Simplified Joint Stock Company. A New era

In spite of the accelerated business world, yesterday a very important decree was revealed by the Economy ministry, which creates a new kind of company, focusing mainly on small entrepreneurs that wish to start a formal business.

Who does it benefit?

The Simplified Joint Stock Company (SJSC) is a new type of entity that can be constituted by one or more individuals, without the need of excessive costs and time.

Even though is oriented to small businesses, it is also an excellent alternative for those businesspersons that need a fast way to start a business or close a deal with their co investors, and require an entity that formalizes said deal. In this case, it can help in projects that have a lengthy pre-operative periods or in those projects that could have a slow growth.

Some characteristics

The government system is similar to any kind of business entity and has the following characteristics:

a)      It can be constituted by one lone partner

b)      The annual income cannot be greater than 5 million pesos

c)       The shareholders must give their consent to constitute a SJSC under the lineaments given by the economy ministry through electronic means

d)      The shareholders must have a valid advanced electronic signature certificate, recognized according to the rulings given by the economy ministry

e)      It does not require a notarial deed or policy for its constitution

Constitution process.

The constitution process is very simple; it can be described as follows:

a)      A folio will be opened for each constitution

b)      The shareholders will select the social bylaws clauses that the economy ministry will provide trough their system

c)       A social contract will be generated for the SJSC constitution signed electronically by all the shareholders, using a valid electronic signature certificate.

d)      The economy ministry will verify that the social contract of the entity constitution complies with article 264 of the trading companies law, and if valid will be sent to be registered electronically in the public commerce registry.

e)      The system will generate an electronic inscription form of the SJSC in the public commerce registry

The existence of the entity will be proven by a social contract of the entity constitution and the SJSC public registry inscription form.

The shareholders that apply for a SJSC will be responsible of the information validity provided to the system; on the contrary they will be liable for any harm that could be originated by this, including the administrative or penal actions that could occur.


The same as any trading company, the social contract (bylaws) must include the following:

·       Name

·         Shareholders names

·         Shareholders fiscal address

·         Fiscal identification number of the shareholders

·         Email address for each of the shareholders

·         Company address

·         Company duration

·         Form and terms that the shareholders agree to pay their shares

·         The number, nature and nominal value of social capital shares

·         The number of votes that each of the shareholders will have according to their shares

·         The company objective

·         The company administration conditions

The after mentioned shares must be paid in a year from the date of the entity inscription on the public commerce registry. When the totality of the social capital has been endorsed and paid, the entity must publish a notice in the stablished electronic system on terms of article 50 of the commerce code.

Does a special fiscal treatment exist?

The government departments function independently, which hinders the benefits form any reform. In this case it would have been appropriate the establishment of a special fiscal regime for this type of entities, like a transparency fiscal scheme where the profits flow directly to the shareholders, this given that a small business owner usually depends on the business profits to subsist.

A SJSC is a company for fiscal effects, in other words, the profits will be given to the shareholders the next fiscal year, and if this profits are allocated before the fiscal costs are high.

Even if paid the next fiscal year, the fiscal retention effects of the 10% for dividend payments must be considered, creating an effective tax rate as high as 40%, considering that the entity must pay 30% income tax.

We hope some special rules will be given to benefit this type of taxpayer.

Effective date.

The decree stablishes that this deposition will be effective six months after it is published, to give time in the creation of rules that will allow the creation of this type of entities. This will be on spetember 15th 2016.

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C.P.C. y M.I. Elias Quezada C.P.C. y M.I. Elias Quezada

Contador Público Certificado, Socio fundador de la firma Kim Quezada y Asociados, SC, Egresado de la Escuela de Contaduría del Instituto Tecnológico Regional de Tijuana,