NAVIGATING THE INCORPORATION PROCESS IN MEXICO: A COMPREHENSIVE GUIDE FOR FOREIGN INVESTORS

NAVIGATING THE INCORPORATION PROCESS IN MEXICO: A COMPREHENSIVE GUIDE FOR FOREIGN INVESTORS

Investing in Mexico offers a wealth of opportunities for foreign investors looking to expand their businesses globally. However, before commencing operations, it is essential to understand the minimum requirements to incorporate a Mexican corporation. This essay aims to provide a comprehensive explanation to foreign investors regarding the necessary steps involved in establishing a business entity in Mexico, ensuring a smooth transition into the Mexican market.

No Minimum Capital Requirements:
A notable advantage for foreign investors is that there are no mandatory minimum capital requirements to incorporate a Mexican corporation. Nonetheless, it is crucial to conduct thorough market research to ensure that the chosen investment aligns with the anticipated operational expenses and regulatory obligations.

Engaging a Local Lawyer:
To navigate the complexities of incorporating a Mexican corporation seamlessly, it is strongly advised to engage the services of a local lawyer well-versed in Mexican business law. While notaries are essential for certain steps in the process, a lawyer provides expertise in navigating legal requirements, drafting necessary documentation, and ensuring compliance with local regulations.

Registration in the National Registry of Foreign Investments (RNIE):
A significant step in establishing a Mexican corporation is registering in the National Registry of Foreign Investments (RNIE). This registry requires detailed and accurate information about the investor, including their nationality, proof of legal existence, and a description of the primary activity or purpose of the investment. Registration in RNIE establishes the investor’s legal presence in Mexico and is essential for conducting business operations.

Obtaining Permission of Name:
Before incorporating a Mexican corporation, investors must obtain permission for their chosen company name from the Ministry of Economy. This process involves submitting multiple name options and may require multiple attempts before obtaining approval. It is advisable to consult a lawyer to ensure compliance with naming conventions and legal restrictions.

Registration with Tax Authorities:
Once the corporation is incorporated, it must be registered with the Mexican Tax Authorities (SAT) for tax purposes. This registration involves obtaining an appointment to receive a Tax ID and FIEL (tax signature). The Tax ID and FIEL are crucial for the corporation to fulfill its tax obligations, such as filing tax returns and issuing invoices.

Opening a Bank Account:
Upon completing the previous steps, the newly incorporated corporation can proceed to open a bank account in Mexico. This can be done by appointing a legal representative, who can act on behalf of the corporation in financial matters. The presence of a local bank account facilitates smoother financial transactions with suppliers, employees, and customers.

Conclusion:
Incorporating a Mexican corporation to conduct business in Mexico requires compliance with specific legal and administrative procedures. Although there are no minimum capital requirements, adequately fulfilling all necessary steps is crucial for a successful venture. Engaging a local lawyer to navigate the complexities of Mexican business law is strongly advised. With a clear understanding of the minimum requirements outlined in this essay, foreign investors can confidently navigate the process and establish a solid foundation in the Mexican market.

María Galaviz  

KEY REQUIREMENTS IMPOSED BY MEXICAN AML LAWS THAT A FOREIGN INVESTOR MUST BE AWARE OF BEFORE STARTING A PDL BUSINESS IN MEXICO

KEY REQUIREMENTS IMPOSED BY MEXICAN AML LAWS THAT A FOREIGN INVESTOR MUST BE AWARE OF BEFORE STARTING A PDL BUSINESS IN MEXICO

1. Anti-Money Laundering Law (Ley Anti-Lavado de Dinero): The primary AML law in Mexico, which establishes obligations for financial institutions, including entities engaged in payday lending activities.

2. Financial Intelligence Unit (Unidad de Inteligencia Financiera – UIF): The UIF is the government agency responsible for investigating and preventing money laundering and terrorism financing. Payday loan businesses must fulfill reporting obligations and cooperate with the UIF.

3. Know Your Customer (KYC) requirements: Payday loan businesses in Mexico should implement robust KYC procedures to verify the identity of their customers. This usually includes collecting official identification documents, proof of address, and understanding the sources of income.

4. Reporting suspicious transactions: Payday loan businesses are required to report any suspicious transactions to the UIF. This includes transactions that may be related to money laundering or terrorism financing.

5. Record-keeping obligations: Payday loan businesses must maintain detailed records of transactions, customer information, and any suspicious activity reports for a minimum period of five years.

6. AML Compliance Program: Businesses engaged in payday lending activities must establish an AML compliance program that includes internal policies, procedures, and controls to ensure compliance with AML obligations.

7. Customer Due Diligence: Payday loan businesses should conduct ongoing monitoring of customers’ transactions and relationships to detect and report unusual activities promptly.

8. Penalties for non-compliance: Non-compliance with AML regulations in Mexico can result in severe penalties, including monetary fines, business restrictions, or even criminal charges.

It is essential for foreign investors operating a payday loan business in Mexico to consult with legal experts who specialize in Mexican AML regulations to ensure compliance with the specific requirements and obligations in the country.

Héctor Otero

Blockchain in the new National Code of Civil and Family Procedures

Blockchain in the new National Code of Civil and Family Procedures

The National Code of Civil and Family Proceedings was published today in the Official Gazette of the Federation, which seeks to establish standardized protocols at the national level to resolve disputes between private parties.

It also incorporates an approach that promotes the use of information technologies in judicial proceedings, with the purpose of unifying the legal standards and foundations to achieve a fair and equitable solution to conflicts.

This Code will be applicable to situations such as: alimony, divorce, guardianship of minors, wills and probate proceedings.

