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National Treatment Extended for Foreign Investors under Article 17 of Mexico’s Foreign Investment Law

September 19, 2014
National Treatment Extended for Foreign Investors under Article 17 of Mexico’s Foreign Investment Law

In accordance with article 17 of Mexico’s Foreign Investment Law, foreign business entities that plan to conductbusiness in an ongoing manner, or that plan to establish themselves in Mexico, are required to requestauthorization from the Mexican Department of Economy.Notwithstanding this fact, as a result of the execution of various free trade treaties, Mexico agreed to grantinvestors of the treaty nations treatment that is no less favorable than that which it grants to domestic Mexicaninvestors. Therefore, in August 2012, the Department of Economy published a resolution setting forth the criteriafor the applicability of article 17, which waives the requirement to obtain authorization from the Department ofEconomy for those business entities established in treaty nations, including the United States of America,Canada, Chile, Costa Rica, and Colombia, among others.Therefore, on May 13, 2014, by means of publication in the Official Journal of the Federation, this benefit wasextended to foreign business entities that plan to establish themselves to provide services and which are organizedin accordance with the laws of any of the countries that are members of the World Trade Organization.Business entities seeking to take advantage of such benefit must file a written statement signed under oathcertifying: i) their bylaws and other formation documents are not contrary to Mexican public policy; ii) they areincorporated in accordance with the laws of their country of origin; iii) the principal activity they plan to conduct;and iv) the address of their agency or branch, or the information of their representative in the place where theyplan to operate. For purposes of the Public Registry of Commerce, it will be sufficient to file the aforementioneddocument with evidence that it has been filed with the Department of Economy.This new resolution expands the criteria previously established by such Department and simplifies procedures sothat certain foreign companies may conduct business efficiently in Mexico.

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