Single Shareholder/Partner Entities in Mexico

Corporate laws and entities in Mexico have several key differences with their respective counterparts in the United States. One of the most notable differences is the number of shareholders, members or partners needed to incorporate any type of entity. While in the United States it is permissible and customary to set up a corporation or limited liability company with one shareholder/partner, this is not allowed under Mexican law. Consequently, we find a considerable number of entities incorporated in Mexico with one "real" majority shareholder/partner and another minority "phantom" shareholder/partner (a straw man), whose sole purpose is to fulfill a corporate formality.

Since 2006 legislators in Mexico have tried to amend Mexico's Law of Commercial Entities, Civil Code and Commercial Code (the "Laws") to allow for sole shareholder/partner entities. Their most recent attempt (2010) was vetoed by President Felipe Calderon. President Calderon opposed the bill because he considered that the reforms would not simplify the creation of sole shareholder/partner entities but would instead over-regulate such entities; in the President's view, the entire purpose of a sole shareholder/partner entity is to be as uncomplicated and practical as possible.

In response to the President's vetoed bill, a new bill was introduced in 2011 by the House of Representatives. Some of their reforms include the following...

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Published In: Business Organization Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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