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Neutral investment is a mechanism through which foreign investment can participate in certain reserved or specially regulated activities.
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The LIE defines neutral investment as investment in Mexican companies or in authorized trusts that will not be taken into consideration for determining the percentage of foreign investment in the capital stock of Mexican companies.
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- Neutral investment represented by instruments issued by trust institutions
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The SE has the power to authorize trust institutions to issue neutral investment instruments, which will only grant, with respect to companies, pecuniary rights to their holders and, if applicable, limited corporate rights, without granting to their holders the right to vote in their general ordinary meetings.
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Furthermore, the SE can authorize the creation or modification of all types of neutral investment trusts, as well as the transfer of stock thereto, regardless of the activity that the company conveying its shares in trust engages in.
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- Neutral investment represented by special series of shares
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The investment in non-voting stock or stock with limited corporate rights is considered neutral, provided advance authorization is obtained from the SE and, when applicable, from the National Banking and Securities Commission. Companies already incorporated or to be incorporated, regardless of the activity they engage in, must obtain the advance authorization of the SE to issue special series of stock as neutral investment.
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- Neutral investment made by international development financing institutions
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International development financing institutions are considered to be those foreign entities whose principal purpose is to promote economic and social development of developing countries by the contribution of temporary venture capital, granting of preferential financing, or technical assistance of different types. These institutions can invest through neutral investment in the capital stock of Mexican companies, provided they are recognized in advance by the CNIE.
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Furthermore, these institutions can invest in the capital of Mexican companies that engage in reserved or specially regulated activities, provided they obtain a favorable decision of the CNIE.
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First, it should be mentioned that the Civil Code (Código Civil) regulates the establishment and operation of civil partnerships (sociedades civiles) and the General Law of Commercial Companies (Ley General de Sociedades Mercantiles, LGSM) regulates the establishment and operation of business entities (sociedades mercantiles).
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The civil partnership is a company in which the partners combine their resources and efforts for a common purpose that is for profit but is not considered commercial trade. Conversely, business entities can be defined as companies in which the partners or shareholders agree to combine the resources or efforts for a common purpose that is for profit and is considered commercial trade.
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Information by Von Wobeser & Sierra, S.C. |
