Doing Business

Doing Business in Mexico 2015

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77 Doing Business in Mexico 2015 Stock Corporation with variable capital Capital structure The most common type of stock corporation is the stock corporation with variable capital (Sociedad Anónima de Capital Variable—S.A. de C.V.). There is no mandatory minimum paid-in capital for the organization of a corporation. The charter or bylaws of the corporation may freely determine such amount; it is customary for Mexican corporations to determine a minimum share capital in the amount of $50,000 pesos, which used to be mandatory. Usually, an unlimited maximum capital stock is provided for most of these companies. The procedures for the increase and decrease of the variable portion of the capital stock should be established in the charter. The law allows considerable latitude in this area. This should be approved by means of and extraordinary shareholders' meeting in terms of article 182 of the law Since Mexican corporations may not hold their own shares, an arrangement providing minimum formalities for the issue of additional variable capital may prove to be a good substitute for treasury shares. However, whether it is stated in the charter or not, an increase in capital stock must first be offered to existing shareholders, who have the right to purchase the same proportion of the increase as they hold in the existing capital stock, before the increase can be offered to outsiders. Capital increases of corporations having foreign investors, whether a majority or not, may require the approval of the Foreign Investment Commission, although, in accordance with the regulations under the Foreign Investment Law and the National Registry of Foreign Investment (Registro Nacional de Inversiones Extranjeras), discussed in Chapter 5, prior authorization is not required in the majority of cases. Except as regards matters related to the variable portion of its capital stock, the S.A. de C.V. is identical to the Sociedad Anónima. Other considerations Stock Corporation for the promotion of investment The SAPI was created in order to provide joint-venture investors with a suitable vehicle to enter into covenants which reflect the intention to develop an investment and ultimately cash in the benefits and part ways, allowing the issuance of much tailored stock, and acknowledging enforceability to certain shareholder agreements which were deemed void under business forms. In most respects, this type of entity is identical to the Sociedad Anónima, exception made for the form of management which must be entrusted to a board of directors, exclusively. Limited liability company In most ways the limited liability company (Sociedad de Responsabilidad Limitada,S. de R.L.) is similar to a corporation in actual operation. However, as an organization of individuals, its bylaws can be drafted in such a way as to give it most of the characteristics of a partnership under the tax laws of foreign countries, except for unlimited liability. Formation procedures This form of organization requires the same prior authorization and registration as a Sociedad Anónima. Costs and time required for organization are essentially the same. The S. de R.L. may be organized by no less than 2 and with up to 50 persons (including 9

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