New Mexico Corporation Law: Everything You Need to Know
New Mexico corporation law requires foreign corporations to obtain certificates of authorization before undertaking business activities within the state.3 min read
2. Issuance of Industrial Revenue Bonds
3. Types of Business Vehicles
4. Management Structure
5. Member and Manager Liability
6. Employee Regulations
7. Employment Contracts
New Mexico corporation law requires foreign corporations to obtain certificates of authorization from New Mexico's Secretary of State office before undertaking business activities within the state. They must also file statements of foreign qualification.
Common Law System
The state of New Mexico maintains a common law system at both the state and federal level. Although there are no restrictions on foreign investments, all foreign entities and shareholders who invest in the state of New Mexico are subject to some registration and authorization restrictions. These restrictions are based on the type of business or investment vehicle. It should be noted that there are no state-specific restrictions, nor currency or exchange control regulations in the state.
Issuance of Industrial Revenue Bonds
Municipalities and counties in New Mexico can issue industrial revenue bonds for projects that promote trade and industry in their locales. They can also issue private activity bonds. New Mexico's Finance Authority can issue revenue bonds to educational, health care, commercial, industrial, and other eligible facilities.
There are other incentives and tax credits for entities willing to do business in the state. They include:
- Technology jobs tax credits.
- Film production tax credits.
- Renewable energy tax credits.
Types of Business Vehicles
LLCs are the most common type of business vehicle used by foreign entities in New Mexico. Their popularity is due to fewer corporate governance requirements, flexible corporate structure, and limited liability.
Entities can create an LLC by filing an article of organization and other related administrative filings with New Mexico's Secretary of State. LLC filings are usually processed within two to three weeks; however, same day or two-day expediting is available on payment of additional fees. Entities can check the availability of their name and reserve it before filing the article of organization. All LLC names must be unique.
An LLC can be managed by managers or members. If there are multiple members, the LLC is managed by all of them or, in the case of single-member LLCs, by a single individual. LLC managers are appointed by the members of the LLC through voting. There are no restrictions on foreign managers.
Member and Manager Liability
Members who don't have managerial responsibilities are not liable to other members or to the LLC because of omissions or acts in their capacity as members. Likewise, members who have certain managerial responsibilities are not accountable, responsible, or liable for damages to other members or to the LLC because of omissions or acts carried out as part of their managerial responsibilities, unless the omission or act constitutes willful misconduct or gross negligence.
New Mexico's Human Rights Act prohibits employers from discriminating against their employees based on medical conditions, mental or physical handicap, sex, ancestry, national origin, color, religion, age, or race.
New Mexico's Minimum Wage Act stipulates $7.50 per hour as the minimum wage. New Mexico's Directory of New Hires Act states that all employers in the state must provide the names, addresses, and social security numbers of new employees to the state's New Hire Directory.
Employers must also keep records of each employee, including wages and work hours. Employees can join unions at their discretion. Promises by an employee to withdraw from a union or not to join one are regarded as void against public policy.
Written employment contracts are not required in New Mexico. Employment relationships with no definite term or contract can be terminated by the employee or employer at will.
Employment contracts are regarded as procedural, substantive, or both. In procedural implied contracts, employers must follow particular procedures before terminating the employee. In substantive implied contracts, employers can only terminate employees for cause. For contract employees, there is an implied agreement of fair dealing and good faith. For at will employees, this implied agreement does not exist.
Under state law, no additional permits are required. Employees don't have the right to be consulted with regards to corporate transactions or management representation. Under Federal law, foreign employees may require residency or work permits.
Generally, employment contracts in New Mexico are at will. This means that either party (i.e. employer or employee) can terminate the working relationship at any time for any reason.
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