Mexican Legal Information Q & A
【Q & A on how to advance to Mexican Market】
Q1. What kinds of forms to do business in Mexico are?
A1: There are four ways to enter Mexico.
(1) sole proprietorship
(2) Local corporation
(3) Branch and representative office
(4) Joint venture (Asociación en Participación)
Q2. What will be the responsibility for sole proprietorship or joint ventures?
A2: Business owner of sole proprietorship are directly responsible for their business obligations. On the other hand, a joint venture is a business form that a partner (asociado) that provides products and services and a business partner (asociante) under a contract in a specific speculative business. Asociado will be responsible only for scope of own contribution and Asociente will be responsible for the business and related obligations.
Q3. What are the forms of company in Mexico?
A3: There are the following seven forms in accordance with the Commercial law “Ley General Sociedades Mercantiles”.
(1) Unlimited partnership (Sociedad en Nombre Colectivo)
(2) Limited partnership (Sociedad en Comandita Simple)
(3) Limited liability company (Sociedad de Responsabilidad Limitada)
(4) Corporation (Sociedad Anónima)
(5) Joint-stock limited partnership (Sociedad en Comandita por Acciones)
(6) Corporative (Sociedad Cooperativa)
(7) Simplified corporation (Sociedad por Acciones Simplificada)
In addition, there is a form of limited liability company called Investment promotion corporation (Sociedad Anónima Promotora de Inverción) in the Securities Market Law promulgated in 2005 (Ley de Mercado de Valores), but it is said that adoption of Japanese companies is extremely small.
Q4. What is the difference between a public company and a private company in Mexico?
A4: When a public company is defined as a listed company, the company becomes a public corporation (Sociedad Anónima Bursátil) or an investment promotion public corporation (Sociedad Anónima Promotora de Inversión Bursátil) and is also subject to the Securities Market Law. Listed companies are obligated to establish an auditing body, and various other rules such as information disclosure will be applied.
Q5. Is it possible for a foreign company’s branch to operate in the same way as a local corporation?
A5: Even if it is a branch of a foreign company, if it is established to satisfy legal requirements and has the necessary licenses and approvals, in principle it is possible to develop activities in Mexico. The flow of procedures for establishment is as follows.
(1) Preparation of notarial deed for representation rights to branch managers and lawyers and registration articles of incorporation
(2) Notice of branch establishment to the Foreign Investment Office of Ministry of Economy
(3) The Notarial deed of (1) and the confirmation of the notice of (2) are combined into one notarial deed.
(Although it is not a legally required procedure, it is a certificate that proves the legal establishment of a branch.)
(4) Commercial registration
(5) Acquisition of RFC number (cf. Q7)
(5) Foreign capital registration
Q6. What is the difference between a local corporation and a branch office?
A6: In the case of a local corporation, it has an independent legal entity different from its parent company, and the corporation is treated as a Mexican citizen. Also, since the parent company is a different entity from this local corporation, if the local corporation takes the form of a limited liability company, the responsibility of the parent company for its activities will be limited within the scope of investment. On the other hand, in the case of a branch of a foreign company, the subject of commercial registration in Mexico is a corporation outside of Mexico, and it will be treated as a foreigner, and will be subject to restrictions on foreigners such as land acquisition. In addition, since it is not an independent entity from a corporation outside of Mexico, the corporation that opened the branch must bear unlimited responsibility for the activities of its branch.
Q7. Is it possible for a foreign company's representative office to operate in the same way as a local corporation?
A7: So-called representative offices are foreign corporations stipulated in Article 2736 of the Civil Code according to the Foreign Investment Law (Ley de Inversión Extranjera), which is able to conduct gathering information or managing distribution, not to conduct commercial transaction. Therefore, it is not possible to conduct general business like a local corporation. In addition, as described in Q6., it will be treated as a foreigner, and of course you will be subject to restrictions on foreigners.
Q8. What is the difference between a representative office and a branch office?
A8: In Mexico, branches are considered to be “entities that conduct business activities under normal conditions” as stipulated in the Foreign Investment Law (Ley de Inversión Extranjera). In the case of a branch office, according to the Foreign Investment Law, it must be registered as a foreign capital (Registro Nacional de Inversiones Extranjeras).
Q9. Can the company be named freely?
A9: As a procedure for establishing a company, it is necessary to obtain a business name permit from the Ministry of Economy. This is because the use of a trademark that conflicts with a registered trademark as an element of its own business name or company name is a violation of the Industrial Property Law. When applying for permission, you can enter up to three trade names that you want to use in order of preference.
Q10. What kind of procedure is necessary for company establishment?
A10: Establishing a company in Mexico is a kind of contract, but it is necessary to make it a notarial deed. In other words, after drafting a notarial document containing a company establishment contract by a notary, the parties sign it in the presence of a notary, and the notary also signs it, then the company is legally established. In addition, since the perfection requirement for establishment of a company is registration, a commercial registration is made using a certified copy of the notarial deed of establishment. In addition, the registration for Federal Tax Authority (Registro Federal de Contribuyentes) is done to obtain a number (RFC number) issued by the National Tax Authority. In addition, companies with foreign capital must obtain foreign investment registration (foreign capital registration). Without an RFC number, administrative procedures, opening a bank account, issuing a regular invoice, etc. are not possible, and foreign companies without foreign capital registration cannot effectively carry out various legal acts. All of these procedures are essential.
Q11. What is a calvo clause?
A11: In Mexico, there is a calvo clause that is mandatory for companies that allow foreign investment to be included in the Articles of Incorporation. As a result, foreign shareholders, etc. of the company will be treated in the same way as the nationals with respect to their investment and any rights derived therefrom, and will not seek the protection of their own government, and if they violate it, they are considered that they agree to be confiscated their rights in Mexico.
Q12. Is it possible to issue classified stocks in Mexico?
A12: A company can issue different types of shares, each with different rights.
Q13. What is the minimum capital required to establish a company in Mexico?
A13: There is no minimum capital to establish a local corporation.
Q14. Is it necessary to include a Mexican as a shareholder when setting up a company in Mexico?
A14: In principle, there are no special restrictions on becoming a shareholder, regardless of whether you are a corporation, individual, nationality or Mexican resident. In addition, the Foreign Investment Law (Ley de Inversión Extranjera) prohibits some entries and regulates the entry rate. For more details, please refer to “Q & A on Mexican Foreign Capital Regulations”.
