Mexico

4 Chapter M&A

    • M&A case of Japanese company

       The automotive industry is extremely developed in Mexico.

      Companies around the world have expanded into Mexico. Especially the number of Japanese auto companies in Mexico has increased to 300 in 2012. Between 2005 and 2012, 137 Japanese companies announced new investment plans totaling more than 9,500 million. About a third of that investment was announced in 2012 and the main investor was Nissan with 2,000 million dollars to establish a new plant for the production of 175,000 vehicles per year.

      Of this investment, 87% is concentrated in the automotive and auto parts sector. Most companies (57% of the total) are investing in auto parts and automobiles.
      Japanese investment in Mexico has distinguished itself by being concentrated in manufacturing and generate more employment per dollar invested. Mexico has become the eighth largest producer of cars and the fourth largest exporter in the world. Japanese automakers operating in Mexico have a high share of domestic production in the domestic market and exports of Mexico, contributing to the surplus that Mexico has with the United States. The three Japanese automakers, Honda, Nissan, Toyota participating with 27.8% of automobile production in Mexico; 24% of exports to other countries. And those same distributors and other Japanese automakers participate with 40% of the domestic market.
       
      Examples of M&A from Japan in Mexico.
       
      ·         In 2012 Japan's Mitsui & Co. Ltd. (FY Mar income 2012: US $ 63,377.1 million) acquired, through its subsidiary MIT SRL Gas Mexico, 15% stake in Gas Natural Mexico SA (income 2011: US $ 405.5 million), the main gas distributor in Mexico US $ 93.9 million.
       
      ·         A merger of three consolidated subsidiaries of Mitsuba Corporation in Mexico, the Corporacion Mitsuba de Mexico, S.A. DE C.V. (CMM), Tokyo Electrica de Mexico, S.A. DE C.V. (TEM), and Partes de Precision Mitsuba de Mexico, S.A. DE C.V. (PMM) was resolved as of January 1, 2013 at the Board meeting held on November 7, 2012.
       
      ·         The Japan Bank for International Cooperation (JBIC; Governor, CEO: Hiroshi Watanabe) signed today a loan agreement amounting up to USD6.5 million (JBIC portion) with G-TEKT MEXICO, CORP S.A. DE C.V. (G-MEX), a Mexican subsidiary of G-TEKT CORPORATION (G-TEKT). The loan is co-financed with The Bank of Tokyo-Mitsubishi UFJ, Ltd. The loan is intended to finance the automobile parts manufacturing and sales business of G-MEX in the State of Guanajuato, Mexico. The fund will be used for the purchase of equipment. G-TEKT, which was established in April 2011 upon the merger of KIKUCHI CO., LTD. and TAKAO KINZOKU KOGYO Co., Ltd., conducts manufacturing and sales of automobile parts, mainly automotive body frame and transmission components; it has operated for more than 60 years from the era of its predecessors. G-TEKT is globally deploying overseas business to establish a mobile parts supply system for customers who are finished car manufacturers and parts manufacturers, backed by the recent expansion of overseas production capacity by Japanese automobile and parts manufacturers.

    • Law/Regulation regarding M&A

      ■Method of foreign investment
       
      Modalities of foreign investment
      Foreign investment may:
      • Participate in the capital of Mexican companies.
      • Acquire fixed assets.
      • Enter new fields of economic activity or manufacture new lines of products.
      • Open and operate establishments (branches, representative offices).
      • Expand or relocate existing establishments (joint ventures).
       
