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INSTITUTO POLITÉCNICO NACIONAL

ESCUELA SUPERIOR DE COMERCIO Y ADMINISTRACIÓN
UNIDAD TEPEPAN

FOREIGN INVESTMENT

FLÓRES RAMÍREZ NORMA ANGÉLICA

UNIT 3

STUDENTS:
 Caso Luengo Caballero Natanael
 Gallegos Rocha Claudia Alejandra
 Montiel Fernández Esteban David
 Zamora Hernández Ricardo de Jesús

4NVD
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INDEX
Unit 3 3

3.1 Translative operations of domain and constitution of 3

guarantees
3.1.1 Acquisition of real estate 3
3.1.2 Acquisition of companies and fixed assets 3
3.1.3 Subscription and Acquisition of stock certificates and share 3
3.1.4 Trusts 4
3.2 Warranty Contracts Set Up 4
3.3 Transferring operations of usage 4
3.3.1 Leasing of company and its fixed assets 5
3.3.2 Transfer of usage and possession of stock certificates 6
3.3.3 Mexican investor’s preference 7
3.3.4 Veto power. 7
3.4 Foreign Investments and its relation with banking and stock-market 8
operations.
3.5 Risks and benefits of Foreign investment. 8

Bibliographies 10

UNIT 3
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3.1 Translative operations of domain and constitution of guarantees

This topic, is the most general part of unit three, the translative operations of
domino is a synonym of transference or transference of real estate in this case,
where there is an intermediary in Mexico, for the exchange of fixed assets for
foreigners, these are notaries public. They provide the corresponding vouchers for
the sale of the property. The guarantees are simply representative titles, which are
the guarantee in favor of foreigners who dispose of a fixed asset.

3.1.1 Acquisition of real estate

This issue is very closely related to Article 27 of the Mexican United States
Constitution, as it speaks about the right to acquire dominion over land, so under
no circumstances will foreigners be able to acquire a real estate directly for that
purpose to be promulgated the Foreign Investment Law to understand these
special cases

3.1.2 Acquisition of companies and fixed assets

If it is a question of the purchase of the patrimony, or parts of the assets of a

company, not of the acquisition of it, it would be an acquisition of company, of fixed
assets of a company or of a division of society. So if one speaks of the division of a
society, foreign investments can enter into a part of the society or the acquisition of
a part of the company with certain conditions. For example:

a) The maximum foreign contributions are 49% the rest, or 51% would have to
provide Mexicans

b) If it is contributed to a company that is already operating the maximum is 25% of

the capital, unless otherwise stated in CNIE

c) If it is transmitted in the form of an alienation to a company, there is no limitation

as regards the foreign seller, but in the case of a buyer or acquirer who is a
foreigner, the 49% limitation will apply to him

3.1.3 Subscription and Acquisition of stock certificates and share

When a person acquire some stock certificates or share, they must pay for they
can manage this. The pay is proportional to the contribution that the socios do.
When the foreign investment already exists, is use for increase.

This types of goods can acquire by sale, barter, judicial adjudication, mortis
transmission, etc.
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It´s related with the article 8- in the law of foreign investment.

3.1.4 Trusts

Is a document where a trustor to give some goods to fiduciary institution and this
institution the goods that received are directed to lawful and determined purpose

Trustor Trust
Transfer Trust
Administer

Goods

Beneficiaries

3.2 Warranty Contracts Set Up

This are all the actions that a government should have when a foreign person want
invest in another country for reduce or eliminate some problem or risk. All the
guarantee that have the foreign people when acquire goods for foreign investment.

3.3 Transferring operations of usage

Article 27 of the Mexican Constitution regulates the ownership of lands and waters
in Mexico

FIL allows foreigners to acquire a real estate outside the restricted area, provided
that such buyers submit a request before SFR (Secretary of Foreign Relations)

The SFR published that all the nationals of countries that maintain diplomatic
relations with Mexico, will only be asked to submit an application in which they
show their agreement in being considered like Mexican nationals.

If the real estate will be located in a municipality that is partially considered within
the restricted area, the SFR will resolve the request for the acquisition permit within
a period of 30 days from the date that the application was filed. If this property is
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located outside the restricted area, if the SFR does not publish its rejection in the
DOF, within 5 days of submitting the request.

