Penner & Associates - Mexico Law Firm and Business Consulting for Mexico

For professional assistance & information on legal & business matters regarding Mexico and Latin America, please contact:

ATTORNEYS AT LAW FOR MEXICO
Please contact us at our Mexico offices located at:
Apartado Postal No. 9
San Miguel de Allende, Guanajuato, Mexico
TEL. US.: (800) 856-5709
Local Phone (415) 152-3648

e-mail E-MAIL

 

BUSINESS CONSULTANTS FOR MEXICO
REAL ESTATE BROKERAGE ASSISTANCE FOR MEXICO
At our Phoenix or Mexico Offices
P.O. Box 42773
Phoenix, Arizona 85080
Tel: (623) 242-7442

e-mail E-MAIL

OUR MEXICO CITY OFFICES
Montecito no. 38 Piso 37 Oficina 37
Edificio World Trade Center
Colonia Napolis C.P. 03810
Mexico, Distrito Federal
Tel: (55)5351-0438

e-mail
E-MAIL

 

         

Law Information

CORPORATIONS, COMPANIES AND
ASSOCIATIONS IN MEXICO

 

Choose one or more:

TYPES , PERMITS AND REGISTRIES , SPECIFIC COMMERCIAL TYPES ( "Sociedad
en Nombre Colectivo" , "Sociedad en Comandita Simple" , "Sociedad de Responsibilidad Limitada" , "Sociedad Anónima" , "Sociedad en Comandita por Acciones" ) , CIVIL LAW TYPES ("Sociedad Civil" , "Asociación Civil") , Civil Law Partnership (Joint Venture -Association in Participation) , Sole Proprietorship , Business Association.

LIQUIDATION AND DISSOLUTION

TYPES:

There are two general group of companies: Civil and Commercial. The civil companies and associations are governed by the different Civil Codes of Mexico. The commercial entities are governed by the Federal Law on Commercial Companies of Mexico.

PERMITS AND REGISTRIES:

All corporations, companies and associations are to acquire a permit to incorporate from the Federal Mexican Ministry of Foreign Affairs/Relations (all entities are licensed federally, therefore they can act in any state of Mexico)., are to be incorporated through a Mexican notary public in a public instrument (escritura pública) and registered at the local Public Registry of Commerce (corresponding to the company domicile, which is freely chosen at the time of permit acquisition). Where the permit to incorporate allows (as determined by the applicant's request) the ability to have foreign investment (as a shareholders, partholder, associate, etc.), then the incorporated entity is to also be registered at the Federal Registry of Foreign Investment, under the control of the Federal Ministry of Commerce and Industrial Development.

If, sometime after incorporation, the partners/shareholders/associates agree on permitting foreign investment into the company ownership (where there was no permission prior thereto), they must notify the Secretariat of Foreign Affairs /Relations in its Constitutional Article 27 Permits Department of this decision and register the company with the National Registry of Foreign Investment.

All entities are to be registered with the federal taxing authorities known as the **Federal Ministry of Hacienda and Public Credit, the **Federal Institute of Social Security, ** the
Federal Housing authority known as INFONAVIT. They are also to be registered with the national chamber of commerce corresponding to the type of business in which it is involved.

There may be other additional registries, depending upon the type of business (example: mining, where concessions are required to mine and therefore there is a registry of the concessions / concessionaires).

 

SPECIFIC COMMERCIAL TYPES

The commercial entities are where two or more persons (individuals or entities) contract and unit in a permanent manner to perform a common licit, possible goal of a preponderantly economic nature, constituting commercial speculation, and under certain formalities of incorporation an registry, under one of the following types:

The "Sociedad en Nombre Colectivo" (Company in Collective Name, also known as General Partnership), is a company in firm or trade name (including all the names of all of the partners or where there is a name missing, you are to place the words "and company" or other equivalent), where all of the partners have ancillary / subsidiary, unlimited and joint responsibility for the company's obligations. If you allow your name to be used in the company name, you become liable for the company's obligations. The company capital and/or ownership is not represented by negotiable instruments, instruments payable to the order of a person (stock) or bearer instruments (stock) and which company parts have restricted transferability. This company type description can be abbreviated by the letters "S. en N.C.". This type of company is a personal type company.

