ART OF DOING BUSINESS IN MEXICO FORMAL AND INFORMAL REQUIREMENTS

FORMAL REQUIREMENTS
1. Choice of Entity : A potential investor domestic or foreign has free choice to operate through any form of entity but usually a stock corporation is commonly used entity for both domestic and subsidiary of a foreign corporation. Other choice of entities include limited participation, unlimited partnership.

1.2 Choice of entity for Foreign Corporation: Limited liability company is used specially if the objective is to treat Mexican company as foreign entity for tax purposes.
2. Government Approval : Prior authorization of a company name has to be required from Ministry of Foreign affairs to form any business entity in Mexico.

3. Formation Requirements: The minimum share capital for a regular corporation established is 50,000 pesos and it must have at least two shareholders.

3.1 After all governmental authorizations have been secured, the charter and bylaws must be formalized in a public instrument and then it should be registered in the Public Registry of commerce.
4. Repatriation of Funds: There is no restriction on remittance of profits or on the repatriation of initial or subsequent investments. 5. Tax Consideration : No Mexican companies are considered as transparent for tax purposes in Mexico. Certain Mexican trusts are considerate for income tax purposes.

6.Legal Aspects: Patent protection is available for non-extendable term of 20 years, trademark for 10 years and copyright piracy is severely punished. 6.1 The stated do not have authority to incorporate corporations. 6.2 When Foreign Investment is involved authorization from Foreign Investment Commission is granted only. 7.Competition Policy: Federal Law of Economic Competition an anti-trust law prohibits monopolies, monopolistic activities, unlawful business activities. Several penalties are imposed on price fixing, selective distribution etc.

8. Price Controls : Federal Law of Economic Competition

sets forth the rules of determining the prices of products and services which are necessary for national economy or popular consumption.

9. Environmental Considerations: The environment laws and regulations are enforced on a broad scale INE (national institute of ecology )and PROFEPA. 10.Labor Considerations: 10.1 It is mandatory for employers to execute individual employment agreements in writing. 10.2 The working hours per week range from 42-48 hours depending on the type of work shift: day, night or mixed. Overtime is permitted by the law. 10.3 Fringe benefits are high in relation to total payroll costs, employee benefits are compulsory under the Labor Law.

11. Business Ethics : Corruption, bribery, tips are part of Mexico Business and the foreigners perception of Mexico. Historically, corruption in Mexico is blamed upon the Spanish conquest. Are bribes necessary for doing business in Mexico? No !!! 11.1 Most business can be done without them. 11.2 Mexican federal public policy and local and state governments have been actively reducing and eliminating institutionalized corruption and penalizing government workers involved in illegal acts.

INFORMAL REQUIREMENTS
1. Communication style: In Mexico, communication in business tends to be indirect and subtle, and presented in such as way as to be diplomatic and non-confrontational. 1.1 When doing business in Mexico, it is vital to take this indirect approach with your Mexican counterparts as it will help to strengthen your business relationships. 1.2 Mexicans will often disguise "no in responses such as maybe or well see.

2. Family: A fundamental Mexican value is that of the family and the place it holds in society, the importance of family is evident in many Mexican companies. 2.1 Family-owned or controlled businesses are not uncommon and you will often find relatives working for the same company.

3.Time: In Mexico, time is considered to be flexible, relaxed and circular, and is therefore unlimited. 12.1 Consequently, business meetings will run at a slower pace and your associates may take longer to reach a decision. 12.2 Punctuality and time keeping are less closely observed; therefore, planning a tight daily schedule when doing business in Mexico should be avoided.

4. Working Practices: It is important to schedule business appointments in advance and confirm them once you have arrived in Mexico. Business lunches are a favorable method of conducting business in Mexico. Hierarchy and social status are particularly significant in Mexican culture and the boundaries they create should be observed.

 Final decisions are generally made by a central authority figure. General consensus is taken into account and subordinates are encouraged to openly express their point of view. In Mexican business culture, cultivating close personal relationships and building trust are considered vital components for a successful working environment. During an initial business meeting, the most appropriate form of greeting is a warm and firm handshake. Mexicans adopt a more formal approach to business relationships; therefore it is customary to address your Mexican business partner with the appropriate title.