One of the most common questions we receive when foreigners—whether individuals or legal entities—want to start business operations in Mexico is whether any restrictions on foreign investment or currency controls exist in our country.
Indeed, Mexico does have restrictions on the participation of foreigners in certain economic activities either because they are reserved exclusively to the State or restricted to Mexican companies with a share capital that is completely Mexican, or with limited foreigner participation, as provided by the Mexican Constitution or the Foreign Investment Law (the "Law").
Classification of Companies with Foreign Participation
Mexican law distinguishes four types of corporate structures to classify foreign investments for companies operating in Mexico.
- Companies with a share capital that is 100% Mexican with a foreigner exclusion clause. These may carry out all economic activities that are not reserved for the State.
- Companies with a mixed share capital. These companies have foreign participation in the share capital but also have the participation of Mexican partners or shareholders. These companies have certain restrictions on their operations.
- Mexican companies with a share capital that is completely foreign. Even if these companies were started in Mexico, they may only participate in those activities in which they are not restricted to operate.
- Foreign legal entities and individuals operating in the country directly. In the case of companies, these operations may be carried out through branches or representative offices.
Regarding the inclusion of foreigners in Mexican companies, the bylaws of these companies must have one of the following two clauses:
- Foreigner Exclusion Clause: In this case, the company in question will establish that it will not admit, neither directly nor indirectly, foreigner shareholders or partners, completely excluding their participation in the share capital.
- Foreigner Admission Clause: This clause allows the integration of foreign partners or shareholders in the share capital, even if at the time of the drafting of the bylaws there is no foreign participation.
Activities Reserved for the State
The Constitution and the Law establish that certain economic activities are reserved exclusively to the State. Among such activities are the following:
- Exploration and extraction of oil and other hydrocarbons.
- Control of the national electric power system and electric power transmission and distribution services.
- Telegraphs and radiotelegraphy.
- Postal services.
Activities Reserved to Mexican Individuals or Companies
The Law establishes that certain economic activities may only be carried out by Mexican individuals or Mexican companies incorporated under the foreigner exclusion clause. Among these are the following:
- Domestic land transportation of passengers, tourism and cargo.
- Development banking institutions.
In these cases, foreign participation is completely prohibited, even through indirect participation methods, such as trusts or collaboration agreements. Therefore, foreign investors may not intervene in these activities under any modality.
Permitted Activities for Foreigners with Restrictions
The Law also contemplates activities in which the participation of foreign capital is permitted, but subject to certain limitations, either through a maximum percentage of equity participation, or through formal requests to the competent authorities. The following are among the activities subject to a foreign investment limit:
- Production cooperatives (with a maximum of 10% of foreign investment)
- Supply of fuel and lubricants for vessels, aircraft and railway equipment (with a maximum of 49% foreign investment)
- Domestic air transport services, international air transport and specialized air transport (with a maximum of 49% foreign investment).
The Law also establishes that, for certain activities, foreign investment exceeding 49% of the share capital of a company will require prior authorization from the National Foreign Investment Commission in order to carry out its operations. The following are some of the activities subject to this requirement:
- Shipping companies engaged in the operation of vessels in offshore traffic.
- Private pre-school, primary, secondary, middle, high school and higher education services.
- Construction, operation and use of railroads that are general means of communication.
In addition to this, the National Foreign Investment Commission must also authorize foreign participation in excess of 49% of the share capital when the total value of the company's assets exceeds a specific amount determined annually by the Commission. The amount established for 2025 is $26,978,252,017.64 MXN.
Understanding the regulations applicable to foreign investment in Mexico is key for any foreign investor seeking to structure a commercial project in the country. Timely planning prevents unnecessary legal risks but also facilitates an effective integration into the Mexican market. Therefore, it is essential that investors receive the proper counseling and support from lawyers that are specialized in these matters to follow the law correctly and understand the risks and benefits involved with the entry of a foreign company in Mexico.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
