Establish a Company share
The Foreign Investment Law (LIE, Spanish acronym) defines the standards allowing the entry of Foreign Investment into the country and drives foreign investment to contribute to the country’s development.
Article 4 of LIE sets forth: “Foreign investment may participate in the capital stock of Mexican corporations in any proportion whatsoever, may acquire fixed assets, venture into new fields of economic activities or manufacture new product lines, open and operate establishments, and expand or relocate existing ones, except for what has been otherwise provided for in this Law”. Therefore, foreign investment may participate in or execute any and all economic activities, provided there are no restrictions expressly set forth in LIE.
LIE lists five types of activities:
- Activities reserved for the State.
- Activities reserved for Mexicans.
- Activities with limited foreign investment.
- Activities with free participation of up to 49%, requiring authorization by CNIE to exceed said percentage.
- Activities without limits to foreign investment.
The processes to be followed to set up a business in Mexico depend not only on the economic activity to be undertaken, but also on the legal entity through which the investment will take place.
Furthermore, the law provides for mechanisms to participate in and execute your projects in Mexico, which may include entering into contracts or neutral investment mechanisms.
Neutral investment is the mechanism set up in LIE to allow Mexican corporations to make use of foreign capital that, in terms of the law, is considered neither Mexican nor foreign, hence the name “neutral”.
Neutral investment may be represented by “N”-series shares (issued by authorized Mexican corporations) or by neutral instruments (issued by authorized trust institutions). In both cases, neutral investment represented by shares or neutral instruments grants shareholders or holders full economic rights and limited corporate rights.
Neutral investment may participate in activities reserved for Mexicans and in activities with a maximum allowed limit of foreign investment.
*Find more information on the neutral investment mechanism in the section called Setting up a corporation.