The "Sociedad en Comandita Simple" (Company in Simple Silent Partnership also known as a Limited Partnership), is a company in firm name or trade name (including all the names of the "comanditados" partners), and which consists of one or more "comanditado" partners that respond with ancillary/subsidiary, unlimited and joint responsibility for the company obligations and one or more "comanditario" partners that are solely responsible for the payment of their portions attributed to the company. The company capital/ownership is not represented by negotiable instruments, instruments payable to the order of a person (stock) or bearer instruments (stock), and which company parts have restricted transferability. This company type description (at the end of the company name)can be abbreviated by the letters "S. en C.S.". This type of company is a personal type company.

The "Sociedad de Responsibilidad Limitada" (Limited Responsibility Company, also known as the Limited Liability Company) is a company with a firm/trade name or denomination (made-up name), consisting of partners whose only obligation is to deliver their portions (money or assets) attributed to the company, which corporate parts are not represented by negotiable instruments, instruments payable to the order of a person (stock) or bearer instruments (stock) and which company parts have restricted transferability. If the person's name is included in the company name, that person will be liable for the larger of the company partner portions. This company can not have more than 25 partners and the company description (at the end of the name) can be abbreviated by the letters "S. de R. L.". This type of company is a mixed type (personal/assets).

The "Sociedad Anónima" (Limited Liability Stock Company, also known as the corporation) is a company with a denomination (made-up name) consisting of shareholders whose only obligation is to deliver the portions they subscribe to (in the corporate capital) and which are attributable to the company, which parts are represented by negotiable instruments (stock), (no bearer instruments/stock), and which company parts may or may not be of restricted transferability (depending on the company bylaws). This type of company requires a minimum of two stockholders in order to incorporate and exist. This type of company may, (if set in the articles of incorporation) have a variable capital portion which would permit it to raise or lower the variable portion without changing the articles of incorporation or bylaws (however it would require an extraordinary shareholders' meeting). This company type description (at the end of the name) can be abbreviated by the letters "S. A.", or if of the variable capital type then "S.A. de C.V.". This company is a capital type company (no personal) and is the one most commonly used in business in Mexico.

The "Sociedad en Comandita por Acciones" (Company in Silent Partnership by Stock, also known as the Limited Partnership with Shares") is a company subject to the rules that govern the "Sociedad Anónima" company (with exceptions); made up of one or more "comanditado" partners/shareholders with ancillary/subsidiary, unlimited and joint responsibility for the company obligations and one or more "comanditario" partners/shareholders that are only responsible for the payment of the company stock they subscribed.

This company only issues nominative stock and the "comanditado" partners may not sell their stock without the the prior approval of all of the "comanditado" partners and two thirds of the "comanditario" partners.

This company may exist under a firm name or a trade name or a denomination distinct to that of the names of the comanditado" partners. If all of the "comanditado" partners are not in the company name, then the words "and company" must be used in the name. Certain of the collective name company rules apply as well as do certain of the simple silent partnership company rules. This company type description (at the end of the name) can be abbreviated by the letters "S. en C. por A." and it is a mixed type company (personal and assets oriented).

 

CIVIL LAW TYPES

The "Sociedad Civil" (Civil Company) in Mexico is foreseen and governed by the Civil Codes of the several states of Mexico. This is a company where two or more persons contract and unit in a permanent manner to perform a common licit, possible goal of a preponderantly economic nature, without constituting commercial speculation (therefore not a commercial company). This company type description (at the end of the name) can be abbreviated by the letters "S. C.".

