On August 27, 2009, several amendments to the Mexican Commercial Code were published in the Federal Official Gazette (“DOF”), with the purpose of creating the Movable Guarantees Sole Registry (“Registro Único de Garantías Mobiliarias,” hereinafter referred to as the “RUG”), as a section of the Public Registry of Commerce dependent of the Ministry of Economy. On September 23, 2010, a decree was published in the DOF by which different sections of the Regulations of the Public Registry of Commerce were amended and supplemented in order to provide the regulations applicable to the operations of the RUG. On October 7, 2010, the RUG started operations through the website www.rug.gob.mx.

Below you will find a summary of the main regulations applicable to the RUG:

I. Movable Guarantees  

The movable guarantees which are subject to registration on the RUG are those derived from the following acts:

1) Non possessory pledge agreement (“Prenda sin transmisión de posesión”).

2) The security interest created as a result of a fixed asset loan or a working capital loan (“crédito refaccionario” or “habilitación o avío”).

3) The Movable Guarantee originated by an industrial mortgage.

4) The Movable Guarantee created on an aircraft or boat.

5) The Movable Guarantee created as a result of the execution of a financial lease agreement.

6) The registration of a conditional sale clause in a commercial sale agreement upon movable property, which is susceptible of being clearly identified.

7) The Movable Guarantee created as a result of the execution of a guaranty trust agreement and the guarantee created as a result of retention rights, and other special privileges in which a debtor’s asset is affected by law, in accordance to the Mexican Commerce Code or other applicable commercial laws.

II. Assets Which Could be Affected as Security Interest to be Registered on the RUG

The Public Registry of Commerce’s Regulations provide that the movable assets which could be affected as security interest to be registered on the RUG are the following:

I. Machinery and equipment;

II. Engine vehicles;

III. Cattle;

IV. Agricultural products;

V. Consumer goods;

VI. Inventory;

VII. Stock certificates and obligations, bonds and option agreements;

VIII. Rights, including collection rights; and

IX. Others.

III. Authorized Persons to carry on registrations on the RUG

The following persons will be authorized to carry on registrations on the RUG:

a) Lenders, financial entities in their capacity as lenders, and those persons authorized by such parties in the RUG’s system with regards to those Movable Guarantees granted in their favor. Those foreign persons who do not possess digital certificates accepted by the RUG, shall be registered in the RUG as lenders by their legal representative or attorneys-in-fact in the Ministry of Economy.

b) Notaries Public, with respect to Movable Guarantees granted before them and being instructed to do so by the lenders or by a competent authority.

c) Those persons being authorized by the Ministry of Economy, with respect to security interests granted in favor of lenders and financial institutions, when such lenders and/or financial institutions have requested the Ministry of Economy to do so.

The registrations produced as a result of a judicial or administrative resolution, or any other acts that create, modify, transfer or cancel a movable guarantee ordered by an authority, will be registered by the following persons:

1) Judges and government officers;

2) Notaries Public;

3) Persons being authorized by the the Ministry of Economy.

IV. Matters to be Considered Regarding the RUG’s Operation

a) The term of the registrations on the RUG will be the term set forth in the corresponding registration. In case it is not provided a specific term, the RUG’s registration will have a term of twelve months. Once such term ends, the RUG automatically cancels the Movable Guarantee. 
The above mentioned term can be extended, provided that the extension is made while the original term is still valid.

b) The creditor who has properly taken the steps necessary to register a security interest over movable assets on the RUG will be protected from debtor misbehavior, from other creditors, and from loss of the collateral in the event of default, being applicable the “First in time first in right” rule. Please be advised that the registration of a security interest over movable assets on the RUG is optional for the lender. However, if the security interest is registered on the RUG such security interest will be enforceable against third parties.

c) Security interests created on movable assets granted after October 7, 2010 shall be only registered on the RUG and not in the Public Registry of Commerce where the debtor is registered (in the case of debtors who are incorporated as Mexican entities). Those security interests on movable assets created and registered in a special registry different from the RUG before the aforementioned date will still be regulated by the rules and regulations applicable to those special registries. Security interests on movable assets created before the date on which the RUG started its operations which were not registered in any registry could be registered on the RUG.

d) As mentioned above, and considering that the lenders are the authorized parties to carry out a registration before the RUG, the lenders will be liable for any false statement or any inaccuracy in the registration of an operation on the RUG. The RUG does not verify or practice a substantive examination to determine if a registration or transaction related to the RUG is well done.

e) In order to make any registration on the RUG, the person carrying out the registration shall have an Advanced Electronic Signature (with the Spanish acronyms “FIEL”) or an Electronic Signature issued by those certification officers authorized by the Ministry of Economy. The legal entities are always required to use the FIEL.

For further information, do not hesitate to contact: