In Mexico, as in most countries with a continental legal system, legal entities are represented through strictly defined organizational and legal forms. Despite their legal diversity, the local market prefers standard designs, especially if they have already received the approval of the SAT accounting and tax department.
In practice, most legal entities consist of only two forms: Sociedad Anónima (S.A.) and Sociedad de Responsabilidad Limitada (S. de R.L.). Both are essentially — local equivalents of Western corporations and limited liability companies. But there are nuances. The choice of form is determined by the scale of the project, the number of founders, the origin of capital and the nature of the activity.
Sociedad de Responsabilidad Limitada (S. de R.L.)— a form similar to a limited liability company. Minimum number of participants — 2, maximum — 50. The authorized capital is formed from shares (partes sociales), the nominal price of which is indicated in the charter. The law does not establish a minimum threshold for the authorized capital; for this reason, in practice it is considered that it can be 1000 pesos. The founders have the right to be individuals or legal entities, residents or non-residents. Governance may be exercised by one or more gerentes appointed by the meeting of members.
Sociedad Anónima (S.A.)— a form similar to a joint stock company. Minimum two shareholders. The authorized capital is divided into shares. Minimum capital — 50,000 Mexican pesos, of which 20% must be paid upon registration. Management is carried out through the Board of Directors (Consejo de Administración) or through a sole administrator. The appointment of a Comisario (internal auditor) will be required. Visitors can be founders or shareholders, with the exception of areas with limited access to foreign capital.
Sociedad Anónima Promotora de Inversión (S.A.P.I.)is a hybrid form, allowing for expanded shareholder agreements and more flexible corporate arrangements. Mainly used for investment and technology projects. Capital requirements are similar to S.A. — from 50,000 pesos. The management structure has the right to provide mechanisms for the protection of minority shareholders, transformation and special rights.
Sociedad por Acciones Simplificada (S.A.S.)— a simplified form allowing the creation of a legal entity with one participant. Suitable only for individuals with a tax residence in Mexico. Registration is carried out electronically without a notary. The maximum annual income of the company should not exceed 6 million pesos. The authorized capital can be arbitrary. The only participant simultaneously performs the functions of an administrator. Non-residents without residency cannot open a S.A.S. because an electronic signature (e.firma) is required to submit an application, which is issued only to residents.
Branch of a foreign companycan only be opened after obtaining a permit from the Ministry of Economy (SE) and registration in the public trade register. Registration with the tax SAT and registration of the RFC are required. Although a legitimate prospect, in practice opening a branch involves high administrative costs and is rarely used. An alternative is to register a Mexican legal entity with foreign capital.
Persona Física con Actividad Empresarial— an individual carrying out entrepreneurial activities. Although not considered a legal entity, we present it here as the most popular form of running a private business. Registration is carried out with the tax authority SAT. You will need a Mexican tax number (RFC), CURP and residence. A foreigner without residency is not able to use this regime.
Foreign participation in companies
Foreign persons, including non-residents, are able to be members or shareholders of Mexican companies. However, the Foreign Investment Law (Ley de Inversión Extranjera) establishes restrictions in a number of sectors (in particular, radio, mining, certain types of transport and financial services). In these cases, the participation of foreign persons may be limited by quotas (usually 49%) or completely prohibited. To exceed the established threshold, permission from the National Commission for Foreign Investment (CNIE) is required.
When a foreigner is able to open a company on his own
Can: in the S.A.S. form, if you have a tax residence and an e.firma electronic signature. It will need to be an individual with CURP and RFC.
Not eligible: without residency or without e.firma.
Cannot: in S.A. forms. and S. de R.L. — A minimum of two participants will be required, even if both are foreigners.
To summarize, the sole establishment of a legal entity is permitted only if there is residency and only in the form of S.A.S. or as an individual with entrepreneurial activity. All other forms require a minimum of two founders, but a foreign citizen without residence is able to attract someone else to become a co-founder.
Norms for authorized capital
S. de R.L.: no minimum size. Capital is divided into shares with par value. The size of shares and the transfer procedure are specified in the charter.
S.A.: minimum capital — 50,000 pesos, of which at least 20% you must pay upon registration. Divided into shares.
S.A.P.I.: the same criteria as S.A., but flexible capital payment rules and expanded participant rights are allowed.
S.A.S.: the amount of capital is determined freely, without legal restrictions. Income does not have to exceed 6 million pesos per year.
Representative offices: the authorized capital is not formed, since the branch is not a separate legal entity.
Wherever the minimum authorized capital is not established, it is considered to be 1,000 pesos.
Leadership positions
S. de R.L.: management can be individual or collective (gerente único or varios gerentes). The choice of structure is fixed in the charter.
S.A.: there is at least one director (Administrador único) or Board of Directors. Mandatory appointment of Comisario (auditor).
S.A.S.: management is carried out by a single participant.
A branch of a foreign company appoints a local representative (apoderado) authorized to act on behalf of the foreign parent.
Restrictions on hiring overseas workers
Mexican labor law (Ley Federal del Trabajo) stipulates that at least 90% of a company's employees must be Mexican when it comes to «core activities» companies. This rule applies to manufacturing and specialized technical positions. Exceptions are allowed in relation to:
- Foreign workers employed in support, administrative or support services — in other words, a transport company can have 100% programmers — foreigners.
