MEXICO Law and Practice Contributed by: Allan Kaye Trueba, Rebeca Sánchez and Mariana Santillán, Aziz & Kaye Business Law
lic announcement of material business transactions, which might include the formation of a JV. In exceptional cases, foreign investment participation in corporate JVs may require government approval. See 3.3 Sanctions, National Security and Foreign Investment Controls . 5.3 Conditions Precedent, Material Adverse Change and Force Majeure Mexican joint venture agreements typically require sat - isfaction of conditions precedent before closing, such as obtaining regulatory approvals (notably antitrust), third-party consents, operating licences, shareholder and board approvals, tax clearances, finalised fund - ing, executed transaction documents, and confirma - tion of no material litigation. If unmet and impossible to be waived, parties may terminate the agreement or delay closing. Material adverse change (MAC) clauses allow parties to withdraw or renegotiate if significant adverse events occur between signing and closing, with definitions often based on financial thresholds or specific events, and negotiations focusing on scope and carve-outs. Force majeure clauses protect parties from liability when extraordinary, unforeseeable events (eg, natu - ral disasters, war, epidemics, or government actions) prevent performance. These clauses require direct causation, prompt notification, mitigation efforts, and typically suspend obligations during the event, sometimes allowing renegotiation or termination if dis - ruptions persist. Parties may negotiate carve-outs or require that events be unexpected at signing. 5.4 Legal Formation and Capital Requirements In a contractual JV, the parties must execute the rel - evant agreements to bind themselves to the project, in some instances as detailed in the negotiation docu - ments. See 5.1 Preliminary Negotiation Instruments and Practices . Typically, collaboration agreements, profit-sharing agreements, or co-investment agreements do not require execution before a public notary. However, the parties may choose to notarise the documents
or have their signatures ratified by a public notary for added legal certainty. Transfer of assets involved in the contractual JV may require notarisation. For a corporate JV, the parties must first select the type of legal entity that best aligns with the intended rights and obligations of each party. For instance, if profit-sharing restrictions apply to one of the parties, the JV vehicle will likely need to be a SAPI, as this type of entity allows for the exclusion of certain sharehold - ers from revenue sharing. No statutory minimum capi - tal is required to incorporate a company in Mexico, but the capital stock or equity should be set forth in the by-laws. Once the entity type is chosen and the terms of the corporate JV’s by-laws are agreed upon (along with the terms of the shareholders’ agreement and any ancillary documents, if required), the parties must incorporate the corporate JV before a public notary. This incorporation process results in the legal exist - ence of the corporate JV, evidenced by an incorpo - ration deed containing the entity’s by-laws and the first resolution of the shareholders or partners. The deed must then be registered in the public registry corresponding to the company’s corporate domicile as specified in the by-laws. Typically, the shareholders’ agreement and any other transaction documents are executed simultaneously with or immediately following the incorporation of the corporate JV. If the corporate JV has foreign shareholders or part - ners, it must also be registered with the National Registry of Foreign Investments and JV parties must consider potential restrictions regarding foreign investment. See 3.3 Sanctions, National Security and Foreign Investment Controls . 6. Core Terms of a JV Agreement 6.1 Drafting and Structure of the Agreement The documentation required for a JV depends on the type of vehicle chosen.
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