Our fifth chapter of Doing Business in Mexico, Creating a Company in Mexico, will provide a general overview of the process to incorporate a company as well as information on company types in Mexico, including some tax-related comments. Furthermore, other business legal structures are explained.
This Chapters includes the following sections:
- Creating a Company in Mexico: the 12 Steps to Create a Company with Foreign Capital
- Traditional Types of Companies in Mexico
- Mexican Stock Company
- Limited Liability Company
- The Variable Capital Regime
- Other Types of Companies
- The Simplified Company
- Stock Investment Promotion Company (SAPI)
- Other Business Structures
- Branch in Mexico
- Joint Ventures in Mexico
How to Create a Company in Mexico?
In recent years, Mexico has changed its Company Law to facilitate the creation of a company. As a result, Mexico relaxed requirements, reduced the days as well as the number of procedures to start a business, and, thus, has improved its Starting a Business indicator of the World Bank’s Doing Business 2020.
According to this study, 8 steps are necessary to create a company in Mexico, but under the assumption that only Mexicans are involved. In that sense, a company with foreign capital is subject to additional steps as noted below.
Before reading this chapter, we strongly suggest reviewing our Foreign Investment Chapter because Mexico prohibits or restricts foreign capital in certain activities or economic sectors. Needless to say, most economic sectors are not subject to foreign investment controls and, thus, we will focus on the “all other” activities or economic sectors that do not have foreign investment restrictions.
We will first outline the steps that a foreign investor must take to incorporate a company or opening a business. Then, we will provide a general picture of the type of companies as well as other business structures suitable for foreign investors.
The 12 Steps to Create A Company in Mexico
The steps to create a traditional company do not vary as to the type of company, such as a stock company or limited liability company.
The intervention of a Notary Public or Public Broker is necessary to incorporate a company in Mexico. Due to the limited legal powers of a Public Broker, entrepreneurs normally prefer to retain the services of a Notary Public.
Step 0: Will you need a Power-of-Attorney?
Are you planning to “shake hands” with your business partners in Mexico or will you delegate the tasks to your trusted advisor?
If a foreign investor, as an individual, is not planning to sign the corporate deed personally, the foreign investor must sign a Power-of-Attorney (POA) in his country, naming his Mexican attorney or attorneys and listing their powers. Once signed the POA, the foreign investor must either apostille or legalize his POA and, of course, send by express packaging services the document.
If the investor is a foreign legal entity, said entity may have to provide additional documentation depending on their residence to prove its legal existence as well as the powers of the legal representative signing the POA. The additional documentation has to be apostilled or legalized. This is normally the case with Asian legal entities.
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 Mexico Starting a Business rank in the Doing Business is 107th out of 190 economies.