Open a SPV Company in Mexico

Foreign investors can open a SPV company in Mexico. SPV stands for special purpose vehicle, which is designed exclusively for securitization purposes, which can refer to isolating certain corporate assets from other business activities, creating joint ventures and others.

The procedure to incorporate this company type follows the same steps required for company formation in Mexico, but which must abide by specific rules regulating the securitization market. Our team of consultants in company incorporation in Mexico can present the current legislation in the field.

What is the law regulating SPVs in Mexico?

Mexican SPV must abide by numerous rules of law, some of which are the standard legislations all companies must follow, and some of which are applicable only to securitization vehicles, such as SPVs. The main rules of law applicable to this industry are the following:

1. the Securities Market Law;
2. the General Provisions Applicable to Issuers of Securities and Other Participants in the Securities Market;
3. the National Banking and Securities Commission Law;
4. the General Provisions Applicable to Credit Institutions;
5. the internal rules of the Mexican Stock Exchange.

What is the structure of a SPV in Mexico?

In order to open a SPV in Mexico, investors must set up a trust, which is the most suitable entity that can be used for securitization purposes in this country. In the case of a trust used as a SPV entity, the following entities must be part of the structure:

1. the sponsor – the owner of the assets to be secured, who is also a beneficiary;
2. the trustee – the financial institution that controls the trust and its operations;
3. the investors – the parties that purchase the debt certificates and who, thus, become beneficiaries as well;
4. the manager – the person appointed to provide services in connection to the assets secured in the trust (usually, the sponsor has this function);
5. the common representative – the party who act on behalf of the debt certificates holders.

Important rules concerning the administration of a Mexican SPV

After you set up a company in Mexico as a SPV, you must know that you have to follow and implement specific management obligations and to comply with many tax requirements. For all these, you can always address our CPA in Mexico, who has the necessary expertise in the field to represent the interests of your SPV. Below, we present some key characteristics:

• the SPV will need an authorization from the Banking and Securities Commission if the securitization is a public one, as per the rules of Article 83 of the Securities Market Law;
• the trust set up as a SPV must have at least 25% independent members in the special board;
• the transfer of assets must abide by the rules of Article 14 of the Mexican Federal tax Code;
• where payments are made to foreign creditors, the withholding tax is charged at a rate of 10% to 40%, if the said creditors live in countries with which Mexico has a preferential tax regime.

A preferential withholding rate of only 4,9% is applied when the securities are registered at a national level. There are also certain categories when there is a tax exemption on the payment of the withholding tax.

Are investors required to conduct due diligence prior to investing in a SPV?

Due diligence is recommended for a variety of investments, including when investing in real estate. Our consultants in company formation in Mexico have the necessary legal background for providing this service, but it must be noted that, when investing in a SPV, investors are not legally required to conduct any due diligence. However, it is highly recommended to do so.

The sole obligation to conduct due diligence applies to institutional investors, who must verify the types of assets involved in the SPV, the SPV itself (its structure, rules of incorporation and functioning, etc.) and others. For additional information on how to set up a company in Mexico as a SPV, we invite you to contact our team.