Article 10 of the Foreign Investment Law establishes that a foreigner who owns a
Mexican company may purchase a real estate in the restricted area, provided that
such property is destined for non-residential purposes.

In the case of residential properties of foreign citizens or companies, a trust will be

required in the restricted area.

The trust will have a duration of 50 years, which can be renewed once the term
expires.

Legal requirements to buy a property in Mexico

1. Offer and acceptance and / or promise agreement

2. Study of titling and conditions of the real estate
REQUIREMENTS FOR THE CLOSURE AND LEGAL CELEBRATION OF A
NORMAL REAL ESTATE TRANSACTION

1. Certificate of Freedom of Liens.

2. Certificate of Not Tax Debt.
3. Property Valuation and Cadastral Clearance
4. Other.
Most common options for buying a property in Mexico

1. General agreement of purchase and sale

2. Contracts for sale on installment with domain reservation
3. Irrevocable real estate trust agreement

3.3.1 Leasing of company and its fixed assets

Fixed assets: These are the tangible assets used to carry out business activities.

The acquisition that a foreign investor intends to make will require authorization
when the percentage of that acquisition serves that corresponding to the foreign
investment to exceed 25% of the capital (or 49% of the fixed assets) of an
enterprise, as a consequence of other acquisitions made previously.

A. a new company, the foreign investor can not more than 49% of the capital
and the Mexican 51.
B. To a company that already operates, the total foreign investment can not
exceed 25% of the capital stock.
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C. Transmits, alienation, there is no limitation with respect to the foreign seller,

but if the buyer is foreign: it will govern for him the limitation of 49%
Definition of leasing of company: also known as an industry or business, can be
defined as that by which, the owner of a company cedes to another company or
entrepreneur the use or exploitation of his company for a specified time and the
payment of a monetary consideratio

Regulatory regulation: This is an atypical contract, not specifically regulated

Purpose: Incorporated by the operation of a company, a property unit with its own
life and capable of being immediately exploited or pending to be

Remuneration system: The price you pay for the consideration. It may be
composed exclusively of a fixed fee, or a fixed and a variable part depending on
the benefits that the lessee obtains.

Obligations of the parties Obligations of the lessor: It consists of delivering the

company with all its elements

Obligations of the tenant: to satisfy the price agreed, that is, to pay the rent

3.3.2 Transfer of usage and possession of stock certificates

The right to foreign investments will be paid, according to the following quotas:

I.- subscription or acquisition of shares or shares of companies to be constituted or

already constituted and establishment of branches in which the foreign investment
participates in more than 49% n $ 1.068. 00.Subscription Of Shares Or Parts Of
Interest In Established Companies.This assumption is related to new contributions
made by the partners, if already exists in the societies FI., it can participate in the
increase

FI may acquire those shares of the companies through non-subscription

transferable business (for sale, barter, judicial adjudication, mortis causa transfer,
right of both, merger, etc.), the limit of 25% of article 8, first paragraph.

In the case of "shares traded abroad", R.R.I.E. provides for a generic authorization

3.3.3 Mexican investor’s preference.

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The most important and immediate antecedent regarding this subject is the Law to
Promote Mexican Investment and Regulate Foreign Investment, which was issued
in 1973.

This law expressly dictated the promotion of Mexican Investment.

The National Commission of Foreign Investment had as one of its main functions
the promotion of the Mexican Investment mentioned above that must "grant a right
of preference to Mexican investors".

The National Commission of Foreign Investment should give preference to

Mexican capital abroad, since the commission is given the right to "resolve on
foreign investment that is intended to be made in companies established or to be
established in Mexico."

- Related Articles:

Article 5. Functions reserved exclusively to the state determined in the estrotic

areas.

Article 6. Economic activities and societies that are exclusively reserved for
Mexicans with a foreign exclusion clause.

Article 7. Economic activities and companies in foreign investment may

participate with different percentages.

Article 8. A favorable resolution of the Commission is required for foreign

investment to participate in a percentage greater than 49% in
economic activities and companies.

