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What is a Foreign Investment Law?

Article Details
  • Written By: P.M. Willers
  • Edited By: Angela B.
  • Last Modified Date: 17 October 2017
  • Copyright Protected:
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    Conjecture Corporation
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A foreign investment law is a law regulating investments made by foreigners or non-nationals in a specific country. Investments regulated by such laws include assets, technology, knowledge, and any other form of capital that is brought into a country for business purposes. Furthermore, foreign investment regulations cover all aspects of investments and business. This could include the promotion, management, and protection of foreign investments, as well as any investment and importation terms.

Laws regulating foreign investment specify when, how, and to what extent foreigners may invest in a country. They may also regulate exchange rates and regulations for interaction with specific financial institutions and within the banking industry in general. Depending on the country and the industry, foreign investment laws may also regulate the rights obtained with certain investments. Additionally, foreign investment law may place restrictions on environmental consequences caused by investments.

Foreign investment laws vary and should always be researched thoroughly and specifically before partaking in any type of business venture in a foreign land. Prior to becoming involved in foreign investments, one should research the foreign investment law of each affected state. It may also be prudent to investigate legal consequences for the mismanagement of foreign investments or other violations, because they may vary dramatically between countries.

Most countries, wanting to encourage investment, regulation, and transparency within foreign investment, properly post their foreign investment policies. Laws and regulations can normally be found on a country’s website or within federal publications. The department that handles foreign investment law varies depending on the country, but may be a branch within the country’s department of finance, investment, business, or international affairs.

It is important to note that within one country, foreign investment laws may differ depending on the region, geography, and history of the specific location and industry. Aside from protecting the country’s economy, regulations can cover nearly every aspect of life. Foreign investment law also monitors the impact of investments on the citizens of the country and their standard of living.

Once your international business has been completed, foreign investment law dictates how and when your funds or income may be repatriated. Before following regulations for profit transfer, it is necessary to follow proper procedure for paying federal taxes, duties, and other fees. Some regulations, such as those regarding taxes, may interact with the laws of a person's home country. It is, therefore, necessary to carefully address applicable procedures for all involved governments. Keep in mind that foreign investment laws may vary depending on your country of origin.

For assistance regarding foreign investment law, it may be necessary to visit the local embassy or consulate of the country in which you would like to do business. For problems resulting from violating a foreign investment law, there are several international organizations that may be of assistance. World Bank and the International Finance Corporation (IFC) manage the Foreign Investment Advisory Service (FIAS), which works with foreign investment in many developing countries. The International Centre for Settlement of Investment Disputes (ICSID) can also provide some information on investor rights. The ICSID has approximately 120 member states and is an autonomous organization that assists in settling disputes between foreign investors and governments internationally.

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