LAW ON FOREIGN INVESTMENTS
(FOREIGN INVESTMENT LAW)
(Published in the
Official Gazette of the Republic of Macedonia No. 31/93-732)
I. GENERAL PROVISIONS
Foreign persons may invest resources for the purpose of pursuing economic and non-economic activities in the Republic of Macedonia (further referred to as: foreign investors), unless otherwise determined by another Law.
Foreign investors may invest resources in domestic enterprises, establish a mixed enterprise or form a private enterprise in the same manner and under the same conditions which apply to domestic persons establishing an enterprise.
Under this Law, a foreign investor represents a foreign legal entity and a foreign physical person, whose headquarters are located abroad.
Citizens of the Republic of Macedonia, who have acquired permanent residence abroad as well as foreign persons which own an enterprise in the Republic of Macedonia, shall be regarded as foreign investors, under paragraph 1 of this article.
Foreign investments may be in the form of foreign currency, equipment and spare parts, raw materials, intermediate goods and rights.
Foreign investors may invest domestic currency acquired through purchase and conversion of obligations relating to certain foreign credits or through other forms, in compliance with the law regulating foreign credit relations.
The contracting parties may directly convert the external debt into a deposit in the existing enterprise or bank.
II. RIGHTS OF FOREIGN INVESTORS AND THEIR PROTECTION
Foreign investors are given the rights that have been set by an agreement, with particular reference to the following:
1) to share profits in proportion to the invested resources and the
right of free transfer and reinvestment of that profit;
2) return of certain invested commodities, if the right is explicitly
retained in the investment agreement;
3) return of the investment in the domestic enterprise;
4) a share in the net property and reparation of that share, if
funds have been invested in a mixed enterprise (company) upon
termination of that enterprise;
5) to transfer the rights and liabilities of the agreement to other
domestic or foreign investors and
6) to manage or take part in the management of the enterprise, in
proportion to the invested resources.
The rights of foreign investors, resulting from invested resources, are determined and protected by this Law and can not be diminished by another law or regulation.
The rights of foreign investors, resulting from invested resources, under paragraph 1 of this article, imply to the rights defined in the investment agreement, the agreement for establishing a mixed enterprise and the statute for establishing private enterprises.
Should the basic law be amended upon the conclusion of the investment agreement, the establishment of a mixed enterprise or the statute for establishing a private enterprise, the provisions of the agreement or statute effective on the date of the legal enforcement of the agreement or statute are applicable, under condition that those provisions are more favorable for the investor or founder or unless the investors, i.e. founders settle certain issues in compliance with the amended basic Law.
Enterprises in which foreign investments have been made are entitled the same rights and liabilities as domestic enterprises
on the territory of the Republic of Macedonia.
Under conditions stipulated by law, foreign investors are entitled profit tax reductions in the initial period of operation as well as tax reductions regarding resources reinvested or consigned in the Republic of Macedonia.
Under conditions stipulated by law, foreign investors may also be entitled certain customs benefits.
III. FORMS OF FOREIGN INVESTMENTS
Foreign investors may invest resources into: all kinds of enterprises, banks, savings banks, organizations, insurance companies, cooperatives and other forms of collaborations and joint operations determined by law.
IV. INVESTMENT AND ESTABLISHMENT
Investments of foreign persons are regulated by investment agreements, agreements for establishment of mixed enterprises and statutes for establishment of private enterprises.
Mutual relations of investors, i.e. founders are regulated by agreements of investment, agreements of establishment and statutes of establishment.
Agreements of investment, agreements of establishment and statutes of establishment must be concluded in writing.
Agreements of investment, agreements of establishment and statutes of establishment must be reported to the state authorities in charge of foreign economic relations, who shall evaluate their conformity with this Law.
Agreements of investment, agreements of establishment and statutes of establishment, which have not been concluded in writing and which the state authorities under paragraph 3 of this article have deemed as not conforming to this Law, shall be of no legal force or effect.
Agreements of investments into existing enterprises are to include the following:
1) the contracting parties;
2) the line of business of the enterprise;
3) the amount of resources entrusted by each investor and the
method of determining the share of each investor within the
4) the form of investment and what the shares consist of;
5) designation of the existing enterprise in which the investment is
made or the type of enterprise that is to be established;
6) the method of share allocation and the procedure of covering
7) the decision making process of the investors;
8) the duration of the investment agreement;
9) the method of restitution of investments and
10) settlement of disputes.
Agreements of investments and/or establishment of mixed enterprises (companies) are to include the following:
1) the contracting parties;
2) the line of business of the enterprise;
3) the nominal capital of the company and the shares of the
4) the type of shares and the bank that issues the shares in cases
of investments in stock companies;
5) the organs of the company and the investors representation in
6) the term of duration;
7) eventual commitments for the purchase of shares or stocks by
the domestic investor and
8) settlement of disputes.
Statutes for establishment of private enterprises are to include the following:
1) the name of the founder;
2) the company, the headquarters and the line of business of the
3) the amount of invested resources;
4) the form of the enterprise and
5) the conditions, practice and allocation of profits.
