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Corporate Law

Constitution of Corporations for Foreigners in Mexico: Process and Restrictions

March 15, 2026 — Enrique Benet-Gregg

The participation of foreign persons in Mexican companies is governed principally by the Foreign Investment Law (LIE), published in the Official Journal of the Federation on December 27, 1993 and with its most recent amendment published on June 22, 2023, together with its Regulations to the Foreign Investment Law and the National Registry of Foreign Investments (RLIE), published on September 8, 1998 and with subsequent modifications. The General Law of Commercial Companies (LGSM), in force with amendments published in the DOF on January 20, 2021 in accordance with the consolidated text available at dof.gob.mx, regulates the available types of companies, the requirements for incorporation, and the corporate regime of commercial legal entities. In a complementary manner, the Commercial Code and the Securities Market Law apply to more sophisticated capital structures.

Types of Companies and Vehicle Selection

The foreign investor may incorporate any of the types of companies provided for in the LGSM. The most commonly used forms in medium and large-scale transactions are the Joint Stock Company (SA), the Joint Stock Company of Variable Capital (SA de CV), and the Limited Liability Company (SRL). The SA de CV is the predominant vehicle in real estate and hospitality projects in the Riviera Maya, due to its statutory flexibility and the ease of incorporating additional shareholders without modifying the fixed minimum capital. The SRL, for its part, limits the number of shareholders to fifty in accordance with article 61 of the LGSM, which makes it suitable for closed structures or bilateral joint ventures.

Additionally, the LGSM incorporated in 2016 the Simplified Stock Company (SAS) as a type of company with entirely digital incorporation through the electronic platform of the Ministry of Economy, with reduced minimum capital requirements and an expedited notarization process. The SAS presents, however, a determinative structural restriction for the majority of foreign corporate investors: only natural persons may be shareholders of a SAS, in accordance with the provisions of Chapter XIV of the LGSM. This limitation functionally excludes any foreign corporate vehicle—whether an LLC, corporation, limited company, or equivalent—that intends to participate directly as a shareholder. Consequently, the SAS may be appropriate for a foreign natural person investor who wishes to establish an initial low-cost presence in Mexico with limited economic activity; conversely, when the foreign shareholder is a legal entity, when the scale of the investment requires significant capital, or when the structure contemplates institutional financing or multiple rounds of capitalization, the SA de CV or the SRL are the appropriate vehicles. For projects in the Riviera Maya that involve real estate assets or sector-specific concessions, the SA de CV remains the instrument of choice due to its compatibility with notarial registries and the requirements of the RNIE.

Incorporation Process: Stages and Timelines

Incorporation before a public notary requires prior obtaining of the name approval permit from the Ministry of Economy (SE). This procedure is resolved in practice within timeframes of one to three business days through the SE’s electronic system. Regarding its regulatory basis, the name approval authorization procedure does not derive from article 15 of the LGSM in its current text, since that provision regulates the clause excluding foreigners from corporate bylaws and not the procedure for prior name approval. The applicable regulatory basis is found in the operating rules of the Ministry of Economy’s electronic system and in the Internal Regulations of the Ministry of Economy, with no article in the current LGSM that specifically regulates the name approval procedure before the SE in its current digital form. Legal practitioners must consult directly the platform www.gob.mx/economia and the current administrative provisions of the DGIE for updated requirements.

The articles of incorporation must be notarized and registered in the Public Commercial Registry (RPC) in accordance with article 6 of the LGSM; the registration period varies between five and fifteen business days depending on the federal entity. In Quintana Roo, registration is handled before the Public Registry of Property and Commerce with headquarters in Chetumal or in the corresponding delegations. Upon completion of registration, the company must obtain its Federal Taxpayers Registry (RFC) from the SAT and, if it has foreign shareholders, register in the National Registry of Foreign Investments (RNIE) within the forty business days following its incorporation, in accordance with article 32 of the LIE.

