The employers shall execute the following filings in order to comply with the education, training and productivity related duties established in the Federal Labor Law (“LFT” for its acronym in Spanish), as a result of the amendments to said Law published in the DOF on November 30th, 2012:

1. Incorporation of the Employer – Employee Joint Committee for Education, Training and Productivity (“Committee”) by employers with more than 50 employees, using for such effects the DC-1 form.

Employers may incorporate more than one Committee, or else, incorporate subcommittees, based on the number of establishments or of workers.

Employers shall keep on their internal records and exhibit to the STPS, when so requested, information on the activities carried out by the Committee during the last twelve months.

2. Elaboration of the Education, Training and Productivity Plan and Program, using for such effects the DC-2 form.

Employers shall establish the education and training plans and programs for a two year period and include in them, among others, the training courses provided by companies from which they have acquired a good or service, as well as those provided by foreigners who train Mexican workers. Likewise, the allowance that employers provide to their workers for them to initiate, continue or complete their education in elementary, middle or college levels, can be included in the education and training plans.

The education and training plans and programs registered before the STPS as of November 30th, 2012, will continue to be effective. Nonetheless, employers shall have a ninety-day term following the publication of the Resolution to update such plans and programs taking into account the actions to be executed in connection with productivity matters, being such:

a. Proposal of changes to machinery, equipment, work organization and labor relations in conformity with the best technological and organizational practices to increase productivity;

b. Proposal to impulse training and measure productivity, as well as to guarantee the fair allocation of its benefits;

c. Surveillance of the compliance of the productivity agreements;

d. Resolution of objections made by workers, if applicable, in connection with the allocation of its benefits.

Employers shall keep available to the STPS, as part of their internal records, the education, training and productivity plans and programs.

3. Issuance of Job-Skills’ Certificates, using for such effects any of the following options: the DC-3 form; the template available at the webpage www.stps.gob.mx; or the document prepared by the employer following the requirements established in this Resolution.

4. Exhibit of Lists of Job-Skills’ Certificates, using for such effect the DC-4 form, within sixty business days following the end of each of the years comprising the education, training and productivity plans and programs’ term, as well as by the end of it (sic), even if the year has not been completed.

Employers which have up to 50 workers may present their list of job-skills’ certificates either printed or electronically, whether employers with more than 50 workers shall present their list electronically only.

In any case, employers shall make available to the STPS, as part of their internal records, a copy of the job-skills’ certificates issued to their workers during the last year, either in printed version or in electronic files.

Additionally, employers may request the following services from the STPS:

1. Multiplier-Agent Training Program. Said program is a free, technical support that the DGC provides to work centers in order to form internal trainers who plan, organize, teach and evaluate training courses based on the company’s specific requirements to improve quality and increase both labor productivity and business competitiveness.

2. Distance Education for Workers Program. The referred program is a free, online training service offered by DGC with the objective of contributing to the development of job skills and abilities, as well as to strengthen favorable environments for productivity in the work place.

In light of the amendments to the LFT on November 30th, 2012, the incorporation and adequate functioning of the Committee has taken great relevance since said Committee is in charge of solving the objections that workers file in connection with the allocation of productivity benefits, as well as of issuing an opinion on the permanency of workers hired under the modalities of initial training and trial period. In this sense, the incorporation of the aforementioned Committee might be advisable as well for those employers with fifty or less workers even though they are not obliged to do so.

The Resolution nullifies the following resolutions on this subject:

• Resolution published in the DOF on December 30th, 2004 by means of which the general criteria to carry out administrative filings in connection with education and training of workers was established.

• Resolution published in the DOF on November 5th, 2009 by means of which the templates to carry out the administrative filings in education and training were divulged.

• Resolution published in the DOF on December 16th, 2009 by means of which the general criteria and templates for the administrative filings in education and training matters published on November 5th, 2009 was updated.

For further information, please contact your principal Firm representative or one of the partners listed below

Mexico Office
Mr. Pedro Velasco (Partner)
Mr. Andrés Rodríguez (Partner)
Tel.: +52 55 5279-5400
Fax: +52 55 5280-7866 / 5280-3214

Monterrey Office
Mr. Juan Carlos de la Vega (Partner)
Ms. Nadia González (Associate)
Tel.: +52 81 8133.6000
Fax: +52 81 8368.0111

Tijuana Office
Mr. Aarón Levet V. (Partner)
Mr. Fernando González (Associate)
Tel.: +52 664 633.7070
Fax: +52 664 634.2978

Some of the most important aspects contemplated in the aforementioned amendment are the following:

Right to Access Information and Communication Technologies

In accordance with the amendment to Article 6 of the constitution, the State to have the obligation to guarantee access to information and communication technologies, as well as to broadcasting and telecommunications services, including the broadband service and internet, establishing effective competition conditions for the rendering of such services. Likewise, the State shall guarantee the integration of the population to the information and knowledge society through universal digital inclusion policies. Additionally the right of the persons to seek, receive and diffuse information and ideas of any nature through any means of expression is consolidated. The prohibition to prior censorship is reinforced and the term “freedom of press” is replaced by “freedom to diffuse”, thus extending the aforementioned guarantee.

Telecommunications as Public Services of General Interest

Telecommunications and broadcasting services are consolidated as public services of general interest. The State shall guarantee that they are rendered under conditions of competition, quality, plurality, universal coverage, interconnection, convergence, free access and without arbitrary interference.

Autonomous Regulating Entity

The Federal Institution of Telecommunications (“IFETEL”) is created as a constitutionally autonomous entity, whose purpose shall be the efficient development of the broadcasting services and telecommunications. IFETEL shall have legal capacity and its own patrimony to carry out its mandate. The general standards, acts or omissions of IFETEL may only be challenged by means of the amparo indirecto trial and the suspension of the challenged act shall not operate in the aforementioned trial. Likewise, it is established that IFETEL may be plaintiff and defendant in constitutional controversies with respect to its acts or general provisions.

IFETEL shall serve as the authority in competition matters in the broadcasting and telecommunications sectors, both on concentrations and on monopolistic practices. Within its authority IFETEL may asymmetrically regulate the participating parties in these sectors, sanction the concessionaires, impose limits to the concentration of national and regional frequencies, to the awarding of concessions, and to cross-ownership controlling several means of communication. IFETEL may also order the disincorporation of assets, rights, partnership interests or shares.

Likewise, IFETEL shall determine the existence of predominant economic agents in the broadcasting and telecommunications sectors, and within the 180 calendar days following its creation shall issue the necessary measures to avoid damages to the competition and free participation.

IFETEL shall have (i) a governing board integrated by 7 commissioners, including a president, who shall be appointed in a phased manner at the proposal of the President of Mexico with the ratification of the Senate; (ii) a consulting board that shall serve as an advising entity thereof; and (iii) an internal control board. In order to appoint the first commissioners, the Evaluation Committee (integrated by the heads of the Bank of Mexico and the National Institute for the Evaluation of the Education and the National Institute of Statistics and Geography) shall send to the President of Mexico the lists of the candidates within the 60 calendar days following the day on which the Decree enters into force. The President of Mexico shall then send his proposals from this list to the Senate within the following 10 calendar days. Once the Senate has convened, it shall have a term of 10 calendar days to resolve on the proposal received.

Additionally, a decentralized government entity is created to provide broadcasting services, on a non-for profit basis, and shall guarantee the access to the greatest amount of people to different contents in accordance with an impartial and objective editing policy.

Concessions on Broadcasting and Telecommunications

Among the powers of IFETEL, it is entrusted with the authority to grant and revoke concessions on broadcasting services and telecommunications, as well as to resolve with respect to their assignment or change of control, holders and operation of the related companies. The concessions shall be granted through a public tender, except for those of public and social use. Prior to their issuance, IFETEL shall obtain the technical non-binding opinion of the Ministry of Communications and Transports and the opinion of the Ministry of Finance and Public Credit with respect to the compensation to be established when granting a concession. In no case shall the determining factor to select the winner be merely economical.

A sanctions scheme is contemplated that establishes that a breach to a resolution related to monopolistic practices shall amount to a cause for revocation of the concession title. In the event of revocation, IFETEL shall notify the President of Mexico in order for him to guarantee the continuity of the service.

