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Commercial Law Memorandum On Foreign Investment

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Commercial Law Memorandum On Foreign Investment

1. The former restrictive provisions of the Aliens (Landholding) Act have been repealed and replaced by a new Foreign Investment Act, No. 16 of 1990 designed to encourage investment by foreign investors.

2. A foreign investor is defined by the Act to mean:-

(a) An individual who is neither a citizen of “a Caricom member country” nor a resident of Trinidad and Tobago;
(b) Any firm, partnership or unincorporated body of persons of whom at least one half of its members consist of persons to whom (a) or (c) applies; or
(c) Any company that is not incorporated in a Caricom member country, or if so incorporated is under the control of a person to whom paragraph (a) or (b) applies or is deemed to be under the control of a foreign investor in accordance with sub?section (2) of Section 2.

3. Section 2(2) of the Act provides that a company shall be deemed to be under the control of foreign investors if:-

(a) At least one-half of the votes exercisable at a meeting of the company or corporation are vested in foreign investors; or
(b) Having a share capital, at least one half of the nominal amount of its issued shares that are voting shares are vested in foreign investors;
(c) Not having a share capital, at least one?half in number of its members are foreign investors; or
(d) It is fact controlled by foreign investors.

4. A “Caricom member country” is one whose laws provide investment facilities for citizens of Trinidad and Tobago similar to those provided by the latter for citizens of Caricom member countries, as specified by the Minister by Order under Section 18.

5. A foreign investor may make the following investments in Trinidad and Tobago under the Foreign Investment Act without the requirement of a licence:-

(a) Incorporate a private company in Trinidad and Tobago or acquire shares in a private company incorporated in Trinidad and Tobago;
(b) Acquire shares in a local public company up to a maximum of 30% of the total cumulative shareholding, direct or indirect, of the local public company;
(c) Acquire land for residential purposes up to a maximum of one acre;
(d) Acquire land for the purposes of trade or business up to a maximum of five acres;
(e) Acquire land jointly with a spouse if the spouse is a citizen of a Caricom member country resident in Trinidad and Tobago.

“Land” does not include money charged on land, mortgages, charges or debentures or oil rights.

6. However with respect to investments made under paragraphs 5(b) and (b) above the foreign investor is required to submit to the Minister of Finance particulars of the investment in accordance with the provisions of the First Schedule to the Act and with respect to these investments made under paragraphs 5(c), (d) and (e) above notice of the vesting must be given to the Minister in accordance with the Third Schedule of the Act.

7. In all other instances foreign investment in land in Trinidad and Tobago would require a licence from the President of the Republic of Trinidad and Tobago. The Minister may also designate particular areas of land in respect of which a licence will always be required.

8. Section 10 of the Act provides that the consideration for investment by a foreign investor must be paid in an internationally traded currency through a person authorised by law as a dealer in that foreign currency except where in the case of a company incorporated in Trinidad and Tobago such consideration is financed out of capital reserves or retained earnings generated from its operations in Trinidad and Tobago. A citizen of a Caricom member country who is otherwise not a “foreign investor” is also made subject to this requirement.

9. No land or shares in a public company may be held on trust for a foreign investor without a licence (Section 11).

10. The title of Aliens lawfully holding land under licence or otherwise at the commencement of the Act is not affected by the Act nor are registered Banks or Financial Institutions subject to it (Section 14).


Extracted From: Trinidad & Tobago Law.com

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