The RNIE: Registration and Reporting Obligations

The RNIE, administered by the SE in accordance with Title Five of the LIE and Chapter IV of the RLIE, imposes three categories of obligations on companies with foreign participation:

  • Initial Registration: within forty business days following the establishment or acquisition of participation by a foreigner, in accordance with article 32, section I, of the LIE.
  • Quarterly Reports: when the equity capital of the corporation exceeds one hundred eighty-five million pesos, in accordance with article 38 of the RLIE, in the months of January, April, July, and October.
  • Annual Reports: for all registered entities, submitted in the months of April and May of the following fiscal year, in accordance with article 37 of the RLIE.

Non-compliance with obligations before the RNIE generates administrative sanctions provided for in Title Five of the LIE. The sanctions regime includes warnings and economic fines; the ceiling of two million pesos frequently cited in the literature corresponds to the historical maximum referenced in the text of article 38 of the LIE according to previous versions of the statute, but legal practitioners must verify the current amount in the consolidated text of the LIE published in the DOF on June 22, 2023, since fines in the matter of foreign investment are subject to adjustment in accordance with the Unit of Measurement and Adjustment (UMA) and the amount expressed in pesos may vary with respect to earlier versions of the statute. The sanctioning consequence is, in any case, independent of the tax contingencies derived from the failure to justify foreign capital flows before the SAT.

Sectoral Restrictions: The Admission Clause and Reserved Activities

Article 6 of the LIE reserves to the Mexican State and Mexican nationals certain activities. Foreigners may participate up to one hundred percent of the capital in most sectors, except in those subject to percentage restrictions provided for in articles 7 and 8 of the LIE. Among the activities relevant for investors in the Riviera Maya, the following stand out:

  • Domestic air transport: limit of forty-nine percent for direct foreign investment in accordance with article 7, section III, of the LIE.
  • Fishing in territorial waters and exclusive economic zones: subject to concession and with foreign capital restrictions in accordance with the Sustainable Fishing and Aquaculture Act.
  • Restricted coastal zone: the applicable regime varies according to the nature of the acquirer and the use of the real property, in accordance with article 27, section I, of the Political Constitution of the United Mexican States and article 11 of the LIE, according to the following differentiated scenarios: (a) foreign natural persons and foreign legal entities may not acquire direct ownership of real property located in the strip of fifty kilometers from the coastline, and must channel their participation through an authorized banking trust in accordance with article 11 of the LIE, regardless of the use given to the real property; (b) a Mexican corporation, even with majority participation of foreign capital, may directly acquire real property in the restricted zone for non-residential purposes, provided that its bylaws include the admission clause for foreigners provided for in article 27, section I, of the Constitution, by which said foreign partners undertake to consider themselves nationals with respect to the acquired property and not to invoke the protection of their governments; (c) when the use of the real property is residential and the acquirer is a foreign natural person, the trust is mandatory without exception, regardless of any interposed corporate structure. This distinction is determinative for the structuring of hotel projects, mixed-use and real estate development in Quintana Roo, where the classification of the use of the real property defines the legal vehicle required.

Additionally, article 8 of the LIE contemplates activities that require a favorable resolution from the National Foreign Investment Commission (CNIE) when foreign investment seeks to exceed forty-nine percent of capital in sectors such as private security, cellular telephony, and inter-state land transportation. It is important to clarify that the obligation to obtain CNIE authorization under article 8 does not operate automatically in all transactions: the LIE and the annual resolutions issued by the SE establish a minimum transaction value threshold below which CNIE authorization is not required, even in sectors subject to percentage restrictions. In accordance with resolutions published in recent years, said threshold has historically been situated in an approximate range of between 165 and 180 million United States dollars, adjusted annually by resolution published in the DOF at the beginning of each fiscal year. Investors must consult the annual resolution in force at the time of the transaction, available through the General Directorate of Foreign Investment of the SE, to determine whether their transaction exceeds the threshold that activates CNIE review. Transactions that do not reach said threshold may be executed without being subject to the authorization process, which substantially reduces the regulatory burden for medium-scale projects in sectors that, apparently, would seem to be subject to mandatory review.

Relevant Tax Considerations

The tax dimension of a foreign investment structure in Mexico cannot be separated from the corporate and regulatory analysis. The following considerations are minimal and indispensable for any medium or large-scale investor; specific tax structuring requires separate and specialized analysis in each case.

