MEXICO Law and Practice Contributed by: Melissa Franco and Mauricio Oropeza, Deloitte Impuestos y Servicios Legales, S.C.
Incorporation of a Mexican Commercial Company The following company types, and their corporate regimes, are regulated by the LGSM: • company in collective name; • limited partnership; • limited liability company; • stock corporation; Investors tend to choose to incorporate a Mexican limited liability company or a stock corporation as these types of companies adjust better to their needs. The LGSM also regulates the modality of “Variable Capital”. All corporate regimes can adopt this modal - ity, which allows an addition of a “variable part” to the capital stock which, according to the law and the by-laws of each entity, requires fewer formalities for its increase or decrease (it only requires the approval of an ordinary meeting) compared to the formalities required for a change of the fixed part of the capi - tal, which requires an amendment to the by-laws and may therefore only be resolved and approved by an extraordinary meeting. • partnership limited by shares; • co-operative company; and • simplified stock company. Other modalities of the corporate regimes are incor - porated into other laws – for example, investment pro - motion stock corporations and public stock corpora - tions are regulated by the Mexican Securities Market Law ( Ley del Mercado de Valores , or LMV). Opening of a Branch Opening a branch in Mexico does not require the incorporation of a new company (“newco”). Instead, a foreign entity will require authorisation from the foreign investment authorities to carry out business/commer - cial transactions in Mexico. This allows investors to have a presence in the national territory without the need to open a newco. As branches are regulated by the LIE, each new branch needs to submit the applicable documentation to the Ministry of Economy, and obtain authorisation there - from. An alternative and simplified process may apply
will have to obtain a neutral investment authorisation (this only applies to those industries that do allow for - eign investment, and not to those that are reserved exclusively to Mexican nationals or the State). Such neutral investment will imply that the foreign investment will participate for economic purposes within the company but with highly limited corporate rights, and the management of the company will be solely on the Mexican investment. Ultimate Beneficial Owner Mexican law requires all Mexican companies – and any other analogue legal figure – to report and keep an ultimate beneficiary owner (UBO) file. For UBO purposes, two different figures are currently regulated: • one for anti-money laundering (AML) purposes; and • a second tax UBO. In this sense, for both cases the law requires compa - nies to identify their individual UBOs, and the regula - tion also requires them to provide supporting docu - mentation such as IDs, Tax IDs and Social Security numbers, among others. For AML purposes, each company is obliged to file a report of the identification, as well as the document stating the control chain that enables the identification of such individuals as UBOs; for tax UBOs, the file must be disclosed only if the tax authorities specifi - cally request it. Regulatory In regulated industries such as finance, hydrocarbons/ energy and environmental, additional authorisations from regulatory bodies may be required. 4. Corporate Governance and Disclosure/Reporting 4.1 Corporate Governance Framework Mexican regulations permit business to be carried out in the national territory via the following methods.
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