Reforms to the General Law on Credit Instruments and Operations: Digitalization of Credit Instruments in Mexico

On March 26, 2024, reforms to the General Law on Credit Instruments and Operations (Ley General de Títulos y Operaciones de Crédito, LGTOC) and the General Law on Credit Organizations and Auxiliary Activities (Ley General de Organizaciones y Actividades Auxiliares del Crédito) were published in the Official Gazette of the Federation of Mexico. These modifications seek to modernize the Mexican legal framework by recognizing the issuance of credit instruments through electronic, optical or any other technological means. This change aims to facilitate commercial operations in a digital environment and provide greater legal certainty to the parties involved.

Key Aspects of the Reforms

1. Recognition of Electronic Credit Instruments

The reforms establish that credit instruments issued by electronic, optical or technological means (hereinafter, Electronic Credit Instruments) will have the same legal validity and effectiveness as those issued in physical format. This is guaranteed as long as the legal requirements established in the LGTOC are met. These include the clear identification of the parties, the specification of the amount and conditions of the instrument, and the use of advanced electronic signatures that ensure authenticity.

2. Information Systems

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The concept of Information Systems is introduced, defined as controlled technological environments that allow the generation, transmission, reception and processing of data messages related to Electronic Credit Instruments. These systems must guarantee:

- Integrity: That the content of the instrument is not altered.

- Authenticity: That the electronic signatures correspond to the parties involved.

- Availability: That the titles can be consulted at all times by the authorized parties.

3. Advanced Electronic Signatures

The reforms establish that the use of advanced electronic signatures is mandatory in the issuance of Electronic Credit Instruments. These signatures must comply with the standards of authenticity and non-repudiation provided for in the Commercial Code and in the Advanced Electronic Signature Law (Ley de Firma Electrónica Avanzada, LFEA).

4. Electronic Registry of Titles

An optional electronic registry is created to register Electronic Credit Instruments, operated under the supervision of financial authorities. This registry aims to provide greater legal security, reducing fraud risks and facilitating consultation by financial institutions and interested parties.