The secondary legislation on the matter shall establish that the concessions shall be all encompassing in order for the concessionaires to render all kinds of services through their networks, as long as they comply with the obligations and compensations imposed by IFETEL. Likewise, the regulation for broadcasting permits and concessions shall be standardized, in order to have only concessions, which may be for commercial, private, public or social use (which includes the community and indigenous concessions).

Secondary Legislation

The Congress is granted the authority to issue laws on communication and information technologies, broadcasting services and telecommunications, including the broadband and internet. Additionally, it is ordered that, within the 180 calendar days following the day on which the Decree enters into force, the Congress shall issue a sole legal ordinance which shall regulate (i) the radio-electric spectrum; (ii) the telecommunications networks; and (iii) the rendering of the broadcasting and telecommunications services. Likewise, the Congress shall carry out the necessary adjustments to the legal framework within the same term.

Creation of Specialized Courts

Since the conflicts with respect to telecommunications are of public interest, they shall be resolved in specialized courts, to grant a greater security to the matters and to strengthen the regulatory decisions. The Federal Judicial Council shall, in a term that does not exceed the 60 calendar days following the day in which the Decree enters into force, establish Circuit Collegiate Courts and District Courts specialized in matters of economic competition, broadcasting services and telecommunications.

Foreign Investment

In order to encourage the growth and modernization of the sector, the percentage of direct foreign investment that may participate in these activities is increased. As from the date on which the Decree enters into force, foreign investment will be allowed with up to 100% in telecommunications and satellite communication services and up to 49% in broadcasting services. However, in the broadcasting sector, it shall be necessary for reciprocity to exist with the country in which the investor is incorporated.

Must carry and Must offer

Under the principles of must carry and must offer, the restricted television concessionaires shall be bound to air on a gratuitous manner the open air television signals, and the open air television concessionaires shall be bound to offer this signal to the former on a gratuitous manner. However, the gratuitous re-airing shall not be applicable for those concessionaires who are considered predominant economic agents who, if applicable, shall pay the tariff set by IFETEL, which in no case shall be reflected as an additional cost in the services hired by the subscribers and users.

New Concessions

In order to encourage competition on open air television, two new open air concessions shall be granted. Within a term that shall not exceed the 180 calendar days following the creation of IFETEL, IFETEL shall issue the bases and calls to tender the concessions for open air television frequencies which shall be grouped in order to form at least two new television networks with national coverage. Economic agents who accumulate concessions to render broadcasting services of 12 or more MHz of the radio-electric spectrum in any zone of geographic coverage shall not be able to participate in the tenders.

Terrestrial Digital Transition

December 31, 2015 is established as the date for the conclusion of the terrestrial digital transition. The concessionaires and the permissionaires, upon the conclusion of this process, shall return the frequencies that had been concessioned to them, in order for the use of the radio-electric spectrum, competition and the exploitation of the band of 700MHz to be guaranteed.

For further information, please contact your principal Firm representative or one of the partners listed below

Mexico Office
Mr. Jorge León-Orantes B. (Partner)
Tel.: +52 55 5279.5452
Fax: +52 55 5280.7840

Monterrey Office
Mr. Jorge Barrero Stahl (Partner)
Tel.: +52 81 8133.6000
Fax: +52 81 8368.0111

Tijuana Office
Mr. Aarón Levet V. (Partner)
Tel.: +52 664 633.7070
Fax: +52 664 634.2978

CNNExpansión

Available in Spanish Only

The System will allow employers, under oath to tell the truth, to inform the Ministry of Labor and Social Welfare (“STPS”) the safety and health conditions prevailing at their work centers. Such System will be managed and operated by the STPS, through its several administrative units, and the access to the same shall be through its web page http://www.stps.gob.mx, in accordance with the requirements determined in the System’s Guidelines of operation and functioning which the STPS shall issue within 60 calendar days following the date in which the Resolution became effective.

Modules of the System will be structured taking as reference the economic activity and the scale and risk factors in safety and health matters at work related with processes and characteristics of work centers. Based on the statement submitted by the employers, the STPS will presume the level of compliance with applicable provisions in safety and health matters at work, which will be confirmed by an inspection visit.

The following rules will be applicable to those companies that voluntarily register themselves in the System:

a) At those work centers which processes or activities are classified within groups I and II of the Regulations of Social Security Law in Affiliation, Classification of Companies, Collection and Auditing Matters (“Regulations of the SSL”), and that obtain the overall result that is set by the Guidelines, inspection visits to provide technical assistance and advice will be carried out, which due to their nature, in case of a first non-compliance, would not result in an administrative proceeding that may impose fines. To the extent the non-compliance of the acquired commitments continues, a new inspection visit will be carried out, and in case the violation to the labor legislation persists, an administrative proceeding to impose fines will be initiated.

The voluntary declaration in the System made by employers will be taken into account as a mitigating circumstance in the imposition of fines. For such purposes, the authority may up to 75% of the total fine that may be imposed on the non-complier.

b) At those work centers which processes or activities are classified within groups III, IV and V of the Regulations of the SSL, and that obtain the overall result that is set by the Guidelines, inspection visits to immediately establish preventive and/or corrective measures targeting elimination of the possible identified risks and the deadline for their execution will be carried out and, in case such measures are not complied with by the company, a new inspection visit will be immediately scheduled, during which, as a protective measure in favor of the workers, access to the work center or to a certain area may be restricted or the operations of those processes which relate to the risk tried to be avoided may be delimited. Under such circumstances an administrative proceeding to impose fines will be initiated with all its legal consequences.

The voluntary declaration that employers could have done in the System will be taken into account as mitigating circumstance in the individualization of the sanction. For such purposes, the authority may reduce up to 50% of the total fine that may be imposed on the non-complier.

Should STPS identify that the information provided by employers is false or that they acted with willful misconduct or in bad faith when submitting the statement, the SPTS will order extraordinary inspection visits at the work center. In case the falsehood of the information provided by employers is evidenced, it would be deemed as an intentional behavior which will be considered when determining the amount of the applicable fine. The foregoing is regardless of the fact that the STPS might share such misconduct with the corresponding District Attorney’s office.

For further information, please contact your principal Firm representative or one of the partners listed below

Mexico Office
Mr. Pedro Velasco A. (Partner)
Mr. Andrés Rodríguez R. (Partner)
Tel.: +52 55 5279.5400
Fax: +52 55 5280.7614 / 5280.3214 / 5280.7866

Monterrey Office
Mr. Juan Carlos de la Vega G. (Partner)
Tel.: +52 81 8133.6000
Fax: +52 81 8368.0111

Tijuana Office
Mr. Fernando González (Associate)
Tel.: +52 664 633.7075
Fax: +52 664 634.2978

Pursuant to its first transitory article, the effects of the LISF shall become effective after 730 calendar days following publication of the LISF in said Official Gazette of the Federation. Accordingly, the current General Law of Insurance Institutions and Mutual Companies (Ley General de Instituciones y Sociedades Mutualistas de Seguros) and the Federal Law of Bonding Institutions (Ley Federal de Instituciones de Fianzas) will be automatically abrogated on that date.

The LISF gathers the regulation applicable to both insurance and bonding institutions (the “Institutions”) in a single statute while standardizing those provisions that are common to both types of Institutions. Moreover, the LISF also regulates mutual insurance companies, but in this document we will not address the specific regulation applying to such companies.

