A. General
1. What is the main legal framework applicable to companies in your jurisdiction?
The main legal framework for companies in Mexico is the General Act for Commercial Entities, which provides the general regulations for the corporate governance and organization of corporations and companies. However, there are other laws that apply to companies, such as the Federal Civil Code, the Code of Commerce,the Foreign Investment Act, the Securities Market Act, as well as other particular laws that may apply, depending on the industry or specialized matters, such as telecommunications, mining, energy,aeronautic, transportation, among others.
2. What are the most common types of corporate entities (e.g., joint stock companies, limited liability companies, etc.) used in your jurisdiction?
The most common types of entities in Mexico are (i) Sociedad Anónima (“S.A.”) comparable to corporations and incorporated by shareholders, and (ii) Sociedad de Responsabilidad Limitada (“S.de R.L.”), comparable to limited liability companies, which are formed by members.Nonetheless, there are other commonly used options depending on the specific features of the project or the purpose of the investment such as Sociedad Anónima Promotora de Inversión (“S.A.P.I.”), similar to S.A., regulated by the Securities Market Act,or the Sociedad Financiera de Objeto Múltiple (SOFOM), aimed to conduct financial activities related to granting of credit,leasing, or factoring, among others.
All the options above mentioned grant protection to the shareholders/partners.Their liability is limited to the amount of their contributions in the capital stock.Except for very exceptional cases, the“corporate veil” cannot be pierced, and liabilities reach the shareholders/partners.
What are the main differences between them (including but not limited-to with regard to the shareholders’ liability)?
Between the two main corporate vehicles above referred (S.A. and S.de R.L.), there are several differences, some more relevant than others. Particularly, the most important matter to consider when deciding on the type of company that will be used is the kind of operations that the company will carry out, the investment scheme, and the admission of new shareholders. For example, if the intention is to incorporate a company that will have constant variations in its capital due to rounds of investment or the admission of new shareholders on are curring basis, it’s more advisable to incorporate a S.A., while, on the contrary, if the company is a family business or a small group of shareholders that is not likely to have frequent modifications in its distribution of the capital stock, it would be more optimal to consider a S. de R.L.
Some of the main differences between both types of entities(S.A. and S. de R.L.) are:
- Ownership: The holders of interests in a S.A. are called shareholders, and they hold shares which, subject to the provisions of the bylaws,can grant different level of benefits and rights to the shareholders. In a S. de R.L.,the holders are members,and they hold equity interests. All equity interests must grant the same rights and obligations.
- Transfer of ownership: In a S.A., as a general rule, the shares are freely transferable, except for particular restrictions that may be provided in the bylaws. In a S. de R.L., the admission and the transfer of the participation of the partners requires the consent and approval of the other members, who have the right of first refusal to acquire the equity interests intended to be transferred.
- Surveillance committee: S.A. are subject to the mandatory requirement to the appointment of at least 1 (one) examiner who may be or not shareholders. The main purpose of the figure of the examiners to supervise the compliance by the board, director and managers to corporate governance rules and applicable laws. Regarding the S. de R.L., there is no mandatory requirement to appoint an examiner.
- Corporate rules: The law provides more flexibility to incorporate into the bylaws of a S.A. special rules regarding obligations and rights of the shareholders, contributions, investments, restrictions. S.A. (and its modality of S.A.P.I.) is the ideal vehicle when the project is a Joint Venture, or a SPV is required.On the other hand, a S. de R.L. is more suitable for a wholly owned subsidiary, with simple corporate structure.
B. Foreign Investment
3. Are there any restrictions on foreign investors incorporating or acquiring the shares of a company in your jurisdiction?
As a general rule, foreign investors are allowed to conduct business in Mexico, either personally, through a branch (foreign entity doing business in Mexico) or a subsidiary(an incorporated Mexican entity). There are no restrictions to foreign investment.
