- Foreign Investment Act 1999 (FIA 1999) along with the Foreign Investment Regulation 2009 govern the foreign investment activities in Fiji which is administered by Investment Fiji.
- Recently passed Foreign Investment (Budget Amendment) Bill 2016 requires any change of ownership or shareholder particulars to be approved by the Chief Executive of Investment Fiji before the change can be effected.
- This approval process replaces what was only a notification process where the foreign investor was required to inform Investment Fiji of any such changes.
Starting a company is risky, but expanding a business to another jurisdiction can be even riskier. However, for entrepreneurs and business leaders the world over they realise that there are significant rewards for successfully expanding into new markets. When expanding to new markets business people can minimise their risk by giving particular attention to that country’s investment policies, permits required for starting a business in that country as well as any other legal steps an entrepreneur must obtain to incorporate and register a business in that particular country.
Fiji, like any other country, has a comprehensive set of rules and guidelines governing the area of foreign investment, including:
- the Foreign Investment Act 1999 (‘FIA’);
- the Foreign Investment (Amendment) Act 2004;
- the Foreign Investment Regulation 2009; and
- the Foreign Investment (Budget Amendment) Act 2016.
With the recent addition of the Foreign Investment (Budget Amendment) Act 2016 to the suite of laws affecting foreign investment in Fiji, it is a better time than any to get on board and up-to-date with your current obligations as a foreign investor or your future requirements as you take the leap into a rapidly growing economy.
A foreign investor is prohibited from carrying on business in Fiji unless he or she has been granted a Foreign Investment Registration Certificate (‘FIRC’) by Investment Fiji. A comprehensive checklist of documents is required to be submitted with the application form available from Investment Fiji. The FIRC is granted except for where:
- the business activity being proposed is a reserved or prohibited activity;
- business activity being proposed is a restricted activity and there are reasonable grounds to believe that the foreign investor may not satisfy the conditions specified under the FIRC;
- the foreign investor is an undischarged bankrupt, or in receivership or liquidation; or
- the Chief Executive of Investment Fiji has reasonable grounds to believe that the application is not genuine.
The Act previously provided for a foreign investor who had been granted the FIRC to notify the Chief Executive of Investment Fiji of any change in its ownership or shareholder details within 15 working days of the change. Since this was only a notification process, it did not allow the Chief Executive of Investment Fiji to approve or refuse any changes or ensure that the new owners/shareholders complied with the FIA.
The 2016 Budget Amendment Act now changes s 11 of FIA 1999 to state:
"if a foreign investor that has been granted a certificate (other than a foreign investor that is a public company and is listed on a securities exchange) proposes to change its ownership or shareholding particulars, the foreign investor must make an application to the Chief Executive seeking an approval for a change in its ownership or shareholding particulars before the change is effected."
This change is significant in bringing Fiji in line with many other more developed economies, requiring better transparency and government oversight. This transparency ensures Fiji has quality investors providing stable investment opportunities. Effectively this will reduce the amount of risk present in the market from dodgy investment proposals making Fiji a better environment for fostering economic growth.
Other significant amendments also include the Chief Executive of Investment Fiji being able to refer certain applications, new as well as those submitted for change in ownership, to the Board for recommendation to the Minister. These will be for cases that fall within the exceptions listed above.
The Need for Approval Process
The need for an additional layer of approval by Investment Fiji had been subject to some debate in Fiji as it was seen as an added step which was already being submitted to Reserve Bank of Fiji and the Registrar of Companies. However, similar approvals and re-certifications are required in a number of other jurisdictions when changes to ownership of the foreign investment company occurs. For example, the approvals sought under the Foreign Acquisitions and Takeovers Act 1975 (FATA) in Australia or the application to Vary an Existing Foreign Investment Approval Certificate with VIPA in Vanuatu.
The turnaround time for processing of applications has also been amended where the Chief Executive of Investment Fiji must notify the foreign investor within 5 working days from the date of application whether it has been approved, refused or referred to the Board. In the event where the Board is making a recommendation to the Minister, this should be done within 15 days of the referral being made and the Minister has another 15 days to make a decision to either approve or deny the application or change. This will streamline the process of foreign investing, making the process quicker and ensuring costs are reduced so more of the cash flow coming to Fiji can be utilised on actual investment than bureaucratic red tape.
As Fiji’s government continues to promote a policy of attracting outside investment, it will make changes to the laws regarding investing and carrying on business in Fiji. It is important as an investor to be aware of your obligations and keep up-to-date as this will enable you to take advantage of the best investing conditions for your business.
If you require any assistance in compliance with the recent amendments to the Foreign Investment Act or are looking at establishing business in Fiji or the Pacific, please feel free to contact us.