Why You Should Incorporate a Company / Legal Entity in Mexico?

How can I incorporate/form a company in Mexico? What legal aspects should a foreign investor take in consideration to start operations in Mexico? These are the key question for foreign investors wishing to establish a Mexican legal entity to expand their business network across.

This article will provide you with the legal framework behind the formation and incorporate of a company in Mexico.

Incorporate a Company in Mexico – Legal Restrictions for Foreign Investment

Mexican law has certain legal restrictions for the participation of foreign investment in specific sectors or activities. According to the Foreign Investment Law (FIL), there are activities reserved to the government and to Mexican citizens and companies, with a clause in the by-laws stating the exclusion of foreigners. In some activities, the percentage of foreign participation is limited to a specific number that ranges from 10% to 49%.

mexico company formation
Mexican law has certain legal restrictions for the participation of foreign investment

Before starting the process to incorporate a company, it is very important to confirm there are no legal restrictions in the participation of foreign investment.

Foreign ownership above 49% can be authorised in special cases for activities protected by Mexican law from foreign investment, subject to approval from the Mexican government. The approval process can take up to 3 months. It is very important to emphasize that, before the government grants this authorization, the company to be incorporated cannot perform the restricted activity for which it is seeking authorisation.

Legal Existence of the Company

In México, the legal requirements to prove the existence of a company are as follows:

  • Having the bi-laws and the incorporation document duly certified by a public notary
  • Having a confirmed registration number (RFC) granted by the tax authorities
  • Having a registry number which proves the registration of the company in the Public Registry of Commerce
  • Having a confirmed register in the Registro Nacional de Inversiones Extranjeras
  • Having proof of an address, a telephone/internet bill, water bill or electricity bill, which are the most recognised by Mexican authorities

Additional Permissions, Authorizations or Concessions

Depending on the activities of your company, Mexican law establishes some cases in which it is necessary to obtain special permissions, authorizations or concessions. This is usually the case of certain industries for example telecommunications, energy, oil and gas sector and mining.

Legal Maintenance of the Company

Once your company has been formally established for a year, you will need to comply with following legal obligations according to Mexican law:

  • Sending the relevant quarterly updated reports to the Registro Nacional de Inversión Extranjera if there are changes to the company structure or fiscal address.
  • Sending to tax authorities the corresponding list of non-resident foreign partners who have an interest in the company.
  • Keeping the tax authorities duly updated if you have changed the fiscal address of the company
  • Register all changes to the company’s bi-laws in the Public Register of Commerce

Interested in Doing Business in Mexico? Biz Latin Hub can help you

If you’re looking to do business in Mexico, we recommend consulting a legal expert in Mexico on the start-up process. You’ll need guidance to ensure your business stays compliant with local laws and regulations throughout the entire company formation process and in an ongoing capacity.

At Biz Latin Hub, our team of local and expatriate professionals offers personalized market entry and back-office solutions to ensure your success entering a new market.

Reach out to our friendly Mexico team, contact us today for support on your journey.

Learn about our team and expert authors, and check out our short presentation offering further tips for doing business in Mexico.

For more information on How to Form a Company in Mexico, watch the following video!

Tags: Company Incorporation | mexico

Categories: LATAM | Mexico

Pin It on Pinterest

Share This

Share This

Share this post with a friend or colleague!