       
       
      ■Regulation each industries.
       (General Law on Commercial Companies)
      Of foreign companies
      Article 250. Foreign companies legally constituted legal personality in the Republic.
      Article 251. Foreign companies may only conduct business from their registration in the Register. The registration may be only authorized by the Ministry of Economy, under the terms of Articles 17 and 17 A of the Foreign Investment Law will be made. Foreign companies required to publish annually in the electronic system set up by the Ministry of Economy, a balance sheet of trading visas for qualified accountant
       
       
      ■Regulation of acquisition of real estate.
      Foreigners wishing to acquire real estate outside the zone restricted, or obtain concessions for the exploration and exploitation of mines and waters in the country, must first submit to the Ministry Foreign Affairs, a statement agreeing to the provisions of Section I of Article 27 of the Political Constitution of the United States
      Mexican and obtain the corresponding permit from that Ministry.
       
       
      LGSM: Ley General de Sociedades Mercantiles (General Law on Commercial Companies)
      ■Corporation limited
      Sociedad anonima
      Of the corporation
      Article 87. Public limited company under which there is a name and consists
      exclusively from partners whose liability is limited to the payment of shares.
      Article 88. The name will be formed freely, but it will be different from any other
      society and the employed will always be followed by the words "Sociedad Anonima" or its abbreviation "S.A."
       
      ■ LLC
      CHAPTER IV
      The limited liability company
      Article 58 LLCs is that which is between partners who are only obliged to pay their contributions, without which the company's shares may be represented by negotiable securities to order or to bearer, since only be assignable in cases and with the requirements of this Act.
      Article 59. The liability shall be limited under a name or under a business name to be formed with the name of one or more partners. The name or business name will be immediately followed by the words "Limited Liability Partnership" or its abbreviation "S.RL "The omission of this requirement subject to the partners to the liability provided for in Article 25.
      Article 61. No limited company will have more than fifty partners.
      Article 62. The capital will be the one established in the social contract; it will be divided into shares that may be of value and unequal class but in any case be a multiple of a weight.
      Article 63. The constitution of limited liability companies or increasing its share capital, it cannot be done through public subscription.
       
      ■Merger and Division.
       
      CHAPTER IX
      The merger, transformation, and excision (division) of societies
      Article 222. The merger of several companies should be decided by each of them, in the form and terms that are relevant to their nature.
      Article 223. The merger agreements are recorded in the Public Registry of Commerce and published in the electronic system set up by the Ministry of Economy, in the same way, every company must publish its latest report, and that or those that no longer exist they shall publish, in addition, the system established for the extinction of liabilities.
      Article 224. The merger may not take effect until three months after enrollment prevented in the previous article have been made. During this period, any creditor of the merging companies may legally oppose in summary proceedings, the merger, which would be enforceable suspended until the judgment declaring that the opposition is unfounded. After the prescribed period without opposition has been made, you can take out the merger, and society subsisting or resulting from the merger, will take charge of the rights and obligations of extinct societies.
      Article 225. The merger will take effect at the time of registration, if the payment of all debts of the companies have to merge is agreed upon, or deposit the amount in a credit institution established, consent of all creditors. For this purpose, the term debt will be defeated.
      Article 226. When the merger of several companies is to be a different, its constitution will be subject to the principles governing the formation of the company to which gender has to belong.
      VII Once the requirements and passed within the fraction V refers to, without having been lodged, the division shall be fully effective; for the creation of new societies, simply the formalization of its constitution and registration with the Public Registry of Commerce;
      VIII The shareholders or partners to vote against the resolution of division shall be free to withdraw from the company, as pertains to apply the provisions of Article 206 of this law;
      IX When the split brings with it the extinction of the original company, once the division takes effect shall be requested from the Public Registry of Commerce cancellation of the registration of the social contract;
       
      ■Joint venture.
      Joint venture is a strategic alliance between two or more companies offering the opportunity to act together to overcome barriers, including trade barriers in a new market or to compete more effectively in today. In Mexico there are 6 different forms of commercial entities, the most widely used is the capital stock corporations, this includes the joint ventures this involves more than 2 parties, all companies have to have at least 2 shareholders, all companies are joint venture in Mexico sort of speak.

