Client Alert | Corporate / M&A & Foreign Investment
August 31, 2026
Mexico’s Federal Executive has submitted to the Senate a bill proposing significant amendments to the Foreign Investment Law (Ley de Inversión Extranjera, or “FIL”) that, if enacted substantially as proposed, would introduce a considerably more developed national security review regime for certain acquisitions by foreign investors.
The bill represents a meaningful development in Mexico’s foreign investment framework. Although the current FIL already empowers the National Foreign Investment Commission (Comisión Nacional de Inversiones Extranjeras, or “CNIE”) to prevent acquisitions on national security grounds, the proposal would replace that general authority with a specific foreign investment screening mechanism, including transactions subject to prior authorization, expressly identified sensitive sectors, review periods, mitigation powers and penalties for non-compliance.
For foreign investors, private equity sponsors, strategic buyers, financial institutions and Mexican companies considering M&A transactions, the proposed regime may introduce an additional regulatory condition that should be assessed at the earliest stages of transaction planning.
1. New national security authorization regime
The bill proposes adding a new Title Six Bis to the FIL, entitled “National Security in Foreign Investments.”
Under the proposed framework, an acquisition would generally require prior approval from the CNIE when three conditions are satisfied:
- foreign investment intends to acquire, directly or indirectly, more than 49% of the capital stock of a Mexican company;
- the Mexican target’s assets exceed a threshold to be subsequently established by the CNIE through general rules; and
- the target engages in activities considered relevant from a national security perspective.
The proposed mechanism therefore goes beyond introducing another foreign ownership restriction applicable to specified industries. Instead, it establishes a separate national security review applicable to certain acquisitions that might otherwise be fully open to foreign investment under Mexico’s existing foreign investment regime.
One of the most important variables remains undefined: the asset-value threshold triggering mandatory review. The bill would grant the CNIE 180 calendar days following effectiveness of the reform to establish that threshold.
Where foreign participation would exceed 49% but the target does not exceed the applicable asset threshold, the proposal contemplates the possibility of a voluntary filing.
2. Potentially covered sectors and activities
The substantive scope of the proposed regime is broad.
Covered activities would include strategic physical or virtual infrastructure relating, among other matters, to:
- energy;
- transportation;
- health care;
- communications;
- mining;
- data processing and storage;
- digital systems;
- aerospace and defense activities;
- sensitive facilities and the land and real property essential for their operation.
The bill also expressly identifies critical technologies and dual-use products, including artificial intelligence, robotics, semiconductors, cybersecurity, aerospace and defense technologies, energy storage, quantum and nuclear technologies, nanotechnology and biotechnology.
The review may also encompass investments involving the supply of critical inputs — particularly energy and raw materials — food security, and access to or control over sensitive information, including personal data.
The breadth of these categories is legally significant. Concepts such as “strategic infrastructure,” “critical technologies,” “sensitive information” and “critical inputs” may potentially capture activities well beyond those traditionally subject to foreign ownership restrictions under Mexican law.
In addition, the ability to include analogous activities through general rules may allow the perimeter of the regime to evolve without further legislative amendments.
3. The CNIE would take on a different institutional role
The reform would also substantially alter the composition of the CNIE for matters related to national security.
It is proposed that the Secretariats of National Defense, the Navy, and Public Safety and Security be included as voting members.
Furthermore, in matters related to national security, the heads of the Attorney General’s Office, the National Intelligence Center, the Tax Administration Service, and the Financial Intelligence Unit would participate as permanent guests, with the right to speak but not to vote.
This change is significant because it transforms the nature of regulatory analysis.
The review of certain acquisitions would no longer be exclusively—or predominantly—an assessment of economic policy and foreign investment and could incorporate considerations related to intelligence, security, oversight, the prevention of illicit operations, critical infrastructure, and information protection.
In practical terms, certain M&A transactions may require a preliminary analysis of the investor’s profile and the transaction that is substantially broader than the traditional analysis of compliance with the LIE.
4. Authorization Procedure and Timeline
When the conditions for mandatory review are met, the Mexican company and the foreign investor would have to jointly file the corresponding application.
In principle, the CNIE would have 60 business days to reach a decision.
During the first 20 business days, additional information may be requested, and the deadline may be extended, on a one-time basis, for up to an additional 30 business days.
One particularly important aspect regarding the structure of the contract is that the absence of a decision would not constitute tacit authorization. Under the draft, failure to issue a decision within the applicable time limit would have negative consequences for the applicant.
Consequently, for transactions subject to the new regime, authorization should be viewed as a genuine regulatory closing condition, with potential implications for long-stop dates, regulatory cooperation obligations, risk allocation between buyer and seller, and termination rights.
5. The CNIE may authorize, impose conditions on, or prevent a transaction
The proposed revision would not yield only binary results.
The CNIE could:
- authorize the acquisition;
- authorize it subject to measures designed to mitigate risks or threats to national security; or
- prevent the acquisition.
The possibility of imposing mitigation measures is particularly relevant for complex transactions.
Depending on how the regime is implemented, conditions may arise related to corporate governance, access to certain information, data management or location, the operation of certain assets, supply continuity, segregation of activities, restrictions regarding certain individuals or entities, oversight mechanisms, or periodic reporting.
The initiative, therefore, may affect not only the likelihood of closing a transaction, but also the manner in which the buyer will be able to exercise control over the acquired company after closing.
6. Implications for M&A Transactions
From a transactional perspective, the reform could have significant effects even before there is established case law or administrative practice.
