Introduction

If you want to expand your business abroad and enter the American market, forming a company in Mexico can be a strategically optimal decision.

There are many favorable conditions. Here are a few examples: strategic geographic location, reduced costs, free trade agreements with many countries, political stability, and much more.

Many entrepreneurs decide to form a company in Mexico not only to “attack” the Mexican market, which is very important in itself, but also to have a strategic base to enter and grow in the United States.

The procedure for forming a company in Mexico is not very complex, and in this article, I want to outline the main steps to follow. However, my advice is always to be supported by a local law firm with experience with international clients. Trying to do it independently can make the process much more difficult and lengthy.

My law firm in Mexico, Braccini & Partners, provides legal, corporate, and tax assistance to both individuals and companies that want to form a company in Mexico and expand their business in North America. It would be a pleasure to provide you with more detailed information and assist you in forming a company in Mexico. To contact me, click here.

Choose the type of company you want to form

The first decision you will need to make concerns the type of your Mexican company.

The Sociedad Anónima (S.A.) is generally recommended for its versatility, but the Sociedad de Responsabilidad Limitada (S. de R.L.) can also be a valid option, especially for less complex corporate structures.

They have many common aspects and are both very flexible. The capital of the S.A. is represented by shares, while that of the S. de R.L. is represented by equity participation. In S.A., the appointment of a statutory auditor (or a board of auditors) is mandatory, whereas in S. de R.L.s it is not.

Choose the name of your Mexican company

You will need to choose at least three distinct names for your Mexican company.

Why at least 3? Because you will need to request authorization from the Mexican Ministry of Economy to use one of the names you prefer. However, if the first option is not available (perhaps because it is the same as or similar to an existing one), you can try again with the other 2 (or more) that you have prepared.This step is essential because, without the permission of the Mexican Ministry of Economy, you cannot proceed with the company’s formation.

Decide who your shareholders will be

In Mexico, both S.A. and S. de R.L. must have at least two shareholders to be formed and to exist. Therefore, you will need to choose who will be your shareholders.

In making this choice, it may help to know that these shareholders can be either individuals or companies. For example, if you have an holding company, you can use it to form your Mexican company by holding its share capital. You will only need to choose a second shareholder (to whom you can perhaps give only 1% of the share capital).

In the vast majority of cases, the shareholders can also be all non-Mexican. The Mexican market is very focused on attracting foreign investments, and therefore the sectors in which a Mexican company can have 100% foreign-held share capital have increased considerably.

Define the content of the Articles of Incorporation

As you surely already know, the Articles of Incorporation is the document that governs your company.

Among various aspects, it stipulates the location of the registered office, the activities your company can carry out, the initial share capital, and the percentages held by each shareholder. Additionally, it establishes the structure of the administrative body, which can consist of a sole director or a board of directors, and for an S.A., also the role of the statutory auditor (or board of auditors).

It will be important to agree with your shareholders on all the rules, rights, and duties that will govern your Mexican company. For example, we always suggest deciding whether it is appropriate to foresee the possibility of issuing different types of shares (or equity participations), agreeing on any pre-emption rights, establishing precise meetings quorums, and procedures in case of a deadlock.

In short, agreeing on everything beforehand and immediately including it in the Articles of Incorporation is always a winning choice.

Sign the Public Deed of Incorporation before a Mexican notary

The final step is the signing of the Public Deed of Incorporation by all founding shareholders before a Mexican notary. It is recommended to find a notary who has experience with international clients.

To comply with anti-money laundering and beneficial owner Mexican rules, you will be required to prepare various documents. Do not worry because a good notary and a good lawyer will know how to guide you and indicate which documents are needed and with what formalities.

Remember that if you cannot personally travel to Mexico to sign the Public Deed of Incorporation, you can still do so by granting a special power of attorney.

Once the Public Deed of Incorporation is signed, the company officially exists.

However, to give the company a distinct legal personality from the shareholders, you will need to register it with the Public Registry of Commerce. Furthermore, when one or more shareholders are not Mexican citizens, you have 40 days to register the company also with the National Registry of Foreign Investments (Registro Nacional de Inversiones Extranjeras or RNIE). Do not worry, these are simple registrations that the lawyers you will engage will be able to carry out without problems. If you decide to rely on our law firm, we will be pleased to guide you through all these steps.

Finally, once the company has been formally formed, you must immediately apply for and obtain the Mexican VAT number (called RFC) and the advanced electronic signature (called e.firma). With these “tools” and other documents, you can then also open the company’s bank account.

If you need further information or clarification, please write to us using this contact form. We will be happy to respond as soon as possible.

DID YOU LIKE THIS ARTICLE?
Read also: “5 things to know before forming a company in Mexico“