{"id":10428,"date":"2022-07-15T20:24:15","date_gmt":"2022-07-15T20:24:15","guid":{"rendered":"http:\/\/legalblog.ie\/investment\/"},"modified":"2022-12-03T22:38:16","modified_gmt":"2022-12-03T22:38:16","slug":"investment","status":"publish","type":"post","link":"https:\/\/legalblog.ie\/investment\/","title":{"rendered":"Investment"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/legalblog.ie\/investment\/#Nature_of_Investment\" title=\"Nature of Investment\">Nature of Investment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/legalblog.ie\/investment\/#Treaties_on_Investment\" title=\"Treaties on Investment\">Treaties on Investment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/legalblog.ie\/investment\/#Industrial_Policy\" title=\"Industrial Policy\">Industrial Policy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/legalblog.ie\/investment\/#Approval_of_Investment\" title=\"Approval of Investment\">Approval of Investment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/legalblog.ie\/investment\/#Local_Entity\" title=\"Local Entity\">Local Entity<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/legalblog.ie\/investment\/#Limits_of_Foreign_Investment\" title=\"Limits of Foreign Investment\">Limits of Foreign Investment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/legalblog.ie\/investment\/#Incentives\" title=\"Incentives\">Incentives<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/legalblog.ie\/investment\/#Guarantees\" title=\"Guarantees\">Guarantees<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/legalblog.ie\/investment\/#Establishment\" title=\"Establishment\">Establishment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/legalblog.ie\/investment\/#Filings\" title=\"Filings\">Filings<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/legalblog.ie\/investment\/#Accounting\" title=\"Accounting\">Accounting<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/legalblog.ie\/investment\/#Corporate\" title=\"Corporate\">Corporate<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Nature_of_Investment\"><\/span>Nature of Investment<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Investment in this context is generally said to involve the taking of a share of at least 10 percent in the controlling shares of a foreign enterprise. Some states do not allow foreign investments at all.\u00a0 It is generally a characteristic of socialist or developing states.<\/p>\n<p>In such cases, participation in investment within the state may require a joint venture with a state authority or state-approved entity. Some states place restrictions on investment in particularly sensitive sectors.\u00a0 Other states seek to stimulate investment by providing incentives for particular types of investment.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Treaties_on_Investment\"><\/span>Treaties on Investment<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>In some cases, laws in relation to investment are the subject of treaties between states.\u00a0 There are approximately 2,000 international bilateral investment treaties.<\/p>\n<p>In some cases, treaties provide for dispute settlement mechanisms. \u00a0Many treaties designate the World Bank International Centre for Settlement of Investment Disputes as the arbitral body. Many treaties designate the World Bank International Centre for Settlement of Investment Disputes as the arbitral body.<\/p>\n<p>Some states have entered bilateral arrangements with their former colonies to allow investment on a most favoured basis.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Industrial_Policy\"><\/span>Industrial Policy<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>State&#8217;s investment policies or laws may promote local industry and development.\u00a0 They may encourage local participation with foreign-based investors in industry.<\/p>\n<p>They may seek to exclude competition from certain areas for the purpose of protecting domestic industries. Laws may encourage investment by incentives, in particular types of industries.\u00a0 It may require percentage participation by local sources.<\/p>\n<p>Regulation may take place at the level of transnational bodies such as the European Union or other regional alliances.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Approval_of_Investment\"><\/span>Approval of Investment<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Many states require investors to register and obtain approval for proposed ventures.\u00a0 The extent to which a state agency involves itself in the process, varies considerably.\u00a0 In some cases, there may be a detailed examination from multiple perspectives. In other cases, the state agency may be coordinating and attempting to assist investment only.<\/p>\n<p>States may limit their review to certain sectors.\u00a0 There may be limited or no review in sectors intended for incentivisation.\u00a0 The criteria for scrutiny may depend on the particular percentage investment or the quantum of investment.\u00a0 There may be more elaborate procedures for larger investments.