For over 25 years, Lorad Law has been helping businesses in the Riviera Maya maintain compliance with Mexican regulations, and one essential requirement is maintaining corporate books. Whether you’re a foreign investor or a local entrepreneur, understanding the legal obligations surrounding corporate books is critical to your business’s success in Mexico.
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What Are Corporate Books in Mexico?
Corporate books are official records that document the history of your company’s corporate actions and decisions. These books are required by the General Law on Commercial Entities (LGSM) and the Mexican Commercial Code to ensure transparency, compliance, and good governance in your business operations.
These records provide a clear overview of the company’s financial and legal decisions, helping to prove ownership, corporate structure, and business activities. They can also act as legal evidence if disputes arise among shareholders or in cases of audits.
Types of Corporate Books every Company must maintain
To ensure your business complies with Mexican corporate law, the following corporate books must be maintained:
- Shares Ledger
Article 128 of the LGSM requires companies to maintain a detailed ledger of their shareholders. This includes essential details such as the name, nationality, domicile, and the number of shares held by each shareholder. The shares ledger is essential for proving ownership and ensuring clear communication between shareholders and the company. - Minutes of Shareholders’ Meetings
Article 194 stipulates that companies must keep a book of minutes for general shareholder meetings, including the mandatory annual meeting. This meeting is critical, as shareholders approve financial statements, major company decisions, and other governance-related matters. Any extraordinary meetings and resolutions must also be documented here. - Capital Variations Ledger
As per Article 219 of the LGSM, this book records any changes to the company’s share capital. This includes capital increases, decreases, or restructuring. Keeping track of these variations is vital for the company’s legal standing and is essential for maintaining an accurate and up-to-date financial profile. - Meetings of the Board of Directors Ledger
Although not explicitly mandated by law, keeping a Board of Directors meeting minutes book is considered best practice for maintaining transparency. This book should track decisions made by the company’s board, helping demonstrate that the company’s management has fulfilled its responsibilities and acted in the best interests of the shareholders.
The Legal Importance of Corporate Books
Corporate books are legal documents that provide a traceable history of the company’s operations. They are vital for:
- Legal Compliance: Corporate books prove that your company adheres to the laws outlined in the General Law on Commercial Entities and the Commercial Code. These records serve as legal proof that the company is operating within Mexican regulations.
- Financial Transparency: These books help ensure that all financial and capital transactions are well documented and transparent. They provide evidence in case of financial disputes or audits.
- Corporate Governance: Maintaining updated corporate books is an indication of good governance, transparency, and accountability, which are critical for fostering trust with investors, stakeholders, and the government.
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Consequences of Non-Compliance
Failure to keep corporate books up to date can lead to severe consequences. These include:
- Fines: Companies may face fines ranging from 25,000 pesos to 5% of the company’s capital stock. This penalty is imposed when businesses fail to comply with legal requirements for maintaining their corporate records.
- Translation Requirements: If your corporate records are not kept in Spanish, authorities may demand that they be translated into Spanish by an official translator. The company must bear the cost of this translation, which can become expensive if done incorrectly or after an audit.
- Legal Complications: If corporate books are not in order, it can complicate legal proceedings such as shareholder disputes or government inspections. Without clear documentation, it becomes harder to prove the legitimacy of corporate decisions, ownership, or financial transactions.
Best Practices for Maintaining Corporate Books
To avoid penalties and ensure compliance with Mexican law, businesses should adopt the following best practices:
- Keep All Records in Spanish: Spanish is the official language for all corporate documentation in Mexico. Companies must ensure that their corporate books, including minutes, capital variations, and shareholder registers, are all kept in Spanish to avoid fines or translation issues.
- Update Records Regularly: Corporate books should be updated immediately after significant decisions or changes. This includes documenting shareholder meetings, capital variations, or board decisions. This will prevent any gaps in the company’s records and ensure that all transactions are legally documented.
- Ensure Secure Storage: Corporate books should be stored securely, either digitally or physically, for at least 10 years. In the event of an audit or legal dispute, the records must be easily accessible and well-preserved.
- Consult Legal Experts: Given the complexities of Mexican corporate law, businesses should work with experienced legal professionals like Lorad Law to ensure that their corporate books are maintained in compliance with the law.
Why Lorad Law?
As a bilingual law firm with over 25 years of experience in the Riviera Maya, Lorad Law understands the challenges businesses face when operating in Mexico. Whether you are a local entrepreneur or a foreign investor, we offer tailored legal services to ensure your business remains in full compliance with Mexican corporate laws.
Our expertise in corporate governance, business law, and compliance makes us the trusted partner for businesses across the region. We can assist with maintaining corporate records, ensuring compliance, and providing ongoing legal support to help your business thrive in Mexico.
FAQs about Corporate Books in Mexico
Which corporate books are typically required for companies in Mexico?
Commonly referenced mandatory books include: (i) shareholders/partners registry (share ledger), (ii) minutes of shareholders’/partners’ meetings, and (iii) capital variations book. Many companies also keep board minutes as a best corporate practice (and in practice it’s expected when a board exists).
How long must corporate books and records be kept?
A widely cited rule in the Mexican Commercial Code is that companies must keep books, records, and documents for at least 10 years (the articles you shared point to this retention obligation).
Who is responsible for keeping the corporate books accurate and updated?
Responsibility generally falls on company management/administration. Depending on the company type and governance structure, this can involve the sole administrator/manager, a board of directors/managers, and in some cases the statutory examiner (comisario) where applicable.
Do corporate books have to be in Spanish?
The content you shared states that the Commercial Code requires commercial records to be kept in Spanish, and that this includes accounting and corporate books (even for foreign companies operating in Mexico). If books are kept in English, a risk mentioned is fines and a possible order to translate at the company’s expense.
What happens if corporate books are missing, outdated, or improperly kept?
The posts you provided emphasize practical risks: fines/penalties, complications during audits or government procedures, and weaker positioning in shareholder disputes because the books are the formal evidence of corporate decisions and ownership.
Need Help with Corporate Book Compliance in Mexico?
Maintaining corporate books is a vital part of your business’s success in Mexico. At Lorad Law, we offer personalized legal advice to ensure your business stays compliant with Mexican corporate regulations. Our team is here to guide you through the complexities of corporate law, helping you avoid penalties and maintain transparency.
Contact Lorad Law today for expert legal support in managing your corporate books and ensuring your company’s legal compliance in Mexico.