Entity set up in Mexico

DLA Piper Guide to Going Global

There are 3 types of commercial entities that generally are incorporated or formed under Mexican federal law:

• Sociedad Anónima de Capital Variable (S.A. de C.V.), which is similar to a corporation in the US.
• Sociedad de Responsabilidad Limitada de Capital Variable (S. de R.L. de C.V.), which is similar to an LLC in the US).
• Sociedad Anónima Promotora de Inversión de Capital Variable (S.A.P.I de C.V.), a subtype of S.A. de C.V., regulated under the Stock Markets Law (Ley del Mercado de Valores).

• S.A. de C.V.

  Unlimited number of shareholders.

  Generally no personal liability of the shareholders.

  Taxed on its earnings at a corporate level and shareholders are taxed on any distributed dividends.

  Shareholders have preemptive rights to subscribe and pay shares if the S.A. de C.V. approves to increase its capital.

  Typical charter documents include the articles of incorporation, bylaws, stock certificates and (a) stock ledger, (b) shareholders’ meetings ledger (c) board of directors ledger and (d) capital variations ledger.

  Board of directors (or sole administrator) has overall management responsibility; officers have day-to-day responsibility.

  Shareholders typically incorporate the corporation or may purchase shares from existing shareholders.

  Shareholders can enter into shareholders’ agreements in which they agree to certain rights and obligations such as drag-along and tag-along rights, put and call options, deadlock solution procedures and the issuance of non-voting shares, among others. Such provisions can likewise be included in the company’s bylaws.

  Relevant law requires a shareholders’ annual meeting to approve:

  • Preceding year-end financial statements
  • Ratification or appointment of new director(s) and statutory examiners
  • The fees paid to directors and statutory examiners and
  • Separation of 5 percent of the profits, if any, for a legal reserve, which shall reach an amount equivalent to the 20 percent of the social capital.

  Federal law requires, when there is foreign investment in the capital of the S.A. de C.V., to register before the National Registry of Foreign Investments and file an annual report with such agency, reporting the preceding year’s year-end financial statements.

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