Prior to taking a decision on whether to invest in a foreign country, the analysis of a tailored country report on legal, tax, regulatory and investment-related issues, coupled with the reading of a standard business guide on investments, may represent an ideal starting point with a view at developing deeper assessments.
The following is a sample checklist which may serve as reference for those foreign investors which intend to retain a local law firm for the drawing-up of the country report.
Such checklist has been loosely drafted as tackling general issues on energy infrastructural projects promoted by national authorities.
- Types of land rights which may be transferred to private investors (ex. ownership, lease, usufruct.....);
- Land rights transfer process: (i) authorities; (ii) planning and zoning issues (ex. change of destination of agricultural land, general restrictions...); (iii) timing;
- Types of applicable permits/licenses/authorizations and the relevant permitting procedures (actors, responsibilities, timing);
- Most common forms of securities on land (mortgages, liens....) and formalities to make them valid and enforceable;
- Most common forms of governmental support (guarantees, letters of support....) in ensuring full enjoyment of land rights by private investors.
Environment and society
- Main applicable environmental and social laws, regulations and guidelines;
- Description of the applicable feasibility studies, reports, analysis, assessments etc. to be prepared pursuant to local law;
- Description of the applicable environmental permits/licenses/authorizations and the relevant permitting procedure (actors, responsibilities, timing);
- Analysis of the legal framework for enforcement and clear allocation of liabilities and penalties between private and public sector;
- Description of processes (if any) to be followed to ensure environmental and social safeguards;
- Description of environmental clean-up, restoration and corrective actions.
- Other permits/licenses/authorizations than those concerning land and environment and society-related permits/licenses/authorizations;
- Relevant permitting procedure (actors, responsibilities, timing).
Corporate governance of the project company
- Restrictions on the ownership of shares by foreign private investors;
- Guarantees to be provided by foreign private investors as support of their shareholding;
- Restrictions on the presence of foreign private investors in the composition of the management bodies;
- Legal framework on the transfer of shares and preemption rights;
- Any non standard/unusual corporate governance provisions which may affect the interests of foreign private investors.
Power purchase agreement
- Description of the main clauses and relevant risks of the standard power purchase agreement as provided by the authorities;
- Description of the standard power purchase price payment guarantees to be provided by the power purchaser;
- Description of forms of governmental support in ensuring power purchase payments by the power purchaser.
- Restrictions on capital investments and profit repatriation;
- Legal framework on the nazionalization/expropriation of project companies/assets and forms of protection/compensation;
- Forms of reliefs/subsidies for specific investments (ex. strategic investments, priority investments, investments in free economic zones....) and/or addressed to foreign private investors;
- Description of the administrative processes for the obtainment of reliefs/subsidies (actors, responsibilities, timing).
- Categories of taxation the project company and the sponsors are liable to (corporate income tax, VAT tax, profit repatriation tax, service tax...);
- Restrictions, controls, fees, taxes or other charges on foreign currency exchange;
- Taxation on goods import;
- Tax reliefs on investments;
- Taxes on environmental pollution and tax credits available for "clean" solutions;
- Specific tax liabilities imposed on foreign investors.