As exception to the general rule, there are some limitations to foreign investment in very particular scenarios. The Foreign Investment Act foresees some categories of activities that are (i) exclusively reserved to the Mexican government, (ii) exclusively reserved to Mexican nationals and to Mexican companies, in which foreign investment cannot participate, (iii) Activities in which foreign investment is limited to specific percentages, ranging from 10% to 49% and, (iv) Activities which require authorization from the National Commission of Foreign Investment to have more than 49% of foreign participation.
Some examples of business sectors to which foreign investment is restricted are terrestrial transportation of passengers, national freight forwarding services, agricultural land, certain port services, among others.
4. Are there any foreign exchange restrictions or conditions applicable to companies such as restrictions to foreign currency shareholder loans?
There are no particular restrictions for transactions to be entered within Mexico, in connection to foreign currency. Loans, investments, capital contributions, and in general, any transaction or payment obligation can be executed in Mexican currency or a foreign currency. If the agreement or contract is silent on the currency, the obligation shall be settled in Mexican pesos. If the agreement is silent on the exchange rate, parties shall use the official exchange rate published by the Mexican Central Bank.
5. Are there any specific considerations for employment of foreign employees in companies incorporated in your jurisdiction?
In order for foreigners to work for companies in Mexico, they must obtain the appropriate immigration permit that allow them to work in the country, whether it be the visitor visa with permission to conduct remunerated activities or the temporary resident visas,depending on each particular case. For both scenarios, a written and legally valid employment agreement between the employer and the foreign employee must be executed, which must include details such as salary, position, duration of employment and working conditions.
The visitor visa with permission to conduct remunerated activities, authorizes the foreigner employee to work or stay in the country for up to 180 days. For this type of visa, it is required to have either a formal job offer or a formal invitation from an authority or institution.
The temporary residency with permission to work in Mexican territory, authorizes the foreign employee to work in Mexico and receive a payment for their work. The foreign employee must have a formal job offer to be able to obtain a work visa. With this permit,the foreign employee is granted the status of temporary resident with permission to work and to stay in the country for a year. This visa card can be renewed.
The companies that employ foreigners must obtain an Employer Certificate from the National Migration Institute (INM).The employer must also enroll their foreign workers on the Mexican Institute of Social Security (IMSS) as well as provide them with social security benefits.
C. Corporate Governance
6. What are the standard management structures (e.g., general assembly, board of directors,etc.) in a corporate entity governed in your jurisdiction and the key liability issues relating to these (e.g., liability of the board members and managers)?
The most important (and minimal) structures, according to the General Act of Commercial Entities, are the following:
Shareholders’ Meeting
The shareholders’ meeting is 1(one) of the most important management structures of the Mexican company since, in accordance with the General Act of Commercial Companies, it’s the supreme corporate authority of the company; it can approve and ratify all acts and operations of the Company and its resolutions shall be carried out by the person appointed for that purpose or by the general sole director or the board of directors when applicable. It is in charge,among other activities and depending on whether it’s an ordinary or extraordinary meeting, of: (i) approving fiscal years, (ii) reviewing and approving the Administration Body and Examiner(s) Report, (iii) appointing and ratifying the members of the administration body
and the examiner(s) and their authorities and powers of attorney, (iv) determining the payments of the members of the administration body and its examiner(s) for their duties, and (v) reviewing the auditors’ report, if applicable. Also, the shareholders’ meeting approve (i) dissolutions and liquidations, (ii) increases and decreases in capital stock, (iii) mergers,and (iv) amendments of the corporate bylaws of the Company.
Regarding liabilities, the general rule is the liability of the shareholders or members is limited to the value of their contributions to the capital stock. However, this rule does not apply to non-limited liability companies, and for certain very specific matters (for example, under certain circumstances, tax liabilities, fraudulent resolutions, among others).
Management Body
The management body may be composed by 1 (one) or more members (sole director or board of directors), which oversees defining the strategy for the execution of the business. Some of its most common activities are:
Approve the annual report for the shareholders’ meeting, to inform the acts carried out, as well as the status of the accounting and management company.
- Appointment or removal of directors, managers, and employees.
- Approve the annual budget and business strategy of the company.
