Chronological steps to carry out a liquidation of mercantile companies in Mexico and derived tax procedures.
For the purposes of this work, tax aspects are highlighted in italics and the following abbreviations are used:
| LISR | Law on Income Tax | LSS | Social Security Law | |
| LIVA | Value Added Tax Law | LFT | Federal Labor Law | |
| LIMPAC | Asset Tax Law | IMSS | Mexican Social Security Institute | |
| CFF | Federation fiscal Code | INFONAVIT | Institute of the National Housing Fund for Workers | |
| RCFF | Regulation of the Fiscal Code of the Federation | SHCP | Secretariat of Finance and Public Credit | |
| LGSM | General Law of Commercial Companies | DF | federal District | |
| RPPC | Public Registry of Property and Commerce | decree | Decree of March 22, 2001 |
No. 1. Dissolution of the Company.
To liquidate a company the first step is its dissolution; dissolution leads to liquidation; it is its beginning. The causes of dissolution may be those established in the General Law of Commercial Companies or any other that has been established in the bylaws.
The Mexican General Law of Commercial Companies contemplates the following causes of Dissolution:
I. Due to the expiration of the term established in the social contract.
II. Due to the impossibility of continuing to carry out the main purpose of the company or because it is consummated.
III. By agreement of the partners taken in accordance with the social contract and with the law.
IV. Because the number of shareholders becomes less than the minimum that this law establishes, or because the parties of interest come together in a single person.
V. For the loss of two thirds of the capital stock.
Art. 229 LGSM
No. 2. Formalities for Assembly.
The partners of the entity will be summoned to liquidate an Extraordinary General Meeting of shareholders in which the Proposal for dissolution of the company is mentioned, within the points of the agenda.
Art. 182 LGSM
• For this, it is necessary to comply with the formalities for calling the meeting established in the bylaws.
• Obtain a list of attendance to the same signed by all the assistants or representatives of partners.
• Transcribe the minutes of the meeting and have it signed by the president and secretary of the same.
Third section, fifth title, LGSM
No. 3. Formalities for Assembly.
The meeting must contain the validity requirements established in the LGSM and the bylaws of the company.
No. 4. Agenda for the Assembly.
The Extraordinary Shareholders' Meeting is held in which the points of:
• Reason for dissolution of the company.
Art. 229 LGSM
• Resignation of the Sole Administrator or the Board of Directors and commissioner (s)
Art. 233 LGSM
• Appointment of the Liquidator (s) who may be the Sole Administrator and / or any other person. Even the latter may or may not be an accountant or lawyer, although it is recommended that it be someone who is familiar with this type of operation since the liquidator must:
Art. 241 and 242 LGSM
- Conclude social operations that were pending at the time of dissolution Paying taxes, liquidating liabilities Collect what is owed to the company and pay what it owes Sell the assets of the company Liquidate each partner their corporate assets.Practice the final balance of the liquidation, which must be submitted to the discussion and approval of the partners, as appropriate, according to the nature of the company. The final balance, once approved, will be deposited in the Public Registry of Commerce.
Art. 247 fracc ILGSM
- Obtain from the Public Registry of Commerce the cancellation of the registration of the social contract, once the liquidation is concluded.
Art. 241 and 242 LGSM
Also among others:
- You must keep (in deposit, which means that in case of non-compliance you can be sued for it) the documentation for 10 years.
Art. 245 LGSM
- And meet any requirement of the company for periods even before the liquidation, among others, and to whom in the same assembly all powers are granted, including domain powers.
The liquidator is jointly and severally liable for the contributions (LISR, Social Security, Infonavit, state taxes, etc., which had to be paid even prior to the liquidation period and those caused by the operations carried out in the liquidation.
The provisions of the preceding paragraph shall not apply when the company in liquidation complies with the obligations to present the notices and provide the reports referred to in this Code and its Regulations.
Art. 26 Fracc. III CFF
When there are several liquidators, they must act together.
Art. 239 LGSM
• Delivery from the sole administrator to the liquidator (s) of all documentation, assets and liabilities of the company.
Art. 241 LGSM
• Appointment of the Special Delegate who will be in charge of registering the Dissolution Assembly with the Public Registry of Property and Commerce.
Art. 232 LGSM
No. 5. Appointment of Liquidators.
