Since the confirmation of Peña Nieto’s reforms to the energy sector in 2013, there has been an increase in opportunities for foreign investors, an expansion of the local industry and an ever-growing focus on investment in ‘green energy’. This article will provide a brief analysis of the current market and explain the process to successfully establish a company within the energy sector.
Keep reading to learn how you establish a service company in the Mexican energy sector.
Current Performance in the Market
According to statistics from the Secretaría de Energía (SENER), this is a sector which is growing at an increasing rate within Mexico. In the period 1999-2016, foreign investment in energy reached USD$10 billion. Furthermore, there is currently an increasing demand for energy, with an annual growth of 3% in domestic usage. The constantly increasing demand for energy represents a trend that is not mirrored in developed countries such as the USA, which have more established energy grids. This provides a unique investment opportunity for foreign companies, especially when coupled with the remarkable natural resources that Mexico possesses.
A Move Towards Green Energy in Mexico
The importance of ‘green energy’ has also grown immensely and has been placed at the centre of Mexico’s national planning. High budget, ecologically friendly energy lines have been commissioned in recent months. Both the lines from Isthmus of Tehuantepec to Morelos (wind energy) and Sonora to Baja California (solar energy) are examples in practice of Mexico’s ambitious pledge to have 50% of all energy coming from renewable sources by 2050. With a growing need for more innovative action to be taken to address the global issue of non-renewable energy sources, such a national determination to reduce its carbon footprint make Mexico an exciting place for potential investors in ‘green energy’.
Steps for Service Company Registration
1. Power of Attorney: The first step in establishing a new company in the Mexican energy sector is to draft and sign a Power of Attorney. This is a document that authorises another party to represent an individual or company in business and commercial affairs, in this case, manage the formation process.
2. Choose the type of legal structure for your business needs: The second step is to determine the name of the company that you wish to register. This is important as it will affect the range of services your company can provide. It is also necessary to decide what type of company you wish to form. This is broadly split into two categories: LLC (Limited Liability Corporation) or a Stock Corporation. An LLC (Sociedad de Responsabilidad Limitada, S.R.L) will help provide more insulation and protection to you as an investor and will mean you are not personally liable for the debts or funds of your company. A Stock Corporation (Sociedad Anonima) differs in that shareholders are only liable for their own contributions and assets.
3. Choose your shareholders: There must be at least two shareholders in your company and they can be either natural or legal persons (i.e individuals or companies). You must inform the authorities how much the company each shareholder will be responsible for, as well as sharing basic information about the shareholder.
4. Register your company: It is now necessary to register the company in the Public Registry of Commerce and the National Registry of Foreign Investment. In the case of a company wishing to enter the energy sector, it is also necessary to obtain the correspondent permits before the Energy Regulatory Commission, which will allow your company to import and export and generate energy in Mexico.
5. Apply for Tax ID Number: In order to obtain your Tax ID number (RFC), you must simply register with the Ministry of Finance and Credit (Secretaría de Hacienda y Crédito Público). This will take you between 1 to 3 days.
6. Open your bank account: Finally, before business can begin to boom for you and your colleagues, you need to open a corporate bank account.
Any investment in Latin America’s second-largest economy will prove to be a worthy commitment and adventure for your company, however investment in the energy sector appears to hold a host of added benefits. Given the steady damage being caused to our atmosphere, the growing concerns of fossil fuels and the related pressure being placed on authorities to curb the negative effects of energy production, investing in a country which has placed ‘green energy’ as a priority, such as Mexico, may prove to be a savvy investment which will only reap positive results for our world.
Need More Information on Incorporating a Service Company in Mexico?
Should you have any questions or concerns regarding the steps to take to forming or incorporating a company in Mexico, we’ll be glad to guide you in the right direction. Our team can provide you with tailored market entry and back-office services to assist you in settling into the Mexican market. Don’t hesitate to contact our Country Manager, Alex at [email protected] for personised advice.
Learn more about our market entry services with the following video!