MEXICO Law and Practice Contributed by: Roberto Cannizzo, Carlo Cannizzo, Stefano Amato and Mauricio Moreno-Rey, Cannizzo
rary suspension of the project, cancellation of the authorisations granted, closure of the pro - ject, fines and arrest for up to 36 hours. 5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets The most common vehicles for acquiring real estate in Mexico are commercial companies and the most frequently used are the stock company ( sociedad anónima ) and the limited liability com - pany or LLC ( sociedad de responsabilidad limi- tada ), both of variable capital, and trusts. These are the most widely used forms because they have perfect patrimonial autonomy. The Stock Company The stock company is composed of sharehold - ers whose liabilities are limited to the amount of their contributions. Its capital is represented by negotiable certificates, and it is the only form of corporation whose shares may be traded on the stock exchange. The LLC The LLC is composed of partners whose liabili - ties are limited to the amount of their contribu - tions. For the transfer of equity and the admis - sion of new partners, the consent of the partners representing the majority of the capital stock is necessary. LLCs are often used by US residents because they can be treated as transparent enti - ties for US tax purposes. The Trust In the case of a trust, the property is owned by the trustee who is a regulated financial institu - tion. Trusts are commonly used, since in many cases it is easier to determine the various obli - gations of the trustors and beneficiaries, vis-à-
vis shareholders’/partner’s agreements, such as contributions by each trustor, reversion of the property if certain conditions are not met, etc. The FIBRA Another vehicle widely used to acquire real estate is FIBRA ( Fideicomisos de Infraestructura y Bienes Raíces ), or REIT. See also 5.3 REITs . Other Structures Other structures currently used for these types of transactions include real estate investment companies (SIBRAs), development capital cer - tificates (CKDs) and investment project fiduciary securitisation certificates (CERPIs). 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity Mexican companies must be incorporated before a notary public or a commercially author - ised person ( corredor público ). All of the con - stituent shareholders or partners (a minimum of two), or attorneys-in-fact, must be present upon the incorporation of the company. For incorpora - tion, it is necessary to do the following: • obtain a permit, to use the company’s name; indicate domicile, purpose, amount of author - ised capital and its division into shares (or equity membership); and • indicate the internal rules of the company governing: (a) shares (or equity membership), the trans - fer and issuing of shares; (b) calling, holding, proceedings, quorum and powers of general meeting; (c) appointment, removal, conduct and pow - ers of attorney of the directors or the sole administrator and auditors; (d) payment of dividends; and (e) dissolution and liquidation of the com - pany.
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