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Brazzil - Economy - October 2003
 

LEGAL GUIDE FOR THE FOREIGN INVESTOR IN BRAZIL 
 

Introduction 

It was a great satisfaction for CESA - CENTRO DE ESTUDOS DAS SOCIEDADES DE
ADVOGADOS
to sponsor and collaborate with the first Legal Guide for the Foreign
Investor in São Paulo. This project was launched in the second half of 1991 at
the request of the Special Assistance Office for International Affairs of the
State of São Paulo Government, and all CESA associates were invited to partake.
 
 

After choosing the topics, defining the chapters and distributing the tasks involved, in
September 1992 we concluded the first edition of the guide, in both Portuguese and English.
This was then printed and distributed by the State Government whenever possible at official
events with international ramifications. Our members throughout
Brazil received copies of
the guide, which was distributed at various group meetings in São Paulo, Rio de Janeiro
and Belo Horizonte.
 
 

The success attained and the significant positive feedback on this project made us at CESA
think of expanding and improving both its structure and scope. This was the seed for a second
edition, a Portuguese/English domestic and international project, undertaken by CESA
for exclusive distribution among its members, class entities and Brazilian development
and promotional organizations abroad. In August 1994 a new edition was prepared at the
request of the Department of Commercial Promotion of the Ministry of Foreign Affairs.
This guide was distributed at all international events sponsored by the Ministry. Starting in
1996, this guide was attached to the Ministry of Foreign Affairs page on Internet, and can
be accessed by all bodies on diplomatic missions interested in foreign investment
in
Brazil (http://www.mre.gov.br).
 
 

The fifth edition of this guide was thoroughly updated and expanded by the various CESA
law firms that participated in this project. From December 1998, all of the 1000 copies of
this edition were distributed and therefore we decided to review and republish the same
edition to meet the ongoing demand of our members, other entities and interested parties.
 
 

The consolidated success of the Guide and consequent demand for a more up-to-date
version made us at CESA to start the sixth edition publication process at the begining of 2001.
Once again, we counted on the contribution of several CESA law firms for updating the chapters
 
 

Finally, we should mention that CESA was founded in January 1982, and today includes
some 410 Brazilian law firms, with the objectives of furtherance of legal careers,
professional betterment, and institutionalization of law firms throughout
Brazil.
 
 

      São Paulo, April, 2001 
       
       

               CESA - Centro de Estudos das Sociedades de Advogados 
 

              Clemencia Beatriz Wolthers - President 
 

      Orlando Giacomo Filho - Council President 
       

      Moira V. Huggard-Caine - Secretary Director

 
 

COOPERATORS 

The CESA Board of Directors would like to thank the following law firms that collaborated in the preparation, updating and translation of each chapter of this Legal Guide for Foreign Investors in Brazil. 

AMARO, STUBER E ADVOGADOS ASSOCIADOS S/C

        Av. Paulista, 1499, 18º andar,

        01311-928 São Paulo, SP.

        Fone: 11 3284-9911

        Fax: 11 3283-0483

ARAÚJO E POLICASTRO ADVOGADOS S/C

        Av. Brigadeiro Faria Lima, 2894, 11º andar,

        01452-002 São Paulo, SP.

        Fone: 11 3049-5700

        Fax: 11 3845-2120/3842-6195

AZEVEDO  SETTE  ADVOGADOS  S/C

        Rua Paraíba, 1000, 14º andar,

        30130-141 Belo Horizonte, MG.

        Fone: 31 3261-6656

        Fax: 31 3261-6797

BARBOSA,   MÜSSNICH   &   ARAGÃO

        Av. Almirante Barroso, 52, 32º andar,

        20031-000 Rio de Janeiro, RJ.

        Fone: 21 3824-5800

        Fax: 21 2262-5536/5537

BATISTELA ADVOGADOS E CONSULTORES JURÍDICOS

        Rua General Jardim, 770, 8º andar, conjs. C/D,

        01223-010 São Paulo, SP.

        Fone: 11 256-7366

        Fax: 11 256-7366

BRITO, MERCADANTE & ROCHA ADVOGADOS

        Rua Profº Antônio Aleixo, 523, 1º andar,

        30180-150 Belo Horizonte, MG.

