I. Initial Investment Considerations

• A. Assess goals and objectives
• B. Analyze target market(s)
• C. Contact and retain local Mexican professional assistance
• D. Learn local customs and business practices
• E. Develop a proposed structure for operations
• F. Prepare a checklist of pending matters

II. Start-Up Considerations

• A. Market Studies
  • Logistics:
    • 1) Identify, select, and assess target markets
    • 2) Determine the market share of the company and its competition
  • Operations:
• 1) Site selection
• 2) Identify and assess operational factors
• 3) Identify permitting and logistical issues
• 4) Take advantage of Mexico’s Trade Agreements
• B. Cultural Differences

III. Foreign Investment Considerations

• A. Analyze foreign investment restrictions, if any (geographic location, if within restricted zone; substantive if within restricted industry)
• B. Determine whether local equity participation is necessary or desirable
• C. Analyze incentives and disincentives for foreign investment
• D. Prepare a list of governmental approvals required for foreign investment

IV. Financing Considerations

• A. Assess availability of:
  • - foreign loans
  • - local loans
  • - enforceable security devices
  • - Export Credit Agency or Multi-Lateral Lending Agency
• B. Determine currency to be used
• C. Determine role of Mexican banks

V. Corporate Structure

• A. Corporate organization
• B. Type of entity in Mexico (e.g. land-owning trust, stock corporation, limited liability company)
• C. Determine ownership of Mexican entity (e.g. individual owners or parent entity?)
• D. Perform complete legal and tax analysis of proposed structure to ensure maximum benefits under Mexican and foreign law

VI. Legal Analysis
With the assistance of legal counsel as necessary:

• A. Become acquainted with applicable Constitutional provisions, laws, decrees, and regulations affecting the proposed entity and investors
• B. Analyze issues of specific concern to investors:
  • Corporate-Commercial Issues
    • 1) rights of investors against third party creditors
    • 2) treatment of minority shareholders or partners
    • 3) ability to secure property and assets in Mexico
    • 4) impact of Mexico's anti-trust law
    • 5) price or materials controls
  • Litigation issues:
    • 1) rights of private action in Mexico
    • 2) product liability
    • 3) ability to enforce foreign judgments and arbitral awards in Mexico
  • Environmental issues:
    • 1) Become aware of environmental legislation, decrees and regulations that may affect operations
    • 2) Compile list of environmental licenses, approvals, environmental impact statements, etc., required for project
  • Tax issues:
    • 1) Become aware of Mexico's tax system and filing requirements (i.e., income tax rates, value-added taxes, property taxes, asset taxes, etc.)
    • 2) Evaluate the impact of Mexico's new intercompany transfer pricing rules
    • 3) Assess the applicability and benefits of international tax treaties
    • 4) Analyze the corporate organization of the project from an overall tax planning point of view, incorporating legal, accounting, and financial advice from both Mexican advisors and home country advisors
  • Intellectual Property issues:
    • 1) Identify IP requiring protection within Mexico
    • 2) For IP requiring protection compile a list of applicable registration requirements and extent of protection offered by same
    • 3) If applicable to the business plan determine whether there are any restraints on the freedom of contract for the licensing of intellectual property

VII. Accounting/Financial Analysis

• A. Become acquainted with local financial reporting requirements
• B. Identify appropriate Mexico advisor for assisting with reporting
• C. Identify and establish procedures for compiling accounting and financial data sufficient to meet accounting and reporting requirements