Q15. Is it necessary to appoint a corporate auditor in Mexico?
A15: In the case of a corporation, it is necessary to have a corporate auditor (Comisario) as a supervisory body. In addition, such auditor must not be i) persons lacking ability to act, ii) workers of the company, of shareholders who hold more than 25% of the company's capital, and of companies which the company holds more than 50% of the capital, iii) lineal relatives by blood of, collateral relatives by blood within the fourth degree of kinship of, and relatives by affinity within the second degree of the company directors, are not allowed.
Q16. What kind of company is a small company in Mexico?
A16: In Mexico, companies with 11 to 30 employees and annual sales of more than 4 million pesos and less than 1 billion pesos fall under the category of small companies (Pequeñas Empresas). In addition, companies with 10 or fewer employees and annual sales of 4 million pesos or less are micro companies (Microempresas), and those with 31 to 100 employees and annual sales of 1 billion pesos or more and less than 2.5 billion pesos are medium-sized companies (Medianas Empresas).
Q17. Is there a concept of a dormant company in Mexico?
A17: In the General Commercial Company Law, the word “Sociedad irregular” can be used to refer to a company that has not been registered as a corporation or a company that has been established for an illegal purpose. The word “Sociedad Durmiente” can be used to refer to a company that has not operated could not be confirmed. However, the Andres Manuel Lopez Obrador administration has also raised the eradication of this dormant company as an agenda, which is generally considered a concept.
【Q & A on Mexican Companies Act (Ley General de Sociedades Mercantiles)】
Q1: I heard that the Mexican Companies Act has recently changed. Is that true?
A1: Amendments to Article 73 and Article 129 of the Companies Act, which are expected to affect Japanese companies, were implemented on December 15, 2018. In the case of a Japanese company, it is likely to take the form of a corporation (Sociedad Anónima), in such case, however, it is necessary to create a stock record, and it is required to constantly update the information. However, the amendment has made it mandatory to notify the stock situation through the electronic system of the Ministry of Economy. At the same time, companies that have not registered with the electronic system must also be registered.
Q2: How many shareholders are needed?
A2: It is necessary to have at least two shareholders. However, in the form of simplified corporation (Sociedad por Acciones Simplificada), added by the amendment of the Companies Act on March 14, 2016, the establishment of a single company is permitted. Although it can be a person, since there is an upper limit on annual sales, it is considered that there is little merit in taking this form in reality.
Q3: Is there a face value stock system?
A3: There is a face value stock system. The company is prohibited from issuing shares discounted share price.
Q4: Is it possible for shareholders to make a written resolution?
A4: According to the Mexican Companies Act, if the general meeting of partners of a limited company stipulates that there is no need to convene in the Articles of Incorporation, a written resolution with a certificate of delivery can be made.
Q5: Is it difficult to reduce capital?
A5: By adopting a variable capital system, it is possible to reduce capital without changing the company's Articles of Incorporation. In the case of the variable capital system, the company's capital is divided into fixed capital that is required in the Articles of Incorporation and variable capital that is not required, and the capital can be reduced by changing the amount of variable capital with a few procedures. In this case, the procedures include notification of the capital reduction, the implementation of the general meeting of shareholders, and notarization of minutes of the general meeting of shareholders. In addition to these, however, in case of reduce of fixed capital, a commercial registration is also required.
Q6: Definition of directors
A6: Directors are appointed at the General Shareholders' Meeting as the management organization of the Company. There is no concept of “representative director” in Japan, and it is distinctive from the executive organization such as the president who is responsible for the business execution of the company, but it is also possible for directors to serve concurrently as executive officers.
Q7: How many directors are needed?
A7: There is no legal limit on the number of directors at the corporation (Sociedad Anónima), and management by the sole representative director (Administrador Único) who entrusts all power to one director is also permitted. However, if a company is listed, the number of directors will be limited to 2 or more and 21 or less.
Q8: Is it possible to decide the compensation of directors freely?
A8: In the case of a corporation, directors' compensation must be approved at the annual general meeting of shareholders (Asamblea General de Accionistas Ordinaria).
Q9: Are there any restrictions on the age of directors?
A9: Although there is no provision for the age of directors in Mexico, the Mexican Companies Act stipulates that “the person who cannot do business by law” is a requirement that he/she cannot assume the position of director.
Q10. Is it a duty for a director to be stationed?
A10: There is nothing that clearly stipulates the relationship between the company and directors, and it is considered that directors are not obligated to reside in the company. In addition, there are no restrictions on the nationality of directors in principle, but there may be some restrictions such as directors of financial institutions as stipulated in the Financial Institution Law.
Q11: Is it necessary to prepare the Articles of Incorporation?
A11: The Articles of Incorporation is indispensable for establishing a corporation in Mexico. At the time of establishment, the Articles of Incorporation must be submitted to a notary in advance and examined for necessary matters such as the legality of company establishment.
Q12: Is it necessary to hold a general meeting of shareholders regularly?
A12: A corporation is required to hold a general meeting of shareholders (ordinary general meeting of shareholders) within four months from the end of fiscal year once a year. In addition, when considering matters involving amendments to the Articles of Incorporation, it is stipulated that an extraordinary general meeting of shareholders (Asamblea General de Accionistas Extraordinarias) be held.
Q13: Is it necessary to create a company seal?
A13: There are no regulations requiring a company seal in Mexico.
【Q & A on labor laws in Mexico】
Q1. What is the minimum wage in Mexico?
A1: As of January 1, 2019, the minimum wage in Mexico is generally 176.72 pesos / day in border areas and 102.68 pesos / day in areas other than border areas. Furthermore, for 59 occupations, there is a separate minimum wage for each occupation. In addition, border areas are each area of the following states.
