19 Mar New criteria from the Mexican Supreme Court of Justice (SCJN): When can the corporate veil be lifted in Mexico?
On February 14th, 2025, the Mexican Supreme Court of Justice (SCJN) issued two isolated resolutions recognizing new criteria for lifting the corporate veil for commercial /mercantile companies in Mexico. This recent declaration represents a significant impact on corporate law in Mexico, since it empowers the judicial authorities to justify lifting the corporate veil. Under the criteria, lifting the veil is justified when, as evidenced in a court of law with objective and subjective elements, a commercial company has been used for the purpose of defrauding third parties or the law, under an assumption of abuse of the legal personality.
The corporate veil, as a fundamental principle of Mexican corporations, establishes a clear separation among the legal personality and assets of a company, and the legal personality and assets of its shareholders, partners or even administrators, which in turn translates into a guarantee of legal certainty for its members. In Mexico, this principle is governed by the General Law of Commercial Companies. Where, as a general rule, it sets forth that the creditors of a commercial company can only request compliance with the obligations of the company with the corporate assets, without affecting the personal assets of the shareholders, partners or administrators.
However, there are circumstances in which this separation of assets and legal personality have been used in an unlawful or improper manner, either with the purpose of evading legal obligations or defrauding third parties. For this reason, in order to provide clarity and legal certainty, the First Chamber of the SCJN published two isolated resolutions covering guidelines on the possibility of lifting the corporate veil in exceptional circumstances, and making it clear that its application must be based on sufficient evidence and adequate justification.
Both resolutions (i) Corporate Veil. It may be lifted as an exceptional measure when it is proven that it is used for the purpose of defrauding third parties, (with digital registration 2029944); and (ii) Corporate Veil. As a general rule, its lifting cannot be ordered as a precautionary measure in a pre-judicial proceeding, (with digital registration 2029943), set forth criteria intended to stop a possible abuse of the corporate veil and the limited liability of the partners, shareholders or administrators for the amount of their contributions.
Based on these criteria, a judge or a commercial court may order the lifting of the corporate veil, provided that certain assumptions and guidelines are met, among which are the following:
- Objective factors, such as the incorporation and structure of the company, as well as subjective elements, such as the intent to defraud, must be analyzed to determine the fraudulent purpose of the company. Nonetheless, the mere existence of a debt or default by the company is not sufficient to conclude on the intent of defraud.
- Lifting of the corporate veil will only be applicable when there are no other legal mechanisms to enforce the company's obligations. Lifting the veil should be an exceptional measure.
- In order to request the lifting of the corporate veil in a pre-judicial precautionary proceeding, it will be necessary to have sufficient evidence to prove the need for this exceptional measure. There must be a reinforced motivation to justify the application of this measure, even without having given the affected party the opportunity to be heard and to provide evidence on the contrary.
This represents an important change in the corporate law in Mexico, since it strengthens the legal certainty and forces all companies to optimize and reinforce their structure, their regulatory compliance and their legal defense.
For this reason, all Mexican companies, particularly in commercial and financial endeavors, must ensure that their incorporation and operation are transparent and that they are, in their entirety, aligned with the principles of good faith and legality, and in compliance with policies that include mechanisms to ensure observation of such rules.
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Jesús Bueno
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Montserrat Gómez
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THE ABOVE IS PROVIDED AS GENERAL INFORMATION PREPARED BY PROFESSIONALS WITH REGARD TO THE SUBJECT MATTER. THIS DOCUMENT ONLY REFERS TO THE APPLICABLE LAW IN MEXICO. WHILE EVERY EFFORT HAS BEEN MADE TO ENSURE ACCURACY, NO RESPONSIBILITY CAN BE ACCEPTED FOR ERRORS OR OMISSIONS. THE INFORMATION CONTAINED HEREIN SHOULD NOT BE RELIED ON AS LEGAL, ACCOUNTING OR PROFESSIONAL ADVICE BEING RENDERED.