Doing Business

Doing Business in Mexico 2015

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54 Tax and Legal Services - PwC Mexico Specialized financial institutions Financial holding companies are usually formed to hold interests in banking, stock brokerage, insurance, bonding, financial leasing, and factoring companies. Separate legislation regulates each of these activities, including holding companies. Non-Bank financial entities An entity called Sociedad Financiera de Objeto Multiple or SOFOM was created as a result of amendments to certain mercantile laws. These entities are basically devoted to providing financing through direct loans, financial leasing and factoring, and do not need to obtain an authorization from the Ministry of Finance to carry out business operations. However, they are not allowed to obtain funds (deposits) from the general public. There are two types of SOFOMs: a. Regulated SOFOMs: According to the Financial Reform, any SOFOM with patrimonial links to a Credit Institution, Popular Financial Corporations, Financial Community Corporations (Levels I to IV), Cooperatives Savings and Loan (Levels I to IV) and those debt securities issued by their dependents and enrolled in the National Registry of Securities, will be considered as regulated. In order to be a Regulated SOFOM it is necessary that a Mexican financial group holding company that owns a bank participate in the capital stock of the SOFOM. Also, a SOFOM would be a regulated SOFOM if either its capital stock is owned 20% or more by a bank or if the bank effectively controls the SOFOM by any means, or if the SOFOM and a bank have common shareholders, or if a financial group holding company directly or indirectly holds 51% or more of both a SOFOM as a credit institution or if the company has shareholders or members in common with any of the companies mentioned above and owns 50% of the two companies or controls the assembly or board of both companies. These types of entities are regulated by the Banking Commission. b. Non-Regulated SOFOMs are those that do not have any capital link with a financial entity regulated in Mexico or a relation as mentioned before. As part of the Financial Reform, both types must be registered with CONDUSEF to be considered as a SOFOM and must also be users of a credit bureau. SOFOMs are considered part of the Mexican financial system for tax purposes and are subject to the same tax treatment, providing that (i) at least seventy percent (70%) of its assets derive from portfolio or accounts receivable resulting from the main corporate purposes of the SOFOM (i.e. credit, factoring or financial leasing), or (ii) that the company derive income from activities and the sale or administration of loan portfolio granted by the company representing at least seventy (70%) of its total income.

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