From this new law it is relevant:

i. That the scope of authority granted to the National Bonding and Insurance Commission (“CNSF”, for its acronym in Spanish) is redefined, considering that a more relevant involvement in the business and affairs of the Institutions is entrusted to CNSF, currently within the realm of the Secretariat of Finance and Public Credit (“SHCP”, for its acronym in Spanish) who, nonetheless, keeps certain key authorities (i.e. general interpretation, for administrative purposes, of the LISF and of those international treaties related to the establishment in Mexico of affiliates of foreign financial institutions, to issue general rules in connection with such Affiliates, and to declare the existence of new coverage categories of damage insurances, among others);

ii. That the Board of Directors has the responsibility of implementing an efficient corporate governance system that takes into account those circumstances that are particular to each Institution. For that purpose, the Board will be assisted by an investment committee (currently established in certain general rules issued by the SHCP) and an audit committee, whose creation is mandated by the LISF;

iii. The enhanced transparence before the market in connection with the financial condition of Institutions, which have to reveal information showing its credit worthiness and capitalization level and, therefore those institutions will be required to rate their credit worthiness with specialized rating agencies;

iv. The possibility for the Institutions to calculate their own solvency capital in accordance with an internal model formula or by means of a standard formula set forth in the LISF. The solvency capital concept substitutes the guarantee minimum capital concept (capital mínimo de garantía) applicable to insurers and the operations base capital (capital base de operaciones) applicable to bonding institutions;

v. The surety bond insurance has been created as a new coverage category, to be offered by specialized insurance institutions;

vi. The possibility for insurance institutions authorized to issue surety bond insurance to request authorization to issue surety bond policies, subject to certain conditions, as well as for bonding institutions to transform into an insurance institution issuing surety bond insurance coverage policies; and

vii. The increase in 33% of the amount of the legal reserve of the insurance institutions which has to reach 100% of their paid corporate capital (capital pagado).

In addition to the above, below please find a summary of the most relevant concepts in this new statute:

I. Legal Form, Administration and Surveillance.

A. Legal Form.

The LISF keeps the principle by which the Institutions shall be incorporated either as stock corporations (sociedades anónimas) or as stock corporations with variable capital (sociedades anónimas de capital variable), in compliance with the General Law of Business Organizations (Ley General de Sociedades Mercantiles) except as otherwise provided in the LISF.

B. Administration and Surveillance.

Institutions shall be managed by a Board of Directors and a director general.

The Board of Directors shall be composed by no less than 5 and no more than 15 members and their respective alternates, in the understanding that at least 25% of the members and their respective alternates shall be independent members. Those Institutions that are affiliates of foreign financial institutions in which the latter holds at least 99% of the issued and outstanding stock may freely establish the number of members of the Board to the extent it is not less than 5 members.

The Board of Directors shall meet at least on a quarterly basis and extraordinarily when called by (i) the chairman of such Board, (ii) at least 25% of the members, or (iii) by any statutory examiner (Comisario) of the Institution. Quorum is reached if at least 51% of the members are present provided at least 1 of them is an independent member. The majority of the members of the Board shall be Mexican or aliens residing in Mexico provided that, with respect to the affiliates of foreign financial institutions, the majority of their members shall be Mexican residents.

It is pointed out that the LISF expands the list of duties of the Board of Directors that are not subject to delegation, being the following the most relevant:

(i) To define and approve: (1) the corporate governance system of the Institution, as well as the mechanisms and measures for a permanent monitoring and evaluation of the operation and performance of the same as well as to foster its proper implementation and (2) the filing of the authorization request for the use of an internal model for the calculation of the solvency capital requirement;

(ii) The establishment of the required mechanisms to control on a permanent basis: (1) the sufficiency of the assets and investments to meet the Institution’s Investment Base (Base de Inversion), (2) the solvency capital requirement calculation, (3) the sufficiency of the Admissible Funds (Fondos Propios Admisibles) supporting the solvency capital requirement, and (4) with respect to those insurance institutions authorized to issue surety bond insurance and the bonding institutions, the collateral, the follow up of the insured risks and the guaranteed liabilities; and

(iii) The review and assessment, at least once a year, of the results of the Institution’s dynamic solvency test (prueba de solvencia dinámica).

The members of the Board of Directors shall have technical expertise, good reputation, acceptable credit background and ample knowledge and expertise on financial, legal or administration matters.

The director general or equivalent position shall be a Mexican resident with a good reputation and acceptable credit background, in addition to other qualifications intended to designate someone with experience on financial, legal or administration matters.

The surveillance of Institutions is ascribed to one or more statutory examiners (comisarios) who shall have technical expertise, good reputation, acceptable credit background and ample knowledge and expertise in financial, legal or administration matters. Statutory examiners shall be Mexican residents but not government officials in charge of the oversight of Institutions or persons forbidden by the LISF to act as statutory examiner pursuant to the last paragraph of Article 60 of the LISF.

Institutions shall comply with the general rules (disposiciones de character general) issued by the CNSF in order to verify compliance with the corresponding qualifications and criteria for the integration of the files evidencing that the appointments of directors and officers made by the Institution has complied with the terms of the LISF.

II. Corporate Governance.

Institutions shall implement an effective corporate governance system securing a prudent and sound operation, in the understanding that the Board of Directors shall be in charge of managing the implementation and follow up of the same, with the assistance of the audit committee (comité de auditoria) and the medical controller (contralor medico), the latter only for Institutions authorized to issue medical insurance policies. The concept of policy controller (contralor normativo) under the current General Law of Insurance Institutions and Mutual Companies and the Federal Bonding Institutions Law will not continue under the LISF.

A. Purpose of the Corporate Governance System.

The corporate governance system shall consider the amount of transactions, as well as the nature and complexity of the activity of the Institution and shall include the establishment and verification of policies and procedures expressly addressing (i) a comprehensive risk management (administración integral de riesgos), (ii) the internal audit and control (auditoria y contraloría interna), (iii) the actuarial activity (función actuarial) and (iv) the retention of third persons to render those services required for the operation of the Institution.

The CNSF may establish by means of general rules, those mechanisms to verify compliance of the corporate governance system of the Institutions pursuant to the LISF for due exercise of the inspection and surveillance duties.

1. Comprehensive Risk Management.

Institutions shall implement an efficient system for a comprehensive risk management that shall consider the policies, strategies, processes and information procedures necessary to supervise, manage, asses, control, mitigate and report to the Board of Directors, on a continuous basis, about the risks that the Institution may be exposed to, individually and in the aggregate, as well as about the correlation of such risks. Such system shall also consider the making of self-evaluation tests in connection with risks and solvency that may end up with proposed measures to overcome those deficiencies, in its case, identified as a result of such self-evaluation.

Such comprehensive risk management system shall: (a) be managed by an specific department within the Institution’s organizational structure, (b) be taken into account on an ongoing basis in the strategic decisions, and (c) encompass those risks set forth for the calculation of the solvency capital requirement, as well as any other risk identified by the Institution not otherwise considered in such calculation.

2. Controlling System.

Regarding the internal controlling system, Institutions shall establish an efficient and permanent internal controlling system to be submitted to the Board of Directors by the audit committee which, shall consist at least, on the performance of those activities related to the design, establishment and updating of the measures and controls to foster the fulfillment of external and internal policies applicable to the Institutions’ businesses and affairs.

The internal controlling system shall consist, at least of: (a) administrative and accounting procedures, (b) an internal control framework, (c) adequate information mechanisms to all levels of the Institution, as well as (d) a permanent follow-up of the activities of the internal control. Likewise, such system shall provide to the Board of Directors and the director general those elements necessary for the assessment of the compliance of the applicable law, its regulation and administrative provisions, as well as the effects of changes in the legal framework in connection with the businesses of the Institution, as well as the compliance-risk determination and assessment.

With the purpose of ensuring the implementation of those corrective measures, the results and suggestions deriving from the internal control shall be informed to the Board of Directors and the director general of the Institution.

3. Internal Audit.

In connection with the internal audit, the Institutions shall implement a system which shall effectively and permanently supervise compliance with such internal and external policies applying to Institutions. The results and recommendations deriving from such internal audit shall be notified to the Board of Directors and the director general for the implementation of the corrective measures that may correspond.

The performance of the internal audit shall be objectively and independently carried out by a specific department within the organizational structure of the Institution but which shall be independent from the Institution’s operation or the operation of the Business Group (as defined in the LISF) to which the Institution is part of. The internal audit department shall be responsible for periodically supervising that the policies and rules approved by the Board of Directors for the sound operation of the Institution are implemented in a proper fashion by means of applying selective testing, as well as for verifying the correct functioning of the internal audit system, its consistency with the applicable goals and guidelines, and the extent such system is sufficient and adequate for the Institution’s activity.

