23 Sept 2016
Mexico Updates FDI Registration and Documentary Provisions
The Mexican government has issued three separate regulations amending and clarifying the registration and documentary requirements for investments made by foreign entities in Mexico in an effort to further enhance the legal certainty of those investments and develop a more friendly and stable environment for foreign investors.
Mexico’s Foreign Investment Law requires the following entities to register their investments with Mexican authorities: (i) Mexican companies whose ownership includes (whether or not through a trust) foreign investment, Mexican citizens who possess another citizenship and reside abroad, or neutral investment; (ii) foreign persons and companies, as well as Mexican citizens who possess another citizenship and reside abroad, who routinely perform acts of commerce in Mexico; and (iii) certain foreign trusts. The new regulations clarify that, in the case of entities listed in point (ii), foreign investment is deemed to participate in a newly-established Mexican company when such investment flows into the company at the time of its establishment, determined by the date of notarisation of the articles of incorporation. In the case of investments in existing Mexican companies by entities listed in point (ii), foreign investment is deemed to participate in such a company upon notarisation of the minutes of a shareholders’ meeting showing the purchase of shares of fixed capital or on the date listed in a contract providing for the purchase of shares of variable capital.
The Foreign Investment Law regulations require foreign persons and companies to submit a registration application no later than 40 business days from the date of initiation of routine acts of commerce in Mexico. The new regulations define the date of initiation of routine acts of commerce in Mexico as the date on which the person or company requested a tax identification number from the Tax Administration Service (Servicio de Administración Tributaria, or SAT). The regulations also clarify the precise timeframes and dates for updating registration information as well as certain other procedures and make various other changes.