Liquidating a company in Mexico: where to start

1. The shareholder resolution

The shareholders resolve to dissolve the company and appoint the liquidator, who represents the company throughout the process. The minutes are notarized and recorded in the Public Registry of Commerce.

2. The SAT notice

The notice of start of liquidation is filed with the SAT within the month after it begins. From then on, the company keeps its tax obligations until it is deregistered.

3. The inventory

Before deciding what to sell, collect and pay, the full list is put together:

• Assets: bank accounts, inventory, equipment, property
• Accounts receivable and payable
• Employees: severance and deregistration with social security (IMSS)
• Current contracts, leases and permits

4. Taxes during liquidation

The Income Tax Law requires returns for the liquidation period and a final one when it ends (article 12). What is distributed to the shareholders at the end also has tax effects: part of it can be a capital reimbursement and part a dividend, and if the shareholders live abroad, withholdings and the applicable tax treaties have to be reviewed.

5. The final balance and the distribution

The liquidator prepares the final liquidation balance sheet, which is published, and then the remaining amount is distributed among the shareholders. Finally, the company's registration in the Public Registry of Commerce is cancelled.

6. Deregistering with the SAT

Once all of the above is done, the notice of cancellation in the taxpayer registry (RFC) due to total liquidation of assets is filed. For it to go through, the company has to be current: all returns filed and no outstanding debts.

How long it takes

It is not a one-day filing. It usually takes several months, mostly depending on how long it takes to collect, sell or pay what was left in the inventory. When the shareholders are outside Mexico, someone has to represent them here throughout the process.