    • LMV

       LEY DEL MERCADO DE VALORES

      Stock

       
      ■Company of investment promotion
      Article 16. The shareholders of corporations promoting investment, entitled
      : I. To appoint and revoke general shareholders meeting a member of the board by ten percent having individually or jointly shares with voting rights, including limited or restricted without applying on percentage referred to Article 144 of the General Law of Commercial Companies. Such appointment may only be revoked by other shareholders when to turn the appointment of all other directors, in which case the substituted persons may not be appointed as such for the next twelve months from the date of revocation is revoked.
      Article 17. Corporations promoting investment agreement of the board of directors may acquire shares representing its share capital without the prohibition in the first paragraph of Article 134 of the General Law of Commercial Companies applies.
      Such companies may perform the acquisition of the shares in question from its equity, in which case we may keep them without the need for a reduction in social or capital under the capital whenever it is resolved cancel or convert issued unsubscribed shares kept in treasury
       
      ■Obligation of information disclosure.
      Financial Information
       
      -Article 172. Corporations under the responsibility of its directors will have to submit to the Shareholders, annually, a report that includes at least:
      A) A directors' report on the progress of the society in the exercise, as well as on the policies followed by the directors and, where applicable, on major existing projects.
      B) A report stating and explaining the main policies and accounting and information criteria followed in the preparation of financial information.
      C) A statement showing the financial position of the company at the end of the year.
      D) A statement showing duly explained and classified the results of the company during the year.
      E) A statement showing the changes in financial position during the year.
      F) A statement showing the changes in the items comprising the company's assets during the year.
      G) The notes are necessary to complete or clarify the information provided by previous states. Previous to the information report,  the commissioners will be added to the Section IV of Article 166 it refers.
      173. The report of the general statement that speaks the previous article, including the report of the commissioners, must be completed and made available to shareholders at least fifteen days before the date of the meeting there to discuss it. Shareholders will have the right to be given a copy of the report.
      176. The lack of timely submission of the report to the general provision of Article 172 shall be grounds for the General Assembly of Shareholders resolves removal Administrator or Board of Directors, or Commissioners, notwithstanding that they were necessitated by the responsibilities that have incurred respectively.
      Article 177. Fifteen days after the date of the general meeting of shareholders has approved the report that the general wording of Article 172 refers, shareholders may request that states are published in the electronic system set up by the Ministry of Economy Financial, along with your notes and the opinion of the stewards.
       
      ■Tender offer obligation
      Acquisition of tender offers is an economic legal phenomenon that responds to the idea of acquiring control of another company by purchase or successive proposals that achieve the Tenure or ownership of considerable percentage actions that target company.
      The Tender Offer is an offer to the shareholders or bondholders, holders of convertible debentures, to transfer its securities to the proponent within a term established at a higher price of the share price.
      This offer can be simple or conditional; The first one is when the bidder accepts any batch of shares at the offered price, and the second when the proponent requires that in case of accepting the proposed contract, the recipient meets the number of shares required by that bidder, so that the absence of that number would not exist acceptance of the offer.
      Article 7. The securities to be offered to the public within the country must be registered in the registry.
      The offering abroad of securities issued in the United States of Mexico or Mexican companies, either directly or through trusts or similar or equivalent figures, must be notified to the Commission describing the main characteristics of supply and compliance with the provisions general that purpose by the Commission.
      Upon completion offering of securities as stated in the previous paragraph must expressly be included in the information document for broadcast use, the securities subject to the offer may not be offered publicly in Mexico.
       
