Mexican Investment Board

México, your partner for growth

Mexican Investment Board

FIRST TITLE

GENERAL PROVISIONS

CHAPTER I
ON THE PURPOSE OF THE LAW

ARTICLE 1.- This law is of public order and for general observance throughout the Republic. Its purpose is the determination of rules to attract foreign investment to this country and promote its contribution to national development.

ARTICLE 2.- For the purposes hereof, the following terms shall have the following meanings:
I.- Commission. The National Foreign investment Commission,
II.-Foreign investment:
a) Participation by foreign investors, in any percentage, in the capital stock of Mexican corporations;
b) investments by Mexican corporations in which foreign capital has majority interest;
c) Participation by foreign investors in activities and acts contemplated herein.
III.- Foreign investor. An individual or entity of any citizenship other than Mexican, and foreign entities with no legal standing;
IV.- Registry. The National Foreign investment Registry;
V.- Ministry. The Ministry of Commerce and Industrial Development;
VI.- Restricted Zone. A strip of the national territory one hundred kilometers wide along the borders and fifty kilometers wide along the coast, as referred to in Section 1 of Article 27 of the Political Constitution of the United Mexican States; and
VII.- Foreigners’ Exclusion Clause. An express agreement or covenant forming an integral part of the corporate bylaws and setting forth that such corporations shall not admit directly or indirectly foreign investors, nor corporations with foreigners’ admission clause, as partners or stockholders.

ARTICLE 3.- For the purposes hereof, investments made in this country by foreigners with inmigrado status are equal to Mexican investment, except investment in activities contemplated in Titles First and Second hereof.

ARTICLE 4.- Foreign investment may participate in any proportion in the capital of Mexican companies, acquire fixed assets, enter new fields of economic activity or manufacture new products lines, open and operate establishments, and expand or relocate existing establishments, except as otherwise provided herein.

The rules for participation of foreign investment in the activities of the financial sector provided for in this Law shall be applied without prejudice to those established by the specific laws for those activities.

For the purpose of determining the foreign investment percentage in the economic activities under certain maximum limits of foreign participation, the foreign investment that, by indirect way, be performed in such activities through the stock of Mexican companies with the majority of Mexican investment, shall not be computed or summarized, as long as such Mexican companies are not controlled by the foreign investment.

CHAPTER II
ON RESERVED ACTIVITIES

ARTICLE 5.- The activities determined by the laws in the following strategic areas are reserved exclusively for the State:

I.- Petroleum and other hydrocarbons;
II.- Basic petrochemicals;
III.- Electricity;
IV.- Generation of nuclear energy;
V.- Radioactive minerals;
VI.- (derogated)
VII.- Telegraph;
VIII.- Radiotelegraphy;
IX.- Postal service;
X.- (Derogated);
XI.- Bank note issuing;
XII- Minting;
XIII.- Control, supervision and surveillance of ports, airports and heliports; and
XIV.- All other set forth expressly by applicable legal provisions.

ARTICLE 6.- The economic activities and corporations mentioned thereunder are reserved exclusively to Mexicans or to Mexican corporations with foreigners’ exclusion clause:

I.- Domestic land transportation for passengers, tourism and freight, excluding messenger or courier services;
II.- Gasoline retail sales and distribution of LP gas;
III.- Radio broadcasting services and other radio and television services, other than cable television;
IV.- Credit unions
V.- Development banking institutions, under the terms of the law governing the matter;
VI.- Rendering of professional and technical services set forth expressly by applicable legal provisions.
Except as set forth in the Fifth Title hereof, foreign investment may not participate directly in the activities and corporations mentioned in this article nor through trusts, contracts, partnerships or by-law agreements, pyramiding plans, or other mechanisms granting any control or equity.

CHAPTER III
ON ACTIVITIES AND ACQUISITIONS UNDER SPECIFIC REGULATION

ARTICLE 7.- In the economic activities and corporations mentioned hereafter, foreign investment may participate in the following percentages:

I.- Up to 10% in: Cooperative companies for production;

II. -Up to 25% in:
a.- Domestic air transportation;
b.- Air taxi transportation; and
c.- Specialized air transportation;

III. Up to 49% in:
a.- Holding companies for financial groups,
b.- Commercial (multiple) banking credit institutions;
c.- Securities brokerage firms;
d.- Securities market specialists;
e.- Insurance institutions;
f. – Bonding institutions;
g. – Currency exchange houses;
h.- General deposit warehouses;
i. – Financial leasing companies;
j.- Financial factoring houses;
k.- Financial companies with purpose limited to those provided for in Article 103, paragraph IV , of the Law of Credit Institutions;
l. – Companies to which article 12 Bis of the Securities Market Law refers;
m.- Shares representing the fixed capital in investment companies;
n.- Operating companies of investment corporations;
o. – Retirement funds’ management companies;
p.- Manufacture and Commercialization of explosives, firearms, cartridges, munitions and fireworks, excluding acquisition and use of explosives for industrial and extraction activities or the preparation of explosive mixtures for use in said activities;
q.- Printing and publication of newspaper for circulation solely throughout Mexico;
r.- Series T shares in companies that own agricultural, ranching, and forestry lands;
s.- Fresh water, coastal, and exclusive economic zone fishing excluding aquaculture;
t.- Integral port administration;
u.- Piloting port services for vessels to carry out operations of inland navigation operations in the terms of the subject law;
v. – Shipping companies engaged in commercial exploitation of ships for inland and coastal navigation, excluding tourism cruisers and exploitation of marine dredging and implements for port construction, conservation and operation,
w.- Supply of fuel and lubricants for ships, airplanes, and railway equipment; and
x.- Concessionaire companies in the terms of articles 11 and 12 of the Federal Telecommunications Law.

IV.- Derogated
The limits for foreign investment participation set forth in this article may not be exceeded directly, nor through trusts, agreements, corporate or shareholders pacts, pyramid schemes or any other mechanism that grants control or equity participation greater than that established, except pursuant to Title Fifth of this Law.

ARTICLE 8.- Favorable resolution by the Commission is required for foreign investment participation in a percentage greater than 49% in the economic activities and companies referred to hereafter.

I. – Port services for ships to effect their inland navigation operation, such as towing, mooring and lighterage;
II.- Shipping companies engaged in exploitation of ships solely for high seas traffic;
III.- Concessionaire or permissionaire companies of airdromes for public service.
IV.- Private education services at the preschool, primary, secondary, upper middle, upper, and combined levels;
V.- Legal services;
VI.- Credit information companies;
VII.- Securities classification institutions;
VIII.- Insurance agents;
IX.- Cellular telephone;
X.- Construction of pipeline for the transportation of petroleum and products derived therefrom;
XI.- Perforation of petroleum and gas wells; and
XII.- Construction, operation and exploitation of railroads considered as General Communications Ways, and rendering of public services of railway transportation.

ARTICLE 9.- Favorable resolution from the Commission shall be required for Mexican corporations where foreign investment intends to participate, directly or indirectly, in a percentage higher than 49% of its capital stock, only when the aggregate value of the assets of the corporations in question, at the filing date of the request for acquisition, exceeds the amount determined annually by such Commission.