Get Adobe Flash player

The Incorporation Process

THE INCORPORATING PROCESS

1. Two Shareholders Needed. Unlike the law of many other countries, Mexican Law requires a minimum of two shareholders to incorporate.

 The general basic procedure related to the organization of a Mexican corporation with 100% foreign capital participation is as follows:

 2. File for an Incorporation Permit. A permit from the Ministry of Foreign Affairs must be obtained, in which, at the time of filing the proposed names the company (several alternatives in order of preference) must be included. Turn around time is about two or three days.

 3. Registering the Corporation in the Public Records. The corporate charter and bylaws must be signed by the corporate members or proxies before a Notary Public or Commercial Broker whom will authorize it for registration in the Commercial Public Records and the various government agencies. No other procedure for registration is presently available.

 

The Company's initial capital contributions must be paid in full if it is paid in kind, or if in cash it can be partially paid at a minimum of 20%. In the case of the "S. de R.L.", the initial paid amount must be at least 50%. The Company must issue registered share certificates, and the shareholders must be registered in the Company Stock Registry Book. Shares Certificates are not necessary in S de RLs.

c. Concurrent with the incorporation, the shareholders/partners must hold a General Ordinary Shareholder's/Partner's Meeting resolving on: i the structure of the capital stock; ii acknowledgment that the fiscal year will run together with the calendar year except for the first year which will be irregular; iii appoint a Sole Administrator or a Board of Directors; iv appoint at least one "Examiner" (statutory auditor) to monitor the Company's administration on behalf of the shareholders (In the case of the "S. de R.L." there is no requirement for an examiner); and v appoint a General Manager, and any other officers or agents.

d. The Sole Administrator or Members of the Board of Directors of the Company may be foreigners and the Board of Director's meetings may be held in or outside of Mexico. If the Sole Administrator or Directors are not Mexican citizens and will be acting in Mexico, they need a migratory permit.

e. The Examiner (in the case of a sociedad anónima) usually is an accountant from an accounting firm who regularly audits the Company. Also, an alternate Examiner should be appointed because this position cannot be delegated at will.

 

All forms of corporations, except the Cooperative, may adopt the form of a fixed capital company ("S.A.") or that of a variable capital company ("S.A. de C.V."). The principal difference between the two is that the latter may increase or decrease its capital within the limits established in the By-Laws by a mere Stockholders' Meeting resolution without the need to fulfill further formalities. Nonetheless, both types of companies must notify of any capital amendment to the National Registry of Foreign Investments.

Besides obtaining prior approval from the Foreign Investments Authorities (if necessary), the incorporation date of the Company is dependent upon: 1) drafting of the By-Laws to be used for the Company; 2) execution and formalization of the special powers of attorney to incorporate the new Company (if any); 3) the approval of the corporate name by the Ministry of Foreign Relations; and 4) an appointment date from the Notary Public or Commercial Broker for signing the incorporation deed.