      ■ Purchase value
      Of forced takeover bids
      Article 98. The person or group of persons intending to acquire or achieve by any means, directly or indirectly, ownership of thirty percent or more of shares of a corporation, registered in the Register, in or out of any bag securities, by one or more transactions of any nature, simultaneously or successively, shall be required to make the acquisition through a public offering in compliance with the provisions of Article 97 of this Act and in accordance with the following characteristics:
      I. The offer will be extended to the various series of shares of the society, including those of limited, restricted or no voting rights vote.
      The consideration offered must be the same, regardless of class or type action. Notwithstanding the foregoing, the offeror shall disclose, where appropriate, the commitments or agreements concluded do or not do in terms of the provisions Article 100 of this Act, either with the company or with the holders of the securities
      It intends to acquire.
      III. The offering will be made:
      a) the percentage of share capital of the company equivalent to the proportion of shares common that proposed purchase in relation to the total of these or ten percent of the capital, whichever is greater, provided that the offeror limits its tenure end connection with the offer to a percentage that does not involve obtaining control society.
      b) One hundred percent of the share capital when the bidder wishes to obtain control Society.
      IV. The offer indicates the maximum number of shares to which it extends and, where appropriate, the minimum number whose acquisition is conditional. In the event that the tender is concerned shall result in the acquisition of one hundred percent of the share capital of the company, shall be observed the provisions of Article 89, Section I of the General Law of Commercial Companies.
      The acquisition of securities convertible into ordinary shares or securities that represent them, as well as warrants or derivative financial instruments payable in kind that have as underlying such shares or debt securities, counted for purposes of calculating the percentage the first paragraph of this article refers to.
       

    • Method of competition (Ley federal de Competencia Económica)

      ■ Exclusion action

      Chapter 2 and 3 from the Competition Law

      Chapter II
      Absolute monopolistic practices
      Article 53. absolute monopolistic practices, consisting of contracts, agreements, arrangements or combinations among competing economic agents together, the object or effect is any of the following are considered illegal:
      I. To fix, raise, or manipulate the price of sale or purchase of goods or services to which they are supplied or demanded in the markets;
      II. Establishing the obligation to produce, process, distribute, market or acquire only a restricted or limited quantity of goods or the provision of or dealing with a number, volume or frequency of restricted or limited services;
      III. Split, distribute, assign or impose portions or segments of a current or potential market of goods and services by customers, suppliers, time or spaces determined or determinable;
      IV. Establish, agree upon or coordinate bids or abstention in tenders, competitions, auctions or auctions, and
      V. Exchange information with any of the objects or effects referred to in the preceding sections.
      Article 54: Monopoly practices are considered the ones consisting of any act, contract, agreement, procedure or combination:
      I. Frame in any of the cases that Article 56 of this Law refers;
      II. Do one or more operators who individually or jointly have substantial power in the same relevant market in which the practice is carried out, and
      III. Have or may have as their object or effect, in the relevant market or in any related market, unduly displace other economic agents, substantially hinder their access or establish exclusive advantages in favor of one or more economic operators.
       
       
      ■Exception of application
      ●Department important policy
       
      Article 6. Monopolies are not considered the functions that the State exercises exclusively in strategic areas identified in the Constitution of the United Mexican States. However, operators who are in charge of the functions that the previous paragraph refers to, subject to the provisions of this Act with respect to acts which are not expressly included in such cases.
       
      ●Labor union/Copyright law/Royalty
      Unions are regulated by the Federal Labor Law; there are over 2000 unions in Mexico. There are two types, labor unions and employers' unions.
       
        Unions of employers may be:
       
      o   Formed by patterns of one or more types of activities.
       
      o   Formed by patterns of one or more types of activities from different states of the Republic.
       
      Labor unions may be:
       
      ·         Union: Formed by people of the same profession.
       
      ·         Company: Formed by people working in the same company.
       
      ·         Industrial: Formed by people working in companies in the same industry.
       
      ·         National industry: Formed by people working in the same branch companies located in different states.
       
      For various occupations: Formed by people of different professions.
       
      Article 7. They don´t constitute monopolies workers associations incorporated under the law of the commodity for the protection of their own interests.
      Not constitute monopolies for certain time granted to authors and artists for theproduction of their works and privileges that are granted to inventors and perfectorsfor the exclusive use of their inventions or improvements.
       
      ● Union of export
      Article 8. They don´t constitute monopolies associations or cooperative producers societies that, in defense of their interests or the public interest, to sell directly inforeign markets national or industrial products.
       
