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Simplifying the Process of Incorporating Companies in Mexico is of Paramount Importance
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José Ernesto Amorós, National Director of EGADE Business School's Doctoral Programs, is one of the authors of a report on challenges and opportunities for the economic reactivation of MSMEs.

By JOSÉ ÁNGEL DE LA PAZ | EGADE BUSINESS SCHOOL 

Mexico is one of the world's 20 most expensive countries for business incorporation, mainly because of notary and registration costs.

In 2020, the nation's MSMEs could have invested up to 1,370 million pesos in mitigating the crisis instead of in incorporation procedures.

This is revealed in the report "Challenges and opportunities for the incorporation of companies in Mexico. An analysis of commercial companies," recently published in the framework of the project "Economic reactivation of MSMEs in Mexico through fiscal policies and the simplification of procedures for the incorporation of companies."

This study was prepared by Tecnológico de Monterrey, with the support of the Friedrich Naumann Foundation for Freedom and in collaboration with the Association of Entrepreneurs of Mexico (ASEM).

The authors are José Ernesto Amorós, Research Professor and National Director of EGADE Business School's Doctoral Programs; Catalina Camarillo Rosas and Elvira Naranjo, Professors at the School of Social Sciences and Government, Tecnológico de Monterrey; and Germán García Fabregat Esquivel, Professor at Tecnológico de Monterrey's School of Business.

Amorós indicated that the objective of the report is to provide technical information on simplifying procedures and reducing costs to set up companies, with an emphasis on commercial companies.

Specifically, the authors focused on Simplified Stock Companies (SAS), since setting up this type of commercial company offers a viable but perfectible mechanism to achieve more significant simplification.

The analysis identified that, in 2020, before the total or partial closing of public and private procedures, 29% fewer Public Limited Companies (SA) were created in Mexico compared to 2019, which reinforces the importance of digitizing the incorporation process.

Although it is currently possible to set up a SAS online at no cost, the study found that 41% of the entrepreneurs consulted did not incorporate their company as a SAS because they did not know that this type of commercial company existed and 35% because it was not suitable for the profile of their company's activities.

Additionally, those who did constitute a SAS pointed out the following main disadvantages:

· Banks' and other entities' ignorance of the mercantile company (31%).

· Operational problems with the Ministry of Economy's digital platform where SASs are created (27%).

· Little flexibility and compatibility with other types of companies (21%).

The document concludes with specific actions to improve the creation of a SAS that would in turn lead to more significant simplification in the incorporation of other commercial companies.

You can download the full report here.

 

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