Basics of Incorporating in Mexico

Basics of Incorporating in Mexico

With MexicanIncorporation.com you do not have to be a legal expert to do business in Mexico. We are the experts. So just sit back and run your business. But before making any decisions you should know the basics of incorporating in Mexico. Mexico, just like in many other countries, has a regular run-of-the-mill company form. It is called an S.A. de C.V…. and is like an “.Inc” company you would find in the United States, for example. We’ll go ahead and spare you the legal jargon and cut to the chase.

If you see a company name in Mexico with the ending “S.A. de C.V” for example, “Sprockets Exporters de Mexico, S.A. de C.V” you should immediately think “.Inc” That part at the end of the name is the Mexican equivalent of “.Inc”, which we all know and love in other parts of the world. You might also see it as simply “S.A.” without the “C.V.” For smaller enterprises you may want to look at the less formal LLC in Mexico, the S de RL

Is a Mexican Corporation or S.A. de C.V. right for me?

If you have a larger number of shareholders in your company and are looking for a more formal arrangement with your partners, than the Mexican Corporate form or S.A. de C.V. is really what you should look at. Think about the following:

• Do you and your business partners not have a close working relationship?
• Do you tend to deal with each other at arms length?
• Do you want to be required to hold formal shareholder meetings, with minutes, and strict accounting regulations?
• Will there be more than 50 shareholders of the company?

If these things apply to your business, a Mexican Corporation is probably the best form for you. I stress, sometimes formality is what is required when one is dealing with business partners who one does not know well and where transparency is a major factor. However, I also stress, the Mexican Corporation is a formal entity and complying with all the requirements to keep the company running according to the law entails paying accountants and lawyers. The Mexican Corporation or S.A. de C.V. form offers security and transparency, however at increased operating cost.

If your company has more than 6 shareholders but especially if you have say… more than 10 shareholders, you really should consider an S.A. de C.V. Additionally, with that many shareholders contributing to the operational costs of the company, perhaps the money required to pay accountants and attorneys won’t be such a big issue (in theory).What are the basic characteristics of a Mexican Corporation or S.A. de C.V.?

Here are some basic characteristics of Mexican Corporations you should consider. First, minimum investment to start a Mexican Corporation is about $3,782 United States Dollars. Second, the Company must have at least two people who will be shareholders. This is different from the United States where a single shareholder can own all of the company’s stock. Third, the company must appoint a disinterested person to oversee the operation of the company on behalf of shareholders. Fourth, you have to hold annual shareholder meetings and keep monthly financial reports. Fifth, the company requires a permanent address in Mexico (which we can provide). In a nutshell, that’s basically what you have to know.

Limited Liability for Lawsuits

Nobody likes getting sued. The most important characteristic of a Mexican Corporation is the limited financial exposure of shareholders if the company gets sued. So, in the case of a lawsuit, the shareholders individually are not held liable. That means, no one can come after your home, your car or your other personal assets. However, the company itself is on the hook for any assets registered in its name such as bank accounts, equipment or other things of value.

Where to find more Information!

We’re not trying to bore you, but you can read in more detail about the list of legal requirements in our Resource Library or check out our Frequently Asked Questions Page. As always, give us a call and we’ll be happy to answer any of your questions.

Video: Roadmap to doing Business in Mexico