Withholding on dividends to foreign partners. Under the Income Tax Law (LISR), dividends distributed by a Mexican company to a foreign partner, whether a natural person or legal entity resident abroad, are subject to a ten percent withholding in accordance with article 140 of the LISR. However, Mexico has a network of treaties to avoid double taxation that includes, among others, agreements with the United States of America (in force since 1994), Canada, Spain, Germany, France, the Netherlands, and the United Kingdom, among more than sixty jurisdictions. Depending on the applicable treaty and the ownership structure, the withholding rate on dividends may be reduced, frequently to rates of between five and fifteen percent depending on the percentage of participation and the beneficial owner requirements provided in each instrument. The analysis of the applicable treaty must be conducted before defining the ownership structure, since the interposition of a holding in a jurisdiction with a favorable treaty may generate significant and recurring tax savings.

Transfer pricing. Every Mexican company that conducts transactions with related parties resident abroad, including royalty payments, inter-company services, financing, and product distribution, is obligated to demonstrate that such transactions are conducted at market values in accordance with the arm’s length principle, under articles 76, section IX, and 179 of the LISR. Non-compliance exposes the company to adjustments to the taxable base, surcharges, and considerable penalties. For structures where the Mexican entity pays royalties or service charges to a foreign parent, transfer pricing analysis is a non-negotiable component of initial planning.

Thin capitalization rules. When the financing of the Mexican company comes from debts with foreign related parties and the debt-to-equity ratio exceeds the three-to-one proportion established in article 28, section XXVII, of the LISR, interest payments exceeding said limit shall not be deductible for tax purposes in Mexico. This restriction directly impacts the structuring of projects that contemplate inter-company financing from the parent or from a treasury vehicle abroad.

Controlling beneficial owner. The reforms to the Federal Tax Code published in the DOF on November 12, 2021, effective as of January 1, 2022, introduced the obligation to identify, verify, and report to the SAT the chain of controlling beneficial owners of every Mexican legal entity, in accordance with articles 32-B Ter, 32-B Quáter, and 32-B Quinquies of the CFF. This obligation applies without exception to companies with foreign participation and requires maintaining updated documentation on ultimate beneficial owners with effective control, whether through shareholding exceeding twenty-five percent or by de facto control in decision-making. Failure to comply with this obligation generates penalties that may reach two million pesos for each beneficial owner not reported, independent of RNIE sanctions. The opening of bank accounts in Mexico equally requires the presentation of this documentation in accordance with money laundering prevention rules applicable to credit institutions.

Relevant Judicial Criteria

The First Chamber of the SCJN has consistently held that freedom of enterprise and the principle of equality before the law are rights recognized in article 5 of the Constitution; however, it has validated sectoral restrictions on foreign investment insofar as they constitute public order measures based on article 27 of the Political Constitution of the United Mexican States, which reserves to the State the original dominion over national territory and establishes the bases for the investment regime in restricted zones. This criterion derives from the jurisprudential line of the First Chamber regarding legislative configuration freedom in economic matters; readers requiring location of specific theses should consult the Semanario Judicial de la Federación at sjf.scjn.gob.mx using the following search parameters: First Chamber, constitutional-economic matter, articles 5 and 27 of the Constitution, foreign investment. IBG Legal does not reproduce in this publication specific isolated thesis numbers for that criterion having been unable to independently verify the exact registration number in the SJF at the time of publication, in order to avoid incorrect citation.

The Collegiate Courts of the XXVII Circuit (Quintana Roo) have established that failure to register in the RNIE does not produce nullity of the constitutive act or share transfers, but rather constitutes an autonomous administrative infraction punishable under Title Five of the LIE. This criterion is of particular relevance for secondary acquisition operations where the seller failed to comply with its reporting obligations, as its application prevents the counterparty from arguing nullity of the transfer based exclusively on non-compliance with registration requirements. The criterion was developed in the context of direct writs of amparo heard before said circuit in commercial and registral matters; as this is a criterion identified by IBG Legal based on its practice before the XXVII Circuit and not a jurisprudence formally published in the SJF with a verifiable thesis number at the time of publication, it is described as a criterion of practical application derived from circuit precedents and not as binding jurisprudence under the terms of article 217 of the Amparo Law. Legal operators interested in invoking this criterion should request a search of specific executories of the XXVII Circuit in the SJF or contact IBG Legal for reference of case files.

