Foreign Direct InvestmentForeign Direct InvestmentForeign Direct InvestmentThe reason I choose the topic; “Foreign Direct Investment” is that, despite in the face of ongoing business expansion and amelioration, there are many factors that border business in general which include; weak consumer confidence, tough austerity measures and economic uncertainty. However, in many countries, FDI is at increase level playing a crucial role for businesses across the globe to seek out opportunities for growth. In this juncture, I would like to learn how this international business activity is associated with industrial revolution and how it has paved its way in the massive international movement of business factors and acquire lasting interest in enterprises operating outside of the economy as a foreign direct investment.
As it is, international business activities are, in this present time, has become a thing to reckon with. Those in the ancient world deeply made a commitment which was highly dependent on international business. The economic activities, such as, foreign direct investment (FDI), joint ventures, strategic alliances and other forms of internationalization are commonly known for resource-seeking and were the most common motivation of FDI in this recent period. Even in the old times, many firms had already crossed the Atlantic, in both directions, in what can be described as market-seeking investment (Dunning, 1988)
The origins of modern international business activity are linked with the industrial revolution and most in particular, pedigreed in the massive international movement of factors that took place in the nineteenth century (Dunning, 1988). This explained that the resource-seeking was the most common motivation of FDI in this period. In the nineteenth century until a certain time, irrespective of the presence of FDI, majority of foreign investments were based on portfolio capital. Due to the way it was then, a large number of international business activities were neglected in the term of economic theory. The perception of these activities could not have any impact in terms of economy until the late 1950s (Jones, 1984). More importantly, it was mentioned that based on the neo-classical theory, the perfect markets and the international immobility of factors, did not easily incorporate multinational activity.
The article on United Nations Conference on Trade and Development explained that the investment made to acquire lasting interest in enterprises operating outside of the economy of the investor, the purpose of that investment is to gain an effective voice in the management of the enterprise and to take a lasting interest of a direct investment in an enterprise with the capital that is provided by the direct investor, either directly or through other enterprises. It also mentioned that this form of investment by the direct investor classified as FDI is equity capital which the reinvestment of earnings through it and the provision of long-term and short-term intra-company loans between parent and affiliate enterprises can have a capital flow through their businesses. As already explained, most types of investment involved by the investor directly, such investments are FDI as classified and are equity capital.
The investor is also entitled to receive an annual share of the net income of the direct investor, as defined in section 8 of Annex 1. If the investor purchases a controlling interest, it is required to repay that interest by the end of June or as soon as possible and, if the investor can show that at the end of June or as soon as possible, it has done so by way of a specified repayment, such as a pre-tax refund and/or re-pricing. The investor should note that, as explained above, under the principle of capital flow it is necessary for the company to seek financing from a third party, such as a bank, to fund the capital flow. In order to be sure that the new investor is not able to obtain shares of the underlying company and is not bound by a payment from a third party, the investor must be aware that by means of a specified agreement, the investor can seek an investor-owned share of the company. In other words, a company whose investors have been able to complete the investment, under an agreement with the investor, is liable for a fixed amount if it can prove that it cannot obtain the right to share the asset. In some cases, the investor’s assets might not be required to be distributed evenly, and a share capital allocation procedure which does not require the acquisition of capital by an external investor was implemented to protect investors’ equity in non-investment entities.
Article 3
Securities held by third parties, provided that in accordance with the provisions of this Regulation securities held by the investor can be transferred through such institutions approved by the Chief Securities Officer (COS), or that foreign securities shall be considered to be in the State of the International Business of the entity which acquired or received the securities, provided that all of the following conditions are fulfilled:
(a) such foreign securities and their respective foreign securities transferable from a company to the issuer and subsequently the subsidiary of the foreign securities are held in their entirety, except for the transfer of any transferred funds.
(b) such foreign securities are held under a trust relationship or with an international authority or other person responsible for or in the capacity of a member of an international body of the country the securities relate to.
(c) the foreign securities are held for not less than three years at maturity and they are held in the country in which they are held.
Article 4
Securities held by third parties on the market in respect of domestic and international commerce for the benefit of the shareholder shareholders, provided that if the purchaser is a shareholder of a company for which the investment is made with a shareholder or a foreign company, the acquisition transaction will take place under a non-monetary transaction, to the extent described in paragraph 24C 1 as a non-monetary transaction.
Article 5
Securities held by third parties or the acquisition of shares of shares of a company through a stock exchange or similar company, provided that the acquisition transaction will take place under a sale transaction under the supervision of a stock exchange which is held for at least three years and held for at least six months by the first company, subject to a registration and disclosure period for which certain shares are classified.
Article 6
Securities held by the shareholder holders of the corporation, or the holders of a share of the corporation, under a contract in which such corporation participates, or as an agent in the performance of a work of the corporation, in respect of its investment.
Article 7
Securities held by the shareholders of the corporation.
Article 8
Securities held by the subsidiary or members of a subsidiary or of a member or member’s stockholders.
Article 9
The investor is also entitled to receive an annual share of the net income of the direct investor, as defined in section 8 of Annex 1. If the investor purchases a controlling interest, it is required to repay that interest by the end of June or as soon as possible and, if the investor can show that at the end of June or as soon as possible, it has done so by way of a specified repayment, such as a pre-tax refund and/or re-pricing. The investor should note that, as explained above, under the principle of capital flow it is necessary for the company to seek financing from a third party, such as a bank, to fund the capital flow. In order to be sure that the new investor is not able to obtain shares of the underlying company and is not bound by a payment from a third party, the investor must be aware that by means of a specified agreement, the investor can seek an investor-owned share of the company. In other words, a company whose investors have been able to complete the investment, under an agreement with the investor, is liable for a fixed amount if it can prove that it cannot obtain the right to share the asset. In some cases, the investor’s assets might not be required to be distributed evenly, and a share capital allocation procedure which does not require the acquisition of capital by an external investor was implemented to protect investors’ equity in non-investment entities.
Article 3
Securities held by third parties, provided that in accordance with the provisions of this Regulation securities held by the investor can be transferred through such institutions approved by the Chief Securities Officer (COS), or that foreign securities shall be considered to be in the State of the International Business of the entity which acquired or received the securities, provided that all of the following conditions are fulfilled:
(a) such foreign securities and their respective foreign securities transferable from a company to the issuer and subsequently the subsidiary of the foreign securities are held in their entirety, except for the transfer of any transferred funds.
(b) such foreign securities are held under a trust relationship or with an international authority or other person responsible for or in the capacity of a member of an international body of the country the securities relate to.
(c) the foreign securities are held for not less than three years at maturity and they are held in the country in which they are held.
Article 4
Securities held by third parties on the market in respect of domestic and international commerce for the benefit of the shareholder shareholders, provided that if the purchaser is a shareholder of a company for which the investment is made with a shareholder or a foreign company, the acquisition transaction will take place under a non-monetary transaction, to the extent described in paragraph 24C 1 as a non-monetary transaction.
Article 5
Securities held by third parties or the acquisition of shares of shares of a company through a stock exchange or similar company, provided that the acquisition transaction will take place under a sale transaction under the supervision of a stock exchange which is held for at least three years and held for at least six months by the first company, subject to a registration and disclosure period for which certain shares are classified.
Article 6
Securities held by the shareholder holders of the corporation, or the holders of a share of the corporation, under a contract in which such corporation participates, or as an agent in the performance of a work of the corporation, in respect of its investment.
Article 7
Securities held by the shareholders of the corporation.
Article 8
Securities held by the subsidiary or members of a subsidiary or of a member or member’s stockholders.
Article 9
The article also described direct investment enterprise as