        Fone: 31 3275-1891/1709

        Fax: 31 3275-2003

        e-mail: bmradvogados@bmradvogados.com.br 
         

CAMARGO, DIAS ADVOGADOS ASSOCIADOS

        Av. Liberdade, 65, 4º andar, conj. 408,

        01503-000 São Paulo, SP.

        Fone: 11 3107-5551

        Fax: 11 3107-5551

        CASILLO   -   ADVOGADOS

        Rua Lourenço Pinto, 500,

        80010-160 Curitiba, PR.

        Fone: 41 310-6800

        Fax: 41 310-6868

CASTRO, BARROS, SOBRAL,VIDIGAL, GOMES ADVOGADOS

        Praia de Botafogo, 228, 15º andar,

        22359-900 Botafogo, RJ.

        Fone: 21 2553-1855

        Fax: 21 2552-1796

        Internet: www.cbsvg.com.br 
         

        CEGLIA  NETO,  ADVOGADOS

        Rua Paula Oliveira, 31,

        04530-020 São Paulo, SP.

        Fone: 11 3845-5244

        Fax: 11 3845-6959

DEMAREST E ALMEIDA ALMEIDA, ROTENBERG E BOSCOLI - ADVOCACIA

        Al. Campinas, 1070,

        01404-001 São Paulo, SP.

        Fone: 11 3888-1800

        Fax: 11 3888-1700

FELSBERG,PEDRETTI, MANNRICH E AIDAR ADVOGADOS E CONSULTORES LEGAIS

        Av. Paulista, 1294, 2º e 3º andares,

        01310-915 São Paulo, SP.

        Fone: 11 3141-9100

        Fax: 11 3141-9150

GOULART PENTEADO, IERVOLINO E LEFOSSE - ADVOGADOS

        Rua Paes Leme, 524, 6º e 7º andares,

        05424-904 São Paulo, SP.

        Fone: 11 3093-6700

        Fax: 11 3031-5008/3819-0364

GREBLER, PINHEIRO, MOURÃO E RASO ADVOGADOS S/C

        Rua Pernambuco, 353, 7º andar,

        30130-150 Belo Horizonte, MG.

        Fone: 31 3261-1400

        Fax: 31 3261-8199

        Internet: www.gpmr.com.br

MACHADO, MEYER, SENDACZ E ÓPICE - ADVOGADOS

        Rua da Consolação, 247, 4º andar

        01301-903 São Paulo, SP.

        Fone: 11 3150-7000

        Fax: 11 3150-7071

MATTOS FILHO, VEIGA FILHO, MARREY JR. E QUIROGA ADVOGADOS

        Av. Paulista, 1499, 20º andar,

        01311-928 São Paulo, SP.

        Fone: 11 3147-7600

        Fax: 11 3147-7770

NEHRING E ASSOCIADOS - ADVOCACIA

        Av. Paulista, 1159, 17º andar, conjs. 1701/9,

        01311-921 São Paulo, SP.

        Fone: 11 288-2577

        Fax: 11 288-2071

        NORONHA   ADVOGADOS

        Av. Brigadeiro Faria Lima, 1355, 3º andar,

        01452-919 São Paulo, SP.

        Fone: 11 3038-8090

        Fax: 11 212-2495/7903

NOVAES, PLANTULLI E MORTARI ADVOGADOS

        Av. Brigadeiro Faria Lima, 2601, 9º andar, conj.94,

        01451-001 São Paulo, SP.

        Fone: 11 3816-1930

        Fax: 11 3813-2688

PAULO ROBERTO MURRAY - ADVOGADOS

        Avenida Paulista, 1499, 13º andar,

        01311-928 São Paulo, SP.

        Fone: 11 3171-3344

        Fax: 11 3171-3444

PINHEIRO   NETO   ADVOGADOS

        Rua Boa Vista, 254, 9º andar,

        01014-907 São Paulo, SP.

        Fone: 11 3247-8400

        Fax: 11 3247-8600

        STRAUBE   ADVOGADOS

        Rua Cel. Xavier de Toledo, 316, 5º andar,

        01048-000 São Paulo, SP.

        Fone: 11 255-8744

        Fax: 11 214-3553

        TESS  ADVOGADOS

        Avenida Brasil, 471,

        01431-000 São Paulo, SP.

