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Forms of Association

OTHER FORMS OF ASSOCIATION

Although not considered corporations, hence not legal entities, these are common forms of doing business in Mexico without the associated with the former during formation and operation.

 Association in Participation. The Association in Participation (Asociación en Participación or "AP") is another common form of doing business in Mexico. Generally, an AP is an agreement in which one or more partners (asociados) participate in kind or services to a managing partner (asociante) in exchange for a right to participate in the profits of a commercial operation which is controlled by such managing partner.

For commercial purposes, the Association in Participation is not a separate legal entity. However, for tax purposes it is a separate entity and requires registration.

 Joint Venture Agreement. Generally, a joint venture agreement is an association of persons (individuals or legal entities) for a limited period of time in which such persons jointly undertake a specific business enterprise. Although a joint venture agreement is sometimes mistakenly categorized only as an AP, a joint venture agreement can take many other forms. A joint venture agreement can take any form in which the parties agree to develop their business and agree to provide for their respective services and contributions of capital or resources, to the by-laws of a new independent company, or both. The exact type of business venture that is to be undertaken determines the liability and tax treatment of such agreement.