MEXICO Law and Practice Contributed by: Roberto Cannizzo, Carlo Cannizzo, Stefano Amato and Mauricio Moreno-Rey, Cannizzo
5.3 REITs FIBRAs (REITs) are investment vehicles listed on the Mexican Stock Exchange ( Bolsa Mexicana de Valores – BMV) for the acquisition and construction of real estate for leasing. At present, Mexican law solely permits publicly traded FIBRAs. FIBRA assets may comprise a wide range of properties, ranging from industrial facilities such as warehouses and manufac - turing sites to corporate spaces such as offices and work areas, as well as commercial premises including malls, plazas and department stores. Legally, a mini - mum of 70% of a FIBRA’s portfolio must be allocated towards the following: • real estate assets designated for rental or accom - modation purposes; • procurement of rights that result in rental income; or • providing financing for the acquisition or develop - ment of real estate assets intended for leasing. The majority of FIBRA certificates are available for issuance, purchase and acquisition by both domes - tic and foreign investors who hold investment agree - ments with authorised institutions in Mexico. Trust certificates are offered to the general public through a public offering in the stock market. Holders of trust certificates issued by a FIBRA will be entitled to receive dividends at least once a year for at least 95% of the result of the immediately preceding fiscal year. Such distributions shall be made no later than March 15th of each year. FIBRA is typically used because it is considered a tax pass-through entity and allows for more flexible structuring of real estate combinations than may be achieved through a corporation. 5.4 Minimum Capital Requirement For a stock or LLC company, there is no mandatory minimum capital required by law. The initial minimum capital is determined by the shareholders or partners upon incorporation. The LLC’s capital will be divided into equity member - ships, with each membership representing at least MXN1 or a multiple of that amount. However, there is a restriction on the number of partners allowed in an LLC, with a maximum of 50 partners.
• Indicate the internal rules of the company govern - ing: (a) shares (or equity membership) – the transfer and issuing of shares; (b) calling, holding, proceedings, quorum and powers of general meeting; (c) the appointment, removal, conduct and powers of attorney of the directors or the sole adminis - trator and auditors; (d) payment of dividends; and (e) dissolution and liquidation of the company. The by-laws covering all the foregoing information may be drafted either by a lawyer or by the same nota- ry public or commercially authorised person ( corredor público ) who will incorporate the company. FIBRAs To incorporate a FIBRA, the parties must have at least 70% of their assets invested in real estate, be engaged in the purchase or construction of real estate to be leased and distribute among the holders at least 95% of the tax result of the previous year. SIBRAs SIBRAs operate in a similar manner to FIBRAs; how - ever, they are commercial companies incorporated under Mexican law instead of trusts. As with FIBRAs, real estate developers receive some tax benefits for using a SIBRA as a financing and structuring mecha - nism for their project. CKDs CKDs are securities that are issued through an irrevo - cable trust. Initial patrimony is formed with the pro - ceeds of the placement and is used to invest in or to finance Mexican companies, either directly or indi - rectly, through various investment vehicles. CKDs are designed to allow the flow of resources to finance pro - jects that consume resources in the short term and later generate long-term flows. CERPIs CERPIs are similar to CKDs; however, only qualified investors can own CERPIs.
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