When conducting investigations, it is important to identify if a company is closed or open. In Mexico, the incorporation and closure of companies are multi-step processes. By better understanding the steps involved to both open and close a business—in addition to the conditions surrounding them—investigators, analysts, and researchers can better understand events in a company’s history.
Creating a company in Mexico is a seven-step process:
- Choose a company name and submit it for approval to the Secretariat of Economy (Secretaría de la Economía).
- Draft the company’s articles of incorporation. This document includes the company’s purpose, duration, type of business, shareholders, and directors. Read our article about Mexican corporate structures to learn about the different types of shares Mexican companies can have. [link to Mexico Corporate Structures article]
- Announce the use of the company name.
- Register the company with Mexico’s corporate registry, the Public Registry of Commerce (Registro Público de Comercio).
- Register with the Tax Administration Service (Servicio de Administración Tributaria) to receive a tax ID number (Registro Federal de Contribuyentes or RFC). More information about the RFC can be found here. [link to Mexican ID Numbers article]
- Register with the Mexican Social Security Institute (Instituto Mexicano del Seguro Social, IMSS).
Register with any other required institutions including organizations at the state or municipal level. In addition, companies with foreign shareholders must additionally be registered with the National Foreign Investment Registry (Registro Nacional de Inversiones Extranjeras).
Company Liquidation and Closure
Closing a company in Mexico takes fewer steps, but is more complicated than it seems. Although liquidation can take as little as two months, it is often a costly process and can last up to two years.
A study by the Failure Institute in 2017 found that six out of ten entrepreneurs whose businesses failed did not report that their company closed. Mexican Senator Héctor Larios Córdova stated that from 2013 to 2017 less than 1 percent of companies registered at the Public Registry of Commerce closed—well below the international average of 40 percent.
Closing a company in Mexico is a five-step process:
- The shareholders must declare and publish the current shareholder structure in the Publication of Business Companies (Publicaciones de Sociedades Mercantiles or PSM).
- The shareholders must agree to dissolve the company, appoint a liquidator, and publish this information in the PSM.
- The liquidator will collect and distribute the remaining assets of the company to the shareholders.
- The shareholders must approve and publish the final balance, as calculated by the liquidator.
- The Secretariat of Economy cancels the company file in the Public Registry of Commerce, officially closing the company.
On July 25, 2018, the Secretariat of Economy introduced new regulations to simplify the procedure for closing companies. The new regulations established a new online portal that businesses can use free of charge to liquidate.
To liquidate through the portal a business must meet the following eight requirements:
- The partners or shareholders of the company must be natural persons.
- The company does not have an illicit business purpose and has not been involved in illegal activity.
- The company published its current shareholding structure in the PSM at least 15 business days prior to the meeting where the company agreed to dissolve.
- The company has not carried out transactions or issued electronic invoices in the past two years.
- The company must be up to date in its tax, labor, and social security obligations.
- The company cannot have any financial obligations to third parties nor be in bankruptcy.
- The company’s legal representatives must not be subject to criminal proceedings.
- The company is not part of the financial system.