Mexico: When Do You Need A Legal Representative In Mexico?

One of the first steps to establish a company in Mexico is to appoint a legal representative. A legal representative acts as an "official face" on behalf of your company before government authorities, as well as other public and private institutions such as the IMSS (Instituto Mexicano del Seguro Social) and banks. Current Mexican law (Ley General de Sociedades Mercantiles, Art. 10º) stipulates that in order to incorporate a company in Mexico, a legal representative must be appointed by the shareholders of the business.

A legal representative will look after the interests of a company and ensure the company is best represented before local authorities. Choosing the right legal representative in Mexico for your firm is key to your business's foreign expansion.

Your legal representative should understand your company, have extensive experience operating in the Mexican business environment and demonstrate an awareness of commercial obligations and liabilities. This is of particular importance if you plan to reside outside Mexico or are unfamiliar with the business culture.

Who can become a Legal Representative?

Your legal representative in Mexico must be a Mexican or a foreign national with the legal right to live and work in Mexico.

There are various requirements that must be met so that one can become a legal representative of a Mexican company:

• They must be Mexican or a foreign national with the legal right to live and work in Mexico.
• They must be at least 18 years old and have an official ID issued by the Mexican government.

What can a Legal Representative do in Mexico?

There are various considerations to bear in mind when choosing your company's legal representation. The position of a legal representative carries considerable responsibility within a business. Essentially, they are appointed to act within the best interests of the company at all times. Therefore, it is important to be aware of the authority and power your legal representative carries within your firm.

In Mexico, a legal representative has the power to:

• Sell company assets
• Draft and sign contracts on behalf of the company
• Pay state contributions
• Lease office space and make purchases on behalf of the company.

It is important to note that the powers granted to a legal representative can be limited. Each business has a different management structure, so it is important to review the extent of authority a legal representative is allowed. A limit of powers and decision making must be specified on the initial power of attorney submitted before a public notary when incorporating a company. This document should be agreed upon by both parties as it is a legally binding document. It is recommended that the shareholders choose a trusted person to be the legal representative and someone who is aligned with the company values and vision. For these reasons, invest time in finding representation that is the right fit for your company.

Duties and responsibilities of the Legal Representative

As mentioned before, a legal representative is necessary to incorporate a company in Mexico. Once the power of attorney has been granted, your representative may assist you with the follow business activities:

Banking

To open your corporate bank account your legal representative will require evidence of a fiscal address, an official Mexican ID and entering contractual agreements with a bank

A legal representative will be responsible for opening a corporate bank account for the company. This process requires evidence of a fiscal address, an official Mexican ID and entering contractual agreements with a bank. Your legal representative may attend to any official notifications received government authorities.

Ultimately, the company is responsible for any notices that are mishandled. Therefore, it is key your representative has a clear understanding of Mexican taxation and accounting principles for compliance purposes.

Labor and immigration

Your legal representative in Mexico has the power to sign contracts and enter employment agreements with staff. In the event of any employment disputes, your legal representative can represent the company before a labour tribunal or government authority.

For businesses expanding to Mexico, a legal representative will be of large assistance when applying for work visas. Coordinating with the Mexican immigration authority (Instituto Nacional de Migracion) can be a long and drawn-out process when you are not familiar with local labour laws and immigration policies.

Shareholders

Other responsibilities of a legal representative may include holding annual shareholders meetings and recording any agreements or resolutions reached during these meetings.

By law, at least one meeting must be held per year. Furthermore, if such powers are assumed, your legal representative can grant and revoke powers to other individuals. This function may be of benefit when one shareholder is unavailable and an obligation must be met in their absence.

Trading

A legal representative that is aware of HS codes, local tariff and duty rates and customs clearance requirements will save your business money while maintaining complianceFor companies engaged with trade activities, such as importing and exporting goods, a legal representative is required for certain processes.

A legal representative that is aware of HS codes, local tariff, and duty rates and customs clearance requirements will save your business money while maintaining compliance.

Dissolution

If for any reason, the company shareholders decide to cease commercial activities, dissolve and then liquidate the company, a legal representative will be required. In order to start the liquidation process, there are several legal documents that require revision and signing. Your legal representative can also be named a liquidator and act on behalf of your company before authorities in Mexico.