HSBC Doing business in Mexico

More documents

Recommendations

Info

14 Up to 10% Cooperative companies for production. Up to 25% Domestic air transportation. Aero taxi transportation. Specialised air transportation. Up to 49% Insurance companies. Bonding companies. Currency exchange houses. Bonded warehouses. The companies referred to in article 12b of the Mexican Securities Market Law. Retirement Fund Administrators. Manufacture and marketing of explosives, firearms, cartridges, ammunition and fireworks, not including acquisition and use of explosives for industrial and extracting activities or the preparation of explosive blends for use in said activities. Printing and publication of newspapers for circulation solely throughout Mexico. 'T' class shares of companies owning land for agricultural, livestock and forestry purposes. Fishing in fresh water and coastal areas and exclusive economic zones, excluding aquaculture. Integral port management. Port pilot services for coastal navigation of vessels pursuant to the applicable laws. Shipping companies engaged in the commercial exploitation of vessels for coastal shipping or coastal trade, except for tourist cruise ships and the exploitation of drills and naval devices for the construction, conservation and operation of ports. Oil and lubricant supply for ships, aircraft and railroad. Telecommunications Concessionaires as provided by articles 11 and 12 of the Federal Telecommunications Law. More than 49% (once approval has been granted by the National Foreign Investment Commission) Port services for inland navigation of vessels, such as towing, mooring and barging. Shipping companies exclusively operating on the high seas. Companies with a concession or permit for public service aerodromes. Private education services for pre-school, elementary, middle school, high school, college or any combination thereof. Legal Services. Credit Information companies. Securities rating institutions. Insurance agents. Mobile telephony. Construction of pipelines for oil and oil by-products. Drilling oil and gas wells. Construction, operation and exploitation of railroads (general means of communication) and public railway services. Setting up a business General requirements The first steps that a potential investor or business visitor in Mexico must take are as follows: 1. An invitation on headed paper must be issued, written in or translated into Spanish, by the respective trade or industry chamber, business association, public or private organisation, or by an industrial or business company or a financial institution, stating the purpose of the visit and declaring that the foreign party has sufficient financial back-up to cover their expenses in Mexico at any location within the country where business is to be conducted (company affiliates). 2. Financial solvency must be proven with a bank letter demonstrating that the party will have available, every month during the year in which the visit will take place, an amount equal to 500 days of the minimum wage of Mexico City, or a financial solvency letter from the party’s principal employer for the term of his/ her stay in Mexico. 3. If the applicant is a business entity or an individual with business activities, he/she/it must submit: • The company’s articles of incorporation. • A certificate issued by a public notary stating the company name, business purpose and official tax domicile. • The most recent tax return filed (e-receipt of the last tax return filed). • A certificate from the National Foreign Investment Registry. • Registration at the respective chamber, association or organisation. • These requirements are not applicable to government entities or agencies or to public higher education institutions. • In the event that the individual with business activities is a foreign national, he/she must submit valid immigration papers. Establishing a Mexican operation Foreign investors may: • Hold equity in Mexican corporations or partnerships; • Acquire fixed assets; • Enter new fields of economic activity or manufacture new lines of products; • Open and operate establishments (branch offices, agencies); • Expand or relocate existing establishments (joint ventures). Incorporation of a company Companies will be incorporated in the presence of a notary and the amendments to the by-laws shall also be recorded. The public notary will not authorise the deed when the by-laws or the amendments thereto contravene the provisions of the General Law of Mercantile Corporations. The General Law of Mercantile Corporations acknowledges legal standing of foreign mercantile corporations that are duly incorporated. Foreign companies can only carry out business in Mexico upon registration in the Public Registry of Commerce, which registration shall take place prior authorisation of the Ministry of Economy pursuant to Articles 17 and 17a of the Foreign Investment Law. Corporations The S.A. and S.A. de C.V. must have a minimum of two shareholders. The minimum capital amount for a S.A. is Mex$50,000, which must be fully subscribed within one year from the establishment of the company. At least 20% of the value of each share must be paid in cash; the balance may be paid with any other assets.