Baja California; Ensenada, Playas de Rosarito, Mexicali, Tecate, Tijuana
Sonora; San Luis Rio Colorado, Puerto Peñasco, General Plutarco Elías Calles, Caborca, Altar, Sáric, Nogales, Santa Cruz, Cananea, Naco, Agua Prieta
Chihuahua: Janos, Ascensión, Juárez, Praxedis G. Guerrero, Guadalupe, Coyame del Sotol, Ojinaga, Manuel Benavides
Coahuila; Ocampo, Acuña, Zaragoza, Jiménez, Piedras Negras, Nava, Guerrero, Hidalgo
Nuevo León; Anáhuac
Tamaulipas; Nuevo Laredo, Guerrero, Mier, Miguel Alemán, Camargo, Gustavo Díez Ordaz, Rio Bravo, Valle Hermoso, Matamoros
Q2. What are the laws related to employment and labor in Mexico?
A2: Labor laws and regulations in Mexico are governed mainly by Article 123 of the Constitution, the Federal Labor Law and the Federal Social Security Law. Main employment labor laws and regulations are as follows.
･ Constitution (Constitución Política de los Estados Unidos Mexicanos)
･ Federal Labor Law (Ley Federal del Trabajo)
･ Federal Social Security Law (Ley del Seguro Social)
･ Law of the Institute of the National Housing Fund for Workers Law (Ley del Instituto del Fondo Nacional de la Vivienda para los Trabajadores)
･ Law of Institute of the National Fund for Workers' life (Ley del Instituto del Fondo Nacional para el Consumo de los Trabajadores)
･ Social Welfare Law (Ley de Asistencia Social)
･ Planning Law (Ley de Planeación)
･ Law of the Institute of Security and Social Services of the Government employees (Ley del Instituto de Seguridad y Servicios Sociales de los Trabajadores al Servicio del Estado)
･ Law on the promotion of the work of micro enterprises and handicraft workers (Ley General para el Fomento de la Microindustria y la Actividad Artesanal)
･ Law on Prevention and Eradication of Discrimination (Ley Federal para Prevenir y Eliminar la Discriminación)
･ Law of the National Commission for Indigenous Development (Ley de la Comisión Nacional para el Desarrollo de los Pueblos Indígenas)
･ Regulations on Industrial safety and health, and labor environment (Reglamento Federal de Seguridad, Higiene y Medio Ambiente de Trabajo)
･ Law on Measurement and Standardization (Ley Federal sobre Metrología y Normalización)
･ Law on Food Assistance for Workers (Ley de Ayuda Alimentaria para Los Trabajadores)
･ Law on the Rights of the Elderly (Ley de los Derechos las Personas Adultas Mayores)
･ Law on Retirement Funding System (Ley de los Sistemas de Ahorro para el Retiro)
･ Housing Law (Ley de Vivienda)
･ Law on Providing Services for Childcare (Ley General de Presentación de Servicios para la Atención, Cuidad y Desarrollo Integral Infantil)
･ Law on Tobacco Control (Ley General para el Control del Tabaco)
• Law on Government employees who work as stipulated in Article 123B) of Constitution (Ley Federal de los Trabajadores al Servicio del Estado, Reglamentaria del Apartado B) del Artículo 123 Constitucional)
Q3. Is it mandatory to conclude a written employment contract in Mexico?
A3: If there is no collective agreement between the employer and the labor union, it is necessary to conclude a written contract between the employer and each worker. The labor contract itself will be concluded if labor is provided for the purpose of paying salary.
Q4. Are there any restrictions on the probational period in Mexico?
A4: If the employment contract is for indefinite period or 180 days or more, the probational period can be set. Although it is not necessary to set a period in advance, this probational period is up to 30 days (180 days for managerial positions). In addition, this probational period should be included in the employment period required for social welfare, etc. applicable to the employee.
Q5. Is Mexico's regulations on working hours the same as Japanese?
A5: According to the Federal Labor Law, the maximum working hours per day is 8 hours in case of day term (6:00 to 20:00), 7 hours in case of night term (20:00 to 20:00), and 7.5 hours in case of astride day term to night term (however, working hours after 20:00 are limited to less than 3.5 hours.) In addition, if the purpose is to close Saturday afternoon, it is allowed to distribute working hours of a week, and since it is necessary to repeat holidays every 6 working days, the maximum working hours of the week is 48 hours, 42 hours and 45 hours respectively.
Q6. Are there any restrictions on break times in Mexico?
A6: It is necessary to provide 30 minutes break per a day. In addition, if employees are in an environment where they cannot leave their workplace during break times, such as at a factory, it must be included into the working hours.
Q7. Is there an upper limit for overtime work in Mexico?
A7: Overtime work is stipulated a maximum of 3 hours per day and 3 days per week.
Q8. What is the extra pay rate for overtime allowances in Mexico?
A8: In case of exceeding the working hours per day, the extra pay rate will be 100% of the normal wage. In addition, if the overtime hours of the week exceed 9 hours, it will be 200% of the normal wage and extra pay shall be twice or three times of normal wage, respectively.
As a general rule, holidays are Sundays. If employees work on Sunday, the extra pay rate will be 25%. Also, if employees work on a statutory holiday, the extra pay rate will be 100%, and the employee have to be paid twice the normal wage.
Q9. How many days are paid leaves in Mexico?
A9: Employees who have worked for more than one year are legally guaranteed the right to take paid leaves. The number of paid leaves that can be taken depends on the length of service, 6 days for less than 2 years of service and 2 days for each year of service shall be added from 2nd year on. After 5 years of service, 2 days are added every 5 years. In addition, when the employee takes paid leave, 25% of the regular wage must be paid as a reward.
Q10. What kinds of vacations are there in Mexico other than paid leaves?
A10: In Mexico, there are maternity leaves other than paid leave. Women who will give birth have the right to take six weeks off before and after childbirth, and the salary is 100% paid during this period.
Q11. What are the provisions for termination of employment contracts in Mexico?
A11: It is stipulated that the employment contract is terminated in the following cases.
(1) When there is mutual consent between the employer and the employee
(2) When an employee was died
(3) When the job ends (completed) or the employee's employment period expires
(4) When a mental or physical disability of the employee is recognized
(5) When it becomes difficult to continue the business because of the reasons that should not be attributed to the employer, such as bankruptcy, force majeure or others.
Q12. What are the regulations regarding the termination of employment in Mexico?
