Penner & Associates - Mexico Law Firm and Business Consulting for Mexico

For professional assistance & information on legal & business matters regarding Mexico and Latin America, please contact:

ATTORNEYS AT LAW FOR MEXICO
Please contact us at our Mexico offices located at:
Apartado Postal No. 9
San Miguel de Allende, Guanajuato, Mexico
TEL. US.: (800) 856-5709
Local Phone (415) 152-3648

e-mail E-MAIL

 

BUSINESS CONSULTANTS FOR MEXICO
REAL ESTATE BROKERAGE ASSISTANCE FOR MEXICO
At our Phoenix or Mexico Offices
P.O. Box 42773
Phoenix, Arizona 85080
Tel: (623) 242-7442

e-mail E-MAIL

OUR MEXICO CITY OFFICES
Montecito no. 38 Piso 37 Oficina 37
Edificio World Trade Center
Colonia Napolis C.P. 03810
Mexico, Distrito Federal

Tel: (55)5351-0438

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NATIONAL REGISTRY OF FOREIGN INVESTMENT IN MEXICO

 

Choose One: The Law , Business Activities , Registry of Ownership of Stock by a Foreigner in a Mexican Corporation , Ownership of Stock in a Mexican Corporation via the Stock Exchange , Real Estate Ownership by Mexican Companies with Foreign Participation , Real Estate Ownership by Foreigners via the Trust. The Restricted Zone .

 

THE LAW.

The Law to Promote Mexican Investment and Regulate Foreign Investment came into effect 1973. It has since been replaced by the Foreign Investment Law and a Regulation to this law.

BUSINESS ACTIVITIES

The law determines those business activities in which foreigners may participate, the percentage of ownership of the business they may hold/own and under what conditions they may hold it. This is done by listing the business activities and identifying the maximum percentage permitted of foreign ownership next to it in a listing . The means by which this is carried out is by use of Mexican business companies, normally the Mexican limited liability stock corporation (see "Sociedad Anonima" ).

REGISTRY OF OWNERSHIP OF STOCK BY A FOREIGNER IN A MEXICAN CORPORATION.

There is a requirement to file for registry with the National Registry of Foreign Investment, by all corporations that permit foreign owners (at the time of incorporation or at any subsequent moment in which the company resolves to permit foreign investment), with the identification of what foreign ownership exists (identifying the percentage in the total and the number of stock). Also, whenever there is a change in the information provided the registry, it is also to be notified to the registry within certain time periods. As well, these companies are to also annually report certain accounting information that shows the annual financial result of its activities.

OWNERSHIP OF STOCK IN A MEXICAN CORPORATION VIA THE MEXICAN STOCK EXCHANGE.

The Mexican stock exchange offers stock for sale to all buyers. However, foreigners to Mexico can not normally own more than that percentage permitted by the Foreign Investment Law. In order to resolve this problem, some Mexican companies have created the "N" stock or neutral stock, whereby foreigners may own it even if that places the percentage of foreign ownership over the permitted limit. The "N" stock however has no voting rights.

REAL ESTATE OWNERSHIP BY MEXICAN COMPANIES WITH FOREIGN PARTICIPATION.

The Mexican companies that have foreign participation in their ownership are to advise the National Commission on Foreign Investment of their direct acquisitions in the Restricted Zone. If the real estate acquired is not business property, then the National Commission on Foreign Investment will demand the cancellation of the direct acquisition. (If they ask for the cancellation it will most likely be due to the fact that they presume it is residential and therefore the property can only be acquired by it via the title trust).

REAL ESTATE OWNERSHIP BY FOREIGNERS VIA THE TRUST.

The Foreign Investment Law authorizes and regulates the ownership of real property by foreigners via title trusts inside and outside of the Restricted Zone (the only way foreigners can own residential/non-business real estate in the Restricted Zone is via the trust. There are other options outside the Restricted Zone).

THE RESTRICTED ZONE.

The Restricted Zone is a strip of land 100 kilometers in width along the international land borders of Mexico and a strip of land 50 kilometers in width along the coast line of Mexico. In this area foreigners can not hold direct title of ownership nor rights of lease greater than 10 years in duration (including stated extensions). The manner in which the law permits foreigners to acquire the real estate in this zone is via the long term irrevocable title transfer bank trust. Long Term in that nowadays it is normally for 50 years (potentially renewable for an additional 50 years). Irrevocable in that the prior owner/transferor of the property into the title trust can not later come back and cancel the trust and take the property back. Title Trust in that a trust is created that will provide for the fiduciary to hold the title of the real estate for the beneficiary. Bank Trust in that only Mexican federally authorized banks can act as the titleholder/fiduciary. In order to create one of these trusts, a permit must be acquired from the Federal Ministry of Foreign Affairs, constitute the trust before a Mexican notary public (via a public instrument) and register the resulting instrument at the corresponding Public Registry of Property and the National Registry of Foreign Investment.

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