Corporate Law at Mexico
Sure! Here’s an overview of Corporate Law in Mexico — covering the main legal framework, types of companies, formation, governance, and other key aspects:
Corporate Law in Mexico: Overview
1. Legal Framework
Corporate law in Mexico is primarily governed by the General Law of Commercial Companies (Ley General de Sociedades Mercantiles - LGSM). Other relevant laws include the Civil Code, Securities Market Law (for publicly traded companies), and tax regulations.
2. Types of Business Entities
The most common corporate entities in Mexico include:
Sociedad Anónima (S.A.) – Corporation (similar to a joint-stock company)
Can be S.A. de C.V. (with variable capital) or S.A.B. (publicly traded company).
Sociedad de Responsabilidad Limitada (S. de R.L.) – Limited Liability Company
Like an LLC, limited liability for partners, no shares but membership interests.
Sociedad Civil (S.C.) – Civil Partnership, used often by professionals.
Sociedad Cooperativa – Cooperative.
Branches of foreign companies are also possible.
3. Formation of a Company
Companies are formed through a public deed (Escritura Pública) executed before a Mexican notary public.
The deed includes the company’s bylaws (estatutos sociales).
Registration with the Public Registry of Commerce (Registro Público de Comercio) is mandatory to acquire legal personality.
Minimum capital requirements depend on the company type, but generally, there is no fixed minimum for S.A. or S. de R.L., though capital must be clearly stated.
4. Governance
S.A. governed by a General Shareholders’ Meeting and a Board of Directors or a Sole Director.
S. de R.L. managed by one or more managers appointed by partners.
Shareholders/partners have rights according to their ownership interests.
5. Shareholders’ Rights and Liability
Shareholders/partners are liable only up to their capital contribution.
Rights include participation in profits, voting in assemblies, and access to company information.
6. Reporting and Compliance
Companies must keep accounting records according to Mexican Accounting Standards.
Annual financial statements must be prepared and approved by shareholders.
Publicly traded companies have stricter disclosure and audit requirements.
7. Corporate Governance
Annual General Meetings (AGMs) are mandatory.
Certain decisions, like capital increases, mergers, or amendments to bylaws, require shareholder approval.
8. Mergers, Acquisitions, and Restructuring
Regulated by the LGSM and Commercial Code.
Includes mergers, spin-offs, transformations, and dissolutions, subject to shareholder approval and registration.
9. Insolvency and Liquidation
Insolvency governed by the Federal Insolvency Law.
Liquidation procedures follow corporate bylaws and applicable laws.
Additional Highlights:
Mexico also regulates foreign investment through the Foreign Investment Law, restricting certain sectors but generally allowing foreign ownership in most businesses.
Corporate tax rate is currently around 30%.
Mexican law requires at least one director or manager resident in Mexico for companies.
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