A12: In Mexico, employers and employees can terminate their employment contracts without liability if there are legitimate reasons, and the followings are stipulated as reasons for employers to be able to be terminated without liability:
(1) In case of using falsehood for employment
(2) In case that violent acts including misconduct, threats, insults, etc. are carried out in working
(3) In case of committing violent acts, including fraud, threats, etc., or dishonest acts that disrupts discipline, against colleagues
(4) In case of committing violent acts including threats, insults, etc. without justifiable reason against employers, customers, business partners, or their families
(5) In case of intentionally damaging an employer's property such as a building or machine
(6) In case that the property of an employer such as a building or machine is damaged due to negligence of an employee
(7) In case of committing acts that threatens workplace safety due to carelessness
(8) In case of committing immoral acts such as sexual harassment or bullying in the workplace
(9) In case of leakage of information about trade secrets or confidentiality
(10) In case of absence with no valid reason for more than 3 days out of 30 days
(11) In case of violation against administrative orders without a valid reason
(12) In case of violation against safety rules in the workplace
(13) In case of drunkenness or using illegal drug at workplace
(14) In case of being imprisoned
(15) In case that documents required for working are missing caused by the employee, and the situation does not improve even after two months have passed since the employer knows it
(16) In case of committing other serious acts similar to each above
The employer must notify the employee of the dismissal directly on the same day of dismissal with notice written the reason and the date on which the event occurred, or notify the competent court within five days from the dismissal date. The company is responsible for verifying the reason for dismissal, and if it fails to do so, the employee can request reinstatement or payment of dismissal compensation. Also, if it is judged an unfairly dismissed, the employer will have to pay the wages that the employee would have earned during the dispute.
Q13. Is there a social security system in Mexico?
A13: In Mexico, a social security system is provided to ensure access to health, medical assistance, personal needs and access to social services necessary for the welfare of individuals and groups. The Mexican social security system is a system in which employers are forced to pay the amount calculated from the salary of employees. The burden rate varies depending on the type of occupation and the wage level of employees, and it is estimated to be approximately 15-30%. The operation is carried out by the Instituto Mexicano de Seguro Social (IMSS). Employees can receive benefits such as occupational accident insurance, medical insurance, disability insurance, life insurance, retirement pension, unemployment insurance and other care services.
Q14. Is there a basis law for the Mexican pension system?
A14: Mexico has established a retirement reserve system (Sistemas de Ahorro para el Retro / SAR) under the Federal Social Security Law as a pension scheme for private employees. More detailed provisions will be based on the Law on Retirement Funding System, but employers are obliged to pay 5.15% of the standard salary based on each employee's salary as contributions.
Q15. Are there any restrictions on the retirement age in Mexico?
A15: The retirement age is not stipulated specifically in Mexico. However, since the qualification for receiving a retirement pension is 60 years for those who were registered with IMSS before 1997 and 65 for those after 1997, it is said that 65 years generally.
Q16. Are there any laws and regulations that apply only to female employees in Mexico?
A16: Chapter 5 of the Federal Labor Law has provisions for female employees, in which the rights of women who are pregnant or breastfeeding and women who have health problems specific to women, such as equal rights and obligations with male employees and prohibition of work after 22:00, are established. In addition, the 2019 amendment added equal treatment and securing of opportunities.
【Q & A on Mexican visas】
Q1. What kind of visa do I need to get for working in Mexico?
A1: To receive payment for work in Mexico, the following visa will be needed for Japanese depending on the length of the stay in Mexico.
･ Visa for visitors who have permission to conduct activities to earn rewards for stays of 180 days or less
･ Temporary Resident Visa for activities that earn rewards for stays longer than 181 days
For activities that do not get paid in Mexico, such as business trips or conference participation, a visa is not required if the length of stay in Mexico is within 180 days. If it will exceed 180 days, a temporary resident visa for non-rewarded activities in Mexico will be required.
Q2. What are the requirements for obtaining a visa to earn rewards in Mexico?
A2: To obtain a visa, you must apply for and obtain an immigration permit (Permiso de Internación) from the Mexican Immigration Authority (INM: Instituto Nacional de Migración) at first. This application can also be made by an agent, and at the time of application, the personal information of the visa applicant and details of the job (stay period, title, compensation, etc.) will also be applied.
In addition, an employer registration is required as a recipient in Mexico. Employer registration is that a company that employs foreigners applies to the Mexican Immigration Authority and is registered, so that the employer's qualifications for residence permit employment and the authority of the company representative in the procedures are granted in advance. This employer registration must be done by state, if there are multiple offices that are expected to employ foreigners, each offices shall be registered. Moreover, the employer registration must be renewed every year, and if there is a change, it must be notified within 30 days.
Q3. How do I apply for a visa to get rewards?
A3: After obtaining an immigration permit, a visa application reservation to the Embassy of Mexico with the NUT number (NúmeroÚnicodeTrámite) printed on the immigration permit will be required, and you need to visit the embassy with the necessary documents to be interviewed on the date of the reservation. At the interview, application contents will be confirmed, so it is necessary to confirm the application details on the Mexican side in advance. The visa is valid for 180 days, and in the case of a temporary resident visa with a reward for staying longer than 180 days, you need to enter Mexico using a visitor card (FMM: Forma Migratoria Múltiple), you must obtain a temporary residence card (TRT: Tarjeta de Residente Temporal) within 30 days from your entry date.
Q4. What are the required documents for applying for a visa to get rewards?
A4: The following documents are required to apply for a visa to get rewards.
1. Original passport and 1 copy (A4 copy of photo page)
2. Copy of entry permit (with NUT number)
3. Application form
4. 1 photo
(3cm x 4cm, white background, without glasses, accessories, etc., show a forehead and ears)
5. When applying to an embassy other than the Mexican embassy in Japan, proof of residence permit such as a residence card in that country
Q5. Is it possible for my family to accompany me when I get a visa to get a reward?
A5: If your family members are Japanese nationalities, they can stay without a visa if they stay within 180 days. If they are staying longer than 180 days, they must obtain a residence card in the framework of a family member (Unidad familiar) by completing procedures at the branch office of the Mexican Immigration Authority that has jurisdiction while their 180-day stay.
Q6. Does a temporary resident card have expiration date?
A6: The first TRT is valid for one year, and renewal procedures can be made one month before the expiration date. After the renewal, term of the resident can be selected from 1 year, 2 years, or 3 years, but the temporary resident status can be up to 4 years. You must apply for and obtain a permanent resident card (TRP: Tarjeta de Residente Permanente), when you stay more than 4 years.
