Mexican “Shelter Company” Arrangements
Starting to do business in a new country is not an easy endeavor. Legal incorporation, tax matters, human resources’ management, cultural differences and language are only some of the elements which play key roles in the success of any business start-up in a new country.
We believe that the proper and timely advice by professional Mexican legal counsel effectively aides companies in their start-up of operations in Mexico. Duly advised, foreign companies may negotiate and formalize tailor-made shelter or service arrangements, under which a Mexican expert service company may provide a Mexican “fronting” legal entity and the business advice required for a smooth business start-up, in most cases assuming responsibility over all administrative issues as well, including human resources, treasury management, and certain operational matters.
The variety of arrangements is unlimited. Through these types of agreements and the business advice and input of a top-quality legal team working together with the experienced service provider, foreign companies may rely on an experienced multi-cultural staff and reduce the risks involved in the management of a business start-up operation in a new country. Consequently, the foreign company’s team may fully concentrate on its core business.
Through a shelter arrangement, a foreign company may start to do business in Mexico even without incorporating a Mexican subsidiary, and not directly subject to a number of governmental approvals and regulatory matters. When properly structured, these agreements allow for the foreign company to achieve full control over all legal aspects of the company and business after the expiration of a previously agreed-upon term, usually when the business is up and running, your local team is trained in the domestic business and familiar with the business culture.
Through the proper legal structure and the negotiation of a tailor-made service agreement, practically there is an open-end of possibilities. All combinations are possible.
The complex legal issues arising of a business start-up require the advice of a professional and sophisticated legal team. Foreign companies involved in these types of projects in Mexico are encouraged to contact Mexican legal counsel for this advice, usually working closely and in coordination with the company’s in-house counsel or advisors.
Some of the risks involved in a new business venture may be efficiently managed. Retainingan experienced law firm to deal with the start-up business risks and their negotiations is a very good start towards efficiently managing them.
Disclaimer: J.A. Treviño Abogados S.A. de C.V. (the “Firm”) does not necessarily endorse, and is not responsible for, any third-party opinion expressed in this article, and therefore the Firm will not be liable for the content of such opinions. Any article, comment, quote or any other information appearing under the authorship of any person or legal entity other that the Firm, even if related to the Firm, solely represents the opinion, comment or position of such author. The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any subject matter. The information contained in this article is protected as property of the Firm. No recipient of this article, client of the Firm or otherwise, should act or refrain from acting on the basis of any content included in the article without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the relevant jurisdiction. This article contains general information and may not be updated. The Firm expressly disclaims all liability in respect to actions taken or omitted based on any or all of the contents of this article.