<\/p>\n<p>Agencies may require details of the investment plan. This may require particulars of the industry, proposed budgets, production schemes, services schemes, transferred equipment, imports and exports, the extent of local imports, employment,, marketing, location and pricing.<\/p>\n<p>Investment laws may determine foreign investment with reference to criteria such as<\/p>\n<ul>\n<li>job creation,<\/li>\n<li>the balance of payments,<\/li>\n<li>contribution to the development of less favoured zones.<\/li>\n<li>ratio of foreign and national contribution of capital.<\/li>\n<li>import substitution.<\/li>\n<li>use of national inputs.<\/li>\n<li>effect on price and quality.<\/li>\n<\/ul>\n<p>There may be a formal investment agreement at the conclusion of the process.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Local_Entity\"><\/span>Local Entity<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Local laws may determine the format or structure that an investment must take.\u00a0 Local participation may be required.\u00a0 There is generally a requirement for disclosure by a local subsidiary or branch under doing business or corporation laws.<\/p>\n<p>States may allow foreign subsidiaries and branches to set up, but they may be ineligible for particular benefits unless certain criteria, such as local participation, is provided.<\/p>\n<p>Most states require the disclosure of information to corporate, regulatory and tax authorities.\u00a0 Some countries positively encourage investment on the basis of the absence of disclosure requirements.\u00a0 These are typically tax havens.<\/p>\n<p>There may be restrictions on the degree of foreign ownership.\u00a0 In some states, this is limited to less than half.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Limits_of_Foreign_Investment\"><\/span>Limits of Foreign Investment<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Many states reserve particular activities exclusively to the state or to nationals of the state.\u00a0 They may allow limited participation in some sectors.<\/p>\n<p>Many states do not allow for participation by non-nationals or provide a public monopoly in relation to public utilities, strategic industries, developing industries and industries which may compete with small domestic industries.<\/p>\n<p>There may be restrictions on investment in \u00a0TV and media, finance, newspapers and resource industries such as mining, forestry, gas and oil.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Incentives\"><\/span>Incentives<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Non-nationals may be incentivised to invest in certain areas.\u00a0 States are especially likely to encourage activity which is novel and hi-tech.<\/p>\n<p>Some states establish special zones in which investments may be freely undertaken.\u00a0 Incentives may be provided for location in those zones.<\/p>\n<p>Ireland formerly provided incentives for the Shannon area and the IFSC.\u00a0 Conversely, there may be restrictions on participating in industries in certain parts of the country.<\/p>\n<p>Many states encourage free zones into and out of which goods may be imported and exported free of tax.\u00a0 Other incentives may be provided in that area. There may be regulation of activities which may be undertaken in free zones.\u00a0 There are almost 200 United States free trade zones.<\/p>\n<p>Export processing zones such as those dealing in raw materials, are imported and processed for immediate export.\u00a0 For customs purposes, they may be neither subject to import nor export duty.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Guarantees\"><\/span>Guarantees<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>States may provide guarantees in order to incentivise investment.\u00a0 The guarantees may guarantee against restrictions on repatriation of profits and other income, non-discriminatory treatment, changes in tax, convertibility of the currency and compensation in the event of acquisition or appropriation. Guarantees may be applied to all investors or on a case-by-case basis.<\/p>\n<p>Constitutions generally guarantee compensation for compulsory acquisition expropriation or nationalization.\u00a0 There may be political considerations in relation to the degree of confidence which might be had in them.\u00a0 The guarantee might be in the foreign currency of the investor.<\/p>\n<p>Repatriation guarantees guarantee the right of the investors to remit profits and, ultimately, capital to their home state.\u00a0 There may be qualifications in the case of foreign exchange difficulties.\u00a0 There may be temporary capital controls in these cases.<\/p>\n<p>Some states guarantee that non-nationals will be treated no less favourably than nationals.\u00a0 This may extend to taxation, ownership, investment and other laws relevant to the industry.\u00a0 It may mean, however, that where nationals are subject to expropriation, non-nationals will equally be so subject.<\/p>\n<p>The state of the investment may provide guarantees with respect to foreign exchange and the exchangeability of currency. Ultimately, however, states retain inherent sovereign powers to nationalize investments and property within their jurisdiction.