Q7. Is there a minimum amount of remuneration that will be taken into account when Japanese obtain a visa?
A7: There are no restrictions on the amount of remuneration that applies only to foreigners in Mexico. However, since the conditions for employment including remuneration will be declared when applying for an entry permit number that is necessary for visa application, it will be important that the contents of the visa application must be the same as the contents of entry permit application, as stated in Q3. In addition, since it is at the discretion of the examination authority that an issuance of an entry permit number and a visa is issued, it cannot be denied that the amount of remuneration that has been declared is considered.
【Q & A on Mexican land legislation】
Q1. Can foreign companies get land in Mexico?
A1: Article 27, Paragraph 1 of the Constitution stipulates that those who have the right to acquire Mexican land shall be Mexican nationality by birth or naturalization or Mexican corporations. A Mexican corporation means a corporation established in Mexico, as described in Q6 of Q & A on how to advance to Mexican Market. In addition, according to the same paragraph, even foreigners (natural persons and corporations) obtain land by accepting the calvo clause and obtaining permission from the Ministry of Foreign Affairs. However, foreign corporations cannot obtain land within 100 km from the border and within 50 km from the coastline (restricted area). In addition, in case of obtaining a land for the purpose of agriculture, animal husbandry, forestry, etc., there is a limitation for area acquired. Even if a Mexican corporation, if it doesn’t have a foreigner exclusion clause (the clause that does not accept foreigners or corporations with foreign capital directly or indirectly as partners or shareholders), in other words, corporations that have foreigners or corporations with foreign capital as shareholders, can only acquire land within the restricted area for purposes other than residence, and notification must be made to the Ministry of Foreign Affairs within 60 business days after purchase.
Q2. Are there any minimum limits for land acquisition price in Mexico?
A2: There is no restriction on minimum acquisition price for land acquisition in Mexico.
Q3. Which organization is applying for land acquisition in Mexico?
A3: First, when a foreign corporation intends to acquire land, it is necessary to submit a letter which written the agreement stipulated in Article 27, Paragraph 1 of the Constitution to the Ministry of Foreign Affairs in advance and obtain permission. After that, you need to ask the notary to make a written contract regarding the purchase of land, and after signing the notarial deed of sales contract, the certified copy is registered with the Legal Affairs Bureau (RegistroPúblicode la Propiedad y del Comercio del Estado). In the case that the acquisition amount is less that 365 times the minimum wage, in addition to procedures by notary, procedures by registrars are also permitted.
Q4. What effect does the registration of land in Mexico have?
A4. Land owned by individuals or corporations in Mexico is treated as private land and must be registered. This registration is a perfection requirement for land ownership.
Q5. Can a third party view the land registration in Mexico?
A5: The real estate register can be viewed by third parties at the branch office of the Legal Affairs Bureau in charge of the real estate. When viewing, it is necessary to apply with the address or block of the real estate, the land register code or the previous registration certificate (copy or original). The register is in Spanish.
Q6. Are land and building subject to separate rights in Mexico?
A6. Traditionally, land owners in Mexico are considered to have the right to enjoy the land and anything that arises from or is on the ground. However, partial ownership of condominiums, etc. is also permitted and registration is possible, but care must be taken as it depends on the laws of each state.
Q7. Are there restrictions on the lease of land in Mexico?
A7: For land within 100km from the border and 50km from the coastline that cannot be acquired by foreigners, foreigners can use them in trust. In this case, it can be renewed for up to 50 years.
Q8. Is there a law in Mexico that protects lessees like the Japanese Land Lease and Rental Law?
A8: At the federal level, there are no laws individually protecting tenants, but there is a civil law (Codigo Civil) that regulates lease transactions.
Q9. Is there a real estate appraiser in Mexico?
A9: Real estate appraiser exists as a national qualification.
Q10. What is the stamp duty rate for acquiring real estate in Mexico?
A10: Stamp duty is not introduced in Mexico. Real estate acquisition procedure costs include notary fees, real estate registration and cadastral registration fees, real estate acquisition taxes, and appraisal costs.
Q11. How much is the taxable amount if the profit is made by transferring real estate in Mexico?
A11. Capital gains tax is imposed in Mexico. A tax is levied on 30% for a Mexican corporation and 25% of the sale or 35% of a sale profit for a foreign corporation.
【Q & A on Foreign capital regulations in Mexico】
Q1. Is it possible for foreign capital to conduct manufacturing in Mexico?
A1. In principle, the manufacturing industry is not a regulated industry, so it is possible to do it even with 100% foreign capital. However, the manufacturing and sales of explosives, fireworks, firearms, etc. are required to have a foreign capital ratio of 49% or less.
Q2. Is it possible for foreign capital companies to do service business in Mexico?
A2. In principle, it is possible for foreign capital companies to do service business in Mexico, but the following types of business are regulated.
Business is reserved in the state (private entry is prohibited)
･ Telegram service
･ Wireless telegraph service
･ Postal service
･ Control, management and supervision of ports, airports and heliports
･ Others specified in laws and regulations
Restricted to Mexican companies that have a foreign exclusion clause in the Articles of Incorporation (cf. [Mexican land legislation] Q1) (i.e. foreign investment is not allowed)
･ Passenger / Tourism / Domestic land transportation (excluding courier service)
･ Provide professional and technical services clearly indicated in applicable law
Businesses restricted foreign investment ratio
･ Investment ratio of 10% or less; Cooperative association
･ Investment ratio of 49% or less; T-series shares of companies that own forest, livestock, and agricultural land, Integral port administration (API), Port pilot services to vessels to perform inland navigation operations under the terms of applicable laws, Domestic shipping excluding tourist cruisers business (who are engaged in commercial ship operations on the coastal or inland routes, or who are engaged in construction, maintenance or operation of ports), Fuel / lubricant supply for ships, airplanes and railway equipment, Radio and terrestrial television broadcasting (however, If the investment ratio is regulated for the same industry under the domestic laws of investors, the rate will not exceed 49% as a mutual principle), domestic air transportation, air taxi transportation, and special air transportation
Regulatory Businesses that require approval from the Foreign Investment Committee when the foreign participation rate exceeds 49%
･ Port services such as towing, mooring and chartering
･ Shipping companies engaged in ocean shipping operations
･ Public airfield authorization or concession company
･ Kindergarten, elementary school, junior high school, high school, private school services of higher learning
･ Legal services
･ Provision of public railway services and construction, operation and management of railways
Q3 Is it possible for foreign capital to do a restaurant business in Mexico?
