MEXICO Law and Practice Contributed by: Melissa Franco and Mauricio Oropeza, Deloitte Impuestos y Servicios Legales, S.C.
if there is an international or bilateral treaty between Mexico and the country of origin of the investment. Mexican Joint Venture A Mexican joint venture or association is regulated in Chapter XIII of the LGSM, and involves the parties agreeing to provide goods or services and share in the profits and losses of the commercial business or several commercial operations. As it is an agreement, a Mexican joint venture does not have legal personality, nor does it have minimum contributions. It is sufficient that the agreement is in writing and that it stipulates the terms, proportions of interest and other applicable conditions. There is no legal relationship between the third parties, the part - ners (who provide the goods and services) and the partner acting on their own behalf. Vis-à-vis third parties, the assets will be the property of the associate. This means that he/she/it will be able to dispose of or transfer the assets freely, except for those that require additional formalities or that are stipulated in the agreement within the association contract. For the distribution of profits or losses, the general terms applicable to commercial companies apply – ie, distribution will be proportional to contribution and, for associated partners, the losses that correspond to them may not exceed the value of the goods or services they contributed. Finally, if it is not stipulated in the agreement, a Mexican joint venture will operate and be liquidat - ed in accordance with the corporate regime of the “company in collective name” ( Sociedad en Nombre Colectivo ), which, broadly speaking, implies that the association will automatically be dissolved upon the death, incapacity, exclusion or retirement of any of the associates, unless otherwise agreed. Individuals Individuals may be considered as merchants and car - ry out commercial transactions, which requires their registration as such before the Mexican authorities.
The specific alternative for investing in Mexico is usu - ally determined according to the specific needs of the investor and the tax implications of each option. 4.2 Relationship Between Companies and Minority Investors There are no specific laws on minority investors, but the LGSM and LMV state several rights for minority shareholders, such as the right to: • appoint a member of the board of directors; • appoint a statutory auditor; • oppose resolutions of general meetings; • call a meeting if deemed appropriate; or • start a liability claim against the directors. Such rights are subject to specific percentages of shareholding, depending on the corporate regime. In addition, regardless of the shareholding they have, shareholders or partners will have a preference right to be favoured against third parties in case of an increase of capital stock or a sale of shares/partnership equity. 4.3 Disclosure and Reporting Obligations Direct and indirect foreign investment requires a quar - terly or annual notice to be filed with the RNIE. Quarterly A foreign investment notice must be submitted within ten business days after the end of the quarter when there are any changes tothe company’s name, its cor - porate purpose or economic activity registered with the Tax Administration Service (SAT) or its registered office or tax domicile. Notice must also be filed in the event of movements in the following assets, liabilities or capital accounts exceeding MXN20 million. • The share capital and/or shareholding structure that implies a change in the share capital held by foreign individuals or legal entities. • Assets – accounts receivable from subsidiaries residing abroad or shareholders residing abroad and/or companies residing abroad that are part of the corporate group and do not participate as partners or shareholders. • Liabilities – accounts payable to subsidiaries resid - ing abroad or shareholders residing abroad and/
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