With regards to liabilities, when a representative of the company does not act on the best interest of the company or acts beyond the limits of its authorities (ultra vires), commits fraud, acts against Mexican laws and regulations, or acts in bad faith before creditors, such director maybe held responsible for any damages or losses caused to the company. Also, under certain circumstances, the directors (as representatives of the company), may be jointly or severally liable for certain tax, environmental or criminal liabilities.
Surveillance Body
Finally, the surveillance body is an internal corporate body (without powers of attorney) responsible for overseeing the activity of the administration body. It can be composed by 1 (one) member (examiner), or a committee composed by several members. This structure is not mandatory for S. de R.L. companies, contrary to S.A. companies, in which is required. The examiner cannot be a member of the administration body, but it can a shareholder.
The main duty of the examiner is to monitor the corporate and business operations of the company in relation to its corporate structures and the activities executed by the administration body or similar management positions, to mitigate or to detect any irregularity. As such, they have the authority, for example, to call to shareholders’ meeting when they deem necessary. The members of the surveillance body may be liable for lack of diligent supervision.
The examiners are individually responsible for the compliance of the obligations provided by the corporate bylaws and the General Act of Commercial Entities; however, they may be assisted by third parties acting under their direction or by the services of technicians or independent professionals.
7. What are the audit requirements in corporate entities?
As previously mentioned, S.A. companies are more regulated regarding audit and surveillance requirements and obligations. In accordance with the General Act of Commercial Companies, S.A. companies must appoint at least 1 (one) person to act as an “examiner”, which will carry out audit and supervision activities to the operations of the board of directors or general sole director of the company. On the other hand, S. de R.L. companies do not have such obligation; however,they are able to appoint an examiner if the shareholders deem it appropriate.
Additionally, according to the Federal Tax Code, in case companies surpass certain thresholds on their annual income, their financial statements must be audited by a certified accountant, as part of their compliance tax obligations.
Other than the above, there are no additional mandatory corporate requirements for audits to be conducted by the company.
D. Shareholder Rights
8. What are the privileges that can be granted to shareholders? In particular, is it possible to grant voting privileges to shareholders for appointment of board members?
As a general rule, the shareholders voting rights for the election of board members in proportion to their participation. In a non-public S.A., when the management body is composed by 3 (three) or more board members, shareholders having 25% of the capital stock may appoint1 (one) board member. The bylaws may provide for special classes of shares whereby special rights may be conferred, allowing issuance of shares with privileged (or restricted) voting or economic rights.
9. Are there any specific statutory rights available to minority shareholders available in your jurisdiction?
Corporate law in fact provides rights to minority stockholders, including, to oppose meeting decisions, review balance sheet and books of the company, as well as the ability to appoint at least1 (one) board member when the administration body is integrated by 3 (three)or more members, as long as such minority represents a 25% of the capital stock. For public companies, whose shares are listed at the Mexican Exchange Stock Market such percentage will be reduced to 10%.
10. Is it possible to impose restrictions on share transfers under the corporate documents (e.g., articles of association or its equivalent in your jurisdiction) of a company incorporated in your jurisdiction?
Mexican law allows for shareholders agreements or bylaws to provide restrictions to the transfer of shares. Some of restrictions and special rules for share transfers that can be contemplated, include previous approval of the board, rights of first refusal, tag-along, drag-along, put-call options, among others.
11. Are there any specific concerns or other considerations regarding the composition, technical bankruptcy, and other insolvency cases in your jurisdiction?
Mexican courts have developed important precedents, experience and criteria with respect to insolvency and bankruptcy procedures and creditor’s rights. Insolvency can be filed either voluntarily by the insolvent company, or by a creditor or the district attorney’s once directly,by following the procedures stated in its special regulation. Under insolvency statutes, certain creditors will rank ahead secured bank or third parties loans, such as, preferential labor payments, management fees and expenses of the estate.
E. Acquisition
12.Which methods are commonly used to acquire a company, e.g., share transfer, asset transfer, etc.?