A3: It is possible that foreign capital is engaged in the restaurant business.
Q4. Is it possible for foreign capital to conduct retail business in Mexico?
A4: It is possible that foreign capital is engaged in retail business in Mexico.
Q5. Is it possible for foreign capitals to conduct hairdressing business in Mexico?
A5: It is possible for foreign capital to is engaged in hairdressing business in Mexico.
Q6. Is it possible for foreign capital to conduct massage business in Mexico?
A6: It is possible for foreign capital to is engaged in massage business.
Q7. Is it possible for foreign capital to conduct business such as gyms in Mexico?
A7: It is possible for foreign capital to is engaged in gym business in Mexico.
Q8. Is it possible for foreign capital to run a cram school in Mexico?
A8: It is possible for foreign capital to run a cram school.
Q9. Is it possible for foreign capital to conduct financial business in Mexico?
A9: Financial business by foreign capital is also permitted, but when establishing a commercial bank as a subsidiary, under the Financial Institution Law, it is limited to banks residing in countries where free trade agreements or similar arrangements are made.
Q10. Are there any franchise regulations in Mexico?
A10: There are no restrictions on foreign investment for franchise, but the Industrial Property Law stipulates matters related to franchise agreements, so it is necessary to comply with those rules, and depending on the type of business, it is necessary to comply with relevant laws and regulations.
Q11. Are there any restrictions on employment of foreigners in Mexico?
A11: It is stipulated that 90% of workers are Mexicans.
【Q & A on dissolution, liquidation and bankruptcy in Mexico】
Q1. What types of dissolution and liquidation are in Mexico?
A1: There are six reasons for dissolution of a company as stipulated in the Companies Act.
(1) Expiration of the duration of the company specified in the Articles of Incorporation
(2) Incapacitate operation of or complete the company's main business objectives
(3) Shareholder agreement
(4) Insufficient number of shareholders
(5) Loss of 2/3 of company capital
(6) Judicial or administrative judgment based on relevant laws and regulations
Q2. What is the flow of dissolution and liquidation procedures in Mexico?
A2: Dissolution and liquidation procedures under the Companies Act are as follows. Procedures by electronic application are also permitted.
(1) Adoption of dissolution resolution, and its registration and notification
(2) Liquidation affairs
(3) Public notice of liquidation balance sheet
(4) Approval, registration and notification of liquidation affairs and liquidation balance sheet
(5) Distribution of residual assets
(6) Company extinction
(7) Document storage by liquidator
Q3. What happens to power of directors and companies in the event of dissolution or liquidation?
A3: After the liquidation of a company is decided and a liquidator is appointed, in principle, directors and companies cannot engage in new operations. All liquidation procedures shall be done by the liquidator.
Q4. What is the liquidation based on judicial or administrative judgment?
A4: The liquidation based on the relevant laws and regulations depend on the type of industry, but in a widely common example, the case that the company was established for the purpose that is against public order and morals, such as a criminal purposes, or the case that it was decided that it should be liquidated by the creditor's appeal are considered.
Q5. Is the same procedure for dissolution in case of insolvancy?
A5: The principle is the same.
Q6. What is the procedure in case of bankruptcy in Mexico?
A6: Bankruptcy proceedings are subject to the Commercial Bankruptcy Law (Ley de Concursos Mercantiles). First of all, the debtor himself or the creditor makes a petition for bankruptcy in the court, but in the case of a claim by the debtor himself, the subsequent process differs depending on whether or not the reconstruction plan is submitted at this time. If the debtor do not submit a reconstruction plan, the court will need an expert to investigate the debtor and ask for an opinion on whether it is worthy of bankruptcy, and will make a decision based on that opinion. If a reconstruction plan is submitted, a bankruptcy declaration will be issued without conducting the investigations described above. The procedure for a creditor complaint is the same as that for not submitting a reconstruction plan, but in this case, there will be a nine-day opposition period. When a bankruptcy is declared, a trustee is appointed and a procedure based on laws and regulations is taken.
【Q & A on Mexican trial and arbitration system】
Q1. What is the judicial system in Mexico?
A1: First, it can be divided into the federal level and the state or district level. Federal level jurisdiction resides in the Supreme Court, Circuit Council Court or Circuit Court, which is responsible for the protection claim lawsuit called Amparo, District Court or Election Court. Each court, except the Supreme Court and Election Court, exercises its rights under the supervision of the Federal Judicial Council. At the state level, it depends on the regulations of each state or district, but generally there are a higher court, first trial court, and lower court from the top. There are courts of various names, such as Small Claims Court, Security Court, District Court, Country Court. These courts are used according to the case contents and the amount of the complaint.
Q2. What is the civil lawsuit system in Mexico?
A2: A civil action in Mexico is started by filing a complaint against the court. Generally, civil procedure is divided into the following five stages. There is no jury system for Mexican civil lawsuits.
(1) Delivery of summons
(2) Mediation hearing
(3) Submission of evidence
(4) Closing argument
Q3. Will Japanese judgments be enforced in Mexico?
A3: In order to enforce a Japanese judgment in Mexico, it must be approved by a Mexican court. Approval is judged based on applicable Mexican legislation.
Q4. Is there any special handling for labor cases in Mexico?
A4: In Mexico, the resolution of labor disputes between employees and employers is handled by the mediation center, which takes the form of a hearing, and then at the labor court, according to the constitutional provisions.
Q5. Is there a mediation system in Mexico?
A5: Some provisions at the federal level stipulate mediation for criminal cases, but there are no civil stipulations for mediation. However, there are private dispute resolution institutions, and there are increasing cases of using mediation in civil matters.
Q6. What is the arbitration system in Mexico?
