Fast Business Establishment in Mexico: A Legal Perspective on Shelf Companies
Mexico, with its favorable conditions and diverse industry sectors, has emerged as an attractive destination for business owners and investors seeking to establish companies. Its strategic location, skilled workforce, and conducive business environment offer numerous advantages for organizations across various sectors. One efficient method to penetrate this thriving marketplace is through the formation of shelf companies in Mexico. The government has implemented pro-business policies, such as tax incentives and streamlined regulations, encouraging foreign investment.
What is a Shelfo Company?
A shelf company, also known as a ready-made company, is a registered entity that has never engaged in any business activities and holds neither assets nor liabilities. It exists solely on paper, awaiting acquisition by a prospective buyer. Historically, purchasing a shelf company was a preferred method for swiftly obtaining a company without enduring the time-consuming process of registering a new one. However, the landscape has evolved, and registering a company has become significantly faster and more cost-effective than acquiring and modifying a shelf company.
Investors in Mexico must complete several steps and undergo a verification process before acquiring shelf companies. This process primarily entails purchasing the equity stock from the current owners. Buyers will sign a purchase/sale agreement to initiate this transaction. Upon completion, the current owners will transfer corporate control to the buyer through a shareholders’ meeting, formally recognizing them as the new owner. Additional steps may include changing the company’s name and address, modifying its purpose, and replacing the Board of Directors.
Key Advantages of a Mexican Shelf Company
Instant Registration
Ready-made companies in Mexico are pre-established entities with a clean history and no outstanding debts. They can be acquired immediately, allowing buyers to commence business activities within just 24 hours of placing an order.
Enhanced Loan Accessibility
Shelf companies facilitate easier access to bank loans for investment purposes. Due to their established status, these companies convey a sense of longevity and credibility, making them more attractive to financial institutions.
Established Track Record
As shelf companies have spent time “on the shelf,” they benefit from an aged corporation status. This implies that the legal entity carries no bad debts or negative credit history, providing a solid foundation for future business endeavors.
However, there are also potential disadvantages associated with purchasing shelf companies in Mexico:
- Liabilities Transfer: When purchasing a shelf company, be aware that its existing and future debts will pass on to you as the new owner. This could complicate obtaining a new loan, as previous loans must be settled.
- Share Transfer Process: Depending on company regulations, firms can undergo periodic reviews and require changes in ownership. While some of these transactions may go unnoticed, they can surface in the future, causing complications.
- Potential for Fraud: Caution is advised when purchasing shelf companies due to the presence of scams. There is a risk of paying a substantial amount for a company that may not hold its claimed value.
To mitigate these risks, it is recommended to partner with a local expert in acquiring Mexican shelf companies. ROE Latam is an excellent legal advisors for companies looking to enter the Mexican market. With an extensive presence in Mexico, they boast a team of proficient bilingual corporate support specialists, ready to provide tailored solutions for your needs.
it’s important to note that the use of shelf companies in Mexico has seen a decline since the enactment of the Mexican Anti-Money Laundering Law.
This law has increased scrutiny on business transactions, making it even more crucial for potential buyers to conduct thorough due diligence when considering the purchase of a shelf company.
Mitigate potential risks by availing the services of ROE Latam. We invite you to send us a message, and we assure you of our prompt response. Your concerns are our priority.
Should you find this article intriguing, we cordially invite you to explore the following links for further information:
- Unlocking Opportunities: Mexico’s Shift to a 40-Hour Workweek
- Game-Changing News: Tesla Chooses Mexico for its Epic Gigafactory
- First Steps to Start a Business In Mexico