Article 126 Federal Labor Law

The following are excepted from the obligation to distribute profits:

I.Companies of new creation, during the first year of operation;

II.Companies of new creation, dedicated to the elaboration of a new product, during the first two years of operation. The determination of the novelty of the product shall be adjusted to what the laws for the promotion of new industries provide;

III.Companies of the extractive industry, of new creation, during the exploration period;

IV.The institutions of private assistance, recognized by the laws, that with goods of private property execute acts with humanitarian purposes of assistance, without profit purposes and without individually designating the beneficiaries;

V.The Mexican Social Security Institute (IMSS) and the public decentralized institutions with cultural, assistance or charitable purposes; and

VI.The companies that have a capital less than that which the Ministry of Labor and Social Welfare fixes by branches of industry, prior consultation with the Ministry of Economy (Secretaría de Economía). The resolution may be reviewed totally or partially, when important economic circumstances exist that justify it.