By Marco Antonio Tena López
On March 26, 2024, the “DECREE amending, supplementing, and repealing various provisions of the General Law of Negotiable Instruments and Credit Operations (LGTOC) and the General Law of Credit Organizations and Auxiliary Activities (LGOAAC)” (the “Decree”) was published. This Decree took effect the day after its publication.
The objective of the Decree is to establish the bases for the issuance of negotiable instruments through electronic means and the repeal of pledge bonds, which are replaced by deposit certificates that must be issued by General Warehouses of Deposit.
In general terms, this reform introduces two important systems for commercial transactions.
The first concerns the Information System that must be used for negotiable instruments issued by electronic means. For negotiable instruments issued by written, electronic, optical means, or any other technology, it is necessary that they be issued through an Information System that will be used to generate, transmit, receive, deliver, or otherwise process data messages, in terms of Article 89 of the Commercial Code (CoCo), referring to electronic commerce.
If a negotiable instrument is issued electronically, it must be displayed through the Information System following the specifics that depend on each negotiable instrument, and the endorsement of the same will be carried out in the same manner and will be considered as delivered to the endorsee within the system.
Likewise, the granting of a guaranty, the identification of the latest holders, and the continuity of endorsements, among other specifics, will be done through this Information System.
This System is significant as it guarantees the chain of ownership and any endorsement or notation that could have been made through the use of technology. It also ensures the integrity of the information.
The main functions of the Information System are:
- Endorsements are made through the System, and once made, are considered delivered
- To allow identifying the person presenting the title as the holder and continuer of endorsements,
- Judges must consult the System to verify existence and circulation; and
- The granting of a guaranty.
Regarding electronically issued deposit certificates, they also aim to establish cryptographic systems that operate in conjunction with the Information System. The LGOAAC is modified to continue what is established with the Information System in the LGTOC.
Its main modifications are:
- The repeal of pledge bonds, replaced by deposit certificates;
- The unique issuance of certificates for goods or merchandise;
- The renewal of validity at the will of its holder or the General Warehouses of Deposit
- The obligation of the General Warehouses of Deposit to publish in the electronic system of Art. 50 of the CoCo, with at least 5 business days in advance, the notice of sale of deposited goods or merchandise,
- It is considered transmitted, received, and accepted when the control of the certificate is transferred in the Information System; and
- Judges must make a notation when a sale granted in pledge is intended to be carried out.
For more information, do not hesitate to contact the Corporate and M&A team at Vega Guerrero Asociados.
