Corporate Law in Mexico

Introduction

Mexican corporate law is governed primarily by the General Law of Commercial Companies (Ley General de Sociedades Mercantiles, LGSM), enacted in 1934 and subsequently amended. The law recognizes several types of business entities and establishes the legal framework for their formation, operation, governance, and dissolution. Corporate law falls within the federal jurisdiction over commercial matters, though state civil codes contain supplementary provisions.

Types of Commercial Companies

The LGSM recognizes seven types of commercial companies: the Sociedad Anónima (S.A., stock corporation), Sociedad de Responsabilidad Limitada (S. de R.L., limited liability company), Sociedad en Nombre Colectivo (general partnership), Sociedad en Comandita Simple (limited partnership), Sociedad en Comandita por Acciones (partnership limited by shares), Sociedad Cooperativa (cooperative society), and the Sociedad por Acciones Simplificada (S.A.S., simplified stock corporation). The S.A. and S. de R.L. are the most common forms.

Sociedad Anónima

The S.A. is the predominant corporate form in Mexico, characterized by limited liability of shareholders, freely transferable shares (subject to statutory preemptive rights), and a mandatory corporate governance structure. An S.A. requires a minimum of two shareholders and must have a minimum capital of 50,000 pesos. The corporate organs are the General Shareholders’ Meeting (Asamblea General de Accionistas), the Board of Directors (Consejo de Administración), and the Statutory Auditor (Comisario).

Sociedad por Acciones Simplificada

The S.A.S. was introduced in 2016 as a simplified corporate form designed for entrepreneurs and small businesses. It may be formed online through the Ministry of Economy’s electronic system with a single shareholder, no minimum capital requirement, and simplified governance rules. The S.A.S. cannot have annual revenues exceeding 5 million pesos and may not transform into another corporate type.

Corporate Governance

The General Shareholders’ Meeting is the supreme corporate organ, with powers to appoint directors, approve financial statements, decide on capital increases, and authorize fundamental transactions. The Board of Directors manages the company’s business and may delegate management to officers. The Comisario oversees the board’s actions and reviews financial statements. Publicly traded companies must comply with additional governance requirements under the Securities Market Law (Ley del Mercado de Valores).

Conclusion

Mexican corporate law offers a flexible framework adapted to different business needs, from the traditional S.A. to the modern S.A.S. The LGSM provides clear rules on corporate governance, shareholder rights, and fiduciary duties, while recent reforms have simplified incorporation procedures and enhanced corporate transparency.