The global pandemic has impacted all markets, with subsequent ramifications for M&A. Investors are now seeking greater protection against general lock-downs and supply-chain disruptions, while governments aim to protect critical supplies and services by imposing new regulations on foreign investment in crucial or strategic industries.
The following overview is an extract from the Foreign Direct Investment in Central Europe publication, which gives insight into the regulations on foreign investment in strategic industries in the region.
Have FDI screening rules been implemented (or will they be implemented) in the country?
No. Regulation 2019/452 has not been adopted under Albanian legislation. The main applicable piece of legislation in Albania with regard to foreign investments is law no. 7764 dated 02.11.1993 "On foreign investors" as amended. Pursuant to Article 2 of such law, foreign investments in the Republic of Albania are not conditioned by a prior authorization. They are allowed and treated on the basis of conditions no less favourable than those recognized to domestic investments under similar conditions, with the exception of ownership of land, which is regulated by a special law.
Definition of FDI
Pursuant to Article 1 of law no. 7764 dated 02.11.1993 "On foreign investors" as amended: "Foreign investment" means any type of investment in the territory of the Republic of Albania, owned directly or indirectly by a foreign investor, which consists of:
movable and immovable property, tangible and intangible, or any type other property rights;
a company, rights deriving from any form of participation in a company, with shares,
loans, monetary liabilities or liabilities in an activity that has economic value and are related to an investment;
intellectual property, including literary and artistic works, technical-scientific, sound recordings, inventions, industrial projects, integrated circuit schemes, know-how, trademarks, trademark designs and trade names;
any right recognized by law or contract, and any license or permit granted in accordance with the law
Definition of foreign investor
Pursuant to Article 1 of law no. 7764 dated 02.11.1993 "On foreign investors" as amended: "Foreign investor" means:
any natural person who is a national of a foreign country; or
any natural person who is a citizen of the Republic of Albania, but with permanent residence abroad; or
any legal person established under the law of a foreign country;
any “community company”, within the meaning of Article 49 of the Stabilization and Association Agreement, approved by law no. 9590, dated 7.2006 “On the ratification of the Stabilization and Association Agreement between the Republic of Albania and the European Communities and their member states, which directly or indirectly seeks to make or is making an investment in the territory of the Republic of Albania in accordance with its laws, or has made an investment in accordance with the laws pertaining to the period from 31.7.1990 onwards
Do the following scenarios trigger the screening?
1. Acquisition of 10% or more of voting rights in the company: N.A
2. Establishment of a new branch: N.A
3. The production of new products: N.A
4. Establishment of a new company in which foreign investor will have more than 10% voting rights: N.A
5. The transfer of use or operational rights in infrastructure or assets that are indispensable for the operation of strategic companies: N.A
6. Other screening triggers: N.A
By Sabina Lalaj, Local Partner, Deloitte Legal