4. Actuarial Activity.

The Institution shall implement an effective and permanent actuarial activity which shall be in charge of, among others: (a) coordinating the actuary efforts related to the design and technical feasibility of insurance products or surety bond technical notes, so that they are aligned with the LISF; (b) coordinating the calculation and appraisal of the technical reserves of the Institution pursuant to the LISF; (c) verifying adjustments to methodologies and models, as well as to the hypothesis used in the calculation of the Institution’s technical reserves; (d) keeping the Board of Directors and the director general informed about the reasonableness and reliability of the calculation of the technical reserves; (e) stating its position before the Board of Directors and the director general in connection with the risk underwriting guidelines and, in its case, the obtainment of additional collateral by the Institutions; (f) stating its position before the Board of Directors and the director general in connection with the adequacy of the reinsurance agreements and, generally, about the Institution’s risk-allocation policy, and (g) to foster the effective application of the comprehensive risk management system.

The actuarial activity shall be performed by experienced and knowledgeable persons in the actuarial, financial and statistics fields.

5. Services retained from Third Parties.

In connection with the retaining of services from third party service providers, the Institutions shall establish policies and procedures to ensure that those activities contracted with third parties, which are related to their business and operation, continue complying with the LISF.

These policies, in addition to complying with the rules set forth in the LISF, shall establish that no operating functions of the Institutions shall be contracted with third parties when this may: (a) affect the quality and efficiency of the Institution’s corporate governance system; (b) pose an excessive increase in the Institution’s operating risk; c) affect the ability of the CNSF to perform its surveillance activities, or (d) affect the appropriate rendering of services to the end user.

B. Corporate Bodies involved in the design, implementation and oversight of the Corporate Governance System.

As mentioned above, the Board of Directors is the first body in charge of the design, implementation and oversight of the corporate governance system, which elements have been described above.

In addition, the Board of Directors is assisted by the audit committee and, for those insurance institutions in the business of issuing medical insurance policies, by the medical controller, whose duties will not be addressed herein.

Generally, the audit committee is responsible of supervising adherence by the Institution to the internal rules approved the Board of Directors, as well as for compliance of the legal and administrative provisions that apply.

Said Committee is formed by at least three and no more than five members and alternate members of the Board of Directors. At least one of such members shall be an outside independent member who shall be the chairman. Quorum is reached with the attendance of majority of its members, in the understanding that the chairman, who has casting vote, shall be attending. Decisions are adopted with the favorable vote of the majority of the attending members.

The Committee shall meet quarterly and may adopt resolutions by the use of electronic means (videoconference or telephone), but any such resolutions shall be confirmed by means of a written executed document.

The CNSF, by means of general rules, shall set forth the activities to be performed, at de minimis, by the Institution’s audit committee, as well as the matters that such committee shall submit for approval of the Board of Directors.

III. Solvency of the Institutions.

The Institutions are subject to certain provisions fostering the creation of a solid financial basis so they can honor the liabilities deriving from the policies issued. Having that in mind, the LISF mandates Institutions to have a minimum paid-in capital (capital mínimo pagado) and to create a legal reserve for an amount equal to 100% of the minimum paid-in capital, which for insurance institutions represent an increase of 33% vis-a-vis the terms of the current law. Moreover, Institutions shall create and maintain technical reserves, spread their risk, as well as maintain an asset-investment policy as provided in the LISF.

In addition, the new LISF brings two concepts. The first one consists on the solvency capital requirement which shall be supported with what the LISF calls Admissible Funds and substitutes the concept of minimum guarantee capital (capital mínimo de garantía) for insurers and the operations base capital (capital base de operaciones) for bonding institutions. The second consists on the insurances special funds.

A. Solvency Capital and Admissible Funds.

The Institutions are obliged to have a solvency capital in order for the Institutions to: (i) have enough resources to overcome (a) those risks assumed in the conduction of their business, (b) those financial risks associated with investment of their resources, and (c) those situations of extraordinary nature posing a risk in their solvency or stability due to their operation or market factors, and (ii) develop appropriate policies for selecting and underwriting insurance and bonds, as well as to allocate risks.

The solvency capital of the Institutions shall be calculated on a monthly basis by using either a standard formula set forth in the LISF or an internal model formula designed by the Institution itself but previously approved by the CNSF, as it may be modified with the approval of such commission. However, those institutions engaged on the pension insurance business or catastrophic risk insurance business may only use the standard formula established in the LISF.

The internal model formula shall meet certain criteria and take into consideration certain mechanisms in order to be eligible for approval by the CNSF. For instance, among others, such internal model formula shall be approved by the Board of Directors and sanctioned since its inception and on an annual basis by the opinion of an external expert which shall state that such model complies with the applicable legal provisions. In addition, such model shall include a control and information system to keep the Board of Directors and director general informed and establish a mechanism for the periodic assessment of the solvency capital.

The solvency capital is backed by Admissible Funds, that is, by the funds of the Institution that have been determined to be the difference between assets and liabilities of the Institution that, in terms of the LISF and the general rules to be issued by the CNSF, are eligible to cover such requirement of solvency capital. Such assets shall not be less than the minimum paid-in capital of the Institution capital.

The Board of Directors shall carry out at least on an annual basis and through an actuary, a dynamic solvency test, pursuant to the general rules to be issued by the CNSF. The purpose of such test is to identify, under different possible scenarios, the sufficiency of the Institution’s Admissible Funds securing the Institution’s solvency capital requirements.

Pursuant to the transitory provisions to the LISF, the CNSF shall determine, by means of general rules, the times and measures to be adopted by the Institutions to adhere gradually to the funding requirements of the solvency capital upon the effective date of the LISF.

B. Special Insurance Funds.

The LISF identifies two different types of special insurance funds. One is contingent considering that its creation is subject to the CNSF identifying a particular circumstance on an insurance category demanding a complementary funding mechanism for the correct operation of such insurance category. The other type of fund is mandatory for insurers.

1. Contingent Special Insurance Fund.

In the event that the CNSF determines that the nature of an insurance category demands the creation of a complementary funding mechanism for its operation, all insurance institutions and insurance mutual companies issuing policies for such insurance category shall appear before a banking institution designated by the CNSF, acting as settlors, to create a trust which will be subject to the supervision and oversight of the CNSF. The assets of the trust will consist of those special fees to be charged to the insureds that have been approved by the CNSF. The beneficiaries of such trust shall be the insured and those beneficiaries under the insurance policies and, if there is a balance, the Mexican Federal Government. Such special fees are part of the insurance premium payable by the insured but in addition to the net risk premium (prima neta de riesgo) and shall be itemized in both the front page of the policy and in any receipt issued by the Institution.

The CNSF shall establish, by means of general rules, the purpose and form to operate those trusts created in connection with the above, as well as for the management of the assets of the trusts, their disbursement and the administrative expenses, under certain guidelines set forth in the LISF.

2. Mandatory Special Insurance Fund.

Those insurance institutions authorized to issue life insurance policies, pension insurance policies issued pursuant to social security laws, as well as insurance policies for personal accidents, medical expenses, health, civil liability and professional risks, maritime and transport, fire, livestock and agriculture, vehicles, catastrophic risks and miscellaneous shall create special funds through irrevocable and privately-formed trusts, funded by contributions made by the insurance institutions themselves. Such trusts shall be subject to the supervision and oversight of the CNSF and shall have the purpose of creating a funding mechanism to assist insurance institutions in complying with their liabilities before the contracting party, insured and beneficiaries of the insurance policies subject to certain requirement.

For purposes of the aforesaid: (i) a trust will be formed to manage the special fund corresponding to life insurance, (ii) a trust will be formed for each social security regime (regimenes de seguridad social) to manage the special fund for pension insurance deriving from the social security laws, and (iii) a trust will be formed for the remaining categories of insurance listed in the prior paragraph.

