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A foreign parent cannot own a Mexican company alone: the two shareholder rule

Last verified: 2026-10-27 · Status: Stable

Abroad, a single member subsidiary wholly owned by its parent is standard; in Mexico a sociedad anónima needs at least two shareholders, each holding at least one share. If shareholders fall below the minimum, or all interests come together in one person, the company is in a cause of dissolution, and directors who start new operations become jointly liable. The one shareholder S.A.S. is open only to individuals, not companies, and must convert once annual income exceeds MXN 7,678,849.94 in 2026.

USD conversions use MXN 18.6638 per US dollar, the US Federal Reserve H.10 noon buying rate in New York for 23 October 2026 (FRED series DEXMXUS), the latest observation available when this page was verified. Mexican law uses the Banxico FIX rate published in the DOF for foreign currency amounts, which differs slightly. Conversions are for orientation only.

Key facts

Minimum shareholders of a sociedad anónima	2 shareholdersLGSM art. 89, section I, as of 2026-10-27 · in force
Maximum partners of a sociedad de responsabilidad limitada	50 partnersLGSM art. 61, as of 2026-10-27 · in force
Maximum total annual income of an S.A.S. (open to individuals only), 2026	7678849.94 MXNLGSM art. 260; update agreement DOF 26 December 2025, as of 2026-10-27 · in force
Single shareholder company owned by a corporate parent	Not available; S.A. needs two shareholders and the S.A.S. admits only individuals textLGSM arts. 89, 229 and 260, as of 2026-10-27 · in force

The rule

1. To incorporate a sociedad anónima there must be at least two shareholders, each subscribing at least one share, and the bylaws must set the minimum capital, fully subscribed.
Cost to do it: No fee for the second shareholder; it adds a second set of corporate documents and, for foreign holders, foreign investment registration.
Example: A US parent forms an S.A. with 9,999 shares held by the parent and 1 share held by a US affiliate. / No US dollar effect.Ley General de Sociedades Mercantiles (LGSM), DOF 4 August 1934 (consolidated text, last reform DOF 20 October 2023; amounts updated by agreement DOF 26 December 2025), Art. 89, sections I and II, 1992-06-11 official text · verified 2026-10-27 · changed: The DOF 11 June 1992 reform set the current two shareholder minimum.

2. Companies are dissolved, among other causes, when the number of shareholders falls below the legal minimum or when all partnership interests come together in a single person. Once the cause is established it must be registered at once in the Public Registry of Commerce, and directors may not start new operations; if they do, they are jointly liable for them.
Cost to do it: Fixing the problem by transferring one share to an affiliate costs notary and corporate housekeeping fees.
Example: After an intragroup reorganization the affiliate's single share is transferred to the parent. The S.A. now has one shareholder and is in a cause of dissolution; directors who sign new contracts become jointly liable for them. / No direct US dollar effect.Ley General de Sociedades Mercantiles (LGSM), DOF 4 August 1934 (consolidated text, last reform DOF 20 October 2023; amounts updated by agreement DOF 26 December 2025), Arts. 229, section IV, 232 and 233, 2018-01-24 official text · verified 2026-10-27 · changed: The DOF 24 January 2018 reform restated art. 232 on registration of dissolution causes.

3. The simplified stock company (S.A.S.) is formed by one or more individuals only, so a foreign or Mexican company cannot be its shareholder. Its shareholders may not at the same time control another commercial company. Its total annual income may not exceed MXN 7,678,849.94 (2026 updated amount); above that it must transform into another company type, and if the shareholders do not transform it they answer to third parties subsidiarily, jointly and without limit.
Cost to do it: Formation through the Ministry of Economy's online system is free, according to the Ministry's citizen guide.
Example: A foreign entrepreneur forms an S.A.S. alone for a consulting business. When income passes MXN 7,678,849.94 in a year, it must convert, typically to an S.A. with a second shareholder. / The income cap is about USD 411,430.Ley General de Sociedades Mercantiles (LGSM), DOF 4 August 1934 (consolidated text, last reform DOF 20 October 2023; amounts updated by agreement DOF 26 December 2025), Art. 260, 2016-03-14 official text · verified 2026-10-27 · changed: The S.A.S. was added by the DOF 14 March 2016 reform; the income cap is updated each year, most recently by agreement DOF 26 December 2025.

4. A sociedad de responsabilidad limitada (S. de R.L.), the form many US groups choose for tax reasons, may not have more than 50 partners, and the same dissolution rule applies when all partnership interests come together in a single person.
Cost to do it: No extra government fee.
Example: A US LLC holds 99 percent of a Mexican S. de R.L. and a second group company holds 1 percent. / No US dollar effect.Ley General de Sociedades Mercantiles (LGSM), DOF 4 August 1934 (consolidated text, last reform DOF 20 October 2023; amounts updated by agreement DOF 26 December 2025), Arts. 58, 61 and 229, section IV, 1992-06-11 official text · verified 2026-10-27

Type	Minimum members	Can a company be the only member?	Typical foreign group structure
Sociedad anónima (S.A.)	2	No	Parent plus affiliate holding one share
S. de R.L.	2 in practice (dissolution if interests unite in one person)	No	Parent plus affiliate holding a small interest
S.A.S.	1 individual	No, individuals only	Not used for corporate subsidiaries

Mexican company types and a single corporate parent. Source: LGSM arts. 58, 61, 89, 229 and 260.

Worked example

A Japanese manufacturer sets up a Mexican S.A. and wants to hold 100 percent.
It places one share with a group affiliate, keeping economic control of 99.99 percent while meeting LGSM art. 89.
When the group later merges that affiliate into the parent, it first transfers the share to another group entity, avoiding the art. 229 dissolution cause.

Step by step

1. Pick the second shareholder (an affiliate, not an individual employee) before incorporation.
2. Record both shareholders in the bylaws and the share registry.
3. Register the foreign investment as the investing pages explain.
4. Before any intragroup share transfer or merger, check that two holders remain.
5. If the company ever drops to one holder, restore the second shareholder before directors start new operations.

Common traps

Group reorganizations that collapse the minority share into the parent trigger a cause of dissolution.
Directors who start new business after a dissolution cause is established are jointly liable for it.
An S.A.S. cannot be owned by a company, and its shareholders cannot control another company at the same time.

Sources

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