The Council of Ministers, by proposal of the head of Presidency, Economy and Enterprise, Jordi Gallardo, approved on Wednesday the bill to modify the foreign investment law, which dates back to 2012: “the process of opening to foreign investment, culminated by the law and the legislation reforms to instore a fiscal system in harmony with international standards, has become essential in placing the Principality as a destination of interest to foreign investors”.
For this reason, and seeing the tendency of developed economies in this context to increase the role of governments in the revising and controlling of foreign investments, the government considers that now is the moment to modify the Law so as to adapt to the current needs and challenges of the Principality´s economy.
Gallardo noted that the legislative reform is based on four main axes: instore a liberating regime on certain investments so as to facilitate the process, obligate all foreign investments to present a declaration to the Registry once they have been completed, install an effective mechanism of control and establish a framework of sanctions. In this sense, the Minister stated that the Principality is not unaware of the possible risks that come with some investments in terms of national security, sovereignty, public order, public health and the environment, which is why he considers it necessary to “strengthen the safety clause and articulate this new legal regime in line with international standards”.
More specifically and with regards to the process of liberating and making procedures more agile to install oneself in the country, the head of Presidency, Economy and Enterprise explained that investors coming from countries that have a signed CDI agreement with Andorra or from a country with a collaboration agreement on this subject, will be able to initiate the process without having to first present an application and do a prior control –this excludes public entities under control of foreign states and investments in sectors included in the safety clause –. However, in all cases, with or without prior application, a declaration of foreign investment will have to be presented and registered in the Registry; this is the point in which an initial control will be carried out.
In the same manner, subsequent controls will be installed to evaluate if foreign investments meet the necessary requirements. If deficiencies are found, the derived control decisions can include the cancellation of the investment, its liquidation or cautionary measures –that range from the suspending of rights to vote to the banning of distributing dividends or asset disposal–. A new sanctioning code will also be installed categorizing grave, serious and light infractions.
To end, Minister Gallardo stated that a transition period of a year will be given for investments projects entered prior to the passing of the law to be declared and registered. He also pointed out that, in order to adapt to the new text, the department of Judicial and Economic Registry will have to be provided with economic, technical and human resources.
Text and photo: Govern d’Andorra
