BASIC
PROVISIONS
Scope
of application
Article
1
This Act regulates foreign investment into companies and other forms of
business establishments with the aim of profit gaining (hereinafter
referred to as: companies) in the Federal Republic of Yugoslavia.
Foreign investment in banks, other financial institutions, insurance
companies and free zones is regulated by the Federal Law that regulates
its establishment or its legal status.
Foreign
investor
Article
2
Foreign investor, within the scope of this Act, is:
1. A legal person established in compliance with a foreign law, whose
principle place of business is abroad;
2. A foreign physical person;
3. A Yugoslav citizen having permanent residence abroad longer than one
year.
Foreign
Investment
Article
3
Within the scope of this Act a foreign investment in Federal Republic of
Yugoslavia is:
1. Foreign investment in a Yugoslav company by which investment the
foreign investor acquires a stake or shares of the basic capital of the
Yugoslav company;
2. Acquiring any other property rights of foreign investor by means of
which the foreign investor realizes his business interests in Federal
Republic of Yugoslavia.
Basic
forms of foreign investment
Article
4
A foreign investor may, on his own account or jointly with other foreign
or domestic investors:
1. Establish a new company;
2. Make an acquisition of stake or shares of an existing company;
Legal documents that regulate legal relations in regard to foreign
investment are the contract on establishment or the contract on investment
that are concluded in written form or decision on establishment made in
written form.
Special
forms of foreign investment
Article
5
A foreign investor may be granted a permit (concession) for exploitation
of a natural resource, an asset in general exploitation or for performance
of the activities of general interest, in compliance with the law.
A foreign investor may build, operate and transfer (B.O.T. - Build,
Operate and Transfer) a specific facility, installation or plant, as well
as infrastructure and communications facilities.
Investment
of a foreign investor
Article
6
The investment of a foreign investor may be in a foreign convertible
currency, in kind, intellectual property rights, securities and other
property rights.
The investment of a foreign investor may be in YUM and may be transferred
abroad according to the foreign currency regulations, wherein profit
reinvestment is included.
A foreign investor may convert its established claim into a stake or
shares of the debtor company.
Non-money investments must be expressed in monetary terms.
II
GUARANTEED RIGHTS OF FOREIGN INVESTORS
Freedom
of a foreign investment
Article
7
Foreign investor may establish or invest into a company for performing all
kinds of economic activities for profit purposes, unless this Act provides
otherwise.
National
Treatment
Article
8
Respecting his investment the foreign investor enjoys equal status, rights
and duties, as domestic legal and physical persons unless provided
otherwise by this Act.
Company with foreign investment enjoys equal legal status and carries on
its business under equal conditions and in an equal manner as do Yugoslav
companies without a foreign investment.
Legal
Security
Article
9
A foreign investor enjoys full legal security and legal protection in
respect of rights acquired by virtue of the investment.
Rights of foreign investor acquired in the moment of registration of the
legal documents cannot be deteriorated by subsequent alteration of laws
and other regulations.
Investment of a foreign investor and assets of the companies with a
foreign investment cannot be expropriated, nationalized, or subject to
other acts of State of equal effect, unless when the public interest is
established by the law or based on the law, and against payment of a
compensation.
Compensation from paragraph 3 of this Article must correspond to the
market value that the investment has on the day of the act of
expropriation, nationalization, or other measure. The change in the
investment value that may occur due to the fact that public has learned of
the expropriation, nationalization or other measure, shall not have impact
on the investment's market value estimation carried out for the purpose of
payment of the compensation.
Compensation from paragraph 3 of this Article must be paid without delay
in convertible currency and the foreign investor may freely transfer it
abroad. In the case of a delay of the payment of this compensation the
foreign investor has the right to the statutory interest.
Currency
conversion and liberty of payment
Article
10
The foreign investor may freely convert domestic currency into foreign
convertible currency as regards each payment related to the foreign
investment.
A company with a foreign investment is free to perform payments in its
international business relations.
A company with a foreign investment may keep foreign currency on a foreign
currency account with an authorized bank and may freely dispose with those
resources.
Right
of bookkeeping
Article
11
A company with a foreign investment, apart from bookkeeping and financial
reporting obligations in compliance with the domestic law, has the right
of bookkeeping and making financial reports in compliance with the
internationally recognized accounting and auditing standards.
Right
to transfer of profits and property
Article
12
Upon settlement of the obligations according to the domestic law, a
foreign investor may, freely and without a delay and in a convertible
currency, transfer abroad all financial and other assets related to the
foreign investment, and particularly:
1. Income derived from the foreign investment (profits, dividends, etc.);
2. Property belonging to him upon termination of the subject of the
investment or based upon the termination of the investment agreement;
3. Amounts received from the sale of stake or shares of the company with a
foreign investment;
4. Amounts acquired on basis of a decrease of the basic capital of a
company with foreign investment;
5. Additional payments;
6. Compensation from Article 9 of this Act.
Preferential
treatment
Article
13
Yugoslav law is applicable to foreign investments made on the territory of
Federal Republic of Yugoslavia.