Practical Implications for the Foreign Investor

A correctly constituted structure must contemplate from the outset: the foreign admission clause in the bylaws in accordance with article 27, section I, of the Constitution; the definition of corporate purpose with sufficient precision to cover the projected activity without generating contingencies in sectoral classification before the CNIE; the designation of a legal representative domiciled in Mexico for purposes of tax and RNIE notifications; and the opening of bank accounts prior to the start of operations, a process that in practice requires presentation of the registered deed, the active RFC, and controlling beneficial owner documentation in accordance with amendments to the Federal Tax Code published in 2022.

Corporate Obligations Following Formation

Once the company is formed and registered, the foreign investor faces a set of recurring corporate obligations that activate within the first ninety to one hundred twenty days of the entity’s existence. Their omission generates autonomous administrative and tax contingencies, independent of those in the constitutive process:

  • First ordinary annual assembly: pursuant to article 181 of the LGSM, the ordinary assembly of shareholders or partners must be held within four months following the close of the fiscal year, with the minimum purpose of discussing the report of the administrator or board of directors, approving the general balance sheet and statement of results, determining the application of profits, and ratifying or revoking the appointment of administrators. The omission of this assembly or the lack of properly notarized minutes may generate observations from the SAT and complicate future notarial and registration procedures.
  • Commissioner or audit committee: the SA is obligated to appoint at least one commissioner pursuant to article 164 of the LGSM, who is responsible for unlimited and permanent supervision of all operations of the company. Companies that opt for the audit committee regime pursuant to the Securities Market Law may dispense with the commissioner; in the field of medium-scale foreign investment, the commissioner is the standard figure and its failure to be appointed in the constitutive deed or at the first assembly constitutes an organic irregularity.
  • Activation of tax inbox and CFDI: the company must activate its tax inbox with the SAT and process digital seal certificates (CSD) for the issuance of digital fiscal receipts via the internet (CFDI) before the start of any commercial operation. The issuance of receipts without active CSD generates autonomous fines pursuant to the CFF and may result in temporary restriction of the e.firma certificate.
  • First RNIE report: the company registered in the RNIE must submit its first annual report in the months of April or May of the fiscal year immediately following its incorporation, pursuant to article 37 of the RLIE. Companies with equity capital exceeding the established threshold must additionally submit the quarterly report corresponding to the period in which such threshold is exceeded for the first time.

Operational Conclusion

In transactional practice in Quintana Roo, the most frequent point of failure in foreign investment structures is not the incorporation itself, but rather the interaction between RNIE obligations and the restricted zone regime: properly incorporated companies that omit the initial RNIE report or that incorrectly classify the use of coastal property face administrative contingencies that are discovered, generally, at the time of a secondary transfer or guaranteed financing process. A comprehensive legal review prior to notarization, and a continuous compliance program during the first twelve months of operation, are the instruments that practical experience has demonstrated to be most effective in preserving the operability of the entity and the transferability of its assets.

IBG Legal has represented foreign investors in the incorporation and structuring of investment vehicles before the Secretariat of Economy, the RNIE, and the Public Commercial Registry of Quintana Roo, including the defense of criteria before the Collegiate Courts of the XXVII Circuit in matters of registration compliance and validity of share transfers. Our practice in Cancún integrates transactional advice in corporate structuring, real estate and hotel projects in the Riviera Maya, and continuous tax and regulatory compliance, with the litigation capacity necessary to defend the structures we establish when contingencies materialize. For specialized advice on this matter, please contact us.

