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The proposed Federal Law on Liability for Abuse of Legal Personality and Corporate Veil Piercing seeks to establish a statutory framework to disregard the separate legal personality of corporate entities and their partners in exceptional cases of abuse or fraud. Its goal is to prevent the misuse of corporate structures to evade legal obligations, defraud creditors, or conceal assets, while preserving the principle of limited liability for legitimate business operations. The bill is currently pending approval by the Federal Congress.
According to the proposed bill:
This bill reinforces established judicial precedents and provides clearer, more predictable rules for when piercing the corporate veil applies in Mexico, which until now has only been regulated through the activity and criteria of the Federal Courts. It confirms that this is an extraordinary remedy, reserved for cases of fraud or abuse of the corporate structure, and must be applied with caution and solid justification. Courts will require objective factors — such as ownership structure, debts, and repeated breaches — alongside evidence of fraudulent intent, all proven with clear and convincing documentation.
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Camila Curiel, Law Clerk, has contributed to this legal update.
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