According to the Foreign Investment Law (“FIL”), the foreign investors can participate in any portion of the capital stock of Mexican companies, acquire assets, among other activities. However, there are certain activities reserved to Mexicans or with certain regulations.

Mexican laws establish the possibility of include in the By-laws of a company the clause of exclusion of foreign investors, which is defined in the FIL as the pact or express agreement part of the By-Laws, by which it is established that the society will not admit directly nor indirectly as partners or shareholders foreign investors, nor companies with admission of foreign investors clause.

1.1 Reserved Activities

•  For the Mexican State.- Petroleum and other hydrocarbons; Basic petrochemicals; Electricity; Generation of electricity by nuclear means; Radioactive minerals; telegraphs; Radiotelegraphy; mails; Issuance of banknotes; Minting; Control, supervision and vigilance of ports, airports and heliports; and all others established expressly in the applicable legal provisions.

b) Mexicans and Mexican corporations with clause of exclusion of foreign investors: Domestic land transport of passengers, tourists and cargo, not including messenger or package delivery services; Retail trade in gasoline and liquefied petroleum gas; Radio broadcasting and other radio and television services other than cable television; Credit unions; Development banks and institutions, in terms of the law governing the matter; and rendering of such professional or technical services as are expressly established in the applicable legal provisions. Except as provided in Title Fifth of the FIL, foreign investment shall not participate directly or through trusts, agreements, covenants in charters or by-laws, pyramidation schemes or any other mechanism granting control or participation, in the activities or societies aforementioned. However, in the activities of international transportation of passengers, turism and freight between points of the Mexican territory and the service of administration of bus centrals of passengers and auxiliary services, the foreign investors can participate at 100% of the capital stock in Mexican societies without need of favorable resolution of the Commission.

1.2 Activities and Acquisitions with Specific Regulation

Foreign investment may participate in the following percentages in the economic activities and societies listed below:

I. Up to 10% in : Cooperative societies of production;

II. Up to 25% in: Domestic air transport; Air taxi transport; and Specialized air transport;

III. Up to 49% in : Insurance institutions; Bonding institutions; Money exchange houses; Bonded warehouses; Finance lessors; Financial factoring enterprises; Limited-purpose finance companies; Corporations of the nature referred to in Article 12 bis of the Law of the Securities Market; Shares of the fixed capital stock of investment companies; Corporations operating investment companies; Retirement fund managers; Manufacture and marketing of explosives, firearms, cartridges, ammunition and fireworks (not including acquisition and use of explosives for industrial or extractive activities, nor preparation of explosive mixtures for consumption by such activities); Newspaper printing and publishing for circulation in national territory exclusively; Series "T" shares of corporations having title to land for agriculture or for animal husbandry, or to forests; Fishing in fresh or in coastal waters or in the exclusive economic zone (but not including aquaculture); Integral port administration; Port services of pilotage of vessels for operations of interior navigation, in terms of the applicable laws; Shipping companies engaged in commercial exploitation of vessels for interior and coastal navigation ( except for tourism cruises and for exploitation of dredges and naval artifacts for construction, conservation and operation of ports); Supply of fuel and lubricants for vessels, aircraft or railway equipment, and Companies holding concessions in terms or Articles 11 and 12 of the Federal Telecommunications Act.

Save as provided in Title Fifth of the FIL, the aforementioned limits for participation by foreign investment, shall not be exceeded directly or through trusts, agreements or covenants in charters or by-laws, pyramidation schemes or any other mechanism granting control or any participation greater than that established herein.

1.3 Permission to Invest in More than 49%

The following activities require an authorization of the National Commission of Foreign Investments (“NCFI”), in order to the foreign investors to participate in more than 49%.

Port services such as pilotage, dock services, mooring and lighterage, for vessels' conduction of their operations of interior navigation; Naval companies engaged in exploitation of vessels used exclusively for high-seas traffic; Corporations holding concessions or permits for airports for public service; Private services of pre-school, primary, secondary, junior- high, higher and combined education; Legal services; Credit information companies; Institutions for categorization of securities; Insurance agencies; Cellular telephony; Construction of ducts for transport of petroleum and derivatives thereof; Oil and gas well drilling, and Construction, operation and exploitation of railways constituting general ways of communication, and rendering of public services of railway transport.

1.4 Restricted Area

According to article 27 of the Mexican Constitution, the foreign cannot acquire properties within Mexican territory, when said properties are located within 100 kilometers a long the borders, and 50 kilometers in the coasts (“Restricted Area). However, foreign investors who are interested in acquire properties in the Restricted Area, can do it, by means of a trust with a maximum duration of 50 years, and cannot be prorogued.

Mexican Law allows Mexican companies with foreign investment to have properties in the Restricted Area, if its activities are not residential and if its By-Laws have an agreement with the Ministry of Foreign Affairs to consider as national regarding the properties, and not to invoke the protection of its governments concerning the properties, under the penalty to lose on behalf of the Mexican nation all the properties acquired by the agreement.

1.5 Direct and Indirect Foreign Investment

Direct Foreign Investment: Performed by foreign legal entities, foreign individuals, foreign economic units without legal personality and Mexican companies with a majority of foreign capital.

Indirect Foreign Investment. Performed by means of loans of international entities to governments or public companies, and the collocation of stock exchange of the country who receives the credit in the stock market of its own country, or the country which grants the credit.

Foreign investors can combine the direct and indirect investment. The income derived from the indirect invest are object of lower taxation, due to the fact that the affiliate company transfer to its Mexican affiliate its deductible expenses.