Mexico: Annual legal compliance for Mexican companies – Act now, be compliant and avoid fines

published on 1 April 2021 | reading time approx. 2 minutes

Following the rules set forth in the General Law of Business Entities (Ley General de Sociedades Mercantiles) and the Federal Tax Code (Código Fiscal de la Federación) Mexican entities need to carry out annually diverse corporate procedures in order to continue operating their business according to the Mexican Laws.

Annual Secretarial Services

1. Submission of annual and quarterly reports to the Foreign Investment National Registry of the Ministry of Economy

Mexican companies with foreign investments, likewise the permanent establishments registered in Mexico, shall submit an updated quarterly report (January–March 2021) to the National Registry of Foreign Investments in the event that the company has incurred in any of the following facts:

• Changes in the corporate name, tax domicile or business activities;
• Modifications in the company’s capital stock and/or shareholding structure under certain circumstances;
• Movements at least in one of the following accounts, exceeding an amount of MXN 20,000,000;
  iv. New contributions and reserves or withdrawal of one of it, which does not affect the capital stock of the company;
• Retained profits of the last fiscal year and disposal of retained profits;
• Receivables or payable loans to: subsidiaries residing abroad, the head office, foreign investors residing abroad with ownership interest as shareholders or partners, and residents abroad which are part of the same corporate group.

2. Notification of the Mexican Companies’ Information System SIEM

All corporations are obliged to register themselves or update their information on a yearly basis in the Mexican Entrepreneurial Information System (“SIEM” in Spanish), which is managed by the government via the Mexican Ministry of Economy. We would like to remind you that not complying with this obligation may derive in a fine.

3. Annual meeting

Pursuant to the Articles of Incorporation and Articles 78 and 80 of the General Law of Business Entities (Ley General de Sociedades Mercantiles), the company is obliged to hold a shareholders’/partners´ meeting at least once a year within the time limit established in the company’s by-laws. The next following ordinary general meeting shall approve the financial result of 2020. The meeting shall be held on April, 30 by the latest;

4. Annual notification of the shareholders with the tax authorities

In the first three months of the year, companies with foreign shareholders/partners that are not registered with Mexican tax authorities, should file a notice with information on the address, tax ID, country and name of each shareholder/partner;

5. Corporate books

All corporations have to update their corporate books with the annual meeting minutes with the annual resolutions.

Labor Law

1. Preparing an addendum of individual labor contracts

Companies are obligated to elaborate an addendum with the increases of salaries to be granted to each employee and to implement any reform, imposed during the last months by the authorities, according to the Federal Labor Law (Lefy Federal del Trabajo);

2. Proof of employer registration with the Mexican Immigration Authority (“INAMI”)

This document that allows to hire foreign employees with permission to perform remunerated activities in Mexico for the company has to be renewed each year showing the last tax return of the company of the fiscal year. The update has to be started 30 days before the deadline; In addition, the authorities need to be informed when the company changes its address or its legal representative. The company has a period of 30 natural days to notify the changes before immigration authorities;

3. Reviewing the internal labor regulations (Reglamento Interno de Trabajo)

Mexican entities have to make the corresponding amendments to the Handbook of the Company according to the reforms of the Federal Labor Law (Ley Federal del Trabajo) and/or make the changes according the needs detected in the last year by the company. All changes have to be registered in the Labor Courts (Junta de Conciliación y Arbitraje).

Data Protection

Update the data protection disclaimers according to the reforms of the Federal Law for the Protection of Personal Data in Possession of Private Entities (Ley Federal de Protección de Datos Personales en Posesión de Particulares) and needs of the company; if the company doesn’t have already its data protection advices it must be implemented with the needed tools in order to obtain, analyze, use, file, safeguard and make available for the interested parties all information from third parties or individuals that may be relevant for the optimal performance of the company, complying at all times with the law and with its rules.

Lease Agreements

Review the lease agreement of the office and/or warehouse of the company in order to renew it to continue complying with the tax authorities and provide the current corporate information in its Federal Taxpayer’s Registry Number (RFC).

Intellectual Property

According to the new T-MEC (United States-Mexico-Canada Free Trade Agreement) the companies should have to review the reforms to the Federal Law for the Protection of Industrial Property (Ley Federal de Protección a la Propiedad Industrial) and make the necessary amendments to its authorized registers. If the company does not have already the corresponding registers it ought to protect the intangible company assets, such as trademarks, patents or industrial designs. The registration of such rights can be filed with the Mexican Institute of Industrial Property (Instituto Mexicano de la Propiedad Industrial, “IMPI”).

Bank Account

Based on several reforms in the Federal Law for the Prevention and Identification of Operations with Resources of Illicit Sources (Ley Federal para la Prevención e Identificación de Operaciones con Recursos de Procedencia Ilícita), all banks each year request to update the files with the current corporate information of the company. If the company doesn’t comply with this requirement the banks block the bank accounts of the company until the legal representative provides to the bank the forms filled in with the information and signed.