MEXICO Law and Practice Contributed by: Luis Álvarez Cervantes, Adolfo Athié Cervantes, Alejandro Barrera, Jesús Colunga, Eduardo Kleinberg, Juan José López de Silanes, Carlos Martínez-Betanzos and Amílcar Peredo, Basham, Ringe y Correa S.C.
considerably relaxed in recent years, still have an impact. In accordance with the FIL, there are certain activi - ties reserved exclusively for the state and reserved for Mexicans or Mexican companies with foreigner exclusion clauses, and other activities under specific regulations as follows. • Activities reserved for the state – set forth in Article 5 of the FIL, as exploration and extraction of oil and other hydrocarbons in accordance with the Political Constitution of Mexico; planning and control of the national electricity system, as well as the public transmission and distribution of electri - cal energy, in terms of the provisions of the Politi - cal Constitution of Mexico; generation of nuclear energy, radioactive minerals, telegraphs, radiote - legraphy, postal service, bank note issuing, minting of coins, control, supervision and surveillance of ports, airports and heliports. • Activities reserved exclusively to Mexicans or to Mexican companies with exclusion of foreigners’ clause – set forth in Article 6 of the FIL, as domes - tic land transportation of passengers; tourism and freight not including messenger or courier services; development banking institutions; and render - ing of certain professional and technical services expressly indicated in legal provisions, among others. • Activities and acquisition subject to specific regula - tion – set forth in Article 7 of the FIL in which the foreign investment participation limits in activities and companies may not be surpassed directly, neither by trusts, agreements or partnerships, nor by-law agreements, pyramiding schemes or other mechanisms granting any control or a higher par - ticipation than the one established. As provided in Section 8 of the FIL, a favourable reso - lution by the National Foreign Investment Commis - sion (the “Commission”) is required for foreign invest - ment to participate in a percentage higher than 49% in activities with specific regulation including, among others, port services, in order to allow ships to con - duct inland navigation operations, such as towing, mooring and barging; shipping companies engaged in the exploitation of ships solely for high-seas traf -
fic; concessionaire or permissionaire companies of air fields for public service; legal services; construction, operation and exploitation of general railways, and public services of railway transportation. In addition, pursuant to Section 9 of the FIL, a favour - able resolution of the Commission is required for the foreign investment to participate in a Mexican com - pany, either directly or indirectly, in more than 49% of the capital stock, solely when the value of the assets of the involved entities exceed the amount determined by the Commission. It is important to take into consideration that the approvals need to be obtained prior to completing the investment. 2.2 Procedure to Obtain Approval and Sanctions for Non-Compliance If approval is required, the process can be completed electronically through the Legal Affairs System for Foreign Investment or by submitting the application in person before the Commission, by appointment. For the electronic procedure, applicants must have a valid email address, create an account with the Legal Affairs System for Foreign Investment and a hold a current e-signature. In this regard, the following documentation must be prepared and submitted with the Commission. • Official Questionnaire SE-02-007 (in Spanish) including information identifying how the project will be beneficial to Mexico’s economy, as well as name and nationality of the investor, description of the project, percentage to be acquired, estimated value of the investment, sector or activity of the company, among other information, executed by the legal representative or person acting on behalf of the applicant. • Written request comprising the corporate name or name of the person requesting the favourable resolution, name of the legal representative or the person acting on behalf of the applicant, an address and/or email for service of notices and the individuals authorised to receive them on behalf of the applicant, facts or reasons that motivated the request, details of the project’s main features,
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