With respect to those trusts referred to in paragraph (i) and (iii) above, (a) the settlors shall be the insurance institutions themselves, (b) the trustee shall be that banking institution appointed by the CNSF, and (iii) the beneficiaries shall be the insurance institutions themselves and, if there is a balance, the Mexican Federal Government. With respect to the trust referred to in paragraph (ii) above, (a) the settlors shall be the insurance Institutions themselves, (b) the trustee shall be that appointed by the SHCP, and (c) the beneficiaries shall be the social security institutes or entities, the settlors, and the Mexican Federal Government subject to certain requirements.

The contributions to be made to each fund by the insurance institutions and the aggregate cap of assets for each fund will be determined by the CNSF by means of general rules. The contributions shall be determined based on the assessment of the future liabilities supported by each particular special fund and shall be established as a percentage of the insurance premiums corresponding to the policies issued by the insurance institutions, in the understanding that, excluding insurance premiums issued in connection with pension insurance policies deriving from the social security laws, such percentage shall not exceed in any case of the equivalent of 0.5% of the premium charged. For pension insurance policies deriving from the social security laws, the insurance institutions shall make contributions based on their retained risks, pursuant to the form and terms to be determined by the CNSF by means of general rules.

Access by the Institutions to the financial support of each mandatory special fund is contingent to complying with certain requirements and conditions which in general, are meant to evidence the eligibility of the institution to be benefited from the fund due to lack of sufficient resources of its own.

Insurance institutions authorized to issue insurance coverage for life, personal accidents, medical expenses, health, civil liability and professional risks, maritime and transport, fire, livestock and agriculture, vehicles, catastrophic risks and miscellaneous insurance policies shall implement the special funds above described under the basis above summarized and by forming those trusts within the one hundred and twenty days following the date on which the LISF becomes effective. Those insurance institutions authorized to issue pension insurance policies deriving from the social security laws shall have ninety days following the effective date of the LISF to modify the trust corresponding to the special funds, to comply with the LISF.

IV. Investment Policy and Investment Committee.

The Board of Directors shall determine the investment policy in connection with its assets based on the provisions of the LISF and the general rules to be issued by the CNSF.

In general terms, such policy shall be framed under a principle of prudence that ensures the safe keeping, diversification, liquidity and profitability of the investments of the Institution and its soundness with respect to the types of business of the Institution. In addition, and among other elements, investments shall be made on assets and other instruments that the Institution is fully aware of its implications and which risks are properly assessed, followed, administered and controlled by the Institutions in an effective manner.

Without prejudice of the authority of the CNSF to limit or prohibit to the Institutions to acquire certain assets or securities imposing on excessive risks to the investment portfolio of the Institutions by means of general rules, due to their characteristics, conditions of the stock markets, lack of information to properly assess the risk or the nature of the transactions carried out by the Institutions,
Institutions shall create an investment committee to define those securities eligible for investment pursuant to the investment policy, the provisions of the LISF, and the general rules of the CNSF, which shall also propose to the Board of Directors those adjustments to the policy deemed appropriate.

The committee shall be formed pursuant to the general rules of the CNSF under the following basis: (i) the Board of Directors shall appoint the members of the committee; (ii) it shall be composed by five members among which shall be the director general, the person in charge of the investment department and two members of the Board of Directors of the Institution one of which shall be an independent member, in the understanding that those individuals in charge of the comprehensive risk management department of the Institution are not eligible for the investment committee; (iii) a member of the audit committee and the head officer of the comprehensive risk management department shall attend the meetings; (iv) the chairman shall report to the Board of Directors about the committee’s activities; and (v) the committee shall meet at least on a monthly basis and its resolutions shall be recorded in a document executed by all attending members.

V. Surety Bond Insurance.

The LISF creates the surety bond insurance as a new category under the damage insurance umbrella. Under such type of insurance an indemnification is paid to the beneficiary of the insurance, within the limits of the insured interest, as means to restore the beneficiary or penalize the policyholder, for the loss suffered in the event of breach by the policyholder of its legal or contractual obligations, but this insurance category excludes obligations related to agreements of financial nature. A characteristic for this type of insurance is that the policyholder shall reimburse the insurance institution those amounts paid by the latter. Therefore, the insurer may request appropriate collateral.

A novelty of the LISF consists of the possibility for insurance institutions authorized to issue surety bonds insurance policies to request under certain basis certain authorization to issue surety bond policies, as well as for bonding institutions to request authorization to transform themselves as insurance institutions to issue bonding insurance policies and credit insurance (seguros de crédito) policies.

It is worth mentioning that due to the specialized nature of the credit insurance, surety bond insurance, housing-credit insurance (seguro a la vivienda) and financial guarantee insurance (seguro de garantía financiera), insurance institutions may only offer one of these insurance categories, with exclusion of any other insurance category of any type, except for the credit and surety bond insurance categories which may be offered by an insurance institutions specialized in these two categories.

VI. Disclosure of Financial Information.

Under the LISF the Institutions are bound to disclose their financial condition and, therefore, the CNSF shall issue general rules to set forth the requirements for the Board of Directors to approve the Financial Statements of the Institution, the approval of such Financial Statements by the CNSF and their disclosure to the public.

Both the submission and disclosure of the Financial Statements of the Institutions and mutual insurance companies are strictly a responsibility of the Board of Directors, the statutory examiners and independent auditors that analyzed and sanctioned the authenticity of the information contained in such statements. Such persons shall be subject to the applicable penalizations in the event the submission and disclosure of said information is not in accordance with the Institution’s financial condition.

The Institutions shall disclose to the general public as a note in their financial statements, the information in connection with their compliance with their Investment Base as well as the level of sufficiency of the Admissible Funds backing the solvency capital requirement.

Likewise, the Institutions shall make public their risk level, based on the credit rating granted by a specialized rating agency authorized by the National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores), pursuant to the general rules to be issued by the CNSF. Institutions shall state such rating as a note in their Financial Statements.

The Institutions are bound to disclose to the general public their information in connection with their corporate, financial, technical, reinsurance, risk management, regulatory, managerial, operational, economic, risk level, solvency and legal matters to be set forth by the CNSF by means of general rules. When defining the scope of such rules, the CNSF shall consider the relevance of such information in order to disclose to the public the solvency, liquidity and operational soundness of the Institutions.

VII. Infringements and Criminal Offenses.

Pursuant to the LISF, those transactions carried out in violation of the (i) LISF itself, (ii) applicable regulations, (iii) general rules issued pursuant to the LISF, and (iv) terms and conditions of the authorization granted to the Institutions for its incorporation and operation as such; will be subject to the corresponding administrative and criminal penalties.

A. Infringements.

The CNSF is entitled to imposing administrative penalties which may consist on (i) the imposition of fines, (ii) the revocation of the authorization granted, (iii) the cancellation of the registry, and (iv) the removal, suspension, dismissal, as well as vetoes or suspension from office.

The CNSF shall consider in determining the corresponding fine, among others, the financial condition of the offender, as well as the relevance of the infringement. The financial condition of the offender shall be evaluated considering its net worth (capital contable).

The offender shall pay the fine within the fifteen business days following the respective notification, with the benefit of obtaining a twenty-percent discount if such fine is timely paid (but provided the offender does not files any legal remedy to challenge the fine imposed).

Under the LISF the authority of the CNSF to imposing administrative penalties will expire after five years counted as from the first business day following the occurrence of the infringement.

Based on the relevance of the infringement, the fines that may be imposed under the LISF range from 200 to 100,000 minimum daily salaries applicable in Mexico City (“DSM”, for its acronym in Spanish), which is calculated annually. Therefore, for this year 2013 such fines range from $12,952.00 Mexican pesos (around US$1,000.00 dollars) to $6,476,000.00 Mexican pesos (US$518,000.00 dollars).

Notwithstanding the foregoing, in some other cases, such as those described in article 487 of the LISF, the fine is calculated based on parameters different than DSM (i.e. the value of the infringing transaction or the shares issued by the Institution that are involved in the infringing act), which could reach, in some cases, twice of the value of the corresponding infringing transaction.

The LISF also provides that for those infringements for which the law does not provide for a specific fine, the fine that will apply could range from 200 to 5,000 DSM, that is, from $12,952.00 Mexican pesos (approximately, US$1,000.00 dollars) to $323,800.00 Mexican Pesos (approximately, US$25,900.00 dollars).

