New Regulation for the Authorization to Use Corporate Names

October 1, 2012
New Regulation for the Authorization to Use Corporate Names

As a result of a recent amendment to the Foreign Investment Law, published in the Official Journal of theFederation on December 15, 2011, regarding the fact that authorizations to use corporate names by entities inMexico have been transferred to the Department of Foreign Relations of the Department of the Economy, theMexican Executive Branch published the Regulation for the Authorization to Use a Corporate Name onSeptember 12, 2012, effective as of September 17, 2012 (the “Regulation”). The Regulation establishes themandatory use of a new electronic on-line system to process requests for authorizations related to the use ofcorporate names, including those necessary for entity formations and entity name changes, as well as for noticesof authorization for use and release of name authorizations previously granted as a result of the dissolution ortermination of an entity (i.e. as a result of liquidation, merger or spin-off). This system may be found on theofficial government website Tu Empresa (www.tuempresa.gob.mx). Access to this website requires priorregistration and use of the Advanced Electronic Signature issued by the Tax Administration Service to theapplicant. The application for authorizations of use and release of corporate names are limited to notaries publicand processors previously authorized by the Department of the Economy, with the ability to use the electronicsignature that the Department of the Economy has issued. The Regulation provides for the possibility ofprocessing these matters directly with officials of the Department of the Economy in the event that an electronicsignature is not obtained and in special cases established therein. The Regulation establishes three stages in theauthorization process: Application, Resolution and Reservation. During the application process, the availabilityof the name is verified along with its compliance with formal naming requirements, designating the prioritybetween competing applicants. During the Resolution stage, the application is examined and the feasibility ofissuing an authorization is determined. Authorization may be denied as a result of similarity to a degree ofconfusion with other existing names that have not been released or with registered trademarks or due to legalimpediments based on word usage. However, authorizations may be conditioned on obtaining prior consent froma potentially affected party. Finally, Reservation may be granted to the applicant for 48 hours so that authorizeduse of the name may be reserved though the designation of the notary public before whom such nameReservation will be exercised and the acceptance of its conditions, including the obligation to give notice of usewithin 180 calendar days, or, extemporaneously, with the payment of fees within the next 30 days. In thismanner, if more than 210 calendar days pass without providing notice, the right to exclusive use of the reservedcorporate name will be lost. In accordance with the Regulation, the Department of the Economy will address authorizations within a time period of no more than two business days as of the date of submission of theapplication.

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