National Report Mexico - Notarius International

212 J. A. Márquez González, National Report Mexico Notarius International 3-4/2005
Finally, it is important to clarify that in Mexico the incorporation
of any type of company invariably requires a
permit to reserve the name with the SRE (foreign ministry),
which keeps a computer record of these names and
also of participation by foreign citizens, in accordance
with the provisions contained in articles 15 and 16 of the
Law on Foreign Investment.
5.3. Capital associations and companies
In Mexico there is a special law dating from 1934 (the
Ley General de Sociedades Mercantiles (General Law
on Commercial Companies). This law recognises various
types of company, but only two are the most common:
limited liability companies and joint stock companies. In
practice, the other types of company are practically nonexistent
for various reasons.
5.3.1. Limited liability companies (SRL)
In limited liability companies the members only agree
to pay their contributions. Mexican law does not require
a minimum number of persons and only states that they
must be formed by “one or more members” although, at
the other extreme, it limits their number to no more than
25. In accordance with that, limited liability companies
frequently bear the name of one or more members although
the law, furthermore, allows them to be established
under one name or under a corporate name.
In any case, both names must be immediately followed
by the literal expression of the technical nature of the
company or its abbreviation – “SRL”; otherwise, the
members will have secondary, limited, joint and several
liability for all corporate obligations. If the name of the
company includes the name of a person outside the company,
that person is obliged to assume liability for the
company's operations up to the amount of the largest contribution
in the company.
In Mexico it is customary to add the expression “y
compañía” (and company) in the case of a corporate
name if the name does not state the names of all the members.
The expression “sucesores” (heirs) is also common.
It does not necessarily mean that the original member has
died, but only that he has left the company or even that
one company has been transferred to another.
In accordance with the law, the capital must not be under
$ 5,000 pesos (approximately USD 500) and must be
fully subscribed. At least 50% of its value must be paid in.
Quid iuris with regard to the form of the company As
a general rule, all companies must be incorporated before
a notary and all amendments of their Articles of Association
must also be executed before a notary.
Finally, it is important to clarify, as was stated above in
the case of civil associations and companies, that this
type of commercial company also invariably requires a
permit from the SRE to reserve the name and for control
of possible participation by foreign citizens.
5.3.2. Joint stock companies (SA)
The joint stock company is the most common legal
form in practice as far as commercial companies are concerned.
This company is highly versatile and has an excellent
image in corporate and advertising terms. Article
87 of the aforesaid General Law on Commercial Companies
states as follows: “A joint stock company is a company
that exists under a name and is made up solely of
shareholders whose obligation is confined to paying in
their shares”. The minimum capital of a joint stock company
must be $ 50,000 pesos, or approximately USD
5,000.
The law expressly states that joint stock companies
must be incorporated under the technical form of a
“name”. These names often take on an air of fantasy since
their form is entirely unrestricted. In any case, the law
prevents the risk of homonyms through the bureaucratic
control exercised by the SRE, referred to above. Whatever
the name, in companies of this type it must invariably
be followed by the words “Sociedad Anónima” (joint
stock company) or their abbreviation, “S.A.”.
What is the legal form of a joint stock company As is
stated above, commercial companies must be incorporated
before a notary, but in this particular case they
may also be incorporated by public subscription. However,
this form of incorporation is not common.
In practice, the notary himself drafts the minutes of the
general meeting to incorporate the company and the Articles
of Association. Articles 95 and 101 state that contributions
other than those in cash will be legalized when
the minutes of the meeting to incorporate the company
are entered in a record and that, when the incorporation
of the company has been approved, the minutes and the
Articles of Association must be entered in a record and
registered. However, the text of article 90 requires appearance
before a notary.
5.4. Cooperative companies (SC)
In Mexico, cooperative companies are subject to a special
law that was passed in 1994. The purpose of cooperative
companies is focused on social organisation made
up of individuals on the basis of common interests and on
the principles of solidarity, their own efforts and mutual
aid, for the purpose of meeting individual and collective
needs through the performance of the economic activities
of production, distribution and consumption of goods and
services.
Cooperative companies are formed by a minimum of
five members and their financial structure is that of variable
capital. As far as the necessary formalities are concerned,
article 12 of the law only contemplates the need
for ratification of signatures before a public authority,
which includes notaries. When the Memorandum of Association
has been signed, the cooperative company acquires
legal status and has assets. This deed must be entered
on the public commercial register.
As far as their system for liability is concerned, companies
of this type may choose limited liability or members'
supplemented liability. In the first case, the members'
liability is limited solely to the payment of certificates
of contribution; in the second case the members
must assume equal liability for the company's operations,