Please keep in mind that in no event the amount of the fines may exceed the equivalent of 2% of the net worth of the Institution.

B. Criminal Offenses.

In connection with criminal offenses, the LISF imposes imprisonment for certain conducts based on their seriousness, ranging from three months to fifteen years plus the payment of fines ranging from 30 to 350,000 DSM. That is, from $1,942.80 Mexican pesos (approximately, US$155.00 dollars) to $22,666,000.00 Mexican pesos (approximately, US$1,813,000.00 dollars).

Some of the offenses that would require special attention are the following:

1. (i) Conducting insurance activities as insurer or acting as insurance broker of said insurers in violation of articles 20 (which relates to conducting insurance activities by natural persons or entities without having obtained the prior corresponding authorization) and 23 (which relates to acting as an insurance broker for foreign insurers or for domestic ones lacking the corresponding authorization), and (ii) offering in Mexico insurance coverage from foreign insurers, either directly or as a broker, through public or private means; and

2. (i) Issuing surety bond policies for a consideration on an ongoing basis or acting as broker of products of said issuers which are in violation of articles 33 (which relates to the issuance of surety bond policies by persons other than authorized Institutions) and 35 (offering as broker surety bond coverage from foreign underwriters or domestic unauthorized underwriters), and (ii) offering in Mexico surety bond coverage from foreign entities, either directly or as a broker, by means of public or private means, to secure acts of natural persons or entities that shall be fulfilled in Mexico;

Such conducts indicated above may be penalized with imprisonment from two to fifteen years and a fine ranging from 2,500 to 20,000 DSM, that is, from $161,900.00 Mexican pesos (approximately, US$13,000.00 dollars) to $1,295,200.00 Mexican pesos (approximately, US$103,600.00 dollars).

Additionally, pursuant to the LISF, those criminal offenses set forth therein may only be prosecuted if committed by willful misconduct (dolo) by the offender. Any such criminal offense will be prosecuted at the request of either the SHCP, the affected Institution or any person having a legal interest. The applicable statute of limitations after which a criminal offense may not be prosecuted is three years after the SHCP, the affected Institution, or any person having legal interest had knowledge of the offense and the alleged offender, or , in the lack of such knowledge, five year pursuant to the rules set forth in article 102 of the Federal Criminal Code.

Finally, those penalties which are set forth in the LISF will be reduced to one-third when evidenced that the damage or breach has been indemnified or cured.

VIII. Transitory Provisions.

As relevant transitory provisions, please take into account that:

1. The new LISF shall become effective within 730 calendar days following its publication in the Mexican Federal Official Gazette that is on April 4, 2015.

2. The regulation, and other general rules issued before the LISF becomes effective shall continue to be applicable, to the extent they are consistent with LISF and until the Executive Branch (the Mexican President), the SHCP, the Bank of Mexico, and the CNSF issue the corresponding regulation and the general rules established by the LISF.

3. The authorization or approval applications submitted to the SHCP before the LISF is effective will be processed and resolved by such SHCP, even after the LISF becomes effective, with the same authority as provided in the General Law of Insurance Institutions and Mutual Companies and the Federal Bonding Institutions Law as it may correspond.

4. Institutions and mutual insurance companies may continue with their business activity without the need to obtain a new authorization, but being subject to the LISF, its regulation and the complementary administrative provisions issued upon effectiveness of the LISF, without prejudice of the terms, conditions and obligations set forth in their respective authorizations which shall continue to be applicable to the extent they are consistent with the terms of the LISF.

5. The CNSF replaces the SHCP with respect to (i) the revocation of those authorizations granted by the SHCP for the incorporation and operation of insurance and surety bonds institutions, as well as mutual insurance company, and (ii) the exercising of the authority to grant, deny or cancel the registration in the General Foreign Reinsurers Registry (Registro General de Reaseguradoras Extranjeras) granted by the SHCP before the LISF starts its effects.

6. Those fine-imposing proceedings, including the motion for reconsideration (recurso de revocación), that commenced before the LISF becomes effective shall continue be processed until fully concluded under the terms of the laws to be abrogated.

7. The Institutions shall have a term of one hundred and twenty calendar days following effectiveness of the LISF to amend their by-laws as set forth in Article 54 of the LISF, in connection with paragraph second of Article 191 of the General Law of Business Organizations. The relevant transitory provision grants the corresponding authorization to carry out the aforesaid amendment to the by-laws.

8. Bonding institutions, affiliate to a foreign financial institution shall have a term of one hundred and twenty calendar days following effectiveness of the LISF to amend their by-laws and to exchange the stock certificates issued by them, as set forth in Article 79 of the LISF. The relevant transitory provision grants the corresponding authorization to carry out the aforesaid amendment to the by-laws, as well as to modify the series of the stock pursuant to the provisions of the Article 79 above referred to.

9. Those in breach of the terms of the current insurance and surety bond laws or that committed a felony under their terms shall continue to be subject to the laws to be abrogated with respect to such breaches or felony acts committed, except in the event that the terms of LISF are more favorable, in which case the terms of the LISF shall apply.

For further information, please contact your principal Firm representative or one of the partners listed below

Mexico Office
Mr. Jorge León-Orantes B. (Partner)
Mr. Daud Carrillo (Associate)
Tel.: +52 55 5279.5400
Fax: +52 55 5280.7840

Monterrey Office
Mr. Cesar G. Cruz (Partner)
Mr. Francisco Torres (Associate)
Tel.: +52 81 8133.6000
Fax: +52 81 8368.0111

Tijuana Office
Mr. Aarón Levet V. (Partner)
Tel.: +52 664 633.7070
Fax: +52 664 634.2978

energíahoy

Available in Spanish Only

El Economista

Available in Spanish Only

Among the objectives of the bill are to consolidate the right to information through access to information and communication technologies, to strengthen competition and to increase telecommunications infrastructure. The bill of amendments is submitted in accordance with the commitments undertaken in the Pacto por México initiative with respect to telecommunications. These commitments include to strengthen the Federal Competition Commission, to create Courts specialized on telecommunications, to guarantee the right to access to the broadband, to strengthen the effectiveness of the decisions of the regulatory entity, and to implement measures to foster the competition in radio, television, telephone and data services.

With respect to the implementation of measures to promote competition, it is proposed to create the Federal Economic Competition Commission (CFCE) and the Federal Institute of Telecommunications (IFT), as autonomous constitutional entities, to encourage competition and supervise commercial practices in the market. In order to promote competition on open air television, the proposed amendment contemplates that, once the IFT is created, it shall tender two new open air television concessions. The amendment proposes to increase the participation of foreign investment in the telecommunications and satellite communication sectors to up to 100%, and in the open air sector to up to 49%. Additionally, it is proposed to adopt the principles of must carry and must offer in order for the restricted television concessionaires to be bound to air the open air television signals, and for the open air television concessionaires to be bound to offer this signal to the former.

Since it is a constitutional amendment, the bill must follow the special process set forth in article 135 of the Constitution to amend it. The bill was submitted before the Chamber of Representatives (“Cámara de Diputados”), who discussed it and approved it on March 21. Now it will be turned to the Senate (“Cámara de Senadores”), who shall review it for approval. Upon obtaining such approval , the bill shall be sent to each of the State congresses. The majority of the aforementioned congresses must approve the amendment and then it shall be sent to the President of the Republic for publication.

We will report on the final contents of the amendment when passed.

For further information, please contact your principal Firm representative or one of the partners listed below

Mexico Office
Mr. Jorge León-Orantes B. (Partner)
Tel.: +52 55 5279.5452
Fax: +52 55 5280.7840

Monterrey Office
Mr. Jorge Barrero (Partner)
Tel.: +52 81 8133.6000
Fax: +52 81 8368.0111

Tijuana Office
Mr. Aarón Levet V. (Partner)
Tel.: +52 664 633.7070
Fax: +52 664 634.2978

Following please find a general description of the most relevant aspects of the Guidelines.

General Provisions

The Guidelines are applicable throughout the Mexican Republic for all private persons carrying out the processing of Personal Data pursuant to the provisions of said Law and its Regulations.