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Establishment\"><\/span>Establishment<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Upon approval, there may be a limited time in which to establish the investment.\u00a0 Once it is in operation, the new foreign business may be subject to periodic review.<\/p>\n<p>Requirements may apply in respect of income tax and withholding tax.\u00a0 The ultimate sale liquidation and withdrawal may require governmental consent.<\/p>\n<p>This may require the submission of reports, accounts, et cetera.\u00a0 There may be an obligation to comply with local regulations or the terms of an investment agreement. There may be a single agency which supervises foreign investments.\u00a0 It may require reports and conduct investigations.<\/p>\n<p>Most company laws require disclosure of information once subsidiaries and branches are established within their territory.\u00a0 In the case of subsidiaries, common law states require filing a memorandum and article.\u00a0 In civil law states, the organisational documents are notarised and entered into a commercial register which is open for inspection.\u00a0 It may also require to be notified and published in an official gazette.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Filings\"><\/span>Filings<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>States generally require filing a disclosure of key changes in the subsidiary.\u00a0 This would typically include<\/p>\n<ul>\n<li>changes in the objects memorandum or articles and association.<\/li>\n<li>Changes in the share classes and rights.<\/li>\n<li>Appointment of directors.<\/li>\n<li>Liquidation and solvency procedures.<\/li>\n<\/ul>\n<p>Reports generally have to be filed, including balance sheets, profit and loss, director&#8217;s reports and auditor&#8217;s reports.\u00a0 Local accounting standards may be required.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Accounting\"><\/span>Accounting<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Accounting standards vary considerably.\u00a0 The International Accounting Standards Board has attempted to harmonize accounting standards.\u00a0 It publishes international financial reporting standards, which are designed to provide transparent and comparable information in statements.\u00a0 All 104 countries are members.<\/p>\n<p>The International Federation of Accountants has 118 members and has established auditing guidelines.\u00a0 It is independent and sets standards on audit assurance education ethics.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Corporate\"><\/span>Corporate<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Many states have entities which enforce their corporate law.\u00a0 The equivalent of the Office of the Director of Corporate Enforcement in Ireland is found in many other states.<\/p>\n<p>Stock exchange rules, company laws and securities laws may grant minority shareholders rights to purchase out at a fair price if they&#8217;re being disadvantaged.\u00a0 They may be granted rights to a minimum dividend.\u00a0 They may be able to demand compensation in the form of dividends or to be purchased out if certain adverse actions happen.<\/p>\n<p>Parent companies may be held responsible for the debts of their subsidiaries in some jurisdictions.\u00a0 In some states, each group member is liable for the others&#8217; debts in the event of the insolvency of any member.<\/p>\n<p>A government authority may be in a position on application to appoint an administrator to protect the minority&#8217;s interest and the interest of local creditors. In some states, the shareholder may be required to pursue their claims in the domestic courts.<\/p>\n<!--themify_builder_content-->\n<div id=\"themify_builder_content-10428\" data-postid=\"10428\" class=\"themify_builder_content themify_builder_content-10428 themify_builder tf_clear\">\n    <\/div>\n<!--\/themify_builder_content-->\n","protected":false},"excerpt":{"rendered":"<p>Nature of Investment Investment in this context is generally said to involve the taking of a share of at least 10 percent in the controlling shares of a foreign enterprise. Some states do not allow foreign investments at all.\u00a0 It is generally a characteristic of socialist or developing states. In such cases, participation in investment [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[144],"tags":[],"_links":{"self":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/10428"}],"collection":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/comments?post=10428"}],"version-history":[{"count":3,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/10428\/revisions"}],"predecessor-version":[{"id":21042,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/10428\/revisions\/21042"}],"wp:attachment":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/media?parent=10428"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/categories?post=10428"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/tags?post=10428"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}