Latin American Blog : Hispanic Latino Business Lawyers & Attorneys : Sheppard Mullin Law Firm : Cross Border Transactions, Government Contracts

The Official Gazette of the Federation (the “Gazette”) published an amendment to the Mexican Commerce Code (Código de Comercio) by which foreign entities (and not only individuals) acting as pledgors who have not been previously recorded in the Public Registry of Commerce, may validly obtain a registration number from the Unique Registry of Mobile Asset Collateral (Registro Unico de Garantías Mobiliarias) (“RUG”), under which first priority liens on mobile assets located in Mexican territory and documented through Mexican security documents (i.e. Floating Lien Pledge Agreements) will be recorded in the RUG perfecting such first priority lien for purposes of third parties.

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The staff of the Securities and Exchange Commission (“SEC”) recently released a study on the cross-border scope of the private right of action under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78j(b), and SEC Rule 10b-5, 17 C.F.R. § 240.10b-5, promulgated thereunder. The study, mandated by Congress following the United States Supreme Court’s decision in Morrison v. National Australia Bank Ltd., 130 S. Ct. 2869 (2010), outlines a number of legislative options for extending the scope of private actions for international securities fraud that may provide a roadmap for future Congressional action.

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By Bram Hanono

On January 16, 2012, Mexico enacted the Law on Public-Private Partnerships (Ley de Asociaciones Público Privadas) ("PPP Law"). The new PPP Law is intended to regulate the formation of partnerships between the public and private sectors in an effort to provide services and build infrastructure to improve social welfare and increase investment levels in Mexico.

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By Neil A.F. Popović and Rachel Tarko Hudson

In the latest U.S. chapter of the long and hard-fought battle over claims of pollution and adverse health effects from oil development in the Ecuadorian rain forest by Texaco (acquired by Chevron in 2001), a potentially important court victory has gone to the so-called Lago Agrio plaintiffs. On January 26, 2012, the Second Circuit Court of Appeals issued an opinion in Chevron Corp. v. Naranjo, ___ F.3d ___, 2012 WL 232965 (2d Cir. Jan. 26, 2012), ordering vacation of a preliminary injunction that prohibited the Lago Agrio plaintiffs from enforcing or preparing to enforce a potential Ecuadorian judgment against Chevron anywhere in the world outside Ecuador.

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By Alejandro E. Moreno

Fluctuating commodity prices, particularly with respect to the price of food and basic staples, have created a significant demand for arable land. The demand for arable land has, in turn, boosted the price Argentina's rural land and caused a flurry of foreign investment. In response to acquisition of land by foreigners, Argentina recently passed a law that imposes several restrictions on the foreign ownership of rural lands.

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By Larissa Calva-Ruiz

Corporate laws and entities in Mexico have several key differences with their respective counterparts in the United States. One of the most notable differences is the number of shareholders, members or partners needed to incorporate any type of entity. While in the United States it is permissible and customary to set up a corporation or limited liability company with one shareholder/partner, this is not allowed under Mexican law. Consequently, we find a considerable number of entities incorporated in Mexico with one "real" majority shareholder/partner and another minority "phantom" shareholder/partner (a straw man), whose sole purpose is to fulfill a corporate formality.

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By Joseph Pileri

Conducting due diligence is a key aspect of any transaction, international or otherwise. Attorneys working on transactions conducted in Mexico or that involve Mexican entities ought to be aware of registration and certification requirements that are unique to Mexico and that can affect the good standing and validity of Mexican contracts and companies.

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By Whitney A. Hodges

On September 30, 2011, the United States government signed an Export Trade Certificate of Review for the Latin American Multichannel Advertising Council ("LAMAC"). This certification will allow seven United States-based entertainment firms to increase the exportation of multimedia entertainment to Latin American countries and will likely pave the way for other United States-based entertainment studios to enter the market. The LAMAC's Certificate of Review was signed by Under Secretary for International Trade, Francisco Sánchez.
 

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By Curt Dombek

Companies are reporting a significant increase in intellectual property seizures at U.S. ports in recent months, resulting in increased supply chain disruptions.  Unfortunately, not all of this activity can be explained by more effective enforcement methods.  More cases of erroneous seizure have also been observed, and some of these are attributable to difficulty in tracing the valid licensing authority for components incorporated in products that have been manufactured abroad.
 

