Establishing a commercial entity is not just about finding a market niche or providing a service. There are legal formalities that you must fulfill to make sure your company is recognized and operates within the bounds of Mexican law. Ley General de Sociedades Mercantiles provides a guideline on how to do this. Here is a closer look ➡️
1. Recognized Business Entities
Mexican law, as outlined in Article 1 of the LGSM, identifies several business structures:
General Partnership (Sociedad en nombre colectivo)
Simple Limited Partnership (Sociedad en comandita simple)
Limited Liability Company (Sociedad de responsabilidad limitada)
Corporation (Sociedad anónima)
Joint Stock Partnership (Sociedad en comandita por acciones)
Cooperative Society (Sociedad cooperativa)
Simplified Joint Stock Company - (Sociedad por acciones simplificada)
Entities from the first to the fifth can also be formed as a variable capital company. Refer to Chapter VIII for more on this.
*For more information on what commercial society might best suit you, check out our blog “Types of Business Structures in Mexico”
2. Registering Your Business
According to Article 5, companies need to be formally constituted before a notary. Any later changes must also be documented similarly. If any rules in the deed contradict the law, notaries won't authorize it.
3. What Your Business Deed Should Include
Article 6 lists the essential information to be present in your company's constitutive deed:
Details of founders (names, nationality, domicile).
Purpose of the company.
Business name.
Duration of the company.
Total capital and individual contributions (cash or assets).
Company's registered address.
Management structures and their powers.
Names of managers and authorized signatories.
Profit and loss allocation method.
Reserve fund details.
Conditions for early company dissolution.
Rules for company liquidation.
All these, together with other specific rules on the company's operations, will form the company’s statutes.
Extra Must-Knows from the Código de Comerció:
Article 16 highlights duties for merchants, such as:
Announcing their business status in the press.
Registering documents in the public commerce registry.
Keeping proper accounting records.
Saving all business-related correspondence.
Meanwhile, Article 19 notes:
Business registration is optional for individual merchants but a must for commercial firms. This encompasses company changes like mergers or dissolutions. Solo traders are auto-enrolled upon any required document registration.
If you're thinking of setting up a commercial entity, it's imperative to be familiar with these legal requirements. By ensuring you comply, you'll be laying a strong foundation for your business to operate smoothly and successfully.
For more information on how to incorporate your business in Mexico, email info@BlackSheepLaw.Co or our Founder and Partner Hilda Castillo Castrejon at Hilda@BlackSheepLaw.Co . Think outside the box!
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