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Understand the Jurisdictions Setup Requirement Before Proceed Your Register Company in Mexico
Why Register a Company in Mexico?
Located in North America, Mexico is bordered by the United States, Belize, and Guatemala. Mexico houses nearly 130 million people where the population is equivalent to 1.7% of the total world population. The International Monetary Fund (IMF) rated Mexico as the world’s 15th largest economy and the World Bank analysts predicted that the Mexican economy would rise to be the world’s fifth largest by 2050.
On top of that, the Mexican economy is the largest economy in Latin America, after Brazil. The advantage of having the market size similar to the whole of Western Europe with a population of over 130 million has further cemented Mexico as one of the investment hotbeds in the region. Many foreign investors will also consider Mexico when they want to expand their business portfolio globally.
How to Register a Company in Mexico?
The vibrant business environment in Mexico has attracted many foreign investors to venture into the country, be it investing in the country or setting up their foreign company in Mexico. Similar to other jurisdictions, there are some procedures and fees involved in the company incorporation. In Mexico, he or she does not need to be a Mexican resident, nor does the applicant technically have to travel to Mexico when registering a company.
Here is a how-to guide about the registration of a company in Mexico.
- Determine the business type:Common business types in Mexico are as follow:
- Limited Liability Stock Corporation (Sociedad Anónima, S.A.) – It is the most common business type in Mexico, which may adopt the form of a fixed capital company or that of a variable capital company (S.A. de C. V) as long as the total capital never falls below $50,000.00 pesos. At least two shareholders (whose shares are transferable by endorsement) are required for the registration. The minimum fixed capital needed is $50,000.00 pesos.
- Limited Liability Company (Sociedad de Responsabilidad Limitada, S.R.L.) – This type of company is similar to a closed corporation in the United States. A minimum capital of $3,000.00 pesos is needed for the company incorporation purpose and many will opt for this type of company to reduce their tax liabilities in the United States.
- Civil Enterprise (Sociedad Civil, S.C.) – This type of business is the service providers such as lawyers and accountants. No minimum capital requirements and there are no limits on the number of partners in a sociedad civil.
- Branch (Sucursal) – A branch office is another alternative for a foreign company to operate in Mexico. All branches must obtain approval from the National Commission of Foreign Investments and the Ministry of Foreign Relations, and they must be registered at the Public Registry of Commerce.
- Subsidiary (Subsidiario) – This is another option for a foreign company to do business in Mexico. A subsidiario is actually a separate legal entity from the parent company in overseas. Setting up a Mexican subsidiary shields the parent company from liability.
- Name the company:Decide a corporate name and register it with Secretaria de Relaciones Exteriores (SRE). Prior to the approval, SRE will run a name check for the proposed corporate name to avoid any repetition. The next step is to obtain a permit from the Ministry of Foreign Affairs (“MFA”) for the corporate name of the company.
- Incorporate the Company:
- Execute the deed of incorporation – A notary public is required to draw up the deed of incorporation. The deed of incorporation includes the company’s approved name, type of business, the intended activity of the business, and the names, addresses and shareholdings of the owners.
- Hold a General Ordinary Shareholder’s/Partner’s Meeting – The purpose of such a meeting:
- To resolve the structure of the capital stock;
- To appoint a Sole Administrator or a Board of Directors;
- To appoint at least one “Examiner” (statutory auditor) to monitor the Company’s administration on behalf of the shareholders (in the case of a S.A.);
- To appoint a General Manager, and any other officers or agents.
Please note that the Sole Administrator or Members of the Board of Directors’ meetings could be held in or outside Mexico. If the Sole Administrator or Directors are not Mexican, they will need a migratory permit if they will be acting in Mexico. The Examiner (in the case of a S.A.) is usually an accountant from a firm who regularly audits the company (A deputy examiner could be appointed if this position cannot be delegated at will)
- File the company’s domicile the public deed containing the articles of incorporation before the Public Registry of Commerce of the company.
- Tax RegistrationAll companies must register with the Federal Taxpayer’s Registry (Registro Federal de Contribuyentes, RFC) at the Secretariat of Finance and Public Credit (Secretaría de Hacienda y Crédito Público, Hacienda) immediately after the incorporation. The company’s RFC number is necessary for all tax and accounting records and it is compulsory for companies to print it on all company invoices.On a final note, Mexico is like a land of opportunity that rivals any other emerging market in the region. The low labour cost, state-of-art infrastructure, and government-pro business environment are the reasons that positioned Mexico as one of the investment hotspots in the region. If you are looking forward to expanding your business in the global market, Mexico is a good option for you to invest overseas.
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