16 5% of a corporation’s annual net income must be allocated annually to a legal accounting reserve until the reserve equals 20% of the value of all issued and outstanding capital stock. If the reserve is reduced for any reason, it must be restored to the 20% level. Any resolution taken by the Management of the Corporation (Board of Directors or Sole Director) or by the Shareholders that resolves not to allocate the 5% as minimum to a legal accounting reserve is invalid. If this is the case, the Management of the Corporation has unlimited liability and liability in whole for the amount not allocated. Partnerships A minimum number of two partners is required for the S. de R.L. and S. de R.L. de C.V., with a maximum of 50 partners. The minimum capital amount for a S. de R.L. is Mex$3,000, which must be fully subscribed at the establishment of the partnership. At least 50% of the value of each partnership interest must be paid in cash; the balance may be paid with any other assets. Joint ventures Business enterprises or individuals may form joint ventures (asociación en participación or A en P) to pursue a common business goal. A joint venture is conducted in the name of an active associate (asociante), who manages operations and has unlimited liability for the debts of the operation. The active associate grants the contributing associate (asociado) the right to participate in profits. Contributing associates are liable only to the extent of their contributions. Jointventure contracts must be in writing, but they need not be recorded at the Public Registry of Commerce. Public notice of formation of the joint venture is not required. For Mexican income tax purposes, the A en P is considered a tax entity when it carries on business activities in Mexico. Branches of foreign companies Foreign companies may establish a branch in Mexico by performing the following: • Obtain prior authorisation from the Ministry of Economy (this may be obtained easily); • Register the by-laws of the foreign head office with the Public Commerce Registry; • Register with the National Foreign Investment Registry; and • Obtain a federal taxpayer identification number. Representation offices shall follow the same procedure applicable for the branches, as well as the requirement to register with the Public Commerce Registry and with the National Foreign Investment Registry. Branches are subject to federal corporate income tax and generally have the same obligations as Mexican corporations. In addition, branches are subject to tax if they pay dividends from sources other than from a ‘net tax profit’ account, which is a retained earnings account for profits on which income tax has already been paid. Structures most often used by foreign investors The forms of enterprise most commonly used by Mexican and foreign investors are the S.A. or its variant, the S.A. de C.V. and, under certain conditions, the S. de R.L. and S. de R.L. de C.V. partnerships. Other authorisations that need to be considered by foreign investors • Authorisation for the Incorporation of Companies. • Authorisation for an amendment to company by-laws (change of corporate name). • Notice of Authorisation for the Incorporation of Companies and of Amendments to their by-laws (change of corporate name, amendment to the foreigner’s exclusion clause for an admission clause; Merger or Spin-off). • Purchase of real estate by foreign nationals outside the restricted area referred to in the General Agreement published on 2nd of March 1998 in the Federal Official Gazette. • Purchase of real estate by foreign nationals outside the restricted area referred to in Article 10A of the Foreign Investment Law. • Concessions for the exploration and exploitation of mines and waters in Mexico referred to in the General Agreement published on 11th of May 1998 in the Federal Official Gazette. • Issuance of authorisation for the incorporation of a trust in the restricted area. • Submission of each notice of purchase of real estate in the restricted area, to be used for non-residential purposes by Mexican companies that have a foreigner’s admission clause.
Page 1 and 2: This publication is a joint project
Page 3 and 4: 4 Executive summary Mexico offers a
Page 5 and 6: 8 Introduction Doing business in Me
Page 7: 12 Conducting business in Mexico Fo
Page 11 and 12: 20 Transfer Pricing Mexican transfe
Page 13 and 14: 24 Audit and accountancy Companies
Page 15 and 16: 28 Maximum working hours The maximu
Page 17 and 18: 32 Banking in Mexico The National B
Page 19 and 20: 36 Country overview Capital city Ar

HSBC Doing business in Mexico

Create successful ePaper yourself

Delete template?

Save as template?