MSTR Cat

Trust Law/Level VIII · Trusts of the world/8.2 Civil-law and religious systems/Lesson 6

Latin America: the fideicomiso

How Latin American legal systems use the fideicomiso, from bank trusts over Mexican coastal land to Panama’s trust and foundation laws and the codes of Argentina and Colombia.

Education, not legal advice. Trust law changes from country to country and state to state, and the right structure depends on your situation. Anything you sign should be drafted or reviewed by a qualified lawyer where you live.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

  1. Mexico: outside the restricted zone a foreigner may own land directly after agreeing before the Ministry of Foreign Affairs to be treated as a national for it (Constitution art. 27). Catch: breaching that agreement forfeits the property; the border and coastal zone stays barred.
  2. Mexico’s restricted zone: a bank fideicomiso gives use and benefit for up to 50 years, renewable, with a foreign-affairs permit (Foreign Investment Law arts 11, 13). Catch: a Mexican company may own directly only for non-residential uses, notifying the Ministry (art. 10).
  3. Argentina: any natural or legal person may act as fiduciario (Civil and Commercial Code art. 1673), so a family member avoids institutional fees. Catch: the contract must be registered in the appropriate public registry (art. 1669) and generally cannot exceed 30 years (art. 1668).
  4. Panama: a private interest foundation (Law 25 of 1995) owes no Panamanian income tax on foreign-source income under territorial taxation. Catch: beneficial-owner data goes to a confidential register through the resident agent (Law 129 of 2020), and beneficiaries remain taxable where they live.
  5. Where a fideicomiso requires an institution, as in Mexico (LGTOC art. 385) or Colombia’s fiducia mercantil, compare its fees with a will or company first. Catch: creditor protection follows each statute; Argentina, for example, keeps fraud actions open against fiduciary assets (art. 1686).

MaterialsMexico’s Ley General de Títulos y Operaciones de Crédito, articles 381 to 407 on the fideicomiso, on diputados.gob.mxArticle 27 of the Mexican Constitution and articles 10 to 14 of Mexico’s Foreign Investment Law (Ley de Inversión Extranjera), on diputados.gob.mxPanama’s Law 1 of 5 January 1984 on the fideicomiso, as amended by Law 21 of 2017, and Law 25 of 12 June 1995 on private interest foundationsLesson 1.2.7, on the Hague Trusts Convention, for comparison

Wonder

  1. How can a foreign person hold rights in Mexican coastal land when the Constitution bars foreigners from owning it directly?
  2. How does a Panamanian private interest foundation differ from a fideicomiso?
  3. Why do some countries limit who may act as fiduciario?

Explore

  1. The fideicomiso is the main trust-like device in Latin America. It is set by statute: a fideicomitente transfers assets to a fiduciario, who holds them for a set purpose for a fideicomisario (beneficiary). In Mexico it is governed by the Ley General de Títulos y Operaciones de Crédito (articles 381 to 407), and only institutions expressly authorised by law may act as fiduciario (article 385), such as banks. This lesson describes these devices and does not suggest using them.
  2. Article 27 of the Mexican Constitution provides that within a strip of 100 kilometres along the borders and 50 kilometres along the beaches (the restricted zone), foreigners may never acquire direct ownership (dominio directo) of land and waters. Under the Foreign Investment Law, a foreign person may instead be the fideicomisario of a fideicomiso in which a bank holds the land, with a permit from the Ministry of Foreign Affairs (article 11). The fideicomisario gets the use and benefit of the land, for up to 50 years, renewable (article 13). Mexican companies whose bylaws admit foreign shareholders may own land there directly for non-residential uses, notifying the Ministry of Foreign Affairs (article 10).
  3. Mexican law also has a fideicomiso de garantía, used as security for a debt (articles 395 to 407, added in 2000). Article 395 limits who may act as fiduciario of such a trust: banks, insurers, bonding companies, brokerage firms, registered multiple-purpose finance companies (SOFOMs), general deposit warehouses, credit unions and certain investment-fund operators. The parties may agree an out-of-court procedure for selling the assets if the debt is not paid (article 403); if they do not, the court procedure set out in the Commercial Code applies.
  4. Panama regulates the trust (fideicomiso) by Law 1 of 5 January 1984, substantially amended by Law 21 of 10 May 2017, which also sets rules for licensing and supervising fiduciaries under the Superintendency of Banks. Separately, Law 25 of 12 June 1995 created the private interest foundation (fundación de interés privado), a legal person that holds assets for purposes set by its founder. Unlike a fideicomiso, the foundation itself owns the assets. Panama is also a contracting state of the Hague Trusts Convention (lesson 1.2.7).
  5. Argentina’s fideicomiso, first regulated in detail by Law 24.441 of 1995, is now in the Civil and Commercial Code in force since 1 August 2015 (articles 1666 to 1707). Any natural or legal person may be fiduciary, but only authorised financial institutions and entities authorised by the securities regulator may offer fiduciary services to the public (article 1673). Colombia’s fiducia mercantil is in the Commercial Code (articles 1226 to 1244); in practice the fiduciary must be a fiduciary company (sociedad fiduciaria) authorised by the Financial Superintendency.
  6. Common uses of the fideicomiso across the region include holding real estate, securing loans, managing payments in development and infrastructure projects, and administering investment funds. Rules on who may be fiduciario, on formalities and on tax differ by country, and costs vary by place and institution. Unlike a common-law trust, the fideicomiso rests entirely on statute, and each country’s own law decides how far the property is protected from the parties’ creditors.

Key facts

  • Mexico’s Constitution (Article 27) bars foreigners from direct ownership of land within 100 km of the borders and 50 km of the beaches.
  • Under Mexico’s Foreign Investment Law, a foreign person may hold restricted-zone land through a bank fideicomiso, with a government permit, for up to 50 years, renewable.
  • Mexico’s fideicomiso is governed by the Ley General de Títulos y Operaciones de Crédito (articles 381 to 407), including the fideicomiso de garantía (articles 395 to 407).
  • Panama regulates trusts by Law 1 of 1984 (amended by Law 21 of 2017) and private interest foundations by Law 25 of 1995.
  • Argentina’s fideicomiso is in its Civil and Commercial Code (articles 1666 to 1707), and any person may be fiduciary.
  • Colombia’s fiducia mercantil is in its Commercial Code (articles 1226 to 1244), and fiduciaries are in practice authorised fiduciary companies.

Exercise nine, six, three, one

9CollectList up to 9 features of a fideicomiso or a Panamanian foundation described in this lesson or in a Latin American source you are reading (some sources give fewer), such as who may be fiduciario, what the trust is for, how long it lasts and what permits it needs.
6ClusterSort them into 6 categories: the parties, who may be fiduciario, land and permits, security for debts, foundations, and facts you are unsure about.
3DistillReduce the 6 categories to 3 groups: features shared across the region, features specific to one country, and features that differ from a common-law trust.
1CrystallizeWrite 1 sentence explaining, in your own words, how the Mexican bank fideicomiso lets a foreign person use restricted-zone land without owning it directly.

Fact check

Dates, figures and claims checked against the published sources listed below.

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