Article 9. Favorable resolution of the Commission that in Mexican companies

where foreign investment intends to participate, directly or indirectly,
in a proportion greater than 49% of its share capital, only when the
total value of the assets of the companies of which exceed the
amount determined annually by the Commission itself.

Article 10. Mexican companies with a clause to exclude foreigners or have

signed the agreement referred to in said provision, may acquire the
ownership of real estate in the national territory

3.3.4 Veto power.

The word veto comes from Latin and literally means '[I] prohibit.' It is used to
denote that a certain party has the right to unilaterally stop a particular piece of
legislation. A veto, therefore, provides unlimited power to stop changes, but not to
adopt them.
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Related articles:

Article 72. Any draft law or decree, the resolution of which is not exclusive to any of
the Chambers, shall be discussed successively in both, observing the
Law of Congress and its respective regulations, on the form, intervals
and manner of proceeding in the discussions and votes.

3.4 Foreign Investments and its relation with banking and stock-market
operations.
The Financial System is a set of institutions that are responsible for capturing the
economic resources of some individuals or corporations to make it available to
other companies or government institutions that require it to invest it.

It is composed of banks, auxiliary credit organizations, insurance companies,

bondholders, brokerage firms and investment companies.

Corporations, public entities, federal entities, municipalities and financial entities

that require resources to finance their operation or expansion projects can obtain it
through the issuance of securities, which are made available to investors and
exchanged on the stock exchange Mexican Stock Exchange.

National or foreign investors are individuals or corporations that show surpluses of

liquidity and try to place their resources in integrated portfolios in order to receive
attractive returns.

Since 1988, measures have been established to strengthen the operation of the
Securities Market and to promote the participation of foreign investors in securities
of national issuers.

Article 20 of the Foreign Investment Law: mentions that investment in shares

without voting rights or limited corporate rights is considered neutral provided that it
obtains prior authorization from the Secretariat and, when applicable, from the
National Banking and Securities Commission .

3.5 Risks and benefits of Foreign investment.

Risks
• If the ownership of companies in foreign
hands grows too much, a process of
decapitalization may occur.
• Create harmful competition for local
business.
• Can generate the multinationals come to
dominate the market.
Benefits
• Allows the transfer of technology.
• It promotes competition in the domestic
market of inputs.
• When a country receives foreign direct
investment they often obtain training for
employees, this contributes to the
development of the country's human

• May lead to social protest.
• New plants can generate more pollution
to the country.
• The country receiving the investment
may have shortages of foreign Exchange.
• In rates the risk that changes in
exchange rates between the Receiving
Country of the Investment and the country
of the investor's domicile may affect the
long-term profitability of the Investment
Receiving Company.
• Political risks include changes in
legislation, reflecting the country's attitude
Receiver of the investment towards the
investor, changes in tax rate, risk of
expropriation without adequate
compensation
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capital.
• The gains from FDI increase the income
obtained from corporate taxes in the
country.
• Aid to the country's growth.
• Reduce poverty.
• Encourages a structure that leads to
productive investment.
• Improve the salaries of the labor forcé.
• Can improve access to export markets.
• Bring lower cost contributions to local
suppliers.
• Improve the balance of payments and
capital account of the recipient country.
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Bibliographies

http://e-paf.com/cfdi-en-operaciones-traslativas-de-dominio/
http://www.paseroabogados.com/downloads/inmobiliario.pdf
https://archivos.juridicas.unam.mx/www/bjv/libros/2/857/7.pdf
http://www.eumed.net/libros-gratis/2008c/427/Distrito%20Federal.-%20Codigo
%20Civil.pdf
http://www.profeco.gob.mx/juridico/pdf/c_comercio.pdf
http://www.diputados.gob.mx/LeyesBiblio/pdf/144_140316.pdf
https://prezi.com/ihdknwggkspx/inversion-extranjera/
¿Qué beneficios aporta la inversión extranjera? / Finanzas y Desarrollo / Junio de
2001
http://hoy.com.do/que-efectos-reales-tiene-la-inversion-extranjera-en-un-pais/
http://www.zonaeconomica.com/inversion_extranjera
https://archivos.juridicas.unam.mx/www/bjv/libros/2/857/8.pdf