In Mexico, the main methods to acquire a private legal entity are the following:
- Total or partial acquisition of shares, securities, or interests by means of a stock purchase agreement;
- total or partial acquisition of the assets of a company/business, through an asset purchase agreement;
- joint venture agreement, typically through the incorporation of a new legal entity, where the parties of the joint venture contribute funds, assets and/or rights, or
- merger with the target entity.
13. What are the advantages and disadvantages of a share purchase as opposed to other methods?
As opposed to the other acquisition methods,share purchase method offers a straightforward control and acquisition of the target entity, and in general terms, share purchase negotiations tend to be shorter than any of the other acquisition methods.
If this method is overseen from a tax perspective, both seller and purchaser are benefited.Tax attributes of the company are indeed transferred with the change of control. The transaction will not trigger value added tax on the shares– while an asset acquisition will trigger value added tax (16% general rate) on certain assets among joint liability on tax liabilities of seller. For seller, under certain elections and formalities, the transfer of shares could be taxed on a gain basis (to avoid withholding taxes, subject to certain requirements and depending on the tax residence of the seller).
Operatively speaking, a share acquisition poses an easier transition, as commercial and employment relations remain in the acquired entity,having a smoother logistic as opposed to asset or joint venture transaction, where purchase order settlement, transit of inventory and sales, pending obligations, accounts receivable and payable, notices to clients, suppliers and third parties, transfer of equipment and machinery ownership all be taken into consideration.
Finally, depending on the party’s perspective, assumption or release of liabilities is an important consideration for the transaction, as purchaser will inherit through the acquisition of shares, all liabilities of the target entity, including civil, labor, administrative, environmental, operating, tax, ongoing disputes, litigations and corporate criminal liabilities, thus purchaser shall conduct an extensive due diligence prior closing transaction and seller might be burdened with pre-closing clean ups and in some cases a purchase price reduction based on monetized risks.
14.What are the approvals and consents typically required (e.g., corporate, regulatory, sector based and third-party approvals) for private acquisitions in your jurisdiction?
Share acquisition consents that shall be met for closing of transaction will be primarily share holders’ approval of the transaction and of any other special requirements or waivers as may be required under its bylaws (for example, waivers of rights of first refusal or option rights of other non- purchasing parties).
Supplier and customer consents or notices will also be relevant for the case of change- of control provisions or asset acquisitions. Approvals of sector regulatory bodies will be directly linked to the activity or industry of the operation of the target company.
Also, depending on the value of the transaction, as well as other economic aspects of the purchasing and selling parties involved,the clearance of the transaction by the applicable economic competition authority (either the Federal Economic Competition Commission or the Federal Telecommunications Institute) might be required.In case that certain thresholds for pre-merger filing are met, the transaction cannot be closed until the relevant antitrust clearance is issued.
15. What are the regulatory competition law requirements applicable to private acquisitions in your jurisdiction?
In case the transaction exceeds certain economic thresholds, an antitrust test must be performed to determine if the private acquisition requires approval from the Federal Telecommunications Institute (“IFT”), for the case of companies relating to the telecommunications or broadcasting sectors, or from the Federal Economic Competition Commission(“COFECE”), which is the economic competition authority for any other economic sector.
However, it is important to mention that due to a constitutional reform published on December20, 2024, the COFECE and the IFT are about to be replaced by a new antitrust authority once the federal legislation that amends or substitutes the current economic competition legal framework is passed by the Congress. As of March 4, 2025, there is a new law initiative that is under discussion by the legislative bodies but it is still unclear if the current draft of anti-monopoly law will be approved (or substituted by a different law initiative) and exactly when the new antitrust authority will take once. In case the transaction needs to be filed for clearance by the relevant economic competition authority, the transaction may not be closed,until it is approved by the relevant authority, otherwise, important sanctions may be imposed.
M&A transactions in certain industries may be supervised by other authorities, such as banking, insurance, and financial bonds sectors.
16. Are there any specific rules applicable for acquisition of public companies in your jurisdiction?
Publicly traded companies in Mexico can be acquired through a takeover or apublic acquisition offer (“OPA”), duly authorized by the National Banking and Securities Commission(Comisión Nacional Bancaria y de Valores or “CNBV”) and the Mexican Exchange Stock Market (Bolsa Mexicana de Valores or BMV); the securities in question shall be registered at the National Securities Registry (Registro Nacional de Valores or RNV).