- Foreign specialists whose knowledge cannot be replaced by local personnel. In this case, additional permissions from the National Institute of Migration (INM) are required.
- Temporary workers employed under certain contracts.
To summarize, quotas do not apply indiscriminately to the entire workforce of a company. Mexican origin of workers will be required only in functional areas that directly affect the production process or core activities. Administrative personnel, cleaning, accounting, transport and similar areas are not subject to quotas.
Procedures for establishing a company
If we are talking about a full-fledged company, and not a temporary S.A.S., the registration process in Mexico begins with a visit to the notary. Here's how it works in practice.
The founders determine the form of the company (for example, S.A., S.A.P.I., S. de R.L.) and collect the main data: name, composition of participants, authorized capital, business goals.
Contact a notary — it is he who submits a request to reserve the name to the Ministry of Economy (or the founders do it themselves and bring a ready-made permit). Although it is theoretically possible to submit a name request online, most founders still go straight to the notary so as not to waste time and do everything under his control.
The notary prepares and certifies the constituent act — this is the basis of the company. He enters data into the RPC, assigns a creation date, certifies the governing bodies and the order of distribution of shares.
For forms S.A., S.A.P.I., S. de R.L. etc. notary — this is the starting point. He coordinates the process, sends papers to the necessary authorities and advises on the criteria. After the notary, you already have the opportunity to go to SAT, set up tax obligations, open an account, and issue licenses.
And only for S.A.S. the process can begin without a notary — through the online portal tuempresa.gob.mx, if the founder has an electronic signature (e.firma) and RFC. But even in such cases, entrepreneurs often consult with a notary in advance, especially if they plan to switch to a different form in the future.
The route for registering a new company is as follows:
- Verification and reservation of the company name with the Ministry of Economy (SE).
- Preparation of the articles of association and articles of association (escritura constitutiva).
- Certification of documents by a notary.
- Registration in the Trade Register (Registro Público de Comercio).
- Obtaining an RFC tax number in SAT.
- Registration of an electronic signature e.firma.
- Registration in IMSS — Social Insurance Institute (if you plan to hire personnel).
- Registration in the municipality or state, depending on the geography of activity.
- Obtaining special permits and licenses (if required).
Each stage is mandatory. Ignoring at least one leads to blocking of the RFC or loss of business prospects.
Beneficiary disclosure
According to the Law on the Prevention of Capital Laundering (Ley Federal para la Prevención e Identificación de Operaciones con Recursos de Procedencia Ilícita), legal entities are required to identify and maintain information about their beneficial owners. The information is not subject to publication, but should be available to tax authorities, banks and other government agencies upon request. When information is concealed, fines and administrative measures are provided.
Taxation and accounting
All legal entities are required to:
- Create an RFC.
- Issue electronic tax receipts (CFDI).
- Maintain accounting records.
- File tax returns monthly.
- Submit financial statements annually.
Failure to comply with any of these requirements may lead to blocking of the tax number, fines, sanctions and criminal liability for tax evasion.
Startups
Mexican startups most often choose the form of S.A.P.I. (Sociedad Anónima Promotora de Inversión) — This is the most flexible and investment-oriented structure, which makes it possible to attract venture and private financing based on criteria familiar to the international market.
Why S.A.P.I. considered optimal for startups?
Flexibility in shareholder agreements — special requirements for investors are allowed: preferred shares, anti-dilution, veto rights, options, stock trusts, etc. All this is not allowed in a regular S.A. without additional legal acrobatics.
Protection of minority shareholders — the form allows for the inclusion of conditions that protect the share of founders or investors when new participants enter, mergers and sales of the company.
Public and private nature — S.A.P.I. is allowed to transform into a public company (S.A.B.) when going public without changing the legal entity.
Transparency and compatibility with international practice — investors from the US, Canada, Europe and other countries will recognize it as familiar corporate arrangements.
However, at the very early stage, when there are no investors and the team is small, the founders are able to start with S.A.S. as a temporary form. It is easy to register, requires only one resident, does not require a notary and is suitable for the MVP stage. However, it cannot be used if the income exceeds 6 million pesos per year and it is not possible to issue options or conduct an investment round under the standard model.
In most cases, the path looks like this:
- Stage 1: S.A.S. — fast registration, minimal formalities.
- Stage 2: re-registration in S.A.P.I., when the investor is accepted or the turnover grows.
Alternative: start immediately as a S.A.P.I. if you plan to raise capital in the next 6-12 months.
Form S. de R.L. startups rarely choose — it limits the number of participants (to 50), does not support the issue of shares and does not provide the required flexibility.
Basic risks when registering a companyrelated to:
- Lack of awareness of national regulations.
- Lack of resident status.
- Incorrect migration documentation.
- Violation of labor quotas.
- Errors in tax accounting.
To reduce risks, it is strongly recommended to use the services of local lawyers, notaries, accountants and representatives. Without understanding national practice and the specifics of interaction with authorities, a foreign founder risks facing sanctions, delays and blocking of activities.