The concepts of “Cookies” and “Web beacons” are defined by the Guidelines which, in terms of the third paragraph of Article 14 of the Regulations, are deemed electronic mechanisms that allow automatic and simultaneous collection of Personal Data automatically and simultaneously from the moment in which the Data Subject has contact with the same.

• Cookies: Data file stored in the hard drive upon browsing an Internet site, allowing the exchange of status information between the site and the browser, enabling disclosure of identifications means of the session or user’s preferences, among other data.

• Web beacons: Visible or hidden image inserted in a web site or e-mail, used to monitor the user’s behavior in these means, which may reveal information such as Internet Protocol (IP) of origin, browser or operating system, among other information.

The provisions of the Guidelines shall not affect sectorial or specific norms applicable to Personal Data processing.

Privacy Policy

The Guidelines ratifies that when Personal Data processing is protected by the Law and the Regulations, the Controller has to produce and make the Privacy Policy to the Data Subject regardless of the requirement of consent from the Data Subject, with exception of those cases referred to in Guideline Fourteenth in connection with Article 5 of the Regulations.

There are certain elements that must be taken into consideration to draft a Privacy Policy such as: (i) to avoid using inaccurate, ambiguous or vague sentences; (ii) consider Data Subjects’ profile when drafting the Privacy Policy; (iii) to abstain from using texts or forms leading to select a specific option; (iv) having pre-checked boxes to evidence consent; and (v) to refrain from referring to texts that are not available for the Data Subject.

Delivery of the Privacy Policy

The Guidelines confirm the provisions of the Law and the Regulations as to the manner and moments in which the Privacy Policy must be made available to the Data Subject, emphasizing that when the data is collected directly or personally from the Data Subject, the Privacy Policy must be delivered to the Data Subject prior to collection of the same.

It should be noted that the Controller indirectly collecting Personal Data, as a result of a consented transfer or a transfer that does not require consent by the Data Subject, or else, from a public access source, must deliver its Privacy Policy upon the first contact with the Data Subject and, in any case, prior to benefiting from the Personal Data.

Types of Privacy Policies

Even though the Law and Regulations address the issue of three types of Privacy Policy, their characteristics, as well as terms and conditions for their use, the Guidelines name them as follows:

• Full: It must be used when the Personal Data is personally collected from the Data Subject and must contain all the information elements contained in the corresponding provisions of the Law, the Regulations and the Guidelines.

• Simplified: It may be used when the Personal Data is collected directly from the Data Subject using electronic, optic, sound, visual means or through any other technology or when they are indirectly collected by the Controller; it has to include the informative elements referred to in Articles 17, Paragraph II of the Law and 27 of its Regulations and Guideline Thirty Fourth.

• Abbreviated: It may be used when Personal Data is directly obtained from the Data Subject by printed means, when the Personal Data collected is minimum and limited. It must be drafted in accordance with Article 28 of the Regulations and Guideline Thirty Eight.

In all cases, the Privacy Policy must be located in a visible place, making its consultation easy.

Full Privacy Policy

The Guidelines describe a series of mandatory requirements for the Full Privacy Policy, such as: (i) the Personal Data or the category of same that will be subject to processing must be identified, emphasizing that the Personal Data listed must not contain inaccurate, ambiguous or vague sentences such as “among other Personal Data” or “for example”; (ii) the purposes of the processing must be described in a specific manner in the Privacy Policy avoiding inaccurate, ambiguous or vague sentences such as “among other purposes”, “other analogous purposes” or “for example”; and (iii) the purposes that give origin and which are necessary for the existence, maintenance and compliance of the legal relationship between the Controller and Data Subject, must be identified and distinguished from those which are not.

In the case of the Personal Data transfers, it is established that third parties must be identified either by name, corporate or business name, or else, by category or activity sector. In addition, it must clear which purposes justify Personal Data transfer, distinguishing those requiring Data Subject’s consent from those not requiring the same, including a clause so that said transfer is either accepted or rejected.

It is added that the Full Privacy Policy must include, the identification and contact data of the person or Personal Data Department that will deal with the exercise of the rights of Access, Rectification, Cancellation and Opposition (“ARCO Rights”).

It should be noted that the Full Privacy Policy must specify the procedure to make ARCO Rights’ claims or to revoke the consent granted, or else, the means to know said procedure. Among other matters, said procedure must include: (i) the requirements, as well as the mechanisms to evidence the identity of the Data Subject and the authority of its representative; (ii) the information or documentation that must be submitted with the claim; (iii) the time limits within the procedure; and (iv) the means to reply.

The Guidelines emphasize that the Full Privacy Policy must inform about the options and means that, as the case may be, the Controller has implemented so that the Data Subject may limit the use and disclosure of Personal Data, other than the exercise of ARCO Rights or the revocation of the consent, such as the enrollment of the Data Subject at the Public Registry of Consumers, the recordation of the Data Subject in a list of excluded individuals kept by the Controller, either sectorial or general, or the enabling of means through which Data Subject may refuse to continue receiving communications or promotions by Controller.

It is emphasized that when Controller uses mechanisms in remote or local means of electronic or optic communication or another technology, that allow automatic and simultaneous collection of Personal Data upon Data Subject´s contact with the same (e.g., Cookies or Web beacons), the Controller must inform the Data Subject at such moment, through a visible communication or warning, about the use of those technologies and that Personal Data is collected through the same, as well as the manner in which such mechanisms may be disabled, the latter unless said technologies are necessary due to technical reasons. The above must be included in the Full Privacy Policy, clearly establishing the Personal Data collected by those means and the purposes.

It is specified in which circumstances the change of the original Privacy Policy results in an obligation for the Controller to deliver a new Privacy Policy (e.g., change of identity of the Controller, change of the purposes that gave origin or that are necessary for the legal relationship between the Controller and the Data Subject; or else, addition of new purposes which require Data Subject’s consent, among others).

Simplified Privacy Policy

The Simplified Privacy Policy must contain: (i) the identity and domicile of the Controller; (ii) the purposes of the processing; and (iii) the mechanisms offered by the Controller for the Data Subject to know the Full Privacy Policy.

In addition, the Simplified Privacy Policy must: (i) inform about specific purposes for which the Personal Data is processed, explicitly mentioning those that refer to marketing, advertising and commercial research; (ii) distinguish between the purposes that are necessary and give origin to the legal relationship between the Controller and the Data Subject, from those which are not; as well as establish the mechanism for the Data Subject, as the case may be, to refuse the processing of its Personal Data for these purposes. Also, it must establish the mechanisms for the Data Subject to know the Full Privacy Policy. If the simplified privacy policy is disclosed to the Data Subject by remote or local electronic or optical means of communication or other technology, the Full Privacy Policy must be made available through the same means.

Abbreviated Privacy Policy

The Short Privacy Policy must contain: (i) the identity and the domicile of the Controller, (ii) the purposes of the processing; and (iii) the mechanisms that the Controller offers for the Data Subject to know the Full Privacy Policy.

The Abbreviated Privacy Policy must contain, at least, a list of the specific purposes for which the Personal Data will be processed, including those referring to marketing, advertising and commercial research as well as inform the mechanisms for the Data Subject to know the Full Privacy Policy.

Good Practices

The Guidelines include one Exhibit which describes those good practices with respect to the Privacy Policy, which compliance is optional for the Controller and which may be adopted by the self-regulatory commitments referred to in the Law and Regulations. Such practices include, without limitation to, inserting the commercial name of the Controller, distinguishing Personal Data that is used for purposes that give origin and are necessary for the legal relationship with the Data Subject, from that Personal Data processed for purposes that are secondary or specify the source of the Personal Data collected.

For further information, please contact your principal Firm representative or one of the partners listed below

Mexico Office
Mr. Jorge León-Orantes B. (Partner)
Ms. Paola Morales V. (Associate)
Tel.: +52 55 5279.5452
Fax: +52 55 5280.7840

Monterrey Office
Mr. César Cruz A. (Partner)
Mr. Diego Acosta C. (Associate)
Tel.: +52 81 8133.6000
Fax: +52 81 8368.0111

Tijuana Office
Mr. Aarón Levet V. (Partner)
Tel.: +52 664 633.7070
Fax: +52 664 634.2978

Following please find a general description of the most relevant aspects of the Parameters.