Agreements of investment, agreements for establishment of mixed enterprises and statutes of establishment may have limited or unlimited validity.
In cases of agreements with limited validity, under paragraph 1 of this article, provisions may be made relating to the automatic renewal of their validity for a further limited period, provided that neither of the contracting parties has canceled them and that they have been reported to and noted by the state authorities in charge of foreign economic relations.
Foreign investors are entitled to inspect the business records of enterprises in which they have invested, in compliance with the investment agreement and the statute (rules).
Foreign investors are entitled to audit the yearly settlement themselves or through authorized representatives.
V. OTHER FORMS OF INVESTMENT
Foreign banks and other foreign financial organizations and investors, under article 2 of this Law, may invest in insurance organizations, banks or savings banks or may jointly establish mixed banks, insurance organizations or savings banks and invest in them mutually, in compliance with this Law.
Foreign banks and other foreign financial organizations and investors, under article 2, may establish banks, insurance organizations and savings banks, in compliance with this Law.
Investments in insurance organizations, banks and savings banks are regulated by law.
VI. REGISTRATION OF FOREIGN INVESTORS
Agreements of investment, i.e., establishment and statutes of establishment, under articles 12, 13 and 14 of this Law, composed in Macedonian and in the language of the foreign investor, are registered with the state authorities in charge of foreign economic relations, within 30 days from the date of their signing.
The state authorities, under paragraph 1 of this article, shall determine whether the agreements, i.e., statutes are in compliance with the Constitution of the Republic of Macedonia and with this Law, and shall bring a decision accordingly.
The state authorities are obliged to bring a decision, referred to under paragraph 2 of this article, within 30 days from the date of receipt of the agreement, i.e., statute. The agreement, i.e. statute shall be considered to comply with the Constitution of the Republic of Macedonia and with this Law should the decision not be brought within the mentioned period.
An appeal against the decision under paragraph 3 of this article may be lodged with the Government of the Republic of Macedonia, within a period of 15 days from the date of receipt of the decision, who shall subsequently bring a final decision within a period of 15 from the submission of the appeal.
Reinvestment of profits, additional investments of foreign investors as well as transfers of foreign deposits from one person to another must be reported to the state authorities in charge of foreign economic relations by presentation of the original document and its translation within a period of 30 days from the date of endorsement.
Investors are obliged to notify the state authorities in charge of foreign economic relations of the expiration of agreements of investment, i.e., establishment or the statute of establishment, the purchase of foreign shares by domestic investors or changes of overall shares of foreign investors in the concluded agreements, within a period of 30 days from the date of the occurred changes.
Agreements of investment, i.e. establishment or statutes of establishment are maintained in separate registers by the state authorities in charge of foreign economic relations.
The following data is entered in the register: the concluding date of the agreement, the names of the investors, the value of the shares of the foreign investors, the name and status of the enterprise invested into by foreign investor, the line of business, the duration of the investment and the possibility of transfer of the foreign shares.
In cases of issued stocks, only the value of the stocks purchased by domestic and foreign investors shall be registered. The register shall also be updated with data of additional investments, reinvestment of profits, termination of the agreement on investment, transfer of shares and reparation of foreign shares. Entries in the register shall be made within 15 days from the date of receipt of notifications relating to each change of foreign shares.
VII. PENALTY CLAUSES
Enterprises or other legal entities shall be fined for business violations with a penalty from 100 to 250 salaries in the following instances:
1) for initiating investment with shares against this Law (article
3 and article 4 paragraph 2);
2) for failing to compose the investment agreement in written form
and for failing to report it to the state authorities in charge
of foreign economic relations (article 11 paragraphs 2 and 3)
3) for not allowing foreign investors to inspect business records
and audit the yearly settlement either themselves or through
authorized representatives (article 16).
Persons in charge of the enterprise and other legal entities shall be fined for business violations under paragraph 1 of this article with a penalty from seven to ten salaries.
Enterprises and other legal entities shall be fined with a penalty from 50 to 100 salaries for failing to notify the state authorities in charge of foreign economic relations of reinvestment of profits or of additional investments of foreign investors or of transfers of foreign shares from one foreign person to another (article 20).
Persons in charge of the enterprise and other legal entities shall be fined for violations under paragraph 1 of this article with a penalty from five to fifteen salaries.
VIII. TRANSITIONAL AND CONCLUDING PROVISIONS
Agreements for investment of resources by foreign investors, amendments and annexes to those agreements, as well as extensions of the validity of those agreements concluded and approved prior to the effective date of this Law, shall be enforced in compliance with the regulations that were in effect during the approval of the agreements.
Agreements of investment concluded prior to the effective date of this Law shall be approved and registered in compliance with the regulations that were in force during the conclusion of the agreements.
Contracting parties may coordinate previously approved agreements with the provisions of this Law, should they find them to be more favorable.
The Law on Foreign Investments (Official Gazette of the SFRJ No. 77/88) shall no longer be enforced on the territory of the Republic of Macedonia as of the date this Law enters into force.
This Law enters into force on the date of publication in the Official Gazette of the Republic of Macedonia.