Investment regulation - Mexico


Foreign investors do not incur any fees when entering or exiting the market and no registration process or prior approval is required before investing in Mexico.

Foreign investors are allowed to hold cash accounts in Mexican pesos. According to the Mexican law, overdrafts are only permitted provided that credit facilities are in place.

The Mexican peso (MXN) is freely convertible and repatriation is not restricted.

Holding restrictions

The Mexican Foreign Investment Law and the Mexican Constitution set specific limitations on foreign investment and reserve certain areas or activities exclusively for:

  • the Mexican State (activities related to petroleum and basic petrochemicals, nuclear energy, postal service, coin money and issuance of bills, and control and surveillance of ports and airports).
  • Mexican nationals (such as retail gasoline stations, and ground transportation except for courier services).

According to the Mexican Credit Institutions Law, the Financial Groups Law, and the Securities Market Law, foreign investors who exercise any kind of governmental power, are not allowed to acquire capital stock of:

  • a Mexican banking institution
  • a Mexican financial group

(together “Financial Institutions”)

  • a brokerage house.

Foreign investors are restricted from purchasing certain classes or series of shares as designated by the issuing company's by-laws. Foreign investors are not allowed to own certain series A shares (and in exceptional cases series B) and unique series designated by an asterisk after the issuers name, except those through a neutral trust that issues a specific type of equity security called Certificados de Participación Ordinarios (CPO). Otherwise foreign investors holding restricted shares incur the risk of having the shares confiscated by the Mexican authorities.

For tax purposes, Clearstream does not accept any holders being resident of Mexico for all "Cebures - Corporate debt" securities.

Neutral trusts and Certificados de Participación Ordinarios (CPO)

Foreign investment in companies that are subject to the Mexican Foreign Investment Law is limited to shares that:

  • do not grant any voting rights; or
  • grant limited voting and corporate rights.

Some issuers establish neutral trusts to allow foreign investors to purchase shares that are subject to foreign ownership restrictions (for example, most class ‘A’ shares). In such cases, the restricted shares are placed in the neutral trust, which then issues a CPO. CPOs represent economic interest in the underlying shares, but do not grant any voting rights to the shareholders (in this case the foreign investors).

The allocation of shares, as well as subsequent changes to the allocation, must be registered with the National Banking and Securities Commission of Mexico (CNBV).

The CPO retains the voting rights to the shares (voting the shares in accordance with the majority in the shareholder meeting) while the shareholder retains the economic benefits of the shares (in this case the dividends).

Foreign investors are reminded that CPO limits may be reached at any time during the day. Therefore, while there may be sufficient CPOs on trade date (T), there may be insufficient CPOs on settlement date (T+2). In the event that a foreign investor purchases a restricted security that does not have a corresponding CPO backing it (for example an irregular position), foreign investors may be obligated to sell the shares in the market, or may be subject to other actions from the CNBV, up to and including confiscation of the shares.

The issues and capacity limits vary from time to time. Customers are requested to be aware of such limits when investing in these instruments.