Regulatory due diligence
The analysis of foreign investment must be conducted in the early stages of the transaction and separately from the traditional analysis of activities that are reserved or subject to foreign ownership limits.
It will be particularly important to identify:
- direct and indirect foreign investment;
- the buyer’s control structure and ultimate beneficiaries;
- the value of the target company’s assets;
- the activities actually carried out by the company and its subsidiaries;
- their access to potentially sensitive infrastructure, technologies, or information; and
- the existence of customers, suppliers, or assets linked to strategic sectors.
Transaction documents
Procurement contracts may require specific provisions regarding:
- a condition precedent to authorization by the CNIE;
- regulatory obligations required of the buyer and seller;
- the obligation to accept—or limits on the obligation to accept—mitigation measures;
- “hell-or-high-water” clauses;
- reverse termination fees;
- long-stop dates;
- operational restrictions during the interim period; and
- contractual allocation of the risk of an adverse ruling.
In competitive bidding processes, the buyer’s ability to assume regulatory risk could also become a significant economic factor in the bid.
Transaction Schedule
A 60-business-day process, which may be extended by an additional 30 days, could significantly alter the closing schedule.
This will be particularly relevant when a transaction requires simultaneous approval from competition authorities, sector-specific approvals, or foreign investment screening procedures in other jurisdictions.
7. A particularly sensitive issue: the threshold above 49%
The project is triggered by foreign ownership exceeding 49% of the share capital.
This criterion raises important questions.
National security and economic control do not necessarily correspond to a specific percentage of share ownership. Veto rights, shareholder agreements, board appointment powers, convertible instruments, trust structures, or other contractual mechanisms can confer significant influence without formally exceeding that percentage.
Conversely, certain investments exceeding 49% may not confer effective control.
Therefore, it will be necessary to closely monitor whether, during the legislative process, the criteria remain strictly based on percentage of ownership or whether additional concepts—such as control, influence, or beneficial ownership—are eventually incorporated.
It will also be necessary to analyze how the reference to “direct or indirect” participation should be interpreted in multilevel structures, investment funds, and special-purpose vehicles.
8. Uncertainty arising from the concept of national security
Another issue that is likely to spark debate is the degree of administrative discretion inherent in the new system.
The initiative aims to introduce the principles of non-discrimination, transparency, predictability, proportionality, and accountability. However, by its very nature, the assessment of threats to national security involves broader criteria than those typically used to determine quantitative limits on foreign investment.
The regulatory challenge will be to strike a balance between the flexibility needed to respond to real risks and the predictability required by investors, who must determine—before committing capital—whether a transaction can be closed and under what conditions.
Administrative practice, the CNIE’s general resolutions, and any criteria that may be developed in the future will therefore be just as important as the final text of the reform.
9. Relationship to International Treaties
The implementation of the regime must also be analyzed in light of the international investment and trade treaties applicable to Mexico.
Mechanisms for reviewing investments on national security grounds are not, in and of themselves, unique in comparative law. The United States, Canada, the European Union, and various other jurisdictions have developed or strengthened similar mechanisms.
However, its specific implementation must take into account Mexico’s international obligations regarding national treatment, most-favored-nation treatment, investment protection standards, and the security exceptions contained in the applicable treaties.
In particular, it will be important to ensure that seemingly neutral criteria do not, in practice, result in arbitrary or discriminatory treatment of investors from different jurisdictions.
10. Penalties
The initiative would also significantly strengthen the sanctions regime.
Among other scenarios, acquiring a stake without first obtaining the required authorization could result in fines ranging from 1,000 to 5,000 UMA.
The transfer of shares despite a denial of authorization, or failure to comply with measures imposed by the CNIE, could result in fines ranging from 5,000 to 200,000 UMA.
Beyond the financial penalty, the main risk for buyers and sellers will be the possibility that a transaction may not be completed under the terms originally negotiated.
11. What should investors and companies do?
The initiative still must go through the legislative process, and its content may be amended. In addition, one of its key elements—the asset threshold that would trigger a mandatory review—would still have to be determined by the CNIE.
However, foreign investors and Mexican companies that are currently evaluating transactions potentially falling within the identified sectors should begin to take the new regime into account in their transaction planning.
In particular, we recommend:
- identify early on whether the target engages in activities that could fall within the categories set forth in the initiative;
- review the buyer’s ownership and control structure, including indirect holdings and ultimate beneficiaries;
- take into account the potential authorization process in the transaction timeline;
- carefully evaluate the contractual allocation of regulatory risk; and
- monitor both the legislative process and any general provisions that the CNIE may issue.
Conclusion
The initiative potentially represents one of the most significant changes to Mexico’s foreign investment regime in recent years.
Rather than introducing new foreign ownership limits in specific sectors, the bill proposes to align Mexico with the international trend toward foreign investment screening mechanisms based on national security.
For the M&A market, the practical implications could be significant: certain acquisitions that until now could be analyzed primarily under the sector-specific restrictions of the LIE and the economic competition regime could now be subject to a third, independent regulatory framework related to national security.
The actual scope of the change will depend on the text ultimately approved by Congress, the asset threshold established by the CNIE, and, in particular, the administrative interpretation that is developed regarding concepts such as strategic infrastructure, critical technologies, sensitive information, and risks or threats to national security.
Vega, Guerrero & Asociados will continue to monitor the legislative process and the implementation of the new regime.
This Client Alert is for informational purposes only and does not constitute legal advice. The analysis is based on the bill introduced in the Senate of the Republic and may change during the legislative process.