        Fone: 11 3059-2900

        Fax: 11 3059-2901

TOZZINI, FREIRE, TEIXEIRA E SILVA - ADVOGADOS

        Rua Líbero Badaró, 293, 21º andar,

        01095-900 São Paulo, SP.

        Fone: 11 3291-1000

        Fax: 11 3291-1111

TRENCH, ROSSI E WATANABE - ADVOGADOS

        Av. Dr. Chucri Zaidan, 920, 8º andar,

        Market Place Tower,

        04583-904 São Paulo, SP.

        Fone: 11 3048-6800

        Fax: 11 5506-3455

ULHÔA CANTO, REZENDE E GUERRA - ADVOGADOS

        Av. Pres. Antonio Carlos, 51, 12º andar,

        20020-010 Rio de Janeiro, RJ.

        Fone: 21 3824-3265

        Fax: 21 2240-7360

VEIRANO E ADVOGADOS ASSOCIADOS

        Av. Presidente Wilson, 231, 23º andar,

        20030-021 Rio de Janeiro, RJ.

        Fone: 21 3824-4747

        Fax: 21 2262-4247

XAVIER, BERNARDES, BRAGANÇA, SOCIEDADE DE ADVOGADOS

        Av. Brasil, 1.008,

        01430-000 São Paulo, SP.

        Fone: 11 3069-4300

        Fax: 11 3069-4301

YARSHELL, MATEUCCI E CAMARGO ADVOGADOS

        Av. Paulista, 1499, 3º andar, conj. 301,

        01311-200 São Paulo, SP.

        Fone: 11 288-4322

        Fax: 11 284-1644

Secretária Executiva: Rua Boa Vista, 254, 4º, sala 413,

        01014-907 São Paulo, SP.

        Fone: (11) 3104-8402

        Fax: (11) 3104-3352

        Silvia Miranda Naufal

 
 

LEGAL GUIDE FOR THE FOREIGN INVESTOR IN BRAZIL 
 

CONTENTS  

 
 

 

1. THE BRAZILIAN LEGAL SYSTEM

 
 

Brazil is organized as a federative republic, constituting the indissoluble union of the states, municipalities and the Federal District. 
 

The legal system adopted in Brazil is codified, and laws are issued by the federal government, the states and municipalities, with due regard for their individual spheres of authority. Court decisions are based on the correct application of the laws prevailing in Brazil. When there is no specific legal provision, the court decides on the basis of analogy, customs and general legal principles. Judicial precedents do not bear the force of law in Brazil, although they do exercise an important role supporting the court's decision. 
 

The Federal Constitution establishes the legislative authority of the federal government, the states and the municipalities, thereby avoiding the issuance of laws that are redundant or conflicting with those in the other spheres. The legislative authority of the federal government, with due regard for the principles of the Federal Constitution, is hierarchically superior to the authority of the states and municipalities.  
 

The federal government is therefore vested with exclusive authority to legislate on civil, commercial, penal, procedural, electoral, agrarian, maritime, aeronautical, space and labor law; expropriation, bodies of water, power, computer science, telecommunications, radio broadcasting, the monetary system, exchange, credit policy, insurance, foreign trade, mining deposits, nationality, citizenship, and other matters. 
 

The Federal Constitution allows the federal government, states and the Federal District to legislate concurrently regarding certain matters, such as, tax, financial, economic and prison law; production and consumption; liability for damages to the environment and the consumer; education and teaching; and social security, protection and defense of health. In this case, the authority of the federal government is limited to the issuance of general guidelines on these matters, with the states and the Federal District being charged with supplementary legislation on these matters, with due regard for the general guidelines of federal legislation. 
 

The legislative authority of the municipalities is restricted to matters of local interest. 
 

The Federal Constitution is at the head of the Brazilian legislative system, and ensures the fundamental rights and guarantees of the citizen; governs the political/administrative organization of the Federative Republic of Brazil; defines the individual spheres of authority of the Executive, Legislative and Judicial Branches; regulates the tax system; and provides for socioeconomic and financial policy. The states are organized and governed by their own constitutions and laws, with due regard for the principles mentioned in the Federal Constitution. 
 

The main legal documents in Brazil are the codes, which contain the basic legislation on the matters dealt with thereunder. Some of the more important of these codes are the Civil Code, the Tax Code, the Penal Code, and the Commercial Code. None of these codes supersedes the Federal Constitution, which is the supreme law of Brazil. 
 