Among the most important aspects of this enactment is the incorporation and recognition of blockchain and metaverse, which are defined as follows:

VII. Blockchain. A set of technologies whose characteristics seek to enable the transfer of value in digital environments through consensus and encryption methods. From a technical point of view, and according to its characteristics, a blockchain is a database, decentralized and distributed in a computer network, formed by a set of linked records where transactions or data are stored, which have been designed to prevent unauthorized modification or manipulation, once a piece of data has been published.

XXVI. Metaverse. Virtual space that enables social coexistence in digital worlds through immersive graphic experiences in third dimension, which usually uses virtual reality, augmented reality, mixed or hybrid reality, tokens and blockchain technologies.

For further information on the note, please contact us.

Source: Diario Oficial de la Federación. Recuperado el 07 de junio del 2023 de:
https://www.dof.gob.mx/nota_detalle.php?codigo=5691385&fecha=07/06/2023#gsc.tab=0

Mariana Z. Crespo Alcalá.

Gloria Ponce de León & Hernández.

The Mexican Senate approves extending vacations from 6 to 12 days.

The Mexican Senate approves extending vacations from 6 to 12 days.

Last Thursday, November 3, the Senate unanimously approved with 89 votes in favor, 0 against and 0 abstentions, the initiative proposes to increase the annual vacation period from 6 to 12 days for workers.

With this initiative, Articles 76 and 78 of the Federal Labour Law are amended to read as follows:

Article 76.- Workers with more than one year of service shall enjoy an annual period of paid vacation, which in no case may be less than twelve working days, and which shall increase by two working days, until reaching twenty, for each subsequent year of service. From the sixth year onwards, the period of vacation shall be increased by two days for every five years of service. 

Article 78.- Workers shall continuously enjoy at least twelve days of vacation.

Now the opinion will be turned to the Chamber of Deputies to be given the corresponding procedure, and if there are no comments against it, the reform will enter into effect on January 1, 2023 if it is published during this year, in case it is published in 2023, it will enter into effect the day after its publication.

The initiative proposes the application of vacation days to both individual and collective work contracts, in effect at the date of entry into force of the reform, provided that they are favorable to workers.

For further information on the note, please contact us.

Source: Senado de la República:

https://comunicacionsocial.senado.gob.mx/informacion/comunicados/4172-por-unanimidad-senado-de-la-republica-aprueba-dictamen-sobre-vacaciones-dignas#:~:text=El%20dictamen%2C%20que%20fue%20aprobado,inferior%20a%2012%20d%C3%ADas%20laborables.

Mariana Z. Crespo Alcalá

Gloria Ponce de León & Hernández.

Use of distinctive signs in social media

Use of distinctive signs in social media

If you are starting a project and plan to use social media to make it known, it is very important that you consider protecting your intangible assets from the beginning, even before registering your profiles or usernames.

The distinctive signs that you are most likely to use in social media and that we recommend you to protect by registering them with the Mexican Institute of Industrial Property (IMPI) are:

  1. Trademark – a sign that is perceived by the senses, that can represent and distinguish a product or service. Usually it can be the name of your project and/or a logo.
  2. Commercial advertisement – phrases or sentences that distinguish you from your competitors and that refer to your project. Also known as “Slogan”.
  3. Trade Name – is the identity of your business. The trade name is the denomination of your trade, establishment, company or industry. It allows your customers to identify your establishment.

Depending on your activities, line of business or services, you may require more than one registration before the IMPI to protect your name, logo, trademark or any other distinctive sign. If you have any doubts, you can contact our team of industrial property lawyers, who will help you to protect the identity of your project in social media.

 

Alan Petz Cantú

Gloria Ponce de León & Hernández

Anti-Money Laundry Law and the Leasing of Properties

Anti-Money Laundry Law and the Leasing of Properties

Did you know that leasing can be classified as a vulnerable activity for money laundering?

The Federal Law for the Prevention and Identification of Operations with Resources of Illicit Origin (LFPIORPI), regulates the activities that are likely to be used for money laundering and terrorist financing.

Within the catalog of activities, article 17, section XV of the LFPIORPI, states that the constitution of personal rights of use or enjoyment of real estate is a vulnerable activity; however, not all leases, by themselves, have this character, because according to the same precept to be considered of this nature, they must be for a monthly amount equal to or greater than 1,605 times the value of the UMA, which are around $154,433.10 pesos, this to be within the identification threshold and $308,866.20 for the notice threshold, considering that the UMA is $96.22 pesos in this 2022

Therefore, not all lessors have the obligation to register their lease as a vulnerable activity, nor comply with the obligations in terms of money laundering prevention; Only those whose monthly income exceeds the indicated threshold have this duty.

If they are in the cases of vulnerable activity, people must comply, among others, with the following obligations:

  • Identify your client or user, and if applicable, the controlling beneficiary.
  • Submit notices on the 17th of each month.
  • Appoint a representative of the obligations (in the case of legal entities)
  • Protect and prevent the destruction and concealment of information supporting operations.
  • Provide the necessary facilities in case of verification, and
  • Prepare a manual of policies and procedures for the verification and updating of data provided by customers.

Currently, the Anti-Money Laundering Law contemplates more than 20 direct and indirect obligations to adequately comply with the Prevention regime, which help to mitigate risks and non-compliance opens the possibility of being credited with some type of administrative sanction, such as It can be the exorbitant fines that range from $17 thousand to $5.8 million pesos for each omission, or from 10% to 100% of the total value of the operation subject to this regime.

Lic. Javier Estrada V.

Gloria Ponce de León & Hernández