With the constant change in the Mexican legal landscape, as a result of the recent reform to the Judiciary, the business sector faces new challenges that require the implementation of new legal strategies, which in turn have to be more practical. Not only is it important to adapt to legal changes, but also to implement preventive legal mechanisms such as Compliance and Due Diligence in order to grow businesses in Mexico and continue to promote the interest of Foreign Investment to put money into them.
In the current context of Mexico, characterized by a dynamic regulatory environment, increased government scrutiny and growing social expectations regarding corporate responsibility, foreign companies face new challenges in investing and expanding operations in the country.
The National Banking and Securities Commission (CNBV), the Ministry of Economy and the Financial Intelligence Unit (UIF) have strengthened their supervision and monitoring processes. This involves a stricter review of corporate structures, origin of funds and business links.
In order to update risk matrices and internal compliance procedures to adequately respond to regulatory audits, it is of importance to use the Due Diligence tool which, mainly, should address 6 (six) main areas of a Company:
- Corporate: Verification of asset ownership (real estate, machinery); Review of current contracts (customers, suppliers, leases); Pending litigation or administrative proceedings; Compliance with local regulations; permits and licenses; Corporate status: minutes, bylaws, powers of attorney, corporate books.
- Tax: History of compliance with federal, state and municipal taxes (SAT – Tax Administration Service, IMSS – Mexican Social Security Institute, INFONAVIT – National Workers’ Housing Fund Institute); Review of pending audits or tax credits; Review of income tax returns; VAT; withholdings; Opinion of current tax compliance.
- Labor: Employment contracts, unions, benefits, labor liabilities; National Workers’ Housing Fund Institute (INFONAVIT); Possible risks due to dismissals; labor lawsuits or illegal practices; Compliance with the Federal Labor Law; IMSS.
- Financial-Accounting: Audited financial statements; cash flow; accounts payable and receivable; current liabilities; evaluation of hidden or off-balance sheet liabilities.
- Intellectual and Technological Property: Trademarks; Patents; Software; Confidentiality agreements and know-how protection.
- Compliance: Environmental and Social Compliance (ESG); Identification of beneficial owners under FATF standards.
At VAHG, our team of Lawyers has the experience to grow your business in Mexico, our legal approach is focused on highlighting the current context of globalization where we can help mitigate risks and provide regulatory compliance that will be critical to the success of our clients’ investments through the development and implementation of regulatory compliance programs, review and adaptation of corporate structures in accordance with new regulations.
Fernando Hernández Gómez | Senior Partner
Compliance & Due Diligence
+52 (33) 38171731 Ext 225 | fhernandez@vahg.mx
| Elvia Ríos Sldaña | Partner
Compliance & Due Diligence +52 (33) 38171731 Ext 228 | erios@vahg.mx |
Ana Karen Inzunza Sánchez | Partner
Compliance & Due Diligence +52 (33) 38171731 Ext 235 | ainzunza@vahg.mx |
Luis Andrés Estrada Intriago | Senior Associate
Compliance & Due Diligence
+52 (33) 38171731 Ext 224 | lestrada@vahg.mx
**The publication of this document does not constitute legal, accounting or professional advice of any kind, nor is it intended to be applicable to particular cases. This document only refers to laws applicable in Mexico.