17.Is there a requirement to disclose a deal,for instance to regulatory authorities? Is it possible to keep a deal confidential?
In order to determine whether an M&A operation can remain fully confidential before authorities, there’s two items that shall be considered, firstly if the target company is publicly traded or private, and secondly, to determine antitrust thresholds where a notice shall be filed with the antitrust authority.
For transactions involving private companies, there is no legal provision asserting the obligation of the parties to disclose a transaction; instead, the parties agree when and how to publicly announce the transaction. Depending on the legal vehicle selected, certainly there are filings that shall be performed following closing that are available to the public – such as filings with the electronic system of commercial entities of the Ministry of Economics. Also, other filings will be required, such as tax returns relating the transfer of shares or assets, merger notice to the tax authorities, filings with the National Foreign Investment Registry.
On the other hand, regarding publicly traded corporations, these shall disclose relevant operations, events and transactions that may have an effect over the value of the shares, as well as to provide relevant information to CNBV for OPA approval which shall be disclosed to the public a day prior to the OPA’s commencement validity date, and they shall submit certain reports before the Securities National Registry.
18.Can sellers be restricted from shopping around during a negotiation process? Is it possible to include break fee or other penalty clauses in acquisition documents to procure deal exclusivity?
Exclusivity periods provisions are common and well used in Mexican M&A transactions, in order to prevent seller to engage in negotiations regarding assets, shares, or any other subject matter related to the M&A transaction. These provisions are commonly integrated to the term-sheet of memorandums of understanding, letters of intent and non-disclosure agreements, as well as in the promissory purchase agreements or purchase agreements that are subject to closing conditions. The parties may validly agree on break-up fees and other conventional penalties in case of default of the exclusivity obligations.
19.What are the conditions precedent in atypical acquisition document? Is it common to have conditions to closing such as no material adverse change?
Conditions precedent for Mexican M&A transactions usually include for the target company to have obtained all regulatory approvals, consents and/or waivers from corresponding governmental authorities, as well as assurance that there’s no legal impediment, claims, actions, or proceedings that may declare the transaction illegal or prohibit its consummation. No material adverse change provisions are customary, and seller and purchaser typically negotiate its scope and limitations. The COVID-19 pandemic introduced new provisions negotiated among the parties to exclude public health governmental orders, among others as material adverse changes or events.
20.What are the typical warranties and limitations in acquisition documents? Is it common to obtain warranty insurance?
Customary representations and warranties in M&A transactions include, corporate organization, consents and approvals, ownership, assets and real estate matters, material contracts, employment matters, environmental, taxes, customs, regulatory matters, anticorruption, and other compliance topics.The type of business activity and sector of the target company will determine representations and warranties that may be required.
Representations and warranties on Environmental, Social and Governmental (ESG) aspects have increased due to international trends.
Representations and warranties insurance is not widely common in M&A transactions in Mexico, but each time, is more frequently seen, particularly, in multi jurisdictional/ cross-border transactions.
21. Is there a requirement to set a minimum pricing for shares of a target company in an acquisition?
There is no legal provision that obliges or provides a minimum price for shares of a target company in an acquisition; however, purchase price should be based on market value considerations. In case of transactions where related parties are involved, transfer pricing rules shall be considered. Acquisitions below fair market value could be challenged by tax authorities or be subject to fraudulent conveyance claims.
22. What types of acquisition financing are available for potential buyers in your jurisdiction? Can a company provide financial assistance to a potential buyer of shares in the target company?
Several structures of acquisition finance may be considered by buyers of target companies in Mexico, including, bank commercial loans, asset-based loans, mixed senior and subordinated loans,private equity funding, mezzanine loans, leveraged buyout, owner earn out.Financing may come from banking or other financial institutions, either local or international.
Therefore, companies may provide financial assistance to the potential buyer of shares, either through equity or debt, or a mix of both.