      ●Establishment of high price
      Article 9: The imposition, in the terms of article 28 of the political Constitution of the United Mexican States, of maximum prices on goods and services which are necessary for the national economy or the popular consumption. It will be to:
      I. It is solely determined by the Federal Executive decree goods and services which may be subject to price ceilings, as long as there are no conditions for effective competition in the relevant market in question. The Commission shall determine by declaration if there is no effective competition conditions.
      II. the Secretariat, without prejudice to the powers that correspond to other agencies or entities and prior opinion of the Commission, determine the rates that apply to goods and certain services under the previous fraction, based on criteria that avoid failure in the supply.
       
      ●Business combination (company concentration)
      Chapter I
      Notification Procedure Merger
      Article 86. The following concentrations must be authorized by the Commission before they are carried out:
      I. When the act or series of acts that give rise to them, regardless of their place of celebration, imported into the national territory, directly or indirectly, more than the equivalent amount eighteen million times the general minimum daily wage for the District Federal;
      II. When the act or series of acts that give rise to them, involving the accumulation of thirty five percent or more of the assets or shares of an operator, whose annual sales originating in the country or assets in the country imported more than equivalent to eighteen million times the minimum daily wage for the Federal District, or
      III. When the act or series of acts that give rise to them involving an accumulation in the national territory of capital assets or exceeds the equivalent of eight million four hundred thousand times the daily general minimum wage for the Federal District and in the concentration involving two or more Economic agents with annual sales originating in the country or assets in the country jointly or separately, import more than forty-eight million times the minimum general daily current salary for the Federal District.
      Acts done in contravention of this article have no legal effect, subject to administrative, civil or criminal liability of operators and individuals who ordered or were instrumental in implementing and notaries public who have been involved in the thereof.
      Actions relating to a concentration may not be registered in the corporate books, formalized in a public document or recorded in the Public Registry of Commerce until the favorable Commission approval is obtained or the term has elapsed Article 90 shall fraction V, but the House has issued resolution. The economic agents involved are not in the circumstances set forth in sections I, II and III of this Article shall notify the Commission voluntarily.
       
      ■Standard of accounting     
      Mexican or international standard. In Mexico now we don’t take international accounting standard. There would be no restriction on choosing Japanese law, but the bylaws of the Mexican entity would have to be subject to Mexican law.

    • Tax regarding M&A

      ■Stock negotiation (how does company sell stock or transfer stock)

      In accordance with the provisions of Art. 24 of the Law on Income Tax there are two mechanics for determining the gain on the disposal of Actions; the first when tenure is equal to or less than twelve months; the second, when tenure is greater than twelve months.

       
      ●IVA
      According to the Law of IVA
      Article 4. - The accreditation is to subtract the creditable tax, the amount resulting from applying the values specified in this Act the applicable fee as applicable. For purposes of the preceding paragraph, the term creditable tax the value added tax that has been transferred to the taxpayer and the tax itself which he had paid on the importation of goods or services in the month in question. The right to accreditation is personal to the taxpayers of value added tax and cannot be transmitted, except in the case of merger. In the event of division, the crediting of tax due to accredit the date of the split will only make the spun-off company.
       
      ● Tax after stock negotiation (taxes)
      The tax will be calculated at the rate of 25% on the total amount of the operation, without any deduction.
       Tax Payment
      The tax must be withheld by the purchaser if he is resident in the country, or a resident abroad with permanent establishment in Mexico. Otherwise, a taxpayer who sells the shares paid the tax to the authorized offices, within 15 days of obtaining income.
       