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The Internal Revenue Service announced on February 8, 2011 the creation of a second special voluntary disclosure initiative for U.S. taxpayers with undisclosed foreign bank and other financial accounts. This new program is a follow-on to the IRS' original voluntary disclosure initiative that closed on October 15, 2009. The 2009 program reportedly attracted some 15,000 voluntary disclosures by taxpayers with previously undisclosed offshore accounts, and has been viewed within the government as a success in getting taxpayers "back into the U.S. tax system" by offering them the ability to avoid or significantly mitigate various the criminal and civil penalties that would otherwise have potentially applied had their failure to disclose been discovered by the IRS on audit.
 

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By Curt Dombek

United States Citizenship and Immigration Services (USCIS) has changed the I-129 Petition for Nonimmigrant Workers. This affects all H-1B, H-1B1 Chile/Singapore, L-1 and O-1A petitioners. Companies must certify compliance with the deemed export laws governing the release of controlled technology or technical data to foreign persons in Part 6 of the new form, which becomes mandatory on December 23, 2010.
 

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By Neil A.F. Popović and Rachel Tarko Hudson

Context: The Chevron-Ecuador Litigation

A high profile and complex dispute involving a group of Ecuadorian residents, Chevron Corporation and the Republic of Ecuador is forcing courts and the media to focus on an arcane provision of federal law that authorizes federal courts in the United States to order testimony or the production of documents for use in a foreign or international tribunal. This once-obscure statute, 28 U.S.C. § 1782(a), authorizes, but does not require, U.S. courts to compel U.S.-style discovery in aid of non-U.S. proceedings. Federal courts on opposite sides of the United States recently ordered parties on opposite sides of the Chevron-Ecuador disputes to provide discovery under section 1782(a).
 

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By Kevin R. Puvalowski

On September 22, 2010, the Court of Appeals for the Second Circuit affirmed the conviction and 42-month sentence of Mauricio Alfonso Mazza-Alaluf (“Mazza-Alaluf”), a Chilean national, for conspiring to operate and actually operating an unlicensed money transmitting business based upon his company's use of bank accounts in the United States. United States v. Mazza-Alaluf, 09-3940-cr, 2010 WL 3666717 (2d Cir. Sept. 22, 2010). Mazza-Alaluf was convicted after a two-day bench trial in November 2008 in Manhattan federal court. See United States v. Mazza-Alaluf, 607 F. Supp. 2d 484 (S.D.N.Y. 2009) (trial court's findings of fact and conclusions of law).
 

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By Daniel L. Brown & Giselle Rivers

On May 27, 2010, the Court of Appeals for the Second Circuit affirmed in part and remanded in part a district court's decision certifying class actions against the Republic of Argentina and granting over $2 billion in damages to eight classes of plaintiffs.  Puricelli v. The Republic of Argentina, No. 09-0332, 2010 WL 2105132 (2nd Cir. May 27, 2010)("Puricelli"). While the Court of Appeals concluded that class certification was appropriate, it held that the district court erred in entering aggregate class-wide relief, as opposed to determining individual relief.

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By Keith Gercken and Dawn Mayer

On February 4, 2010, the Department of Treasury signed a new income tax treaty with Chile, signifying a milestone for both countries. The treaty has not yet been ratified, but if approved by the U.S. Senate, would become the first income tax treaty between the U.S. and Chile and only the second U.S. income tax treaty with a South American country (a treaty with Venezuela was signed in 1999).
 

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By Donald Klawiter and Jennifer Driscoll-Chippendale

This article is the first in a three-part series on multi-jurisdictional cartel investigations. 

In a break from traditional enforcement trends, two recent events underscore the importance of antitrust compliance training for companies located or doing business in Mexico and Latin America. First, in November 2008, the European Commission announced that several cement companies, including Cemex, a global building materials company headquartered in Mexico, were under investigation for violating Article 81 of the EC Treaty, which prohibits cartel behavior. In May 2009, Mexico’s Federal Competition Commission joined the probe, wreaking further havoc on Cemex’s precarious financial position. Second, in February 2009, the Brazilian Ministry of Justice, in conjunction with the U.S. Department of Justice and the European Commission, took the lead in an antitrust investigation of compressor makers, including Empresa Brasileria de Compressores S.A.-Embraco and Tecumseh do Brasil Ltda. The scope of the Brazilian inquiry was unprecedented, with nearly 60 federal police agents, Justice ministry officials and state prosecutors working to serve six search warrants in Sao Paolo and Santa Catarina and gather evidence of wrongdoing.  
 