Sources and References

Legislation

  • Political Constitution of the United Mexican States, articles 5 and 27, section I; last amendment published in the DOF on October 18, 2024.
  • Foreign Investment Law (LIE), DOF December 27, 1993; last amendment published in the DOF on June 22, 2023; articles 6, 7, 8, 11, 32 and 38. For the sanctioning regime and current fine amounts, consult the consolidated text available at dof.gob.mx, considering the update of amounts in accordance with the UMA.
  • Regulation of the Foreign Investment Law and the National Registry of Foreign Investments (RLIE), DOF September 8, 1998; with amendments; articles 37 and 38.
  • General Law of Commercial Corporations (LGSM), DOF August 4, 1934; last amendment published in the DOF on January 20, 2021 in accordance with the consolidated text at dof.gob.mx; articles 6, 61, 164, 181 and Chapter XIV (Simplified Stock Corporation, articles 260 to 270).
  • Commercial Code, DOF October 7, 1889; with amendments in force as of 2025.
  • Federal Tax Code, DOF December 31, 1981; amendments regarding controlling beneficiary published in the DOF on November 12, 2021, effective as of January 1, 2022; articles 32-B Ter, 32-B Quáter and 32-B Quinquies.
  • Income Tax Law (LISR), DOF December 11, 2013; with amendments in force; articles 28, section XXVII (thin capitalization); 76, section IX and 179 (transfer pricing); 140 (withholding on dividends to non-residents).
  • Law on Sustainable Fishing and Aquaculture, DOF July 24, 2007; with amendments in force.
  • Annual Resolutions of the National Commission of Foreign Investments (CNIE) published in the DOF at the beginning of each fiscal year, regarding transaction value thresholds for purposes of article 8 of the LIE; consult the resolution in force at the time of each transaction through the General Directorate of Foreign Investment of the SE.
  • Internal Regulation of the Ministry of Economy and operating rules of the electronic system of the DGIE for the authorization procedure of corporate names.
  • Treaties to avoid double taxation entered into by Mexico, in particular: Mexico-United States of America Convention (DOF February 3, 1994); Mexico-Canada Convention; Mexico-Spain Convention; and other applicable conventions in accordance with the investor’s structure. Texts available on the SAT portal at www.sat.gob.mx.

Judicial Criteria

  • First Chamber of the Supreme Court of Justice of the Nation: consistent criterion that validates sectoral restrictions on foreign investment as public policy measures based on constitutional article 27, compatible with the right to freedom of enterprise recognized in constitutional article 5. The specific thesis numbers are not reproduced in this publication as they could not be verified independently in the SJF at the time of publication; legal practitioners must consult sjf.scjn.gob.mx with the following parameters: First Chamber, constitutional-economic matter, constitutional articles 5 and 27, foreign investment.
  • Collegiate Courts of the XXVII Circuit (Quintana Roo): criterion regarding non-compliance with obligations before the RNIE, to the effect that the omission of registration or reporting constitutes an autonomous administrative infraction and does not produce the nullity of the incorporating act or of the stock transfers executed. This criterion is identified by IBG Legal based on its litigation practice before the XXVII Circuit in direct writs of amparo in commercial and registral matters; as it does not have a thesis number formally published in the SJF verifiable at the time of publication, it is described as a criterion of practical application derived from precedents of the circuit and not as mandatory jurisprudence under the terms of article 217 of the Amparo Law. For reference to specific case files, contact IBG Legal.
  • Barrera Graf, Jorge. Institutions of Commercial Law. Editorial Porrúa, Mexico.
  • Mantilla Molina, Roberto L. Commercial Law. Editorial Porrúa, Mexico, updated edition.
  • Díaz Bravo, Arturo. Commercial Law. Iure Editores, Mexico.

Official Sources

  • Official Journal of the Federation (DOF): www.dof.gob.mx
  • Ministry of Economy, General Directorate of Foreign Investment: electronic system of procedures of the RNIE and corporate names, www.economia.gob.mx
  • Judicial Weekly of the Federation (SJF), Supreme Court of Justice of the Nation: sjf.scjn.gob.mx
  • Tax Administration Service (SAT), tax treaty portal and controlling beneficiary compliance: www.sat.gob.mx
  • Official Gazette of the State of Quintana Roo: records and provisions of the Public Property and Commerce Registry of Quintana Roo.
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