For close to a year now, Americans have been inundated with stories of gloom and doom about the U.S. economy. Similarly, Mexicans have been dealing with their own albatross, most significantly, the security and safety issues affecting parts of Mexico.
From this chaotic climate emerges a symbiotic relationship, a love affair of sorts that connects the Mexican investor with his American counterpart.
San Antonio is particularly situated to gain from this courtship. A June report by the Brookings Institution ranks San Antonio as one of America’s 10 strongest–performing metropolitan areas. This news is not lost on Mexican investors, many of whom have known of the stability and strength of San Antonio’s economy for years and have shown a strong affinity for the city’s culture and people.
Recent reports also suggest that Mexican citizens are establishing residences in San Antonio like never before. Some reports attribute the influx of Mexican citizens into San Antonio to the growing security issues affecting Mexico.
For San Antonioans, the influx of Mexican citizens into the community presents a unique investment opportunity as many of these Mexicans look to raise capital, invest and establish business operations in Texas.
With the right legal maneuvering, Americans seeking to diversify their investment portfolios can do so by engaging in joint ventures with their Mexican counterparts. For example, NAFTA offers easy solutions for successful Mexican business people who seek to relocate families temporarily in the U.S., while Mexico’s national government addresses their security concerns.
For a relatively small investment in a business, NAFTA affords a Mexican citizen investor the right to live and remain in the U.S. for up to five years at a time. Often, he or she can team with a U.S. manager to oversee the business, while the Mexican investor continues to run his or her main Mexico–based operations. This special treaty right, known as the E–2 treaty investor or E–1 treaty trader visa, can be renewed indefinitely if the investment or the trade continues.
Current U.S. law also gives Mexicans and all foreigners the right to obtain a green card for an investment of as little as $500,000 in a U.S. business or under the U.S. government’s “Regional Center” program, in a development or commercial project.
The relationship between Mexican and U.S. investors is a valuable one. But like every relationship, it must be tended to and nurtured. There are a number of legal issues that arise in the context of this relationship that must be addressed. For example, issues related to entity formation, financing and banking support, taxation, and securities law compliance play a large role in the success of any business venture; however, these issues have additional implications when dealing with foreign investors.
For Mexican investors hoping to become U.S. citizens, there are also immigration compliance issues that must be strictly followed so as not to jeopardize citizenship opportunities.
While San Antonio’s economy has fared significantly better than other metropolitan areas, it is not immune to the effects of the recession. San Antonio offers a respite for Mexicans seeking safety and security for their families. On the flip side, Mexican investors offer an infusion of investment opportunities into the local economy helping to stimulate an otherwise sluggish national economy. This mutually beneficial relationship helps to turn what would otherwise be straw into gold — and from this, the love affair begins.
This article is not intended as an exhaustive discussion of the issues raised herein. Please contact your legal and financial professionals for more information.
The author wishes to thank H. Richard Sindelar III, a former U.S. Consul in Monterrey and attorney in the Houston office of Jackson Walker L.L.P., for his contributions to this article. For more information please contact him at (713) 752–4200.