23.What are the formalities and procedures for share transfers and how is a share transfer perfected?
In Mexico, the minimum formalities for the transfer of stock are(i) the execution of the stock purchase agreement(and although not being a requirement of validity, it is recommended to certify the agreement with a notary public, required for tax filings and appropriate support of the effective date of the transaction), (ii) shareholders resolution approving the transaction, if required under the by-laws of the target company, (iii) delivery and endorsement of share certificates and (iv) registration in the corporate books of the target entity of the relevant transfer of shares. Certain notices will be required before the corresponding authorities, such as tax authorities, Ministry of Economy,National Registry of Foreign Investments and, depending on the target company’s activities and/or sector, notices to regulatory entities, as provided by the special regulation of such sector or industry.
24. Are there any incentives (such as tax exemptions) available for acquisitions in your jurisdiction?
M&A transactions are subject to federal, state, and local taxes depending on the type of transaction (for example, if real estate assets are involved in an asset deal, local taxes will apply for the transfer of the real estate).
At the federal level, Seller would have to pay income tax, and buyer (when the acquisition ison assets) would have to pay value added tax. Depending on whether the transaction involves individuals or entities, and their tax residency, different rates and rules would be applicable.
Depending on this as well,international tax treaties may be applicable for reduced rates. There are no federal tax exemptions applicable to M&A transactions as a general rule; although, it is relevant to mention that on June 2023,the Federal Government issued a decree that provides up to 100% income tax and value added tax exemptions for 3 (three)and 4 (four) years respectively for companies investing within the Isthmus of Tehuantepec in certain economic activities (electronic, semiconductors, automotive, medical devices, pharmaceutical, agroindustry, generation and distribution of green energy, machinery and equipment, information technology and others). Also, on January21, 2025, Mexico’s Federal Government issued a Decree of federal tax incentives for immediate deduction of certain investments in new projects as a counter measure against the new tariffs and measures being imposed by the US Government as a result of the new foreign trade policies of its president Donald Trump.
Regarding estate and local taxes, exemptions or special treatments may be applicable, but that would depend on the regulations of specific state with jurisdiction on the particular asset or operation. The typical incentives for new investments include temporary discounts or exceptions in payroll taxes,property transfer taxes and support on capital investments.
Foreign entities could be subject to taxes under certain circumstances, considering, among others, rules of (i) tax residency, (ii) permanent establishment, and(iii) source of income to determine whether taxes are applicable in Mexico.
F. Enforceability
25. Can acquisition documents be executed ina foreign language?
Yes, acquisition documents may be executed in any language, however, for the mandatory notarization in Mexico of any of such documents, for the filing or registration before a Mexican authority (if statutorily required) and for tax compliance purposes, a translation to Spanish is required. In M&A transactions, the standard practice is to prepare a short form purchase agreement in bilingual form, typically Spanish and English,for filing purposes.
26. Can acquisition documents be governed by a foreign law?
Under Mexican law, the election of a foreign law is valid (subject to certain conditions) and, therefore, foreign law can govern the main purchase agreement. However, Mexican statutory regulations and public law provisions must be taken into consideration, such as, formalities required for the transfer and registration of stock, transfer of real estate, notices to authorities, among others. Other topics that should be considered when electing the applicable law are: (i) address of the party with the potential obligation to indemnify (it is easier to enforce and execute a “local”court
/ arbitration ruling than a“foreign” one; and (ii) arbitration versus courts of law(consider the expertise in foreign law of a court of law of another country versus the knowledge of arbitrators).
27. Are arbitration clauses legally permissible or generally included in acquisition documents?
Yes, arbitration clauses are permissible and normally included in acquisition documents. They are more widely used for transnational transactions or when different jurisdictions are involved.As explained above, in selecting the country for the arbitration and the applicable law, we suggest using the criteria of “enforcement”, i.e., selecting the country where the agreement or transaction is likely to be enforced.
28. Are there any specific formalities for the execution of acquisition documents? Is it possible to remotely/digitally sign documents?