The "Asociación Civil" (Civil Association) in Mexico is foreseen and governed by the Civil Codes of the several states of Mexico. This is a company where two or more persons contract and unit in a permanent manner to perform a common licit, possible goal of a preponderantly non-economic nature, and without constituting commercial speculation. This also known as a common goal company. (Therefore not a civil company). This company type description (at the end of the name) can be abbreviated by the letters "A. C."

 

Civil Law Partnership (Joint Venture)

The U.S. difference between partnership and joint venture and the different types of partnerships are not that common in Mexico. What is common in Mexico is the "Association in Participation". For discussion purposes herein, we will say that the partnership is an ongoing relationship of more stability than that of the joint venture. However, since there is no legislation (in general terms) that restricts it, the parties can contractually agree on the durability (one specific deal, one specific venture limited in time or place, or ongoing) of the business and create a hybrid of the association in participation, a partnership and a joint venture (the key is to be specific, complete and avoid agreeing on items contrary to law).

The "Association in Participation" (Asociación en Participación) is not a company nor corporation (it does not have separate existence), still it is a common way of doing business in Mexico. This is an agreement where one or more partners ("asociados") deliver goods and/or services to the managing partner ("asociante") for use in a specific business venture. The managing partner is the one responsible before third parties and the one that performs the business. Both the silent and managing partners will have the right to participate in the profits of a commercial venture. Mexico has not enacted a Dealer's Act or Transfer of Technology.

Joint Ventures should have: compatibility of business sense and culture attitude, there should be a continuity of management, be flexible to change and understand the market. The restrictions on joint venture in Mexico in the past have been the Foreign Investment policy, Industrial Development policy and certain practical effects in the country.

 

Sole Proprietorship: Any individual (physical person) (foreigner with immigration status or Mexican national) in Mexico may open a business and/or do business in his or her own name without creating a separate entity, which is known as a Sole Proprietorship. He, the individual, is fully personally liable for the losses of the enterprise.

 

Business Association: Businesses are required to organize themselves as associations. When there are 20 or more in any specific type of industry they are to organize themselves in that type of national industrial association (or chamber) (example: National Association of Steel Manufacturers). When there are fifty or more in any specific type of commercial activity, then they are to organize into a national chamber of commerce of that type of commerce (example: National Chamber of Commerce of Hotels).

LIQUIDATION AND DISSOLUTION

One must first receive  and review the present corporate existence of the Mexico Company.
This should include the incorporation and changes to the bylaws and articles.
to:
Verify type
Verify place of registry
How it functions
Any changes since incorporation
Present day officers.
Prior shareholders meetings (to verify that none are missing - if missing we
will need to complete them - which we can do in the last ordinary annual shareholders
meeting)
 
2. Then perform final ordinary shareholders meeting and approval of the administration
of the company and actions of the officers and authorized agents. Here we include
a prior publication of notice of intent to meet. After the meeting we may need to register
it at the corresponding public registry of commerce (where it is registered).
 
3. Then perform shareholders meeting of liquidation appointing liquidators and authorization
for them to carry out the liquidation.  Here we include a prior publication of notice of
intent to meet. After the meeting we will need to register it at the corresponding public
registry of commerce (where it is registered).
 
4. Then perform liquidation, by publication of announcements to creditors of intent to liquidate
and to perform collection against debtors.
 
5. Then perform shareholders meeting of approval of actions under the liquidation process
and to approve final dissolution of the company. Here we include a prior publication of
notice of  intent to meet. After the meeting we will need to register it at the corresponding
public registry of commerce (where it is registered).
 
6. Then final final notice of liquidation and dissolution of the company with the National Registry
of Foreign Investment. These two notices can be done together if accomplished in the same
fiscal (calendar) year. If in separate calendar years, then they will need to be registered
separately.

7. Final final notice of liquidation and dissolution of the company with the Federal Income

tax Authority.
 
8.Final notice of dissolution with any other agencies or chambers of commerce, etc.
as the case may be (determined by the industry in which the company was active).
 
These steps can be performed by our firm. Please do call us. 

 

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