For most foreign companies setting up in Mexico, the decision comes down to two structures: the Sociedad de Responsabilidad Limitada de Capital Variable (S. de R.L. de C.V.) and the Sociedad Anónima de Capital Variable (S.A. de C.V.). Both offer limited liability and allow 100% foreign ownership in most sectors. In 2026, the S. de R.L. remains the preferred structure for US parent companies because of its tax treatment, while the S.A. and its S.A.P.I. variant suit companies expecting outside investment. This guide compares Mexico's main entity types from a foreign investor's perspective. For the full process, see our Mexico company formation guide.
What entity types do foreign investors use?
Four structures account for nearly every decision foreign companies make in Mexico: the S. de R.L. de C.V., the S.A. de C.V., the S.A.P.I. de C.V., and the branch of a foreign company. Formation is executed before a notary public and the entity is registered with the Public Registry of Commerce, with its tax ID (RFC) issued by the SAT.
Limited Liability Company (S. de R.L. de C.V.)
This is the most common structure for foreign-owned subsidiaries. Its owners are partners (socios) who hold partnership interests (partes sociales), not shares, with a minimum of 2 and a maximum of 50 partners. Transferring partnership interests requires partner consent, which makes it well suited to closely held subsidiaries. Its main advantage for US parent companies is tax related: under US rules, the S. de R.L. can elect to be treated as a pass-through entity (check-the-box), an option the S.A. does not have.
Stock Corporation (S.A. de C.V.)
This is the traditional stock corporation. Its owners are shareholders (accionistas) who hold shares (acciones), with a minimum of 2 shareholders and no upper limit. It has more formal governance (a board of directors or sole administrator, plus a statutory auditor known as the comisario) and freely transferable shares, which makes it better suited to businesses expecting outside investment or a broad shareholder base. Under US tax rules, the S.A. is treated as a per se corporation, with no option to elect pass-through treatment.
Investment Promotion Corporation (S.A.P.I. de C.V.)
This is a variant of the S.A. designed for venture capital and investment rounds. It allows more flexible corporate governance and shareholder rights (different share series, exit clauses, minority protections), making it the standard structure when institutional investors or funds are expected to come in.
Branch of a foreign company
A branch is not a separate legal entity: it is the same foreign company operating in Mexico, so the parent company is directly liable for its obligations. It requires authorization and registration, and is usually chosen in specific cases rather than as the default structure for a local operation.
Quick comparison
| Structure | Owners | Minimum | Best suited for |
|---|---|---|---|
| S. de R.L. de C.V. | Partners (partnership interests) | 2 partners | Closely held subsidiaries, US parent companies |
| S.A. de C.V. | Shareholders (shares) | 2 shareholders | Businesses expecting outside investment |
| S.A.P.I. de C.V. | Shareholders (shares) | 2 shareholders | Investment rounds and venture capital |
| Branch | The foreign parent | Not applicable | Specific cases, no separate entity |
Which structure is right for the foreign investor?
For most foreign-owned operating subsidiaries, the S. de R.L. de C.V. is the starting point, especially for US parent companies because of the pass-through tax election. If you expect outside investment, a changing shareholder base, or a capital round, the S.A. de C.V. or the S.A.P.I. de C.V. are the better fit. The branch is reserved for specific situations. The right answer depends on your ownership structure and your plans.
Frequently asked questions
Can a foreigner own 100% of the company? Yes. In most sectors, a foreign investor can own 100% of a Mexican company, with no need for a local partner.
What's the minimum capital? There is no high minimum capital requirement; the S. de R.L. starts from a modest statutory minimum (on the order of 3,000 pesos). Capital should be set according to actual operating needs.
Which structure do most US parent companies choose, and why? The S. de R.L. de C.V., because it allows an election for pass-through tax treatment in the US (check-the-box), which usually avoids an extra layer of tax.
Can I convert an S. de R.L. into an S.A. later? Yes. It's possible to transform the entity from one structure to another, so starting with an S. de R.L. doesn't close the door to adopting an S.A. if your circumstances change.
NavviPal forms and manages these entity types in Mexico and in 12 other Latin American markets, and can confirm which one fits your structure before you incorporate. Compare Mexico with other markets in our comparison tool, see the Mexico page, or check our company formation service.
Figures last verified: July 2026.
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This article is for informational purposes only and does not constitute legal or tax advice.
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