MEXICO Law and Practice Contributed by: Javier Díaz de León, Monica Ramos and Martín Cortina, Díaz de León Abogados
facilitate the implementation of mergers and spin-offs for family purposes. The financial consolidation of a parent company and subsidiaries represents another advantage when it comes to strategic decisions deal - ing with the valuation of the family group. Of particular importance is that Mexican holding com - panies generally receive tax-free treatment upon the receipt of domestic dividends from Mexican subsidi - aries. In the case of foreign profits, Mexican holding companies are able to claim indirect foreign tax cred - its against the income tax of 30% assessed on foreign profits. Management Trust The contribution of assets by the settlor to a Mexican trustee may be achieved tax-free, provided the sett - lor preserves the power to reacquire said assets or remain as beneficiary of the trust. Management trusts follow different objectives depending on family needs. However, they are an effective vehicle to concentrate assets on a tax-free basis as well as to delegate future wishes under a Mexican financial institution acting as trustee. The management trust may release assets, cash flow and collaterals, from time to time in accord - ance with the trust agreement. In other circumstances, it may be seen as a separate modern tool to transfer assets by inheritance. Voting arrangements on con - troversial topics like buyouts, drag-along, tag-along and liquidity events may also be regulated under a Mexican trust whereby settlors provide voting instruc - tions in a unified manner for the execution of the trust The shareholders’ agreement is more frequently adopted by Mexican families trying to regulate all the corporate governance, majority and minority rights, dividend distributions, on-site and virtual sharehold- ers’ meetings, compliance and financial statements, and liquidation events, of Mexican holding companies and/or operating subsidiaries. They effectively regu - late dispute resolution and mediation mechanisms in the event of family controversies, which avoids unnec - essary litigation in federal or domestic courts that are excluded by the original intentions of the founding members of the family. during the life of the trust. Shareholders’ Agreement
Shareholders’ agreements (SHAs) must be carefully prepared to include corporate covenants that may be upheld by the domestic or federal courts. SHAs may not result in outcomes going against the public order or human rights recognised in the Mexican Constitu - tion and federal laws. Family Protocol The family protocol is a set of management, control and succession provisions suggested for the opera - tion of a family office, a family-owned business or personal property. Mexican families have adopted the family protocol, mainly inspired by the European tradition surrounding this instrument. The legal nature of the family protocol is questionable in some circum - stances given that it is neither a shareholders’ agree - ment nor an enforceable contract. The family protocol needs to be formalised as a valid agreement under Mexican or foreign law to preserve the intention of the The transfer of partial interest during lifetime or at death is generally found in usufruct transactions whereby the transferor transfers an interest in the ownership of assets. Other example are derivative transactions whereby the economic rights over financial assets are assigned to a different party. The adjusted fair market value of the asset in question is generally measured upon the transfer of the partial interest for income tax purposes whether the transaction may be implement - ed on an income tax-free basis or not. Further transfer of interest will receive a step-up basis on the fair mar - ket value only if this value was used as transfer price. parties in the case of any dispute. 4.3 Transfer of Partial Interest
5. Wealth Disputes 5.1 Trends Driving Disputes
Disputes regarding estates, trusts, foundations or similar entities are subject to negotiation, mediation and arbitration mechanisms to solve out-of-court con - troversies on family assets, closely held businesses, management trusts, foundations and foreign assets. Mexico experimented a major judicial reform in 2025 that resulted in the removal of justices, magistrates and judges of federal and state courts. The new judi - cial power is fully integrated, and private clients prefer
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