General Provisions

The Parameters are for general compliance within the Mexican Republic for the validation and recognition by the Federal Institute for Information Access and Data Protection (Instituto Federal de Acceso a la Información y Protección de Datos – “IFAI”) of those self-regulatory Schemes drafted or promoted by private persons for Personal Data protection.

It should be noted that private persons will not be obliged to comply with these Parameters, unless they have chosen to adhere to one or several Schemes or become an Accreditation Entity or an Accredited Entity.

Following please find certain relevant definitions set forth in the Parameters in addition to those contained in the Law and the Regulations.

• Member: Controller or Processor that voluntarily agrees to comply with a Scheme;

• Accreditation: Declaration from an Accreditation Entity with respect to the technical qualification, reliability, and conformity of the Accredited Entities before the Law, the Regulations, the Parameters and other rules applicable to perform audits in Personal Data protection matters and issue the corresponding Certificates;

• Certificate: Document evidencing that a Certification has been granted to a specific Controller or Processor and describing the scope of said Certification;

• Accredited Entity: Individual or legal entity approved by an Accreditation Entity, with the purpose of issuing Certificates;

• Certification: Determination by Accredited Entity that the processing, policies, programs and procedures for the protection of Personal Data comply with the Law, its Regulation and other applicable rules, standards and best practices. Specific principles, duties and obligations considered in the Law, its Regulations, the Parameters and other applicable rules, may also be subject to Certification;

• Accreditation Entity: Legal entity (a civil association) authorized by the IFAI to perform the Accreditation of private persons or legal entities seeking to become Accredited Entities; and

• Self-Regulatory Scheme Commitments: Set of principles, regulations, and procedures to be adopted voluntarilyy but binding validated by the IFAI to control Controllers and Processors in relation to their processing of Personal Data.

The adherence of a Controller or Processor to a Scheme is voluntary but once adhered, compliance will be mandatory.

A Scheme will be governed by the principles of willingness to adhere or adopt the Scheme; enforceability for those who adhere or adopt the Scheme; transparency; responsibility, and impartiality when applying the Scheme. A Scheme may be a deontological code, code of good practice, privacy policies, corporate privacy rules, seals of approval and certifications in terms of Article 44 of the Law and 88 of the Regulations.

Adoption of and compliance with a Scheme that has been registered before the IFAI will be taken into consideration for penalties reduction, in case of any breach of the Law and the Regulations. Also, the IFAI may grant incentives, at its discretion, to promote adherence to Schemes.

It is important to point out that Schemes must complement data protection principles provided by the Law and the duties of confidentiality and security; shall contain rules and standards to harmonize processing carried out by members of the Scheme, and shall mention those statutory, regulatory or administrative provisions governing a particular sector. Additionally, Schemes shall clearly stipulate, among other matters: (i) the type of Scheme, including its operation and management system, requirements and procedure for adherence; (ii) its scope of application both material and personal, in the understanding that the first refers to the processing of Personal Data and the latter to the Data Subjects, the Controller, group of Controllers or sector committed to comply with the Scheme; (iii) the duration and the mechanism for updating, renewing or terminating the Scheme; and (iv) the means to notify any update, renewal or termination of the Scheme.

Any Scheme must have a manager, who may be a person or collegiate body, either internal or external, guarantying its impartiality and preventing any conflict of interests. The manager will have, among other duties, to carry those steps necessary to notify the Scheme to the IFAI and request its recordation, as well as the imposition of penalties to those Controllers that fail to comply with the Scheme. Such penalties may be warnings, fines, temporary or definitive suspension to a Scheme, among others.

Certification in Personal Data Protection Matters

The Certification Scheme is meant for Accredited Entities to evaluate compliance with the Law, the Regulations and other rules applicable to the matter, as well as with standards and better processing practices, of the policies, programs, and procedures related to protection of Personal Data, implemented by the Controllers and Processors.

There are two types of Certification Schemes:

• Total: when a Scheme includes and complements all of the Personal Data protection principles, and the confidentiality and security duties governing Personal Data processing, as well as the provisions of the Law, its Regulations, the Parameters and other rules applicable on the matter.

• Partial: when a Scheme certifies specific principles, duties or obligations provided by the Law, its Regulations, the Parameters and other rules applicable on the matter, as well as standards and better practices.

The system for Certification in Personal Data protection will be composed by: (i) the IFAI; (ii) the Accreditation Entities; (iii) the Accredited Entities, and (iv) the certified Controllers and Processors. The Parameters describe in further detail the obligations and authorities of these agents.

The Parameters set forth the procedure and requirements that must be followed to be authorized as an Accreditation Entity, the procedure that the IFAI must follow to suspend or revoke the authorization to said entities, as well as those triggering events for suspension or revocation.

Among other obligations, the Accreditation Entities must: (i) resolve any Accreditation applications submitted by individuals or legal entities seeking to become Accredited Entities; (ii) maintain, extend, reduce, suspend, restore and revoke the Accreditation; and (iii) submit reports of their activities to the IFAI every six months.

It should be noted that the Parameters determine the triggering events and procedure for suspension, temporary interruption, revocation, reduction, or termination of the Accreditation conferred to an Accredited Entity.

The purpose of Accredited Entities is to issue Certificates that are valid for two years and are renewable. The Certificates shall set forth that the processing, policies, programs, and procedures placed by the Controller and Processors to protect Personal Data, comply with the Law, the Regulations and other applicable rules.

The Parameters describe the requirements that must be fulfilled by individuals or legal entities to be accredited as Accredited Entity, the triggering events and procedures for the suspension, temporary interruption, revocation, reduction, or termination of the Certificate granted to a Controller or Processor.

Accredited Entities will have those obligations described in the Parameters, such as: (i) to resolve those applications for Certification submitted by Controllers and Processors, issuing, as the case may be, the corresponding Certificates, and (ii) to renew, maintain, expand, reduce, suspend, restore and revoke the Certification of the Controllers and Processors.

It should be noted that Accreditation Entity and the Accredited Entity shall not offer and provide services affecting their impartiality and shall make available to the public in general the information requested by Parameters, including, without limitation to: (i) the procedures, including the conditions to grant, renew, maintain, expand, reduce, suspend, restore and revoke an Accreditation or Certificate; (ii) a description of the requirements for the Accreditation or Certification, including precise technical requirements for each Accreditation sector or type of Certificate; and (iii) a detailed description of the rights and obligations of the Accredited Entities or of the certified Controllers and Processors, respectively.

The IFAI will keep an updated list of the authorized Accreditation Entities, Accredited Entities, and certified Controllers or Processors, which shall available to the public in general through the Registry of Schemes of Self-Regulatory Commitments (“Registry”). Those procedures and criteria used by the Accreditation Entities and the Accredited Entities will also be recorded in the Registry.

It is worth mentioning that any Scheme must be simultaneously notified to the IFAI and to the corresponding sectorial authorities pursuant to the requirements provided in the Parameters and the process to be implemented by the IFAI, bearing in mind that the IFAI will only recognize those Schemes recorded in the Registry.

Please know that the operation rules of the Registry shall be published by the IFAI within a six-month upon the effectiveness of the Parameters, that is, at the latest on July 18, 2013, and that the IFAI will begin processing applications for the recordation of Schemes in the Registry and for the authorization of Accreditation Entities after nine months following the effectiveness of the Parameters, that is, on October 18 of this year.

For further information, please contact your principal Firm representative or one of the partners listed below

Mexico Office
Mr. Jorge León-Orantes B. (Partner)
Ms. Paola Morales V. (Associate)
Tel.: +52 55 5279.5452
Fax: +52 55 5280.7840

Monterrey Office
Mr. César Cruz A. (Partner)
Mr. Diego Acosta C. (Associate)
Tel.: +52 81 8133.6000
Fax: +52 81 8368.0111

Tijuana Office
Mr. Aarón Levet V. (Partner)
Tel.: +52 664 633.7070
Fax: +52 664 634.2978