“BUYER BEWARE: A BRIEF GUIDE TO OBTAINING A FOREIGN INVESTOR’S LICENCE”
M. Hamel-Smith & Co.
The provisions of the Foreign Investment Act, Chap 70:07 are to facilitate investment by both Caricom nationals and foreign investors through the acquisition of land and shares and the formation of companies. A foreign investor seeking to acquire land or shares in Trinidad and Tobago may need to obtain a licence prior to the vesting of the land or shares in the foreign investor. This article will answer some of your questions relating to acquiring land or shares under the Act.
Who is a foreign investor?
A foreign investor is:
(a) an individual who is not a national of Trinidad and Tobago or another Member State (Member State refers to the countries of CARICOM);
(b) any firm, partnership or unincorporated body of persons of which at least one-half of its membership is held by persons who are not nationals of Trinidad and Tobago or another Member State; or
(c) any company or corporation that is not incorporated in Trinidad and Tobago or another Member State or if so incorporated is under the control of persons to whom paragraph (a) or (b) apply, or is deemed to be under the control of a foreign investor.
A company or corporation is deemed to be under the control of a foreign investor if:
- at least one-half of the votes exercisable at any meeting of the company or corporation are vested in foreign investors; or
- having a share capital, at least one-half of the nominal amount of its issued shares that are voting shares are vested in foreign investors; or
- not having a share capital, at least one-half in number of its members are foreign investors; or
- it is in fact controlled by foreign investors.
When is a licence required?
A licence is required by a foreign investor where:
- For commercial purposes, the land to be acquired is more than 5 acres;
- For residential purposes, the land to be acquired is more than 1 acre;
- The land to be acquired is located in Tobago (regardless of size or purpose). By the Foreign Investment Tobago Land Acquisition Order 20097 (Legal Notice 63/2007), Tobago was deemed an area for which a foreign investor should first obtain a licence under the Act before acquiring any lands.
Notwithstanding the above, the Minister of Finance may by Order prescribe certain areas in Trinidad and Tobago (regardless of size or purpose) in which a foreign investor may not acquire land without first obtaining a licence.
When is a licence not required?
A foreign investor does not require a licence in the following circumstances:
- On an annual tenancy or for any less interest for the purpose of his residence, trade or business where, in total, the land does not exceed 5 acres;
- As a legal personal representative or beneficiary under a will or intestacy, for a period of 1 year from the date of death of the deceased or for such extended time as the President may grant;
- In pursuance of his rights to foreclose or enter into possession as a mortgagee for a period of 1 year from the acquisition of the land or for such extended time as the President may grant;
- As a judgement creditor for a period of 1 year from the date of acquisition of the land or for such extended time as the President may grant;
- Jointly with his spouse, where that spouse is a citizen of a Member State who is resident in Trinidad and Tobago within the meaning of Section 5 of the Immigration Act.
Can the foreign investor acquire multiple properties once the threshold acreage is not exceeded?
For residential purposes, the foreign investor is restricted to one (1) parcel of land. For commercial purposes, there are no restrictions providing the aggregate area does not exceed 5 acres. However, a separate application must be submitted for each parcel of land.
What are the required documents?
- For individuals, original passport or certified copy of bio-data page and page with T&T immigration entry stamp
- For companies, a copy of the Certificate of Incorporation
- Police Certificates of Good Character from authorities in the countries of residence of the individual or directors as the case may be.
- Town and Country Outline Planning Approval for the erection of a building on the land in respect of which a licence is sought.
- Credit references and evidence of adequate capital (from an acceptable source, such as a reputable accounting firm or registered financial institution) to maintain the applicant pursuing acquisition for business or residential purposes.
- Where land is being acquired under a will or intestacy, a certified copy of the Will and Grant of Probate or Letters of Administration, as the case may be.
- For commercial purposes, a Business Plan must be submitted outlining:
- The proposed business activity to be undertaken;
- Level of capital investment;
- Credit references and evidence of adequate financing from an acceptable foreign source such as a reputable accounting firm or financial institution;
- Significant impact on local employment; and proposals for training;
- Foreign exchange earnings/savings; and
- Linkages with the rest of the economy.
When is a foreign investor’s licence required?
A licence is required where a foreign investor is desirous of acquiring shares in a public company where the holding of such shares by the foreign investor (directly or indirectly) results in 30% or more of the total cumulative shareholding of the company being held by foreign investors.
When is a foreign investor’s licence not required?
A licence is not required where a foreign investor is desirous of acquiring shares in a private company, or in the case of a public company where the shareholding percentage is not exceeded in public companies as outlined in the previous paragraph. Although, a licence is not required in the above circumstances, the foreign investor must give notice to the Finance Minister (and the Secretary of a public company) before acquiring shares in a private or public company.
Foreign Investor’s Notice
The following information must be given by a foreign investor prior to acquiring shares in a private or public company:
- For individuals, their name, address, nationality and former nationality.
- For companies, its name, place of incorporation, principal place of business and corporate documents; and the names, nationality, former nationality and addresses of its directors and the name of any controlling shareholder.
- The identity of any other country in which the foreign investor holds investments.
- The purpose of he investment.
- Whether the foreign investor is or is nota resident of Trinidad and Tobago within the meaning of the Exchange Control Act, Chap. 79:50.
- Full particulars of the consideration for the investment and of the payments and credits made, and the name of the local bank (must be an authorised dealer, i.e. an entity that is authorised to deal in foreign exchange under the Exchange Control Act) through which each such payment or credit was made or given.
How long does the application take?
These applications are complex in nature and, where ALL of the required information is provided, it may take up to 20 working days to process.
How is the land or shares to be paid for?
The consideration for the land or shares is to be paid into a local bank in an internationally traded currency, except in the case of a company incorporated in Trinidad and Tobago where such consideration is financed out of capital reserves or retained earnings.
Is the licence transferrable?
The licence is not a form of property and is not transferable to another foreign investor. Therefore, a foreign investor seeking to acquire land or shares which were previously owned by another foreign investor who was granted a licence to acquire that land or shares, must also obtain a licence prior to the acquisition of that land or shares.