A6: Arbitration provisions are found in the Commercial Code and the Federal Civil Procedure Law, and the Commercial Code provisions correspond to the UNCITRAL International Commercial Arbitration Model Law. Mexico also ratified the New York Convention in 1971 and the Panama Convention in 1978. The arbitration is based on Mexican and international laws, and the arbitral award is said to be as effective as a court decision. Mexico's arbitral award can be enforced in foreign countries under the New York Convention. Similarly, foreign arbitration awards can be enforced with permission from the court. In this case, the court will be a federal court or a state court, depending on the choice of the parties.
【Q & A on Mexican patents】
Q1. What kind of invention can be patented?
A1. A new invention with industrial applicability resulting from an inventive step is patentable under the provisions of the Industrial Property Law (Ley de la Propiedad Industrial), except for the following: (Article 4 and Article 16 of the Industrial Property Law).
(1) Content that violates public order and morals, morality or proper practice
(2) Essential biological methods for the generation, replication or reproduction of animals and plants
(3) Biological and genetic materials found in nature
(4) Animal breeds
(5) Human body and living materials that make up the human body
(6) Plant varieties
Q2. What is the definition of an invention?
A2. In Mexico, the invention is“Creation of people who change materials or energy that exist in nature into a form that can be used to meet specific needs of people” (Industrial Property Law Article 15).
Q3. Are there any inventions that cannot be patented?
A3. The inventions that cannot be patented are the following (1) to (8). (Industrial Property Law Article 19)
(1) Theoretical or scientific principles
(2) Research results that publicly or publicly disclose things that were not known to humans or that already existed in nature
(3) Diagrams, plans, rules and methods, and calculation methods for performing mental actions, playing games, or performing business activities
(4) Computer program
(5) Information provision method
(6) Aesthetic creations, artworks and literary works
(7) Surgical, therapeutic or diagnostic procedures applicable to the human body or animals
(8) Combinations of known inventions, mixing of known products, or changes in their usage, shape, dimensions or materials. However, the following cases are excluded. In case that, in reality, the degree of their coupling or integration is strong and does not function in individual states, and in case that the characteristics or functions of these components have changed significantly and they have been changed to produce industrial results or uses that were not obvious to those familiar with the technology in the field.
Q4. Which language is used for applying?
A4. The application language will be Spanish. If you are submitting a document written in another language at the time of application, you will need to attach a translation into Spanish language. (Industrial Property Law Article 179)
Q5. What is the official cost required to apply for a patent?
A5. There is no examination request system for patent applications, and all applications are examined, so the following costs including the examination request fee are required at the time of application. In addition, the following costs are subject to a 16% value added tax.
Application (up to 30 sheets): 4550 pesos
61 pesos will be added for each additional sheet.
Amendment or change of application: 818.08 pesos / time
Early publication request: 1185.35 pesos
Q6. Is it possible to change from a utility model application to a patent application?
A6. If it is considered that the content of the application is not consistent with the protection law applied, the utility model application should be changed to a patent application within 3 months from the date of filing or within 3 months from the date when the Industrial Property Office requests the applicant to change the application. A change from a patent application to a utility model application is also possible. (Industrial Property Law Article 49)
【Q & A on Mexican trademarks】
Q1. What are the benefits of registering a trademark?
A1. Once a trademark has been registered, the trademark can be used exclusively, and any person who infringes its rights shall be removed from the use of the same or similar trademark and be claimed damages. There are also administrative measures and criminal penalties.
Q2. What do I need to prepare for a trademark application?
A2. A trademark request is done by filing an application. The following information must be included in the application. (Article 113 of the Industrial Property Law): The application must be in Spanish.
(1) Applicant's name and address
(2) Trademark to be registered
(3) The date on which the trademark to be registered was first used, or a statement that it is unused (if not stated, the trademark is recognized as unused)
(4) Products and services that use the trademark to be registered
(5) Other matters stipulated in the Industrial Property Law
Q3. How much does it cost to a public institution when a trademark is applied?
A3. The following fees are required for filing a trademark. The following amount will be subject to a 16% value added tax.
Application: 2695.18 pesos
Q4. What is the flow of application for trademarks?
A4. The process is “application → public notice → formal examination → substantive examination → registration”. The average examination period from application to registration is said to be 6 to 12 months, but the procedure is often delayed, and it is necessary to apply with plenty of time.
Q5. What will be examined in substantive examination?
A5. In substantive examination, inherent distinctiveness, distinction in relation to products and services, similarity to prior trademarks, etc. are examined.
Q6. If it is difficult to determine whether a trademark to be filed has distinctiveness, is there any other way besides applying?
A6. The decision as to whether the trademark to be filed has discriminating power is based on the judgment of the examiner. Applications will be submitted after sufficient consideration.
If the examiner determines that the trademark registration requirements are not met, the reason for refusal will be notified in writing, and the applicant will be given an opportunity to object or amend.
Q7. What kinds of trademarks cannot be registered?
A7. The followings are defined as marks that are not registered as trademarks. (Industrial Property Law Article 90)
(1) Technical or commonly used names of products or services for which trademark protection is sought and words that are common names or general names of such products or services due to daily terms or business practices
(2) Three-dimensional shapes that are publicly known or that can be used by the general public, three-dimensional shapes lacking uniqueness that make it easy to distinguish from others, and ordinary or usual shapes or properties of products, or shape determined by industrial function
(3) Holograms that are known or lack uniqueness
(4) Mark that is recognized as a whole describing products or service for which trademark protection is sought, including descriptive or instructional terms that serve to identify the type, quality, quantity, ingredient or content, use, price, place of origin or time of production of products or services.
(5) Independent letters, numbers or colors. However, these are excluded if they are combined with or accompanied by a mark with special saliency.
(6) Translation of words that cannot be registered, rearrangement of their spellings and artificial combinations, and transliteration of marks that cannot be registered
(7) Unauthorized reproduction or imitation of national, state, local government or other administrative entity's emblem, flag or insignia, and names, abbreviations, marks, or armorial bearings and publicly used signatures of international organizations, government organizations, NGOs or other recognized organizations, and designations related to them.
