Sociedad de Responsabilidad Limitada (S. de R.L. or Limited Liability Company) are corporate entities consisting of two or more shareholders, whose shareholders enjoy limited liability. The S. de R.L. is similar in structure to the United States Limited Liability Company. In Mexico, it is treated as a corporate entity not a partnership. However, many foreign jurisdictions like the United States consider the S. de R.L. a partnership for tax purposes.
If only planning a small-business in Mexico, we wholeheartedly recommend the S. de R.L. The S. de R.L. is flexible in the way it may be organized. Such flexibility includes a simplified management structure, which may or may not include a board of directors, the ability to establish preferential voting structures for specific shareholders, or restrictions on transferability of shares. Like in other jurisdictions, the Mexican government established the S. de R.L. to be simple and easy to run.
Start-up costs with a S. de R.L. are minimal. While the S. de R.L. requires a minimum share capital of MX3,000 pesos (US229 dollars) an S.A. de C.V. requires 50,000 (US3,820 dollars).
The S. de R.L. has fewer corporate formalities than the comparable S.A. de C.V. (Corporation). For example, there are fewer restrictions on the manner in which general shareholders’ meetings may be held. Shareholders may be mailed the agenda for the meeting and vote remotely. The statutory issues that must be decided at shareholders meeting may be limited or expanded. For example, the Organizational Agreement may provide that certain decisions be taken without calling a general shareholders meeting such as the firing or hiring of managers, modification of the Organizational Agreement, the admission of new shareholders, and other actions listed in Article 78 of the Mexican General Law for Commercial Entities. Many of the same formalities that are included in the S.A. de C.V. may be included in the S. de R.L. but are not required. Really, the possibilities are endless. An S. de R.L. can be designed to be nearly as complex as an S.A. de C.V. or not.
The S. de R.L. is ideal for Mexican subsidiaries that exist to satisfy legal formalities in Mexico. If it is not planned for the subsidiary to have a large number of employees or to be an active nerve-center, the S. de R.L. might be ideal. For instance, Wal-Mart, Inc. established a subsidiary holding company as an S. de R.L. in Mexico of the same name. Additionally, it established an S.A. de C.V. in Mexico to issue shares on the Mexican Stock Exchange. The Wal-Mart S. de R.L. acts as a holding-company vehicle specifically to own Wal-Mart stock on the Mexican Stock Exchange.
Like all other Commercial Entities in Mexico, the S. de R.L. must continue to file monthly tax reports. However, this is the only major administrative cost that will be incurred on a monthly basis.
Special Shareholder Issues:
Special Administrative issues: