Mexico Proposes New Foreign Investment Review Regime on National Security Grounds.

On August 30^th, 2026, the Federal Executive submitted to the Mexican Senate a bill to amend the Foreign Investment Law that would establish, for the first time in Mexico, a formal foreign investment screening mechanism based on national security considerations. The proposed regime would identify sectors subject to heightened scrutiny, establish specific review criteria, and authorize the imposition of mitigation measures or, where applicable, the prohibition of certain transactions.

Transactions Subject to Prior Approval

If enacted, the reform would require prior approval from the National Foreign Investment Commission (the “CNIE”) where foreign investors seek to acquire, directly or indirectly, more than 49% of the equity interests of a Mexican company, provided that the company’s total assets exceed a threshold to be established by the CNIE and that it operates in one of the designated sensitive sectors. All three conditions would need to be satisfied concurrently; if any one of them is not met, prior approval would not be required.

Accordingly, the proposed regime would not operate as a general screening mechanism for foreign investment, but rather as a targeted review process applicable to certain transactions involving companies of a specified size operating in designated sensitive sectors.

Decision-Making Authority and Review Process

The CNIE would be responsible for reviewing and deciding on transactions subject to the proposed regime. The reform would also add the Ministry of National Defense, the Ministry of the Navy, and the Ministry of Security and Citizen Protection as members of the CNIE, with both speaking and voting rights. In sessions involving national security matters, the Office of the Attorney General of the Republic, the National Intelligence Center, the Tax Administration Service, and the Financial Intelligence Unit would also participate, with speaking but no voting rights.

The CNIE would have 60 business days to issue its decision, with a request for additional information suspending the count for 5 to 30 days and an extension of up to 30 days. If no decision is issued by the authority.

The decision could take one of three forms: (i) determine that the proposed acquisition may proceed; (ii) condition the acquisition on certain modifications designed to mitigate the identified risk; or (iii) prohibit the acquisition. It should be noted that the first two outcomes would include specific terms and conditions on a case-by-case basis, which may involve periodic reporting and an assessment of compliance with national law.

Sensitive Sectors

The proposed reform would focus on the activities actually conducted by the Mexican company, rather than solely on its corporate purpose or formally stated line of business. In addition, the list of sensitive sectors would be separate from the activities currently reserved or subject to foreign investment limitations under the Foreign Investment Law.

 

Category	Scope	Profiles of Mexican Companies Potentially Covered
Strategic, physical or virtual infrastructure	Energy, transportation, healthcare, communications, mining, data processing or storage, digital systems, aerospace, defense and sensitive facilities, as well as land and real estate essential for their operation.	Logistics operators with assets located in bonded facilities, ports or border crossings; hospitals and clinics; data centers; and industrial parks associated with such facilities.
Critical technologies and dual-use products	Artificial intelligence, robotics, semiconductors, cybersecurity, aerospace and defense technologies, energy storage, quantum and nuclear technologies, nanotechnologies and biotechnologies.	Electronics and auto parts manufacturers involving sensors or power electronics; specialized software developers; laboratories; and medical device companies.
Critical inputs	Supply of critical inputs, particularly energy and raw materials, as well as food security.	Agribusiness companies with a significant position in supply chains; distributors of industrial inputs; and mining companies and related processing operations.
Sensitive Information	Access to sensitive information, particularly personal data, or the ability to control such information.	Financial services, healthcare or consumer platforms holding personal data at scale; and shared service centers managing group information across the region.
Open-ended provision	Any other analogous or similar activities or economic sectors that the CNIE may determine by general resolution.	The scope would not be exhaustively defined by law and could be expanded through administrative action, without Congressional involvement.

 

Penalty Regime

1. Completing an acquisition without having obtained the required favorable resolution. From 1,000 to 5,000 UMAs, equivalent approximately MXN $117,000 to MXN $587,000, or USD $6,900 to USD $34,500, applicable to the foreign company.
2. Transferring, assigning, delivering or otherwise transferring the equity interest despite a denial, without having obtained the required prior favorable resolution, or failing to comply with the mitigation measures imposed. From 5,000 to 200,000 UMAs, equivalent to approximately MXN $587,000 to MXN $23.5 million, or USD $34,500 to USD $1.38 million, applicable to the Mexican company.

Amounts in U.S. dollars are approximate and were calculated using a reference exchange rate of MXN $17.00 per USD $1.00.

M&A Transactions Within the Scope of the Proposed Regime

The application of the proposed regime would depend on the structure of each transaction and on whether, as a result thereof, foreign investors would hold, directly or indirectly, more than 49% of the equity interests of the Mexican company. Some of the most common transaction structures would present the following scenarios:

 

