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Mexico’s Federal Labor Law (LFT) establishes that the legal minimum wage is the minimum amount that anemployee must receive for services rendered during a working day. The LFT also provides that the minimumwage should be sufficient to meet the normal material, social and cultural needs of a head of household, and toprovide for the mandatory education of his/her children. The minimum wage is classified as: (i) GeneralMinimum Wage, which is the established wage to be applied to one or more states in the Mexican Republic,divided into three geographic zones as explained below; and (ii) Minimum Professional Wage, which is theestablished wage to be applied to professions, occupations or special employment within one or severalgeographic zones. For purposes of regulating minimum wages, the National Minimum Wage Commission(Comisión Nacional de Salarios Mínimos or CONASAMI) divides the country into three geographic zones andmakes an annual determination as to the applicable amount for each zone. CONASAMI is a tripartitecommission comprised of employees, employers and government representatives. The minimum wage bygeographic zones may be seen on the CONASAMI website, available at: www.conasami.gob.mx . For 2012, theminimum wage for each geographic zone is the following: (A) for geographic zone “A,” the general minimumdaily wage is $62.33 pesos; (B) for geographic zone “B,” the minimum daily wage is $60.57 pesos; and (C) forgeographic zone “C,” the general minimum wage is $59.08 pesos. As a result, employees have a right to receivewages that may not be less than the general minimum wage or general professional wage established byCONASAMI, as applicable to each geographic zone. Wages should be determined in accordance with thequantity and quality of services rendered by the employee. Such wages should be paid weekly or bi-weekly, asthe case may be, on the day and time stipulated, and at the location where the employee renders services. It isimportant for companies to correctly pay wages to their employees, given that failure to do so may result in fines and other penalties imposed by the Mexican Department of Labor and Social Welfare (Secretaría del Trabajo yPrevisión Social) during their routine inspection visits to companies.
Depending on the law of each state, there is an obligation to donate or make payment through a donation propertyto the municipality and/or state government where the real property is located, whenever a subdivision, urbandevelopment, condominium development and/or construction project is carried out. In some cases, thisrequirement may be burdensome for the developer, since the percentage of land to be donated may be significant.For example, this requirement can be anywhere from 7% to 17% in the state of Nuevo Leon, depending on thepurpose of the real estate development. While it is common for the law to establish that donated areas must beused for green spaces or recreational areas, there are also occasions when a prohibition exists against donatingareas that are subject to encumbrances, such as an electricity right of way easements granted to the FederalElectricity Commission. While some laws require that donation of land have been declared unconstitutional, theprocess to obtain an amparo injunction and enforcement of the judgment may affect the timing of a project andthe willingness of the authorities to grant authorizations required for a project. In these cases, it is common fordevelopers to prefer to make payment through a donation of land or, when permissible by law, comply with thisrequirement by acquiring and donating real property in another location, the same which requires reaching anagreement with the respective authorities. Consequently, it is important to review the applicable laws withrespect to land donations and evaluate the impact that such may have on a given real estate development project,and, if applicable, the possibility of asserting available legal defenses.
On August 8, 2012, the Department of the Economy (SE) published the “General Resolution establishing thecriteria for the application of Article 17 of the Foreign Investment Law with respect to the establishment offoreign entities in Mexico.” In accordance with Article 17 of the Foreign Investment Law, foreign entitiesseeking to establish agencies or subsidiaries to regularly carry out business activities in Mexico must obtainauthorization from the SE, including those foreign entities that intend to establish representative offices withoutincome in Mexico. Additionally, such foreign entities should register with the Public Registry of Commerce inorder to legally transact business in Mexico. By means of such resolution, the SE, through the National ForeignInvestment Commission, has eliminated the need to obtain the authorization referred to above, in the spirit ofregulatory simplification and to promote investment in Mexico, and has replaced it with the requirement topresent a prior written statement in which the applicant states under oath: (i) that the formation documents are notcontrary to public policy and that the activities are legally permitted for foreign entities in Mexico; (ii) that theentity has been duly formed in accordance with the laws of the country of origin; (iii) that the entity will establishan agency or subsidiary, as the case may be, providing its domicile; and (iv) that the entity will have arepresentative domiciled in Mexico, authorizing such individual to formally respond for any obligations of theforeign entity in the event of a representative office without income. Furthermore, the new criteria stipulates that,for purposes of registration with the Public Registry of Commerce, if the entity will regularly carry out businessactivities, filing the written statement with an acknowledgment of receipt will suffice. The General Resolutionbecame effective the day after its publication, meaning August 9, 2012, and such ends the previous lengthyprocess required in order to establish branches of foreign entities doing business in Mexico, the same whichincluded preparing an application, issuance of an approval, designation of a domicile and representative, notice ofregistration, opening or commencement of operations, all pursuant to the obligations listed in the approval itself.It is important to note the importance of carefully evaluating the different options available for establishing andcommencing operations in Mexico, along with the risks and benefits that each provides.
