For individuals looking to expand their business globally, Mexico presents a lot of opportunities. It boasts a competitive market, stable political environment, and ranking 15th in the list of global economies, it is a perfect gateway to other Latin American countries from a business perspective.
Mexico, a land of opportunity for entrepreneurs and investors
The spirit and diversity of Mexican culture, and its rapid urban growth, in addition to the reasons outlined next, makes Mexico a very lucrative place for entrepreneurs and investors to start a company.
- No requirement for a bank trust.
- A corporation in Mexico can be 100% owned by foreigners.
- Investors have the opportunity to purchase property through a corporation with the purpose of using the property as an investment.
- A Mexican corporation provides the most scope for growth and has a remarkably simple formation process to get to grips with.
- The Mexican corporation has the ability to be a very lucrative enterprise by legally renting out essential vacation property.
- There is no barrier to how many properties a Mexican Corporation may own.
- Investing in Mexico provides financial data to assist in residence visa requirements.
Setup your company in Mexico
The Mexican Corporation
Mexico has a number of corporate structures that all serve different purposes. One of the most popular being the Stock Corporation (Sociedad Anónima de Capital Variable or S.A. de C.V). This is identical to the U.S. corporation in which there are stockholders. In Mexico, this corporation is governed by the Mercantile Law. Being one of the best company structures in Mexico, more and more, foreigners are forming Mexican corporations.
Features of The S.A. de C.V.
Here are some important features of the Mexican corporation:
- Up to 100% foreign ownership is allowed
- There must be at least (2) shareholder
- The company can sponsor foreign employees
- Shareholders of a corporation are naturally not liable for the debts of a corporation aside from their financial contribution to the corporation.
- There are no capital controls
- No minimum share capital requirement
- The registration process can be completed between 6 and 8 weeks.
Key steps to incorporate a company in Mexico
S.A. de C.V.
- Request of use of the corporate name
- Drafting and authorization of bylaws and articles of incorporation
- Integration of a KYC (Know your customer) file
- Open a corporate bank account
- Deposit the essential capital to activate the corporate bank account
- Formalize the documents with a Mexican Notary Public, and
- Registering the public deed with the Public Registry of Commerce.
- Obtain a Tax ID number
Important considerations when incorporating a company in Mexico
Legal Representative
The Mexican Company requires a legal representative which acts as the legal face of the business and is the person who must sign for all company operations. A legal Representative has the legal obligation to ensure the company performs correctly in the eyes of the local law. The legal Representative can be a Mexican national or a foreigner but must legally reside in Mexico.
Requirements For Shareholders And Directors
Requirements for shareholders depend on the corporate purpose of the entity as specific activities have foreign investment restrictions. For directors of a corporation, there are no certain requirements except if the corporation grants powers of attorney to such directors, in which case, to be able to utilize such powers, they are required to have a proper visa.
Overview Of Director’s, Officer’s, And Shareholder’s Authority And Limitations
The board of directors of a corporation is elected by the shareholders and is the highest authority in the management of the corporation, governing the organization by defining policies and objectives, given that any shareholder or group of shareholders holding more than 25% of the capital stock shall have the right to elect a director.
Contrarily, officers are elected by the board of directors or the shareholders to direct the day-to-day operations of the corporation.
Company Address
A legal address is one of the minimum statutory requirements for a corporation. This address will be registered with the Mexican tax authorities and will be used for all official business communication such as mailing and tax purposes.
Tax Presence
An S.A. de C.V. is subject to double taxation. Firstly, the S.A. de C.V. pays a corporate tax on its corporate revenue, then, the S.A. de C.V. dispenses profits to shareholders, who then pay income tax on those profits.
If you are considering doing business in Mexico, and you want to incorporate your company, let’s go ahead and contact your Damalion expert now.