      ●Deficit
      (DEBT)
      The most important benefit of financing through debt rather than by issuing shares, is the deductibility of interest for income tax purposes in Mexico. However, the introduction of the flat tax has limited
      use of debt for acquisitions. Among the aspects to be considered regarding the ISR they include the following:
      • Interest payments on loans backed, as defined in Mexican tax law, can be treated as dividend distributions
      • The borrower may be subject to inflationary income loss as a result of the purchase or Mexican currency
      • The borrower can deduct any foreign exchange loss of principal and interest
      • Rules concerning transfer pricing apply. Any interest in transactions between related above the comparable interests that would be used with or between independent parties in comparable transactions parties are treated as a distribution of dividends, and are not deductible
       
      ●Compensation and Guarantee  
      In a stock acquisition, the buyer acquires the target company together with all related liabilities, including contingent liabilities. Therefore, the buyer usually requires more extensive guarantees and compensation in the case of an asset acquisition. The alternative approach to inject the seller business in a newly formed subsidiary will not operate in most cases, due to the joint liability tax on transfer a business in accordance with Mexican law. In a sale of shares a due diligence tax is essential. When considerable amounts of possible tax contingencies resulting from the process are identified tax due diligence, it is very common that the buyer requires the establishment of an amount in deposit withdrawals which can be made according to an agreed schedule. The Mexican tax authorities are empowered to carry conduct reviews to determine additional taxes for any exercise at any time within a period of five years, counting from the day following that on which it had to pay taxes or tax returns were filed, including supplementary declaration.
      If the taxpayer has deducted tax losses of tax revenue, the tax authorities are entitled to review and evaluate the information regarding such losses regardless of how they were generated them for up to five years after the amortization of the loss
       
      ■Asset transfer
      ●IVA
      The current regular IVA (value added tax) rate in Mexico is 16%. Asset Transfers in Mexico incur Iva. The current regular IVA (value added tax) rate in Mexico is 16%. Asset Transfers in Mexico incur Iva. The basis of calculating IVA is the price or the agreed consideration, which may include any other amount collected from or chargeable to the purchaser either for the taxes, governmental fees, interests (ordinary or delinquent), liquidated damages or any other applicable concept. Asset transfers trigger IVA at the moment of payment. There is no IVA on the transfer of, among other things, equity quotas, receivables and negotiable instruments.[1]
       
      ●Income tax of real estate.
      Real Property Transfer Tax
      The transfer of real state property destined for commercial or industrial purposes in Mexico triggers IVA at the rate of 15%. The transfer of empty lots (with no construction) and residential homes is exempt from IVA.
      Income Tax. Individuals and entities are obligated to pay income tax in the following cases:
      -Mexican Residents, with respect to all revenue, regardless of the location of the source of wealth from which they arise.
      -Non Residents with a permanent establishment.
      -Non Residents without a permanent establishment within the country.
      The transfer of real estate owned by nonresidents are located in Mexico is taxed in Mexico.[2]
       
      ●Tax after asset transfer
       In the case of a sale of assets in Mexico, the tax attributes of the company (tax losses or tax credits) is not transferred to the acquirer of the assets.
       
      ●Goodwill (patente in Spanish)
      Article 167. In the case of royalties for the use or enjoyment of patents or certificates of invention or improvement, trademarks and trade names, as well as advertising, the rate applicable to income you get the taxpayer for such items will be the maximum rate to be applied to the excess of the lower limit that sets the rate contained in Article 152 of this Act.
      Where contracts involving a patent or certificate of invention or improvement and other related section II of this precept refers to concepts, the tax is calculated according to the amount of the payment of the fee is made for each of the concepts . In case you cannot distinguish the proportion of each payment that corresponds to each concept, the tax is calculated by applying the rate established in Section II of this article.
      Article 176. Nor is considered income subject to preferential tax regime perceived by entities or foreign legal concepts of royalties paid for the use or right to use a patent or trade secret
       
