Mexico tightens review of foreign investment

Mexico’s federal executive branch has sent the Senate a bill to amend the Foreign Investment Law and create a new Sixth Bis Title on national security in foreign investment. The proposal would subject acquisitions of Mexican companies in strategic sectors to closer review, including cybersecurity, data management and storage, artificial intelligence, semiconductors, and physical or virtual infrastructure.

What changes for foreign investment?

The bill would require approval from the National Foreign Investment Commission when foreign investment seeks to exceed 49% of the share capital in Mexican companies involved in activities sensitive to national security. Those activities include critical technologies, strategic infrastructure, access to sensitive information, and the supply of essential inputs.

Cuatrecasas reported that the draft adds a new national security review chapter and replaces presumed approval with explicit approval. That raises the level of upfront compliance for investors. Mexico Business News also said the covered activities include data storage and processing, cybersecurity, robotics, quantum technologies and biotechnology.

What penalties does the proposal include?

The reform sets fines of between 5,000 and 200,000 times the daily value of the UMA for Mexican companies that transfer shares to foreign investors without prior authorization or despite a denial, when the transaction involves activities sensitive to national security.

Mexico Business News said the penalties can reach 200,000 times the UMA for violations in transactions subject to authorization. The same coverage said the framework also applies to share transfers tied to cybersecurity and data storage.

Who would have a voice on the commission?

Infobae, citing EFE, reported that the proposal adds Defense, Navy, and Security and Citizen Protection with voice and vote on the National Foreign Investment Commission. Senate President Laura Itzel Castillo confirmed receipt of the bill and said it seeks to give the CNIE new powers to provide greater legal certainty for foreign investment.

The same report added that the commission could require a favorable resolution when the company has assets above an amount that the CNIE itself will define, in addition to the condition that foreign capital exceeds 49%. Cuatrecasas also said the reform eliminates presumed approval for transactions that need authorization.

What other government reforms affect data and platforms?

The federal government is preparing a package of reforms that includes changes to the Federal Penal Code and the Federal Law for the Protection of Industrial Property to detect and pursue violations committed through digital platforms, especially the online sale of counterfeit products. IDC Online said the goal is to strengthen enforcement in e-commerce and online services subject to criminal and industrial property rules.

At the same time, Claudia Sheinbaum sent Congress a proposal to create a Single Identity Platform based on the CURP, which will include photos and fingerprints, according to legal adviser Ernestina Godoy. Urrutia Comunica said the plan is presented as a tool to strengthen the search for missing persons and would mean centralized processing of sensitive personal data.

Mexperience added that the rollout also envisions iris scanning and would require special enrollment modules or centers with support from local RENAPO offices and the Civil Registry. Regulatory changes are also moving ahead in Mexico City and the states. Morena in the Mexico City Congress reported amendments to the Personal Data Protection Law and the Transparency Law, while Chiapas and the State of Mexico published initiatives and new laws on transparency and personal data.