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By Bram Hanono

In July 2007, President Felipe Calderon launched the National Infrastructure Program ("NIP") to increase coverage, quality, and competitiveness of Mexico's infrastructure. Through infrastructure investment, Mexico is seeking to advance its regional and global standing. The NIP, slated for 2007 through 2012, calls for approximately US$230 billion, comprised of federal and private investment, to finance 480 infrastructure projects. About half way through its duration, there are still ample procurement opportunities for U.S. Companies.  
 

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By Bram Hanono

The U.S. Food and Drug Administration (FDA) recently announced the opening of its new post in Mexico City. The new post is the FDA's third post in Latin America and the tenth international post the FDA has opened in the past 13 months. The other posts in Latin America are located in Santiago, Chile and at the FDA's Latin America Office headquarters in San Jose, Costa Rica. The agency's other new offices are in China, India and Europe.
 

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By Gabe Matus

The current global economic crisis has spawned a recent wave of complex insolvency proceedings in jurisdictions spanning the globe. Add to the mix the increasingly global nature of business and economics and the result is that a debtor subject to an insolvency proceeding in one jurisdiction may likely have assets and operations in a number of other sovereign jurisdictions. Managing the interrelation between concurrent multi-jurisdictional proceedings involving the same debtor or affiliated debtors has been a challenge for court systems, debtors and creditors alike since the emergence of the global economy. As economists warn of continuing risks and concerns with regard to the global economic outlook,[1] the regime established under Chapter 15 of the United States Bankruptcy Code (Ancillary and Other Cross-Border Cases)[2] becomes increasingly relevant for creditors and debtors – both abroad and within the U.S. This article provides a brief overview of Chapter 15 and some of the issues relevant to parties-in-interest in cross-border insolvency proceedings.
 

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By Jerry Gumpel, Jeralin Cardoso and Larissa Calva-Ruiz

Introduction:

The type of transaction and the purpose behind the transaction will largely shape the focus of the due diligence process. Due diligence is about uncovering hidden risks and reducing further exposure. Whether the transaction involves the sale of a company or the purchase of assets, it is imperative to determine what you, as the Purchaser, are seeking to get out of the deal and to structure the due diligence review in a manner that will further such goal. The location of the company or the assets being purchased will also impact the due diligence process by determining which laws will govern your review.
 

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By Mauricio Monroy, Deloitte

On January 1, 2008, a business flat tax (flat tax), also known as IETU, its Spanish acronym, became in force in Mexico. The tax was enacted through a decree published on October 1, 2007 in the Mexican official gazette.
 

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By Margaret Mann

The globalization of the world’s business activities and the nearly universal adoption of capitalism as the world’s economic system have led to two related phenomena.   The first is the need for effective national economies to enact an effective bankruptcy law. Capitalism rewards the taking of risk, and the taking of risk leads to inevitable failures. The more efficiently the applicable bankruptcy system frees the assets trapped in a failed capital structure, the more economic growth can be generated from the asset. China, Mongolia, the Czech Republic are among the emerging economies that have realized this phenomenon and recently adopted a new bankruptcy law.
 

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By Mr. London, London Group Realty Advisors

Baja California’s easy access, proximity, great weather and warm culture have always attracted Americans to travel to its Mexican next door neighbor. Now, world class housing and hotels, and great real estate value, add to the allure for Americans considering investing or living in Mexico.
 

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The scope of authority vested in an individual by virtue of his or her position in a US company can be as confusing and unfamiliar to a person from Mexico as the use of powers of attorney in Mexico is to someone from the US. A US person about to form a Mexican company will be asked at the outset to whom powers of attorney will be issued, and the nature of those powers. More often than not US clients will be baffled when these questions are first posed as they will not understand why powers of attorney are required at all, nor will they be familiar with the different forms of power of attorney. Conversely, a Mexican client about to form a US corporation will be just as perplexed when told by her attorney that no powers need be granted and that the officers and directors can perform all required functions by virtue of the authority inherent in their positions.

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By Beni Surpin, Bram Hanono and Joseph Panetta, CEO, Biocom

Historically, the collaborative efforts between the U.S. and Mexico in the Biotech arena, separate from medical devices, have been at the educational level with informal collaboration projects and student exchanges. One of these, of course, initiated the founding of two well known biotechnology institutes in Mexico. In the late 1970's, a Mexican scientist named Francisco Bolivar participated in the development of the first genetically engineered protein and the development of the first cloning vectors at the University of California, San Francisco. He, along with Luis Herrera-Estrella, returned to Mexico to co-found and direct the Biotechnology Institute of the National Autonomous University of Mexico (UNAM) in Cuernavaca, and the Center for Research and Advanced Studies of the National Polytechnic Institute (CINVESTAV) in Irapuato. 
 

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