, Media Technology) – Mexico – Band 1

Rafael Tena – Tax: Controversy – Mexico – Band 4

Here is the link to the results: https://chambers.com/legal-rankings/tmt-telecoms-media-technology-mexico-9:1843:144:1

On July 5, 2021, an agreement issued by the Federal Telecommunications Institute (“IFT” by its initials in Spanish) was published in the Official Gazette of the Federation (“DOF” by its initials in Spanish) establishing the guidelines that will regulate traffic management and network administration of Internet access services (hereinafter, the “Guidelines“). The published agreement arises as a result of the provisions of Article 145 of the Federal Telecommunications and Broadcasting Law, which provides that the IFT shall issue the Guidelines.

The purpose of the Guidelines issued by the IFT is to establish the criteria for the implementation of traffic management and network administration applicable to concessionaires that provide Internet access services. In general, these guidelines seek to ensure the quality of the service and the network, the privacy of the users, the freedom of navigation of the users and the obligation of the concessionaires not to limit the users’ access to the Internet. It also highlights the obligation of the concessionaires of this service to have a code of traffic management and network administration policies (the “Codes“), which must be published for consultation by users.

Finally, the IFT will publish an annual report on the implementation of the Guidelines and may also require licensees to adapt their Codes in accordance with the provisions of the Guidelines. These Guidelines will enter into force 60 days after their publication, that is, on September 3, 2021.

As part of the implementation of the Constitutional Reform related to judicial matters, published in the Federal Official Gazette on March 11, 2021, the Mexican Congress approved the laws and reforms to reorganize the structure and functioning of the Federal Judiciary.

The draft law approved by the Congress provides the expedition of a new Federal Judiciary Organic Law and the Federal Judiciary Career Law. It also amends, supplements, and repeals several provisions of the Injunction Law (or Amparo as it is known in México), the Federal Public Defender’s Office Law, the Federal Code of Civil Procedure, the Federal Law on Workers in State Service, Regulatory of paragraph b) of Section 123 of the Constitution, and the Regulation Law of paragraphs I and II of Section 105 of the Constitution.

The amendments approved by the Congress include (i) the incorporation of the Judicial Disputes Commission of the Federation related to labor conflicts, (ii) the establishment of the Institute of the Public Defender’s Office and the training of its staff by the Federal Judicial Training School, (iii) adjustments to focus the jurisdiction of the Supreme Court of Justice of the Nation in exceptional constitutional matters and fundamental rights, as well as to transit from a system of jurisprudence of reiteration of criteria to one of obligatory precedents, and (iv) the replacement of Unitary Circuit Courts for Collegiate Courts of Appeal.

According to its authors, the new laws and reforms intend to strengthen actions to address nepotism, conflicts of interest, sexual harassment, and corruption within the Federal Judiciary, to guarantee independence, impartiality, suitability, stability, professionalization, and specialization of public servants, and provide the mechanisms to achieve an adequate administration of justice.

One of the most controversial points in the legislative process was the incorporation of a transitory provision for implementing the constitutional reform of the Federation Judiciary and the corresponding regulatory Acts, which establishes that the current president of the Supreme Court of Justice of the Nation and the Council of the Federal Judiciary extends the duration of his assignment until November 30, 2024, on the understanding that the period for which Minister Arturo Zaldivar was elected runs from January 2, 2019, to December 31, 2022. Several sectors of society have expressed their opposition to this extension of the mandate as unconstitutional. It is foreseen that the Supreme Court of Justice of the Nation will carry out the analysis corresponding to this transitory provision through the action of unconstitutionality that may be filed once the laws and reforms mentioned herein be published by the Executive in the Official Gazette of the Federation.

On April 23^rd, 2021, a Decree was published in the Official Gazette of the Federation (“DOF”) amending, adding and repealing several provisions of the Federal Labor Law; the Social Security Law; the Law of the National Workers Housing Fund Institute; the Federal Fiscal Code (“CFF”); the Income Tax Law (“LISR”); the Value Added Tax Law (“LIVA”); the Federal Law of Workers in Service of the State, Regulatory of Section B) of Article 123 of the Constitution; and, of the Regulatory Law of Section XIII Bis, Section B of Article 123 of the Mexican Constitution (the “Decree”).

Such Decree states that the amendments to the mentioned laws will become effective until August 1^st, 2021.  Among the main changes to the tax laws are the following:

1. Federal Tax Law

1.-       Deduction and crediting.  The provisions of the CFF establish several limitations so that invoices arising from the payment of subcontracting services may not be deducted or credited.

Payments for services in which personnel is placed at the disposal of the contractor may not be deducted or credited.  This, only in the case that: (i) the workers made available to the hiring party, were originally its employee, and (ii) when the workers made available perform the same predominant economic activities, according to the bylaws and business object of the hiring party.

The exception to the general rules applies only if the outsourced service consists on specialized services or, for the execution of specialized works, different from the predominant economic activity of the hiring party.  However, the application of such exception is subject to the condition that the person rendering the outsourcing services complies with the following: (i) is registered before the Ministry of Labor and Social Welfare (“STPS”), and (ii) it complies with the provisions of Articles 27, Section V of LISR and article 5, section II second paragraph of the LIVA.

2.-       Penalties.  If any of the aforementioned points are not complied with, the CFF establishes the following penalties:

1. a) Deducting or crediting the payment for outsourcing services without complying with the provisions of articles 27, section V of the LISR and article 5, section II, second paragraph of the LIVA, will be considered as an aggravating circumstance in the commission of infractions. In addition, a fine of MXN$150,000.00 to MXN$300,000.00 will be applied for each failure to comply with the provisions of the articles.

1. b) In the event that a taxpayer simulates schemes for the rendering of specialized services, the execution of specialized works or keeps its personnel outsourced, it will be equivalent to the crime of qualified tax fraud.

1. Income Tax Law

1.-       Deduction requirements.  Regarding payments for the provision of specialized services or execution of specialized works, the hiring party must comply with the following: (i) verify that, at the time of the payment, the service provider is registered before the STPS, and (ii) request from the service provider a copy of the following:

• The invoices covering the payment of worker’s salaries.

• The receipt of payment of the withholding taxes made to the workers.

• Payment of labor-management contributions.

• Payment of INFONAVIT contributions.

III.     Value Added Tax Law

1. A) Withholding of 6%. Pursuant to the Decree, the six percent (6%) withholding that was established in article 1-A, section IV of the LIVA, for cases in which a person benefits from outsourcing services, was repealed, and therefore, as of August 1^st, 2021, it will no longer have to be withheld.

1. B) Requirements for crediting. Now, in order for the value added tax to be creditable, in the case of subcontracting activities of specialized services or the execution of specialized works, when paying for those services, the hiring party must comply with the following: (i) verify that the service provider is registered before the STPS, and (ii) request from the service provider a copy of the value added tax return and acknowledgment of receipt of payment, corresponding to the period in which the payment was made.

In the event that such information is not collected, the hiring party must file a supplementary return in which it will have to reduce the amounts credited for those services.

We hope you find this information useful.  The complete publication of the Decree can be found through the following link:

https://www.dof.gob.mx/nota_detalle.php?codigo=5616745&fecha=23/04/2021

If you have any questions or comments, please contact us at the following e-mail addresses:

Rafael Tena Castro rtena@acsan.mx

Luis Kanchi Gómez lkanchi@acsan.mx