(8) Duplicating or imitating official signs or official seals for management or guarantee adopted in Mexico without the permission of the competent authority, or marks that are duplicating or imitating coins, banknotes, commemorative coins or other Mexican or foreign legal coins
(9) Duplicating or imitating the names, marks or graphic representations of decorations, medals and other prizes awarded at official trade shows, product exhibitions, gatherings, cultural events or sporting events
(10) That is which with a unique or ordinary geographic name and map, as well as a noun or adjective indicating the country and display the source of the products or services and cause confusion or misperception of such source. It includes expressions such as “género”, “tipo”, “manera”, “imitación”, “producido en”, and “con fabricación en”, and expressions that cause such misunderstandings to consumers.
(11) Names of cities or places known for the manufacture of specific products or the provision of specific services, which are named to protect such products or services. It includes expressions such as “género”, “tipo”, “manera”, “imitación”, “producido en”, and “con fabricación en”, and expressions that cause such misunderstandings to consumers.
(12) Names of prominent private property characterized by the manufacture of specific products or provision of services, without the consent of the owner.
(13) Names, surnames, nicknames, or pen names of prominent persons that, if used, could cause a connection or could lead to consumer misunderstanding, misuse, or confusion. However, in the case of the person concerned, the case of the person or the person who has the right are excluded. Similarly, if there is no explicit consent of the rightful person or the person is dead, the person's image, identifiable voice, portrait or video.
(14) Names and titles that are confused with the titles of literary and artistic works, and imitations of such titles, which are widely misunderstood and misunderstood as related to those works. Stuff. However, this excludes cases where explicit consent has been obtained from the rightful owner of the work. Similarly, a mark that is a reproduction of all or part of a literary or artistic work without explicit approval from the author. Similarly, a fictional character or symbolic character depicted in such a work, or a figure with a character that can be misunderstood as related with such characters. However, it excludes the application by the author himself or a third party with the author's consent.
(15) Marks that may be generally misunderstood or misleading, such as inappropriate display of company names, characteristics, properties, and components that can distinguish services and products.
(16) A mark that is the same as or similar to a trademark that the Industrial Property Office judges or declares that it is well known in Mexico based on the provisions of Chapter 4 Section 2 of the Industrial Property Law for being used for products or services and applicable in the following cases. However, this does not apply if the registered applicant is the owner of a well-known trademark.
(a) When there is a risk of confusion with the owner of a well-known trademark or misunderstanding of the alliance
(b) When there is a risk of unauthorized theft by the owner of a well-known trademark
(c) When there is a risk of harming the reliability of well-known marks
(d) When there is a risk of diluting significant features of a well-known trademark
(17) A mark that is similar to or confused with a trademark that the Industrial Property Office judges or declares that it is famous for use in products or services under the provisions of Chapter 4, Section 2 of Industrial Property Law. However, this does not apply if the registered applicant is the owner of a well-known trademark.
(18) A mark that is the same as or confusingly similar to another trademark that has been filed earlier and is already registered and still valid, and also such mark will be used for a same or similar product or service.
(19) The trade name used by a company or industrial, commercial or service establishment whose main business is the manufacture, sale or provision of products or services to be protected by the mark, and that is same or confusingly similar to those used on the registration filing date of the mark or before the date of first use oath. However, this shall not apply if the trademark registration application is filed by the owner of the trade name and no other same trade name has been published.
(20) The official name of a natural person that is same as or confusingly similar to the trademark that is being applied for the same or similar products or services and is proceeding registration, the registered trademark that is still valid, or the published products name.
(21) Names representing the varieties of protected flora and fauna, or marks that reproduce or mimic their components, which may mislead consumers about the designated products or services.
(22) Marks for which an application was filed in bad faith. In addition, when a registration application is made in a manner contrary to good use or practice in the industrial property rights system, or when an intention to gain profits by harming a legitimate rights holder is seen as malicious.
Of these, conditions (1) to (6) do not apply when a trademark for a product or service having characteristics resulting from use in the market is filed.
In addition, the condition of (2) is not applied to the case of the trademark is three-dimensional and has unique characteristics resulting from the use in the market because of that is understood the form inherent to the property or functionality does not acquire uniqueness.
Q8. How do I specify designated products or designated services?
A8. Mexico is a member of the Nice Agreement, and the Nice classification is used for the classification of products and services. The applicant can specify a classification according it, but the classification to which it belongs is ultimately determined by the Industrial Property Office. In Mexico, one application and one division system is adopted, so designation of products and services across multiple divisions is not permitted.
Q9. Can I use the Mad Pro system when applying for a trademark in Mexico?
A9. Since Mexico joined Mad Pro in 2013, you can use the Mad Pro system.
【Q & A on Mexican lawyer system】
Q1: How can I get a Mexican lawyer qualification?
A1: A Mexican lawyer (abogado) qualification (Cedula Professional) must be obtained by registration with the Ministry of Public Education (Secretaría de Educación Pública) after obtaining a law degree approved by the Ministry of Public Education or a specific national university. It is said that it usually takes 4 to 5 years to obtain a law degree, and after completing the lecture, it is necessary to conduct practical training as volunteers.
Q2: Is there a bar association in Mexico?
A2: In Mexico, lawyers do not need to register with a bar association when they work as a lawyer. Therefore, there are several bar associations, but it is said that very few lawyers are registered.
Q3: Can foreign law firms work in Mexico?
A3: Currently, there are no special regulations specialized for foreign law firms. Foreign law firms can provide advisory services on foreign and international law as a company. If the foreign investment ratio of the corporation exceeds 49%, approval from the Foreign Investment Committee is required.
Q4: Does Mexico have the same qualifications as judicial scriveners and administrative scriveners?
A4: There are no related legal experts such as judicial scriveners and administrative scriveners in Mexico, and lawyers comprehensively perform these duties.
【Q & A on Mexican law revision】
Q1: What is the trend of Mexican law revisions?
A1: It is said that Mexico is undergoing frequent amendments. Looking at recent Mexican legislative revisions, there are many things that can lead to improvements in the business environment, such as revisions to labor laws and revisions to the digitization of administrative procedures. However, for example, a constitutional amendment was made in 2016 as a means of resolving labor disputes, but there are also problems such as the fact that the rules at the working level have not been established and the implementation is delayed, so it is important to understand the situation.
Q2: Are there any future legal revisions?
A2: As Lopez Obrador took office in 2018, it is drawing attention that many legal changes will be made. In particular, the Labor Law and Tax Law are attracting attention as they may be revised significantly.