Direct investment is a type of capital transaction involving either:
- Investments by residents (legal or natural persons) abroad.
- Investments by non-residents (legal or natural persons) in North Macedonia.
Direct investments are made with the intention of establishing a lasting economic connection and/or gaining management rights over the company or other legal entity in which the investment is made.
Types of direct investments
Direct investments can be realized in several forms, including:
Capital Contributions:
- Establishing a company wholly owned by the investor.
- Increasing the capital of a company wholly owned by the investor.
- Acquiring full ownership of an existing company.
- Participating in an existing company or acquiring more than 10% of its capital or voting rights.
Loans:
- Long-term loans with a period of five (5) or more years, when the loan is from the investor and intended for a company wholly owned by them.
- Long-term loans with a period of five (5) or more years, intended to establish a lasting economic connection between economically related entities.
Branches:
- Establishing a branch by a non-resident entity in North Macedonia.
Requirements for Residents
Residents are free to make direct investments abroad. However, they are required to report these investments to the Central Register within 60 days from the date of the capital transaction that forms the legal basis for acquiring the direct investment. This includes any subsequent changes to the investment.
The Central Register records these investments and any subsequent changes in the Register of Direct Investments of Residents Abroad. After registration, the Central Register issues a certificate of registration and for any future amendments to the direct investment.
The Minister of Economy prescribes the method of reporting, registration, and the form, content, and manner of maintaining the register of direct investments of residents abroad.
Direct Investments by Non-Residents in North Macedonia
Direct investments by non-residents in the Republic of North Macedonia are generally free unless otherwise regulated by specific laws, such as the Law on Foreign Exchange Operations.
Residents in which a non-resident has made an investment considered a direct investment are required to report the investment and any subsequent changes to the Central Register within 60 days of the capital transaction that serves as the legal basis for the direct investment.
As with resident investments abroad, the Central Register records these investments and any changes in the appropriate register, issuing a certificate for the initial registration and for any further modifications.
Legal Compliance and Penalties
Failure to report a direct investment in the register for direct investments, as required by Article 56 of the Law on Foreign Exchange Operations, constitutes a violation. The Ministry of Finance—specifically, the State Foreign Exchange Inspectorate—handles the misdemeanor proceedings and imposes penalties for non-compliance.
Closing arguments
At Vanevski Law Office, we understand the complexities of direct investments and the importance of compliance with legal requirements. Whether you are a resident investing abroad or a non-resident investing in North Macedonia, our team is here to guide you through every step of the process. Proper reporting and adherence to regulations not only ensure legal compliance but also safeguard your investments.
For further assistance and expert advice on direct investments, feel free to contact us at Vanevski Law Office.
