Doing Business

Doing Business in Mexico 2015

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80 Tax and Legal Services - PwC Mexico Capital structure There are no requirements as to minimum capital, and there are no shares. It is often stipulated that foreign venturers should receive a maximum of 49% of the profits of the venture, in which case attorneys believe that neither approval nor registration with the Foreign Investment Commission is required. However, legal advice is necessary to comply with requirements, if applicable. Higher percentages of participation would require prior approval of the Commission. Relationship of venturers and managers Full responsibility for managing the venture rests with the joint venturer (asociante), although some contracts for large ventures, often in the construction field, provide for the establishment of a technical committee with representation of the silent partners (asociados) as well and with responsibilities quite similar to those of the board of directors of a corporation. In such cases a representative of the managing venturer would be in charge of the committee and the venture. Liquidation The procedures for liquidation that are used are those of a partnership, except that, unless the contract contains other provisions, a joint venture contract is considered as terminated upon the death of any of the venturers. Books and records Managing venturers must keep accounting records of the operations of the joint venture, separate from their other activities. Tax returns must also be filed for the joint venture operations separately from those of the asociante. Branch of a foreign corporation A foreign corporation can be registered to operate in Mexico, with full access to the local courts, through a branch office (sucursal de sociedad extranjera) after complying with certain formalities as well as obtaining the prior approval of the Mexican government through the General Department of Foreign Investment of the Ministry of Economy, exception made for those foreign corporations from that certain countries with which Mexico has entered into a free trade agreement (i.e. United States of America, Canada, among others), in which event there is no need to obtain prior authorization, but only to file a notice with the abovementioned authority. The Foreign Investment Commission has expressed a willingness to authorize Mexican branches of non-resident companies, except in those activities where foreign investment is restricted. Please refer to Chapter 5. A principal advantage to setting up a branch office in Mexico is establishing the presence of the foreign company in Mexico without the necessity of having a local board of directors or being subject to the provision of the General Law of Mercantile Companies applicable to Mexican companies. However, a disadvantage of this form of organization is that because a branch has no independent legal status in Mexico, the parent company will be liable for any claims arising out of activities performed by the branch office.

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