If an international or bilateral treaty, members of which are both the
State of a foreign investor and Federal Republic of Yugoslavia, provides
for the foreign investor or his investment a preferential treatment
compared to the treatment provided for by this Act, such preferential
treatment shall be applied.
III
FOREIGN INVESTMENT INCENTIVES
Liberal import
Article
14
Import
of goods that represent the investment of a foreign investor is liberal,
providing such goods satisfy environment protection laws.
Tax
and customs benefits
Article
15
A foreign investor and a company with a foreign investment enjoy tax and
customs benefits in compliance with the law.
Customs
Exemption
Article
16
Importing (new) equipment on basis of the investment share of the foreign
investor, except for motor vehicles, fun machines and lottery games, is
exempt from customs and other import duties.
The right from paragraph I of this Article may be used according to the
determined investment dynamics up to the time of the completion of the
objects being built or a beginning of an activity into which the
investment is being made or if the investment is being made on a basis of
the profit reinvestment -throughout the validity of the contract or the
agreement.
Customs exemption from paragraph I of this Article may be also used by a
company with a foreign investment to the limit of the foreign investment
and for period of two years from the day of the registration of the
foreign investment.
IV
DISPUTE SETTLEMENT
Courts
and arbitration
Article
17
All disputes arising from foreign investments may be resolved before the
competent courts in Yugoslavia or before mutually agreed domestic or
international commercial arbitration.
V SPECIAL PROVISIONS
Environment protection
Article
18
In performing his activities the foreign investor is always obliged to act
in compliance with the environment protection laws.
Right
to minority shareholding in special fields and areas
Article
19
A foreign investor may neither himself nor with another foreign investor
establish in the Federal Republic of Yugoslavia a company in the field of
manufacturing and trade of armaments, or in areas prescribed by the law as
the restricted zones.
In these fields and areas foreign investor may establish a company jointly
with a domestic entity or invest into a company, but may not acquire a
majority shareholding in such company.
In a case described in paragraph 2 of this Article, the foreign investor
is obliged to obtain an approval of the Federal Defense Ministry for the
participation in establishing a company, or for the investment into a
company.
In the approval procedure the Ministry from paragraph 3 of this Article
especially takes into consideration the quality, type and extent of the
foreign investment.
The Ministry from paragraph 3 of this Article is obliged to bring a
decision upon the request within 30 days from the receipt of application.
If within the said period no decision is brought upon the request, it will
be deemed that the approval is granted.
In the case of a refusal the Ministry from paragraph 3 of this Article is
obliged to render a justified decision.
A complaint can be lodged to the Federal Government against the decision
from paragraph 6 of this Article within 15 days from the receipt of the
decision.
Against the final decision from paragraph 6 of this Article procedure in
contentious administrative matters cannot be held.
Acquisition
of real property
Article
20
Foreign natural and legal person, in capacity of a foreign investor, may
acquire ownership of real property in compliance with the law.
VI
REGISTRATION AND EVIDENCE OF FOREIGN INVESTMENT
Registration
of foreign investment
Article
21
Foreign investments within the meaning of Article 3 paragraph 1 are
registered in the competent Court in compliance with the law regulating
status of commercial companies.
Registration of foreign investment into other forms for conducting
economic activities for profit purposes is performed in compliance with
the laws regulating their status.
Foreign investor in the fields and areas prescribed by Article 19 must
obtain the approval within the meaning of paragraphs 3 and 5 of that
Article, for purposes of registration of foreign investment in the
competent Court.
Evidence
of foreign investment
Article
22
The Registry Court, by duty of office, informs the Ministry competent for
Foreign Economic Relations, on registration of form of foreign investment,
for evidence purposes.
The Ministry from paragraph 1 of this Article dispatches to the Registry
Court a list of States with whom reciprocity does not exist, for each
calendar year in advance.
VII
TRANSITIONAL AND FINAL PROVISIONS
Application
of this Act
Article
23
This Act is applicable to all foreign investments that before the day of
coming into effect of this Act have not been registered in the competent
Court.
Termination
of validity of other regulations
Article
24
As of the day of coming into effect of this Act, the Foreign Investment
Act (Official Gazette of the FR of Yugoslavia, no.79/94 and 29/96) is
repealed.
Coming
into effect
Article
25
This Act comes into effect on the eighth day from publication in the
"Official Gazette of FR Yugoslavia".
Informal
translation of version in Serbian language; Official Gazette of the FR of
Yugoslavia, no.3/2002