Transaction structure	Within scope?	Analysis
The Mexican company continues to operate with the same shareholders, without changes.	No	The proposed regime would be triggered by an acquisition. Existing ownership structures would not be subject to retroactive registrations, filings or approvals.
Acquisition of an equity interest exceeding 49% by a foreign investor.	Yes	This is the clearest scenario. If the asset threshold and sectoral criteria are also met, prior approval would be required. The Mexican company and the foreign investor would jointly submit the application.
Additional acquisition or capital increase resulting in foreign ownership exceeding 49%.	Yes	A subsequent transaction could trigger the prior approval requirement if it results in foreign ownership exceeding 49%, whether through the acquisition of existing equity interests or the subscription of newly issued shares or equity interests. The relevant factor would be the ownership percentage resulting from the transaction, rather than solely the percentage acquired in the particular transaction
Debt capitalization resulting in foreign ownership exceeding 49%.	Yes, in principle	The conversion of debt into equity may result in the acquisition of an equity interest exceeding the applicable threshold, even in the absence of a purchase and sale of existing equity interests.
Merger resulting in foreign ownership exceeding 49%.	Yes, in principle	The proposed reform does not expressly address mergers. However, if, as a consequence of the transaction, a foreign investor would hold more than 49% of the equity interests of the Mexican company, it would be necessary to assess whether the proposed regime would be triggered.
Transfer of an equity interest to another foreign entity within the same corporate group.	Assess under a case by case basis	The proposed reform does not expressly provide for specific treatment of intragroup reorganizations. Whether an acquisition within the same corporate group would trigger the proposed regime would need to be assessed in light of the final statutory language, any amendments to the applicable regulations, any general resolutions issued by the CNIE regarding its implementation, and the specific terms and conditions of the specific resolution for particular each case.
Acquisition of a foreign parent company resulting in an indirect change in ownership of a Mexican company.	Yes	The proposed reform expressly covers both direct and indirect ownership interests; therefore, an acquisition completed outside Mexico could fall within the scope of the proposed regime. However, the draft of amendment does not provide clarity of application in these regards.

 

Impact and Implications for M&A Transactions

The most immediate impact would be on transaction closing timelines. Where applicable, CNIE approval would operate as an additional condition precedent to closing, and the review process could extend for nearly six months. Accordingly, outside dates would need to be adjusted to account for the review period and potential extensions.

The reform would also affect the allocation of regulatory risk. Under the initiative, failure by the CNIE to issue a decision within the applicable period would be deemed a denial. Transaction documents would therefore need to address which party bears such risk, the level of efforts required from the buyer to obtain approval, and the extent to which the buyer would be required to accept mitigation measures. Closing without the required approval could also result in the penalties described above.

The new framework could also affect deal certainty and the evaluation of competing bids. In competitive processes, the buyer’s regulatory profile could become a relevant consideration for the seller, while the scope of the buyer’s due diligence would need to extend to the sectoral classification of the Mexican company and the value of its assets.

The principal legal challenge would be regulatory uncertainty. The initiative does not define what constitutes a risk or threat to national security, does not establish the scope of potential mitigation measures, and leaves several significant issues unresolved, including the treatment of indirect acquisitions and reorganizations, as well as coordination with other regulatory approval processes.

Practical Recommendations

1. Initial Assessment. Identify which group companies conduct activities that could potentially fall within the scope of the new framework and maintain up-to-date information regarding their assets.
2. Review of Ongoing Transactions. Identify acquisitions currently under negotiation or already signed that could close after the reform potentially enters into force, as the initiative does not provide for a clear transitional regime for pending transactions.
3. Contractual and Documentary Preparation. Consider building flexibility into conditions precedent, outside dates for closing and regulatory risk allocation, and centralize information regarding ultimate ownership, source of funds, and the buyer’s tax and compliance profile.
4. Legislative Monitoring. Monitor the legislative process, implementing rules and, in particular, the CNIE resolution establishing the applicable asset threshold, which will be key to determining the practical scope of the new framework. The draft of amendment does not provide clarity about how the thresholds will be assessed (whether based on price, market value, book value, etc.), and therefore, any further clarity in these regards will be relevant.

At Cuesta Campos

We have the experience to advise foreign investors, sellers and Mexican companies in assessing whether a particular transaction or structure may fall within the scope of the new framework, including the analysis of foreign ownership percentages, the activities conducted by the Mexican company and the applicable asset threshold. We also advise on transaction structuring, the evaluation of alternative ownership and governance arrangements, the negotiation and drafting of regulatory conditions and risk allocation mechanisms in acquisition agreements, as well as the preparation and filing of applications with the National Foreign Investment Commission.

We are also closely monitoring the legislative process and implementing regulations and will provide timely updates on the implications of the new framework once the final text of the reform becomes available.

This publication is intended solely to provide general information and does not constitute legal advice. The legislative initiative discussed herein remains a proposal and may be modified during the legislative process. Accordingly, the information contained in this alert should not be relied upon as a basis for any particular action or decision. Readers should seek specific legal advice based on their individual circumstances and the applicable legal framework before taking any action in connection with the matters addressed herein.

Should you have any additional questions or comments, please do not hesitate to contact us.

 

Contacto

Jesús Bueno

jbueno@cuestacampos.com

  

THE ABOVE IS PROVIDED AS GENERAL INFORMATION PREPARED BY PROFESSIONALS WITH REGARD TO THE SUBJECT MATTER. THIS DOCUMENT ONLY REFERS TO THE APPLICABLE LAW IN MEXICO. WHILE EVERY EFFORT HAS BEEN MADE TO ENSURE ACCURACY, NO RESPONSIBILITY CAN BE ACCEPTED FOR ERRORS OR OMISSIONS. THE INFORMATION CONTAINED HEREIN SHOULD NOT BE RELIED ON AS LEGAL, ACCOUNTING OR PROFESSIONAL ADVICE BEING RENDERED.