What is a S.O.F.O.M. E.N.R.?

S.O.F.O.M., E.N.R. (Sociedad Financiera de Objeto Múltiple, Entidad No Regulada)-A S.O.F.O.M. is created once a corporation (S.A. de C.V. -Sociedad Anonima de Capital Variable) stipulates the development of certain activities on a professional and regular basis in its corporate purpose.

The activities included are Credit Transactions, Factoring and/or Leasing. Once having incorporated these provisions in its corporate purpose, the corporation is required to add S.O.F.O.M. to its name. A S.O.F.O.M. may or may not be part of a financial group or entity. If it is independent from a financial group, then it would not be under the scrutiny of the Commission Nacional Bancaria y de Valores, and would not need any kind of special permit to begin operations.

It would also be required to include the words "Entidad no regulada"(Non-regulated entity), whereas the regulated SOFOMS (those linked to financial institutions) would be required to state the opposite. The non-regulated S.O.F.O.M would nevertheless be overseen by the C.O.N.D.U.S.E.F. (Commission Nacional para la Protección y Defensa de los Usuarios de Servicios Financieros), the Federal Commission for the protection of consumers of financial services. The C.O.N.D.U.S.E.F. would have authority and may impose sanctions upon the S.O.F.O.M. or even upon their consumers when provided by the Law, in case of breach of contract or controversy.

Among some other benefits, a S.O.F.O.M. may act as trustee in loans offered through master or secured trusts, providing the ability to start the foreclosure in case of default; assign the rights to accounts receivables with or without the participation of a Notary Public, as long as the debtor is properly informed; and to be considered as a corporation part of the financial system for some tax benefits.