In the absence of provision of the social contract, the appointment of the liquidators will be made by agreement of the partners, taking in the proportion and form that this law indicates, according to the nature of the company, for the resolution on dissolution. The appointment of liquidators must be made in the same act in which the dissolution is agreed or recognized. In cases where the company is dissolved due to the expiration of the term or by virtue of a final judgment, the appointment of the liquidators must be made immediately after the term ends or the judgment is issued.
Art. 236 LGSM
No. 6. Appointment of Liquidators.
As long as the appointment of the liquidators has not been registered in the Public Registry of Commerce and they have not taken office, the administrators will continue to carry out their duties.
Art. 237 LGSM
No. 7. Compliance with Tax Requirements.
Once the Liquidation Assembly has been registered in the RPPC, the liquidator will proceed to present before the SHCP the notice of Start of liquidation (Form R-1 Change of fiscal situation, box 9) This notice must be given to the authority within the month following the day in which the liquidation begins which must be signed by any of the named liquidators.
Art. 22 fraction I RCCF
The liquidator must present a notice of liquidation of the company and closure of establishments and premises.
Art. 14-IV RCFF
The notice of initiation of liquidation of companies must be given before the corresponding collecting authority, within the month following the day in which the liquidation procedure begins in the R1 format, box 9, indicating the date of the meeting.
Art. 22-I RCFF
Submit within the month following the start of settlement:
• Informative statement of salary credit.
• Informative statement of wages and deductions.
Art. 83 fraction. V LISR
No. 8. Irregular Exercise and Tax Consequences.
The company will end its fiscal year early on the date that it enters into liquidation, therefore it will be considered that there will be a single fiscal year for the entire time that the liquidation lasts.
Article 11 CFF
You must file within the following three months an annual statement for the irregular exercise due to dissolution (from January 1 to the date of dissolution) for the purposes of ISR, VAT and Asset Tax.
Art. 58 fraction. VIII LISR
Art. 9 LIMPAC
Art. 5 LIVA
Submit informative returns:
• Of loans abroad.
Art. 58 Fracc. IX LISR
• From customers and suppliers, ISR withholdings.
Art. 58 Fracc. X LISR
• From investments in low tax jurisdictions.
Art. 58 Fracc. XIII LISR
No. 9. Formalities for Liquidation.
The liquidation will be practiced in accordance with the relative stipulations of the social contract or the resolution taken by the partners when the dissolution of the company is agreed or recognized. In the absence of such stipulations, the liquidation will be carried out in accordance with the provisions of the LGSM.
Art. 240 LGSM
No. 10. Asset Sale Process.
The liquidator will begin by selling the assets that the company has to pay the liabilities that it has. Making firstly the payment of settlements to employees, (calculating the income tax withholding if applicable): calculation, preparation and payment of employer-employee settlements to the IMSS and INFONAVIT, taxes withheld and caused to the SHCP and finally to settle the creditors and suppliers.
Labor aspects:
As a result of the liquidation of the company, the employment relationship will have to be terminated in accordance with Mexican Law, therefore, the following concepts must be covered in addition to the salary earned and the benefits accrued:
• Compensation of three months' salary.
(Calculated at the integrated salary according to article 89 of the LFT)
Art. 48 LFT
• Seniority premium.
12 days per year of service (with a cap of 2 times the general minimum wage in force in the economic zone where the service is provided)
Art. 162, 485 and 487 LFT
No. 11. Liquidation Process.
Once liquidated (made liquid, that is, converted to cash) the corporate assets, if there is any remainder, it will be delivered to the partners in accordance with the corporate bylaws.
Art. 243 LGSM
No. 12. Liquidation of Social Assets.
No partner may demand from the liquidators the total delivery of the corresponding assets; but the partial that is compatible with the interests of the creditors of the company, as long as their passive credits are not extinguished or their amount has been deposited if there is inconvenience to make their payment.
The partial distribution agreement must be published in the official newspaper of the company's domicile, and creditors will have the right to object in the manner and terms of article 9.
Art. 243 LGSM
No. 13.
In the liquidation of joint-stock companies and limited companies by shares, the liquidators will precede the distribution of the remainder among the partners, subject to the following rules:
I. The final balance shall indicate the part that corresponds to each partner in the corporate credit.
II. Said balance shall be published three times, ten days out of ten, in the official newspaper of the town where the company is domiciled.
Art. 247 Fracc. I and II
No. 14. Publication of Balance Sheets.
Once the payment of the corporate credit is concluded, the liquidator must publish the final balance of the liquidation exercise three times for 10 days each, in the official newspaper of the town (or of the federation, according to social statutes).. In the event of any remnants, the manner and time in which their corporate assets will be delivered to each partner.
