CURRENT MONTH (October 2023)
By Luis Armendariz, De Hoyos Aviles
October has had two important legal developments so far affecting (a) the functioning of business corporations and companies in Mexico and (b) the tax framework for exporters in the context of nearshoring of manufacturing operations.
On October 11, 2023, a decree was published in Mexico’s Federal Official Gazette with a list of tax incentives for key sectors in the export industry. These sectors include semiconductors, automotive, electric and electronics, medical devices, cinematography, and agroindustry. The tax incentives generally consist of immediate deduction of investments in new fixed asset goods. The deduction values range from 56% to 89% depending on the type of good and its respective use. There is also a 25% additional deduction available to qualified taxpayers that invest in employee training.
On a different front, on October 20, 2023, amendments to Mexico’s General Law of Business Organizations were published in order to allow the use of electronic, optic, and other technology resources to hold both shareholder and board of directors meetings. Read more about these changes here.
COP28 Fever and Sustainable Finance Initiatives in the UAE
By Hessam Kalantar, Kalanter Business Law Group
There has been a frenzy of activity in the lead-up to Dubai hosting COP28 (the 28th United Nations Climate Change Conference, or Conference of the Parties) in November of this year, which has not been free of controversy given that the United Arab Emirates (UAE) is a hydrocarbon-producing country and the COP President-Designate, Sultan Al-Jaber, is the chief executive of the country’s largest fossil fuel company. The vision for COP28’s agenda is a grand one, encompassing, among other things, the first “Global Stocktake” of the Paris Agreement assessing progress towards its goals, as well as advancing development of a workable global architecture for climate finance. Achieving the goals of the Paris Agreement requires in excess of USD 2.4 trillion of annual investment in climate action to be directed to developing countries by 2030, said the President Designate in his letter to participating nations on October 17.
Which takes us to sustainable finance frameworks for private capital in the UAE. The Abu Dhabi Global Market (ADGM), one of the country’s two financial free zones that host and regulate banks, asset managers, and issuers, enacted sustainable finance regulations, as well as rules governing ESG disclosures, in an effort to spearhead the adoption of a harmonized taxonomy through the introduction of “green” designations that applicable securities and other financial products may opt to adhere to. Although the designations are voluntary, the ESG disclosure requirements are mandatory for ADGM-domiciled entities that meet certain size requirements.
The Dubai International Financial Centre (DIFC), also a prominent domicile for institutional finance providers, has similarly unveiled its own sustainability framework, which essentially embraces various ICMA, LMA, LSTA, and APLMA guidelines applicable to debt capital raising, those being (i) the Social Bond Principles, (ii) the Social Loan Principles, (iii) the Green Bond Principles, (iv) the Green Loan Principles, and (v) the Sustainability Bond Guidelines, specifically so far as use of financing proceeds, process for project selection, management of proceeds, and reporting is concerned.
Complementing climate-friendly finance through ADGM’s and DIFC’s regulatory reforms is the growing appetite for carbon credits regionally, together with the will to create more vibrant carbon markets locally. Some sixteen Saudi firms, including oil giant Aramco, reportedly purchased more than 2.2 million tons of carbon credits this past summer, and last month a coalition of UAE companies pledged to purchase $450 million of African carbon credits. There have even been reports that the UAE may announce a multibillion-dollar fund for climate action during COP28, which would represent perhaps the largest state-sponsored financial effort to finance climate change mitigation.
We await the conference and its outcomes with bated breath.
