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Regulation of the public registry of pledges of movable assets

Ricardo Gómez-Palacio del RíoCecilia Legaspi Chávez

As previously published by Ritch Mueller in IFLR's International Briefings, amendments to the Commerce Code of Mexico were enacted to create the new Public Registry for Movable Assets Liens (Registro Único de Garantías Mobiliarias) (the Registry), and the rules there under were pending creation and publication by the Mexican Ministry of Economy (Secretaría de Economía) (the Ministry).

On September 23 2010, the amendments to the Rules of the Public Registry of Commerce (Reglamento del Registro Público de Comercio) (the Rules) were published and became effective 10 business days thereafter. The Rules provided the regulatory framework for the Registry.

On October 5 2010, the Ministry published the norms, formats and guidelines for the electronic operation of the Registry, and thereafter initiated the operation of the Registry under the webpage www.rug.gob.mx. The Registry is now in operation as a sub-section of the Public Registry of Commerce, but is under the management of the Ministry.

The Registry is accessed electronically via the internet at www.rug.gob.mx. There is no cost for becoming a registered user of the Registry. Any person may become a registered user by simply registering with a name, email and password.

Registered users are able to undertake searches in the Registry seeking to obtain information regarding registered liens, either by debtor, type of asset, or file numbers.

The principal users will be financial entities, including banks and microcredit institutions, as well as creditors in general. Registered banks and financial institutions (through appointed representatives), public notaries and commercial public attestors (when specifically authorised by debtors or creditors), judges and high ranking officers of the Ministry will be allowed to make entries, registrations, modifications, cancellations, and corrections in the Registry as credited users.

All other users will only be entitled to make searches and obtain information, without the ability to make direct entries and actual lien registrations.

The Rules provide that liability for the existence and veracity of the information registered in the Registry relies on the person (or entity) that carried out the registration process. Any mistake or error in the information given shall be rectified by the same person who registered the original lien.

The Ministry does not verify the validity of the registration entry, nor the agreement or consent of the parties to register the security interest. When a creditor or any other entitled person registers a security interest in the Registry, it is presumed that the grantor of the lien has consented to the registration. Of course, if any person suffers any loss or damage as a consequence of the unlawful registration of a security interest, such person shall have the right to be indemnified by the person who was responsible for the registration.

The type of entries allowed within the Registry include the following.

(i) Preventive notice. A preventive notice may be filed alerting third parties that a lien will be registered over a certain asset within the following 15 calendar days.

(ii) Lien registration: the actual registration of a given lien including pledges, banking mortgages, security interests on ships and aircrafts, financial leases, security trusts, and others permitted by law.

(iii) Registration amendments: an entry that modifies, updates, or increases the registration entry.

(iv) Error rectifications: an entry made to rectify an error or mis-registration of a previous entry.

(v) Term extension: an entry made to extend the term of the original security interests.

(vi) Registry cancellation: an entry made to cancel an existing lien registration.

(vii) Judicial entries: entry in the Registry regarding encumbrances or liens as ordered by a judge or administrative body.

(viii) Searches and certificates. Upon a specific search, the Registry will issue an electronic certificate with the registered information.

As indicated above, only credited users will be able to undertake entries in the Registry. The system currently requests credited users to provide their electronic advance tax signature (firma electrónica avanzada) to obtain their authorisation.

Foreign entities that wish to become credited users (because they are or will be granting secured loans in Mexico) do not have such tax signature and therefore are required to register directly (as opposed to electronically) at the offices of the Ministry. The efficiency of such process remains to be experimented yet.

The Registry system allows for different types of searches, is programmed to issue lien certificates, allows for the registration of preventive notices, and is open for the registration of all types of liens on movable assets. We believe that the Registry will enhance and develop the registration of liens in Mexico with a more modern and efficient means of access.

Ricardo Gómez-Palacio del Río and Cecilia Legaspi Chávez

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