Which sectors are restricted to foreign investment in Mexico?

The LIE and its regulations list activities reserved exclusively to the State (e.g. hydrocarbons in certain phases), reserved to Mexicans or to companies with an exclusion-of-foreigners clause (e.g. certain transport and media services), and activities with a cap on foreign participation (e.g. 49% in bonding companies or airlines). For the rest, foreign investment may participate without prior approval, unless the acquisition of assets in certain sectors is subject to CNIE review.

When must CNIE authorization be sought?

When the foreign investment intends to participate in activities with a participation cap or in those where the law requires a favorable resolution from the National Foreign Investment Commission. The CNIE evaluates the application and may authorize, authorize with conditions, or deny. In M&A, if the buyer is foreign and the target operates in one of those sectors, the parties must verify whether authorization is required and factor the timing and outcome into the closing timeline and conditions.

LIE (Foreign Investment Law): what it is and why it matters in M&A | M&A Glossary

The LIE (Ley de Inversión Extranjera / Foreign Investment Law) is the law that regulates foreign investment in Mexico. It defines which activities are reserved to Mexicans or the State, which require approval from the National Foreign Investment Commission (CNIE), and which are open. In M&A it matters because if the buyer is foreign and the business operates in a restricted sector or is subject to a participation cap, the transaction may require prior authorization or may not be permitted; verifying this in due diligence avoids failed closings.

Due diligence and regulatory framework →

What is the LIE and what does it regulate?

The Foreign Investment Law (LIE) is the framework that defines the conditions under which foreign capital may participate in the Mexican economy. It establishes activities reserved to the State, reserved to Mexicans or to companies with an exclusion-of-foreigners clause, and activities with a limit on foreign participation; the rest are open, with the possibility that the National Foreign Investment Commission (CNIE) must approve certain acquisitions. For a foreign buyer evaluating a Mexican SME, the LIE determines whether the transaction is free, subject to a cap, or requires prior approval.

What are the restricted sectors and foreign participation?

The LIE and its regulations list restricted activities: exclusive to the State (e.g. exploration and extraction of oil and gas under the constitution), exclusive to Mexicans or companies with an exclusion clause (e.g. domestic land freight transport, media), and those that allow foreign participation up to a maximum percentage (e.g. 49% in bonding companies, transport cooperatives). In other activities, foreign investment may participate up to 100% without prior approval, unless acquisition of assets or establishment in certain sectors triggers CNIE review. Checking the current list and the buyer’s participation level avoids assuming the deal is viable when it is not.

Why does it matter in M&A?

In the sale of an SME to a foreign buyer, if the company operates in a sector with a participation cap or subject to CNIE authorization, the transaction must comply with the LIE. Failing to verify this in due diligence can lead to a closing that cannot be consummated or to penalties. Including the LIE and CNIE in the regulatory checklist allows the parties to agree on closing conditions (e.g. a condition precedent for authorization) and realistic timelines.

What do buyers and sellers ask about the LIE?

Which sectors are restricted to foreign investment in Mexico?: The LIE and its regulations list activities reserved exclusively to the State (e.g. hydrocarbons in certain phases), reserved to Mexicans or to companies with an exclusion-of-foreigners clause (e.g. certain transport and media services), and activities with a cap on foreign participation (e.g. 49% in bonding companies or airlines). For the rest, foreign investment may participate without prior approval, unless the acquisition of assets in certain sectors is subject to CNIE review.
When must CNIE authorization be sought?: When the foreign investment intends to participate in activities with a participation cap or in those where the law requires a favorable resolution from the National Foreign Investment Commission. The CNIE evaluates the application and may authorize, authorize with conditions, or deny. In M&A, if the buyer is foreign and the target operates in one of those sectors, the parties must verify whether authorization is required and factor the timing and outcome into the closing timeline and conditions.

In this glossary:

National Foreign Investment Commission — body that authorizes in restricted sectors.

Foreign direct investment — context and relevance for SMEs.

Due diligence — verification before closing.

COFECE — antitrust and concentrations.

M&A (Mergers and Acquisitions) — process and context.

Representations and warranties — contractual statements about the business.

Sources

The LIE defines in which sectors and under what limits foreign investment may participate; in M&A, verifying this in due diligence avoids unviable closings. For what the buyer reviews and the cross-border regulatory framework, see the due diligence in Mexico guide and the frictions in Mexico–US cross-border transactions guide.