Investors in Mexico can choose among several different business forms, according to the size of the company, the plans to expand it, the number of founders and the available paid-up capital.
The general requirements for company incorporation may vary according to the chosen type of company. Our Mexico company formation agents can help you choose the most suitable business type, according to your business needs.
Main business forms in Mexico
The General Law of Commercial Companies establishes several types of companies that can be constituted in Mexico. These include:
– the general partnership;
– the limited partnership;
– the limited liability company;
– the limited liability stock company, or corporation;
– the association in participation;
– the sole proprietorship.
Investors in Mexico will typically choose to incorporate a limited liability company or a stock corporation (also referred to as the limited liability stock company). These two business types offer a high degree of investor protection and may be fully owned by foreign investors.
The Mexican Foreign Investment Law allows foreign corporations to establish a branch in Mexico, subject to authorization from the Ministry of Economy. The registration is also mandatory for the branch and it is performed with the Public Registry of Commerce. The foreign company abroad will be fully liable for the debts and obligations incurred by its branch in Mexico.
Differences between company types in Mexico
Investors choose the most suitable business type according to their business plan, the available capital and whether or not they plan on working together with a partner to develop the business.
Partnerships in Mexico are business forms favored by investors who share the same business goals. The general partnership is established by partners who will co-own the business and will be able to contribute to the business assets as they see fit. In this business form, all investors have unlimited liability and partners are jointly liable for the debts and obligations of the business. In the limited partnership, one or more partners may benefit from a higher degree of protection (they are not jointly liable for all the debts, like the rest of the general partners, but they are liable according to their asset contributions).
The companies are the limited liability company and the limited liability stock company. The limited liability company is suited to small or medium-sized businesses and investors are only liable to the extent they have contributed to the capital. It cannot sell shares and their transferability is restricted. The number of partners is limited to 25. The limited liability stock company shares some characteristics in that the liability is limited to the amount of contributed capital. However, this type of company can sell shares and their transferability is established in the company’s bylaws.
The Law Governing Commercial Companies contains provisions for the management and control of a Mexican company. The stock corporation can have an unlimited number of shareholders and at least two founding members. Its management is performed by one or more directors who do not need to be shareholders in the company but are appointed following a Shareholder’s Meeting.
You can contact our Mexico company formation agents if you need more details on how to choose the types of legal entity and the special requirements according to the type of business. We can help you throughout the Mexico company registration process.