 

 
 

2. INSTITUTIONS FOR ECONOMIC DEVELOPMENT

2.1. Government Ministries and Secretaries

 
 

The Statute for Administrative Reform (Decree-Law No. 200/67 and its subsequent alterations), classified the Federal Administration into two categories, Direct and Indirect Administration. The first deals with services which are integrated with the administrative structure of the Presidency of the Republic and its Ministries. The Indirect Administration deals with matters relating to the diverse entities, public (Autarchies) or private (Societies of Mixed Economy, Public Firms and Foundations), linked to a Ministry, but administratively and financially independent. 
 

The Federal Public Administration is directed by the President of the Republic and aided by Ministers of State. 
 

The Ministries are independent organs at the top of the Federal Administration subordinate only to the Presidency and outlined by the 1967 Administrative Reform with later alterations (the last reform was implemented by Provisional Remedy No 2.123-28 de 26/01/2001), to wit: 
 

  • Ministry of Justice - deals with the following matters: defense of legal system; political rights and constitutional guarantees; judicial politics; nationality; immigration and foreigner; citizenship; narcotics; public security; traffic; federal police; prison administration; foreigners; defense of economic rules and consumer rights, children and adolescent, Indians, bearer of deficiency and minorities; publication, documentation and record of the official acts; legal aid to the pours.

 
 

  • Ministry of Foreign Affairs - acts in the field of international politics, diplomatic relations, programs of international cooperation, also in charge of participating in bilateral commercial, financial and technical negotiations with foreign countries and entities; assistance to Brazilian committees and representation before international and multinational agencies.

 
 

  • Ministry of Transportation - deals with matters related to rail, road and water transport; merchant navy, ports and shipping routes; participation in the coordination of air transportation.

 
 

  • Ministry of Agriculture and Proveyance - deals with matters related to: agricultural policy, such as production, commerce, supply, storage, and minimum price guarantee; agropecuary production and promotion; animal and vegetable sanitary inspection; technological research; meteorology; rural development; co-operativism, technical assistance and rural extension; coffee, sugar and alcohol policies.

 
 

  • Ministry of Education - is in charge of the national directives: national policy for education, such as elementary education, high-school, university, technical schools, special schools and distance teaching.

 
 

  • Ministry of Culture - deals with cultural policy, protection of Brazilian historic and cultural patrimony, etc.

 
 

  • Ministry of Labor and Employment - deals with policy of labor creation, policy of earnings and assistance to employee; policies of employment relationship modernization; labor inspection and penalties application; salary policies, immigration policies, formation and professional development; security and health conditions at work.

 
 

  • Ministry of Social Security and Assistant Social - is in charge of matters related to social security and complementary pension plans; and social assistant.

 
 

  • Ministry of Health - is in charge of national health policies; medical and paramedical matters; supervision, immunization, epidemic control, medication, drugs and food, sanitary research, and formation of human resources at the health area.

 
 

  • Ministry of Development, Industry and Foreign Commerce - is in charge of policy of development of industry, commerce and services; industrial property and transfer of technology; metrology, normalization and industrial quality; foreign commerce; support to micro, small and craftsmanship companies and register of commerce.

 
 

  • Ministry of Mining and Energy - is in charge of matters relating to geology, mineral and energy resources; improvement of hydraulic energy sources; mining and steelworks, the oil, fuel and electrical industry, including nuclear energy.

 
 

  • ANP - is responsible for implementation of the national oil and natural gas policy, in relation with supplying of oil derivative in national territory and with the protection of consumers and users regarding price, products quality offering, etc.

 
 

  • CNPE - is in charge to promote a logical improvement of Brazilian energy resources; insure the supplying of energetic raw material to the remotest areas in the country, etc.

 
 

  • ANEEL - is in charge of declaring the public utility, for expropriation or creation of public easement in the areas where is need to be install concessionaire and representatives of electrical energy, etc.

 
 

  • Ministry of Communications - has the incumbency of national policies of telecommunications, postal services and radio frequency spectrum; regulation, grant and inspection of telecommunications services; control and administration of use of postal and radio frequency spectrum.

 
 

  • ANATEL - Promote the development of modern and efficient telecommunications, able to offer adequate services to users, diversified and in a fair price, in the national territory.

