How to Create a Joint Stock Company in Mexico?

Over the past decades, Mexico has risen in ranks as a country whose policies support international trade, company formation and company incorporation.  In December of 2015, the Mexican Congress amended the General Corporation Law, giving birth to a new type of company: Sociedad por Acciones Simplificada (joint stock company), also known as the SAS. This new adjustment was implemented after the Mexican government saw the positive results it brought Colombia.

Mexico – Sociedad por Acciones Simplificada (SAS)

 An entrepreneur in the process of selecting the appropriate type of company to conduct their business operations in Mexico should be aware of the finer details of a Mexican joint stock company. The joint stock company was created to enable entrepreneurs to quickly create their businesses through an online application, at no cost and without the need of a public notary. The main goal of this type of entity is to encourage entrepreneurs to formalize their business operations through a quick and effective online process. The joint stock company is the first type of company to permit a company to have a single shareholder. There is a limited liability as shareholders are only held accountable for their contributions. This type of company can be approved within 24 hours via internet, providing the authorization and proof of registration in the RFC and RPC.

Factors to Consider Before Creating a Mexican Joint Stock Company

Although it may seem hassle-free to create Mexica joint stock company at no cost, within 24 hours and online, it’s important to keep in mind the following

• Partners and responsibility: Joint stock company partners cannot be shareholders of other companies. Although liability is limited to the amount of contribution by the shareholders, should any illegal activities be detected, they will be held fully liable and responsible.

• Constitution of the SAS: As there is no intervention or advice provided by a notary to draft bylaws, shareholders must be careful not to make mistakes due to their lack of awareness of the proper protocols. It would be preferable to seek legal services of a Mexican entity to ensure a comprehensive understand of bylaws.
• Social Capital and income: If the total annual income of the joint stock company is equal to or greater than 5 million pesos, you will be obliged to change the type of company to a traditional model. This switch will incur costs and administrative processes. Should shareholders fail to make the switch to the correct type of company when required, they risk facing severe charges.
• Excessive surveillance:While the joint stock companies in Mexico promise a free and instant up, it is important that you keep authorities abreast of every move you make. In addition, any contract that your joint stock company signs with legal entities or persons must be recorded in the electronic registration system of the Ministry of Economy. The owner of the joint stock company also has the legal obligation to issue and record reports in the electronic system. Failing to do so two consecutive times will result in the removal of your joint stock company.
• Formality and validity:Even though your registered company has all its certificates of registration, a Mexican joint stock company can sometimes generate distrust when working with certain entities, particularly with banks, given the lengthy documents usually requested from traditional company structures compared to joint stock companies.