Art. 247 Fracc. II LGSM
This in order that if there is a creditor who does not agree with your payment, object to the aforementioned settlement.
No.15.
Once the balance sheet is approved, the liquidators will proceed to make the corresponding payments to the shareholders, against the delivery of the shares.
Art. 248 LGSM
For the payment of the corporate asset, the liquidators must update the value of the shares owned by each shareholder and pay with the remainder of the sales of the assets, both their balances in favor, if any, as well as the value of his social credit. (To carry out this step, you must first determine which tax option is more favorable to each partner, see if the company has cufines, update the capital contributions, etc.) The intervention of a prosecutor and a lawyer is recommended to count with a study which serves as the basis for the settlement.
No. 16.
Once the sale and payment of rights and obligations has been carried out, an Extraordinary General Meeting of shareholders will be called in which the annual liquidation balance will be approved.
Art. 247 Fracc. III LGSM
No. 17 Final liquidation assembly
The Extraordinary General Meeting of shareholders is held in which the following points are expressed:
- The liquidator will render a detailed report of the legal, fiscal and civil procedures that he carried out in the performance of his assignment as liquidator, mentioning among other things; In order to determine the value of the assets, the approval, where appropriate, by the partners of the payment of taxes, liquidation of employee liabilities, to government offices, suppliers and creditors.
In the case of remnants, point it out and submit a project for the reimbursement of their shares in accordance with the statutes for the consideration of the partners, in the assembly with partners they will decide what is conducive.
- As well as the determination of the form, date and requirements for the payment of the corporate assets of the shareholders against delivery of the share titles they are owners.
Art. 248 LGSM
- The appointment of the Special Delegate will be made who will be in charge of registering the Final Settlement Assembly with the Public Registry of property and commerce.
No. 18. Remains not reimbursed to partners.
It is worth mentioning that the sums that belong to the shareholders and that are not collected within the following two months will be deposited in a credit institution, and the latter will pay them to the shareholder, their legal beneficiaries or by court order in the event of the death of the partner., against delivery of their shares.
Art. 249 LGSM
Once the Liquidation Assembly has been registered in the RPC, the liquidator will proceed to present the final statement for the year to the SHCP. Which will comprise the period from when the settlement began and until the date it concludes
Art. 11 LISR
Art.11 sec. CFF paragraph
No. 19. If the settlement concludes:
a) Before 6 months after the dissolution meeting:
Submit final statement of the settlement exercise.
b) After six months: Submit statements no later than the 17th of the month following the end of each semester.
These declarations are presented for cumulative periods of six months counted, from the beginning of six months of the liquidation and the payments made previously will be credited and have the character of provisional payment according to art. 12, third paragraph of the LISR.
For these statements, the assets of establishments located abroad will not be considered.
Once the settlement is finished:
Present the last statement for liquidation that will include the assets of establishments abroad no later than the 17th day of the month following its conclusion.
Art. 11 LISR
No. 20. Tax opinion.
It is obliged to issue an opinion on its financial statements for tax purposes for the liquidation exercise, if the previous regular year had been required.
Art. 32-A CFF
In the cases of liquidation, the tax opinion may be presented, as it is considered an irregular exercise, either for 12 months or for the irregular exercise, provided that it is presented within 3 months of the end of the fiscal year. liquidation (irregular fiscal year).
Art. 46 RCFF
Presentation of notices:
Notice of cancellation of the RFC, (Form R-1 Change of tax situation, the liquidator must present a notice of cancellation in the federal registry of taxpayers (box 11 total liquidation of the assets) which must be signed by any of the named liquidators. Notice of cancellation to the RFC must be submitted together with the final declaration of the total liquidation of the business assets.
Art. 23 fraction. I RCFF
Likewise, once the Cancellation Notice has been received in the RFC, the liquidator must submit the company's withdrawal notices as patron to the IMSS (it also takes effect for Infonavit), AFIL format. 01, box G,. The liquidator must submit a notice of withdrawal to the Treasury of the DF or the respective State, the union and the Secretary of Labor and Social Security.
Art. 15 LSS
Implications for Asset Tax.
You are exempt from the payment of Asset Tax for the liquidation exercise only for the first two years, however, according to the decree dated March 22, 2001, if during the immediately preceding fiscal year there were tax revenues of less than $ 14,700,000.00 It will be exempt from payment for the liquidation exercise.
Art. 6 LIMPAC and Decree
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