 
 

  • Ministry of Science and Technology - is in charge of preparing and implementing scientific and technologic research; planning, coordination, supervision and control of all scientific and technological activities, as well as the preparation of a development policy for informatics and automation; national politic and biosecurity; spatial and nuclear policy, and control the export of sensible asset and services.

 
 

  • Ministry of Environment - is in charge of planning, coordinating, supervising and controlling all actions relative to the environment and all hydric resources; preparation and execution of a national policy for environment and hydric resources; preservation and rational use of renewable material resources; implementation of international agreements in the environmental area; politic integration to the Legal Amazon; ecological-economic zoning.

 
 

  • Ministry of Defense - deal with the following matters: national defense policy, administration of the Brazilian Navy, the Army and practice the control and coordination of the activities of the Civil Aviation.

 
 

  • Ministry of Finance - is in charge of matters pertaining to currency, credit, financial institutions, capitalization, private insurance and savings; tributary, budgetary, financial and patrimonial administration; public accounting and auditing; administration of public internal and external debts; supervision and control of foreign trade; economic and financial negotiations with international and multilateral entities and governmental agencies; prices and taxes publics and administrative; and control of international commerce.

 
 

  • Ministry of Planning, Budget and Management - is in charge of the national strategic planning; evaluation and impacts social and economics of the policies and programs of the Federal Govern; elaboration of especial studies for the reformulation of the policies, etc.

 
 
 

  • Ministry of Agrarian Development - is in charge of the agrarian reform and the promotion of supportable development of the rural segment formed by the agricultural families.

 
 

  • Ministry of National Integration - deal with the following matters: formulation and conduction of national development policy; formulation and conduction of the plans and regional programs of development; fix the strategies of integration of the regional economies, etc.

 
 

  • Ministry of Sport and Tourism - is in charge of the national policy of the development of tourism and sports, etc.

2.2. National Monetary Council

 
 

One of the diverse organs of the Ministry of Finance, the National Monetary Council (NMC) is presided over by the Minister of Finance, with the objective of elaborating currency and credit policies, with a view to the economic and social progress of the country. 
 

The functions of the National Monetary Council are to: supervise the application of resources of public or private financial institutions with the intent of providing, in different regions of the country, favorable conditions to the harmonious development of the national economy, coordinate monetary, creditary, budgetary and fiscal policies, regulate the foreign value of the currency and the balance of payment, strive for the liquidity and solvency of financial institutions, etc...

2.3. Central Bank of Brazil

 
 

The Central Bank of Brazil (BACEN) is also linked to the Ministry of Finance and its principle functions are: fulfill the norms expedited by the National Monetary Council, be a depository of official gold reserves and foreign currency reserves, control credit of all forms, control foreign capital under the Law, control check payments and other papers, represent the Brazilian Government with international financial institutions, carry out the inspection of financial institutions, put into effect buying and selling operations of federal public titles as an instrument of monetary policy, etc...

2.4. Chambers of Commerce

 
 

With a view to approximating Brazil economically to other countries, increasing the commercial and financial flow between countries, there are a series of Chambers of Commerce. Among them are the American Chamber of Commerce, the Japanese Chamber of Commerce and Industry, and the Italian-Brazilian Chamber of Commerce and Industry, Chamber of Foreign Commerce (CAMEX) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 

3. FOREIGN CAPITAL

3.1. General Features

 
 

Foreign capital in Brazil is governed by Laws Nos. 4131 (the Foreign Capital Law) and 4390 of September 3, 1962 and August 29, 1964, respectively. Both laws are regulated by Decree No. 55762 of February 17, 1965, and have been amended. 
 

According to Law No. 4131, "foreign capital is considered to be any goods, machinery and equipment that enter Brazil with no initial disbursement of foreign exchange, and are intended for the production of goods and services, as well as any funds brought into the country to be used in economic activities, provided that they belong to individuals or companies resident or headquartered abroad". 
 

There are two official exchange markets in Brazil, both of which are subject to Central Bank regulations: 
 

  • the commercial/financial rate market, which is reserved basically for (i) trade-related transactions (import and export); (ii) foreign currency investments in Brazil; (iii) foreign currency loans to residents of Brazil; and (iv) certain other transactions involving remittances abroad that are subject to preliminary approval by the monetary authorities; and

 
 

  • the tourism rate market, which was initially developed for the tourism industry, and was later expanded to cover certain other transactions, such as inbound and outbound transactions. Applicable regulations indicate the types of transactions that qualify for this market.

