Setting Up a Company in Mexico: A Practical Guide for Foreign Investors

Most foreign groups enter Mexico by incorporating a Mexican company (a subsidiary). The alternative is to register the foreign company itself to do business in Mexico, usually through a branch. A subsidiary is more common because it is a separate Mexican legal entity, called a persona moral, with its own tax ID and its own liability.

A Mexican commercial company registered in the Public Registry of Commerce (Registro Público de Comercio) has a legal personality separate from that of its shareholders. A foreign company that wants to carry out commercial acts habitually in Mexico needs prior authorization from the Ministry of Economy (Secretaría de Economía) and must then be registered before it can trade.

The General Law of Commercial Companies recognizes seven types of commercial company. In practice, foreign investors almost always choose one of three: the sociedad anónima (S.A.), the sociedad de responsabilidad limitada (S. de R.L.) or, for small ventures owned by individuals, the sociedad por acciones simplificada (S.A.S.). Most of these types can also be set up as variable-capital companies, which is why you will see the suffix "de C.V." (de capital variable). Variable capital lets the company increase or decrease capital with fewer formalities.

S.A. (stock corporation). Shareholders are liable only up to the amount of their shares. Incorporation requires at least two shareholders, each subscribing at least one share. The bylaws must state the minimum capital, which must be fully subscribed. At least 20% of each share paid in cash must be paid in at incorporation, and shares paid in kind must be paid in full. Management can be entrusted to a sole administrator or a board, and administrators do not need to be shareholders.

S. de R.L. (limited liability company). Partners are liable only for their contributions. Ownership is divided into partnership interests (partes sociales), not negotiable share certificates, and these interests can only be transferred under the conditions set by law. An S. de R.L. may not have more than fifty partners, and it is dissolved if all the partnership interests end up in a single person's hands, so in practice it needs at least two partners. The same dissolution rule applies to an S.A. whose shareholders fall below the legal minimum. Some foreign groups prefer it for home-country tax reasons.

S.A.S. (simplified stock company). It can have one or more shareholders, but they must be individuals (personas físicas), so a foreign parent company cannot own one. An S.A.S. is created online through the Ministry of Economy's electronic system, and no public deed or notary is required. Its total annual revenue is capped. The text of Article 260 published by the Chamber of Deputies currently shows MXN 7,678,849.94, an amount the Ministry of Economy updates every year. If the cap is exceeded, the company must convert into another company type.

Before incorporation, the Ministry of Economy must authorize the company name (denominación). This is done online. The bylaws must also include either a foreigners exclusion clause or the agreement provided for in Article 27, section I of the Constitution. That agreement is known as the Calvo clause: foreign shareholders agree to be treated as Mexican nationals with respect to their interest in the company and not to invoke the protection of their own governments. A company with foreign shareholders uses the Calvo clause.

Except for the S.A.S., a Mexican company is incorporated before a public attestor (fedatario público). This is a Mexican notary public (notario) or a commercial notary (corredor público), who records the articles of incorporation (acta constitutiva) in a public deed or policy. The attestor must refuse to authorize the deed if the bylaws contradict the law.

The articles must include the shareholders' names, nationalities and addresses. They must also include the corporate purpose, name, duration (which may be indefinite), capital and each shareholder's contribution, registered domicile, management structure and powers, appointment of administrators, profit-sharing rules among shareholders, reserve fund, and rules for dissolution and liquidation. Since 2023 the law also requires rules on how shareholder and board meetings are held, which may include electronic meetings.

Foreign shareholders usually sign through an attorney-in-fact under a power of attorney. A power granted abroad generally has to be apostilled or legalized and then translated by an authorized expert translator.

Every legal entity must register in the Federal Taxpayers' Registry (Registro Federal de Contribuyentes, RFC) kept by the tax authority, the SAT. It must report a tax domicile and obtain an advanced electronic signature (e.firma). Legal entities must also record their shareholders' RFC numbers in the share registry and file a notice identifying their shareholders, their ownership percentages and who exercises effective control.

The notary is involved here too. The notary must require proof that the RFC application was filed within the month after the deed is signed, and must report to the SAT if it was not. Foreign-resident shareholders do not need their own Mexican RFC if the Mexican company files a list of its foreign shareholders with the SAT within three months after each fiscal year-end. The list must show each shareholder's address, tax residence and foreign tax ID number.

For legal entities, the SAT issues the e.firma certificate. A separate digital seal certificate (certificado de sello digital) is needed to issue electronic invoices (CFDI). The SAT may refuse both if a controlling shareholder appears on certain non-compliance lists, so check the tax history of the people and entities involved.

A Mexican company with any foreign shareholding must register in the National Registry of Foreign Investment (Registro Nacional de Inversiones Extranjeras, RNIE). It must do so within 40 business days of incorporation or of the date the foreign investment came in. The application covers the company's activity, legal representative, foreign investors and their percentages, capital, expected start of operations and the estimated total investment.

Registration has to be renewed every year by filing an economic and financial questionnaire. Changes to the registered information must be reported. Notaries ask for proof of RNIE registration in later corporate acts, such as capital increases, mergers or liquidation, and they report to the registry if it is missing. Missing or late filings can lead to fines.

With the deed, RFC and e.firma in hand, the company can open a Mexican bank account. Each bank sets its own know-your-customer requirements. Expect to provide the incorporation deed, proof of tax status and address, powers of attorney, and identification and beneficial-ownership information for shareholders and signatories. Some banks require a signatory to appear in person.

If the company will hire staff, it must register as an employer with the Mexican Social Security Institute (IMSS) and register its workers. New hires, departures and salary changes must be reported within no more than five business days. See our guide on hiring employees in Mexico for the full list of payroll obligations.

Timing depends mainly on how quickly foreign documents are apostilled and translated, and on notary, SAT and bank schedules. As a planning range, many incorporations of an S.A. de C.V. or S. de R.L. de C.V. with foreign shareholders take several weeks from name approval to an operating bank account. Bank onboarding is often the slowest step. Two deadlines are set by law: 40 business days for the RNIE filing, and the month after signing in which the notary must confirm the RFC application.

SDV Asesores de Negocios has worked with companies in Mexico since 1998. We can help you compare company types, coordinate with the notary, obtain the RFC and e.firma, file with the RNIE and set up your tax, payroll and invoicing obligations from day one. We work in Spanish and English. This guide is general information, not legal advice.