How Foreign Investment Laws Effect FDI in Argentina

Foreign Investment Laws Effect
How the Foreign Investment Law Effects FDI in Argentina

According to the Economic Commission for Latin America and the Caribbean (CEPAL), in 2015, Argentina was ranked as the fifth largest recipient of foreign direct investment (FDI) within the region, behind Brazil, Mexico, Chile and Colombia. FDI in Argentina grew by a staggering 130% in 2015 reaching USD$11 655 million dollars.

Foreign Investment Laws in Argentina

The Foreign Investment Law (Law 21.382) constitutes the legal framework for FDI in Argentina, with the main provisions of this law outlined below:

  • Foreign investors have the same rights and obligations as local investors
  • Foreign capital investment is defined as:
    • Capital contributions belonging to foreign investors applied to activities of an economic nature carried out in the country
    • Purchases of interests in the equity of an existing domestic company by foreign investors
  • Foreign investors are defined as:
    • Natural or legal persons who are domiciled outside the territory with a foreign capital investment
    • Domestic foreign-investment companies which invest in local companies
  • Domestic foreign-investment companies are defined as:
    • Companies domiciled in the country, in which individuals or legal entities domiciled outside the country hold a direct or indirect interest of above 49% in its equity or are the direct or indirect holders of such number of voting rights as are necessary to prevail at the shareholders’ meeting
  • Foreign investment may be carried out in some of the following ways:
    • Converting foreign currency
    • Capital goods, their spare parts and accessories
    • Profits or capital in national currency belonging to foreign investors, provided they are in legal conditions to be transferred abroad
    • Foreign credits capitalization in freely convertible foreign currency
    • Intangible goods
    • Other forms of contribution provided for in especial or promotional systems
  • Foreign investors may transfer abroad realized profits coming from their investments, as well as repatriate their investment.
  • Foreign investors may use any of the legal forms or organization provided within the national legislation.
  • Domestic foreign-capital companies may use local credit with the same rights and under the same conditions as domestic national-capital companies
  • Transient foreign-capital contributions related to execution of lease and services contracts or others not covered by the law
  • Legal acts entered into by and between a domestic foreign-capital company and the company which directly or indirectly controls it or an affiliate of the latter, are considered as entered into by independent parties.

The CEPAL also highlights the need for alignment and integration of FDI policy with other countries’ development policies in order to better attract FDI. Likewise, the business climate and investment promotion agencies are key to reducing information asymmetries and connecting foreign investors with business opportunities. Argentinian investment law stands out from many of the other domestic policies within the country with its non-discrimination principle between foreign and domestic investors.

Biz Latin Hub can help you navigate investment law in Argentina

At Biz Latin Hub, we provide integrated market entry and back office services throughout Latin America and the Caribbean, with offices in 17 key cities around the region, including Argentina’s capital city Buenos Aires.

Our unrivaled presence around the region means we are ideal partners to support multi-jurisdiction market entries and cross-border operations.

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Contact us today to find out more about how we can assist you.

If you found this article on corporate law and finding a legal firm in Argentina of interest, check out the rest of our coverage of this highly-developed South American country.

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Tags: Argentina | Business | Expats | Investment | Legal

Categories: Argentina

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