Setting up a company in Mexico
In recent years, the country of México has opened commerce to foreign investors and setting up international business operations is relatively not difficult. México has the 15th largest economy in terms of Gross Domestic Product (GDP). In addition, México has trade agreements with over 10 countries worldwide and has close economic ties to the United States, Europe and Canada. Furthermore, México is second in Latin America for doing business.
In México, most corporate activities are open to foreign investors and most economic sectors are not restricted for foreign investment.
Thus, this overview is a brief description of options for foreign companies interested in establishing a corporate presence in México.
Corporations may be incorporated with two or more partners, which may be foreigners. The common business corporations in México are: Stock Corporation (Sociedad Anónima, S.A.), Limited Liability Company (Sociedad de Responsabilidad Limitada, S. de R.L.), and Stock Investment Promotion Company (S.A.P.I.)
To establish business in México as a foreigner, these are the primary options:
1. Company Representative A company representative is appointed to act on the behalf of a foreign corporation. The company representative is a designee that does not operate commercially and generally provides information services, consultation of activities and operations, and/or products or services offered by the base company. In México, a foreign company representative is only permitted to engage in non-commercial activities.
2. Branch office A branch office is a location where business is conducted. In México, branch offices of foreign companies may perform commercial activities. They are not common in México, as they do not have independent legal status. Since corporate rights are kept judicially personal, a foreign company can establish a limited presence, without full commitment to corporate entity. Registration of the branch office must be made to the Public Commercial Registry, including articles of incorporation and by-laws.
3. Subsidiary A subsidiary operates with foreign capital, as a separate legal entity. As part of a larger company, it is controlled by a foreign company headquartered outside of México. In México, a subsidiary can be registered as LLC.
First, local government authorization must be obtained, along with a paid fee to the Mexican government. A declaration which includes the incorporation documentation of the parent company must be filed with the Ministry of Economy to obtain permission. A preauthorization must be obtained from the Ministry of Commerce and Industrial Development to register the branch office. The documentation must by dully apostilled by the Embassy/Consulate in the foreign country with official translation. A letter is also required, addressed to the local government, declaring that the parent company is legally incorporated in the country of origin, that by-laws are within public order, an explanatory statement of activities, and the physical address for the commercial activities. Registry in the Public Commercial Registry. Federal Registry and National Investments Registry.
4. Limited Liability Company (Sociedad de Responsabilidad Limitada, S. de R.L.) In México, the Limited Liability Company is flexible in the way it may be organized. It has a corporate structure of two sections, a general partners’ meeting and an administrative body run by managers. The S. de R.L. is treated as a corporate entity, not as a partnership. To incorporate, these are the requirements; company name, purpose, minimum share capital, shareholders, minimum share capital, shareholders, administrator/board of directors, fiscal auditor and fiscal address.
The SA is the most common business type entity.
It is important to seek expert legal advice, and consider engaging a Notary Public or Public Broker in establishing a company in México. Documentation must be authenticated and required documents apostilled.
Basically, a corporate name permit is obtained from the Economy department. A business attorney, through a Notary Public, then reports corporate bylaws to the Ministry of Foreign Affairs that includes a clause stating that foreign investors may invest in the company.
The auto industry in Mexico is one of the top ten in the world.