Índice de desempeño

The advantage of creating a local subsidiary is that the foreign firm may thus limit its liability because the activities of the subsidiary are legally independent from those of the parent company.

Foreign investors have a free choice of entity. The most common forms used by foreign investors are Stock Corporations with either fixed capital (Sociedad Anónima; S.A.) or with variable capital (Sociedad Anónima de Capital Variable; S.A. de C.V.). A Stock Corporation must at least have two shareholders. While it is not possible to exclude shareholders from participating in the profits, it is possible to limit voting rights. In these cases, however, a cumulative dividend of not less than 5% p.a. is granted to shareholders by law. The minimum capital for a Stock Corporation is 50’000 MXP, 20% of which have to be paid in at the time of incorporation. In the case of a S.A. de C.V., further variable capital may be added. The assembly of shareholders is the highest organ of the stock corporation, and they elect either a sole administrator or a board of directors for the management of the corporation.

Other less frequently used business entities are the General Partnership (Sociedad en Nombre Colectivo), the Limited Liability Company (Sociedad de Responsabilidad Limitada; S. de R.L.), the Limited Liability Partnership (Sociedad en Comandita Simple or Sociedad en Comandita por Acciones). Some of these forms may be interesting from a tax perspective, but liability implications should not be overlooked. Particular forms are the Cooperative Company (Sociedad Cooperativa) which is frequently used for fisheries or agricultural business, the Civil Society (Sociedad Civil; S.C.) which is commonly used by professional practitioners, and the Civil Association (Asociación Civil; A.C.) which is normally used by charitable or non-profit associations. A Joint

Venture may either be established as a Joint Venture company, taking any of the legal forms set out above, or it may be constituted through a Joint Venture Agreement (Asociación en Participación).

The following steps are customary procedures when a stock corporation, i.e. the most frequent forms of foreign investment, is constituted:

• Approval from the Ministry of Foreign Affairs

The firm must seek approval for its name from the Ministry of Foreign Affairs (Secretaría de Relaciones Exteriores; SRE; http://www.sre.gob.mx;
11.4). The competent office is the Office of Incorporation Permissions (Permisos de Constitución de Sociedades). This permission will be reproduced in the notarial instrument (see below).

• Authorisation from the National Commission on Foreign Investment

In the cases determined by the LIE (see Section 7.2.1), applicants must seek approval from the National Commission on Foreign Investment (Comisión Nacional de Inversión Extranjera; CNIE; http://www.economia.gob.mx;
11.4).

• Formalisation in a Notarial Instrument

The charter and by-laws, on which the shareholders agreed, must be officially notarised. Power of attorney should be granted to a resident in Mexico who represents the shareholder before the notary for this purpose. The permission granted by the Ministry of Foreign Affairs, the charter and the by-laws are reproduced in a notarial instrument issued by the notary public.

• Registering with the Public Registry of Commerce

The notarial instrument must be recorded in the Public Registry of Commerce (Registro Público de Comercio) of the local entity where the corporate domicile is located.

• Registering with Tax Authorities

The corporation must then be registered in the Federal Taxpayers’ Registry (Registro Federal de Contribuyentes; RFC) at the Tax Office which corresponds to the corporate

Each corporation with foreign capital must also register with the Foreign Investment Registry (Registro Nacional de Inversiones Extranjeras; RNIE) which is administered by the Ministry of the Economy (Secretaría de Economía; SE; http://www.economia.gob.mx;
see address entry ”Dirección General de Inversión Extranjera” in 11.4).

• Registering with Social Security Institutions

If workers are employed for whom social security contributions must be made (see Section 8.4 for details), the corporation must also register with the Mexican Social Security Institute (Instituto Mexicano del Seguro Social; IMSS; http://www.imss.gob.mx;
11.4) and the Institute of the National Workers’ Housing Fund (Instituto del Fondo Nacional para la Vivienda de los Trabajadores; INFONAVIT; http://www.infonavit.gob.mx;
11.4).

• Registering with the SIEM and Chambers

All corporations are required to register with the Mexican Business Information Sy- stem SIEM which is run by the Ministry of the Economy (Sistema de Información Empresarial Mexicano; http://www.siem.gob.mx; see also Section 4.2.1) and with the appropriate commercial chambers.

• Providing Statistical Information

Business entities are also obliged to report statistical information to the National Insti- tute for Statistics, Geography and Computing (Instituto Nacional de Estadística, Geografía e Informática; INEGI; http://www.inegi.gob.mx;
11.4).

• Specific Obligations

Under specific circumstances, the following steps will be additionally required: If the corporation carries out manufacturing activities, it will have to seek permits from the National Ecology Institute (Instituto Nacional de Ecología; INE; http://www.ine.gob.mx;
11.4). If it is active in food preparation or the manufacturing of pharmaceutical or health products, it will also require a sanitary license (licencia sanitaria) which may be obtained from the Ministry of Health (Secretaría de Salud; SS; http://www.ssa.gob.mx;
11.4). If the firm will be importing products, it must register with the Federal Registry of Importers (see Subsection 6.4.1). Applications for permits under specific export promotion programmes (see Section 7.6) must be directed to the Ministry of the Economy (Secretaría de Economía; http://www.economia.gob.mx;
11.4).

A list of law firms is included in Section 11.11. Bancomext

(http://www.bancomext.gob.mx;
11.12.2) offers several publications which are oriented towards foreign investors. Besides the survey on industrial costs in Mexico mentioned above in Section 7.5, a basic investment guide in Spanish and in English is available. Some of these documents may be downloaded without charge from the internet: Go to the website of Bancomext (http://www.bancomext.gob.mx). If you use the Spanish language version, choose ”Usuarios fuera de México” and then ”Centro de Información”. If you use the English language version of the website, you will find the documents under the heading ”Invest in Mexico”. A detailed guide on the legal aspects of investing in Mexico (see Chapter 12) is also provided by the law firm Goodrich, Riquelme y Asociados in English and French. It is available as paperback from the law firm, or it may be read online at

http://www.goodrichriquelme.com. PriceWaterhouseCoopers has also published a detailed Doing Business Guide on Mexico with much information concerning investment and a strong focus on tax issues (see bibliography in Chapter 12).

8

Selected Legal Aspects of Doing Business

Doing business in Mexico naturally implies doing business under a different jurisdiction and in a different legal setting than at home. While it is important to be familiar with key legal aspects that govern business relations, it goes without saying that the legal environment is far too complex to be dealt with in detail in this book. Consequently, we have chosen selected areas of law which are usually relevant for a large number of exporters and/or investors, and which have not yet been dealt with elsewhere. It is obvious that the purpose of this chapter is to only give readers an introductory orientation on the legal environment and to direct them to more specific sources on the issues covered (see Section 8.6). The usual disclaimer applies (see page 7).

We gratefully acknowledge the invaluable support we received from the law firm Goodrich, Riquelme y Asociados (http://www.goodrichriquelme.com;
11.11) when we edited this chapter.

For expert legal advice or tax counsel, readers should contact law firms in Mexico. As a first indication, a list of reputed law firms is included in Section 11.11.