Since 2003, through the Code of Commerce, Mexico began regulating digital and electronically signed documents. Later, in 2016, with another amendment to the Commerce Code, it has been approved that all documents, despite being wet-ink or electronically executed, have the same validity and enforceable power before third parties and authorities.
For a digital document to be completely valid, the digital-signature services provider must comply with certain requirements which are regulated by Mexican O%cial Standard 151, regarding protection and preservation of data messages and digitization of documents (such fully recognized signature, “advanced e-signature”). If the provider of e-signature services does not have this certification, the e-signature will not be considered equally valid as a wet-ink signature, and therefore, it will not be an advanced e-signature.
Finally, forcus to mary uses and practices, more than legal provisions, there are some debates on the validity of advanced e-signature in certain documents (for example, in labor and employment disputes).In M&A transactions in Mexico, wet-ink signatures are still preferred and recommended.
G. Trends and Projections
29. What are the main current trends in M&A in your jurisdiction?
Due to the nearshoring opportunities for Mexico,as a strategic neighbor of the
United States of America, M&A transactions have been importantly active and rising in Mexico. The trending targets in Mexico are manufacturing companies, agro- industries, pharmaceutical, electronic, automotive, financial, digital industries, telecommunications, logistics and infrastructure. We have seen M&A transactions in their different forms: stock sales, asset acquisition, joint ventures, strategic expansions, and divestitures.
Also,we have seen bothM&A financed by private equity capital, syndicated bank loans (under different structures) and owner earn-outs. However,as further explained in the following section, Mexico has been facing important challenges in the international trade scenario due to the new US measures under the Trump’s administration, which effects are still to be assessed.
30. Are any significant development or change expected in the near future in relation to M&A in your jurisdiction?
Mexico’s first female president, Claudia Sheinbaum, took once on October 1,2024. She has close ties with the former president and therefore, it is anticipated that she will continue the strategic government policies of her predecessor. During the first weeks of her tenure, several constitutional and law amendments aiming to convert the Federal Electric Commission (“CFE” for its acronym in Spanish) and the oil production entity, PEMEX from state-owned “productive” to “public” companies, have been in the process of approval. These amendments seek to strengthen the powers of these state-owned companies and limit private investment in certain energy activities. For instance, one of the objectives is that 54% of the energy production is concentrated by the CFE, while46% may be concessioned to private companies subject to strict rules to be issued.It is also anticipated that the energy transition to renewable sources will be exclusive to the Mexican government.
Apart from that, the Mexican government shared in October2024 its strategy to promote and support private and foreign investment. Among the areas where the government is interested in promoting investment are housing, trains, highways, ports, and infrastructure in general, among other activities that are expected to be continued,such as manufacturing, technology and consumer products.
It is also relevant to mention that an important judicial reform was approved by the Congress in September 2024. This reform aims to have judges, magistrates and Supreme Court ministers elected by popular vote (in replacement of the former judicial-career system). Due to the uncertainty of the practical effects of this reform in the day-to-day administration of justice in Mexico, it is expected that foreign law(when feasible) and arbitration provisions will become more frequent in cross-border M&A transactions.
Another trend to mention is that representation &warranty insurance in Mexico is becoming more frequent in cross-border and multi jurisdictional M&A transactions.
Finally, Mexico has been navigating within uncertain waters due to, first,the tariff threats and, then, the effective 25%-tariff imposition by Donald Trump on March 4, 2025 (date in which this Mexico chapter was completed). It is unclear if these tariffs will be effective long term or not but, in any case, international companies will have to deal with the new foreign trade scenarios, review their international sale, manufacturing, supply or distribution agreements and review and adapt their strategic plans in the short and long terms. Mexico has opened anti-dumping investigations with respect to certain products coming from China, and it is expected that Mexico will impose certain retaliatory measures against the importation duties imposed by the US government (in case the current scenario does not change).
Despite the above, Mexico is still being seen as a strategic location to do business and to take advantage of the nearshoring opportunities. Business decisions are being taken under long term vision, and the current troubled waters in the international relations sea have not created,until now, a generalized freeze of ongoing M&A transactions or business projects in Mexico.