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Company Liquidation in Mexico

Company Liquidation in Mexico

Company liquidation in Mexico is governed by the Law on Commercial Enterprises, which covers the reasons and procedures applicable in such cases. The process of closing a company in Mexico relies on several steps completed over a period of several months or even more.

Below, our lawyers in Mexico explain the company winding up process. They are also at your disposal with various services related to the liquidation procedure.

Company liquidation reasons under the Company Law in Mexico

As mentioned above, the Commercial Code provides for the grounds under which one can terminate a business in Mexico. They are:

  • conclusion of the activities of the company in Mexico;
  • impossibility of carrying out its activities in accordance with its Articles of Association;
  • a mutual understanding between the shareholders to close the Mexican company;
  • not reaching the minimum number of shareholders;
  • loss of two-thirds of the share capital without the possibility of recovery can also lead to company liquidation in Mexico;
  • inability to pay its creditors, which leads to insolvency followed by bankruptcy.

The reason dictates the company liquidation procedure applicable to the Mexican company.

If you consider your business is undergoing any of these situations, you can consult with our Mexican law firm on the best course action, especially because reorganization measures can be taken in certain cases.

The two procedures for closing a company in Mexico

 Company winding up in Mexico is possible through:

  1. a voluntary procedure;
  2. a mandatory procedure.

While the first one implies a decision adopted by the shareholders to terminate the activities of the Mexican company, the second one relies on the decision made by a court of law.

Liquidation steps

Company liquidation in Mexico must follow specific steps that finish with its dissolution or deletion from the Trade Register. These steps are:

  • the extraordinary meeting of the shareholders which in the case of the mandatory procedure must be held after the ruling of the court;
  • the appointment of the liquidator who will carry out any remaining business and will handle the payment of the creditors;
  • the submission of the decision to liquidate the company with the Trade Register and Mexican tax authorities;
  • creation and filing of the last annual declaration;
  • holding the final general assembly;
  • submission of the request for company dissolution.

If you need assistance in gathering the papers for the company winding up in Mexico, you can rely on our law office.

Liquidators’ role in closing a company in Mexico

The liquidator is one of the most important people in the company liquidation procedure in Mexico. Their appointment lies on the shareholders when the company is closed voluntarily and by the court in the case of the mandatory procedure.

In the case of voluntary winding up, the liquidator is usually one of the directors, while in the other situation, he or she is an officer of the court.

The liquidator will:

  • complete all remaining obligations of the company;
  • make an inventory of the company’s assets;
  • sell the respective assets to reconciliate the creditors’ claims;
  • draft the financial statements of the company;
  • lodge the company’s dissolution request with the Trade Register;
  • maintain the company’s liquidation documents for 10 years.

You can rely on our law office in Mexico for more information on the duties of liquidators.

Simplified company liquidation procedure

Recently, the Ministry of Economy announced a simplified company liquidation procedure without any type of debt.  When it comes to how long it takes to close a company in Mexico, here is what to expect:

  • the minimum period is 12 months;
  • the maximum period is 20 months for the voluntary procedure;
  • in the case of a mandatory procedure, the time frame can exceed 20 months.

Deletion from the Trade Register is the last step in company liquidation in Mexico.

Our lawyers are also at your disposal with immigration services in Mexico. They can help you apply for Mexican residency and citizenship.

Feel free to contact us if you need assistance with company winding up in Mexico.