      ●Fixed asset tax
      Article 32 from the ISR LAW. For the purposes of this Act, are considered investments in fixed assets, expenses and deferred charges and disbursements made in preoperative period, in accordance with the following:
      Fixed asset is the set of tangible goods that use taxpayers to perform their activities and to invalidate the use by the taxpayer service and over time. The acquisition or manufactures of these goods have always intended to use them for the development of the activities of the taxpayer, and not to be sold in the normal course of business. Deferred charges are represented by intangible assets or property rights to reduce operating costs, improve quality or acceptance of a product, use, enjoy or exploit a well,
      for a limited period, less than the duration of the activity of the firm. Also considered intangible assets deferred expenses for the exploitation of public property or the provision of a public service concession. Deferred charges are those that meet the requirements stated in the previous paragraph, except those relating to the exploitation of public domain goods or the provision of a public service concession, but whose benefit is for an indefinite period depending on the duration of the activity the moral person. Pre-operating expenditures made in periods, are those that aim to research and development related to the design, development, improvement, packaging or distribution of a product as well as the provision of a service; provided that the expenditures are made before the taxpayer disposes of its products or provide its services constantly. In the case of extractive industries, these expenditures are related to the exploration for localization and quantification of new deposits likely to be exploited
       
       
      ■Depreciation
      For tax purposes, for depreciation of tangible and intangible assets acquired should use the straight-line method at the maximum rates specified for each asset on the Law of Income Tax. Among others, the applicable rates are as follows:
      • 5% for buildings
      • 10% for furniture and office equipment
      • 25% for cars, buses, trucks, tractors, forklifts and trailers
      • 30% for desktops and laptops, servers, printers, optical readers, scanners and computer network hubs
      There are special rules for cars and certain intangible assets, such as royalties. There is also the accelerated depreciation long as the taxpayer meets certain requirements.
       
      ■Merger
      Mergers involve a union of two or more companies to form a separate entity; often proceeded by a merger acquisition. The advantages of a merger and acquisition is that it facilitates quickly enter a new market, does not incur costs of research and development, it enables rapid diversification, restructuring the market, renews organizations can combine complementary resources between the participating companies and use surplus funds.
      The disadvantage is that they can create administrative economies des inability to control, coordinate and efficiently encourage new firms, as well as improper calculation of the expected return on your purchase. Known in Mexico as fusión or escisión. The merger or fusion is when two companies merge by extinction of one of them or the two with the creation of a new one. The escisión or spin off is when one company decides to terminate and divides its capital and assets in two or more entities or when, without extinguishing transfers part of its equity or assets to another entity without extinguishing, transfers part of its equity or assets to another entity. · If the purchase is a merger, transferable assets and liabilities will be succeeded to by the merging entity, certain non-transferable assets and liabilities (including certain governmental authorizations or contracts) may require more detailed case-by-case analysis

      [1] International Asset Transfer: An Overview of the Main Jurisdictions. Kay L Tidwell. 416-419

      [2] International Asset Transfer: An Overview of the Main Jurisdictions. Kay L Tidwell. 416-419

    • Basis of M&A’s scheme

      ■Acquisition of stock

      When a company buys another, or accumulates enough shares which have control, it described as acquisition. To complete the transaction, the adherent probably be willing to pay a price higher than the price action which is currently trading. The advantage of owning stocks is that holders benefit directly from any increase to take into generating profits of the company. The money market is where financial market that is issued and performs the intermediation of debt instruments with short-term highly liquid, low risk, with preset output (fixed or variable) and defined period. Moreover, the purchase of shares in a company does not represent a deduction for income tax purposes or IETU. Moreover, in a sale of shares does not apply IVA.

       
      ■Relative deal (Acquisition of asset)
      An asset acquisition increases the cost of the transaction, since the transaction is normally subject to value added tax (VAT). However, when the buyer is a resident of Mexico, the additional cost can be credited and / or refundable in case of obtaining a credit balance. It may also be applicable Domain Transfer Tax or property acquisition tax, according to the federal entity where the transaction. However, from a tax perspective, the acquisition of assets preserves the buyer's tax base and, therefore, can reduce the taxable base for income tax purposes and IETU