 
 

Both markets operate at floating rates freely negotiated between the parties, and the key distinctions between them are that (i) the commercial/financial exchange market, as a rule, is restricted to transactions that in certain cases require preliminary approval from the monetary authorities; and (ii) the tourism exchange market is open to transactions that do not require any preliminary approval from Brazilian monetary authorities. 
 

Exchange operations are effected by means of exchange contracts entailing an inflow or outflow of foreign currency.

3.2. Registration of Foreign Capital

 
 

Circular No. 2997 of August 15, 2000, issued by the Central Bank of Brazil, introduced the electronic registration system for foreign direct investment in Brazil. This circular took effect on September 4, 2000 and brought some changes in foreign direct investment registration in Brazil and the obtaining of information on these transactions. 
 

Since then, registration of foreign investments has been made through the RDE-IED (Registro Declaratório Eletrônico - Investimento Externo Direto) Mode, which is part of the Central Bank Information System (Sistema de Informações do Banco Central - SISBACEN). 
 

For electronic registration purposes, foreign direct investment is defined as the permanent ownership interest held in the Brazilian investee, or, according to common market practices, the ownership interest intended to be permanently held by nonresident investors, whether individuals or legal entities, residing, domiciled or headquartered abroad, through the ownership of shares or quotas representing the corporate capital of Brazilian companies, as well as the allocated capital of foreign companies authorized to operate in Brazil. 
 

The party responsible for the foreign direct investment must first enroll in SISBACEN, according to the rules currently in effect. When registered through the RDE-IED, foreign direct investments will be given a permanent number for the investor-investee case, and all subsequent changes and additions will be made under this same registration. 
 

The major changes introduced by Circular 2997/00 are the following: (i) registration of foreign direct investments is now made through a statement, which means that the Brazilian investee and/or the representative of the foreign investor are responsible for registration of foreign investments, which will no longer be subject to preliminary review and verification by the Central Bank; and (ii) registration of foreign investments will also be made in Brazilian currency. 
 

All foreign investments must be registered with the Central Bank of Brazil. This registration is essential for offshore remittances, capital repatriation and registration of profit reinvestment.

3.3. Currency Investments

 
 

No preliminary official authorization is required for investment in currency. The investment to subscribe for capital or to buy a stake in an existing Brazilian company can be remitted to Brazil through any banking establishment authorized to deal in foreign exchange. However, closing of the exchange contract is conditional on the existence of a RDE-IED registration number for the foreign investor and the Brazilian investee. 
 

Registration of the investment is made through the RDE-IED System by the Brazilian company receiving the investment within 30 days of closing of the exchange contract for the remittance, together with documents reflecting capitalization of the funds. 
 

Foreign currency investments must be registered in the original currency or, upon express request of the investor, in another currency, maintaining the exchange parity, in addition to the registration in Brazilian currency, as mentioned above.

3.4. Investment by Conversion of Foreign Credits

 
 

If the transaction is not registered in the RDE-IED System, investment by foreign credit conversion will be subject to preliminary authorization from the Department of Foreign Capital Control and Registration (Fiscalização e Registro de Capitais Estrangeiros - FIRCE). After authorization, a token exchange transaction must be performed, representing the purchase and sale of the foreign currency. 
 

Pursuant to article 8 of the Annex to Circular 2997/00, conversion into foreign direct investment is defined as �the transaction whereby credits eligible for offshore transfer based on prevailing rules are used by nonresident creditors to acquire or pay in an ownership interest in the capital of a company in Brazil.� 
 

Registration of foreign direct investment resulting from conversion, however, depends on receipt by the Brazilian investee of (i) a statement from the creditor and committed investor, defining exactly the due dates of the installments and respective amounts to be converted, and in the event of interest and other charges, also the period to which they refer and the respective rates and calculations, and (ii) a binding statement from the creditor, agreeing to the conversion. 
 

The Brazilian company has 30 days to capitalize these funds and apply for registration with the Central Bank of Brazil.

3.5. Investment by Import of Goods without Exchange Cover

 
 

Investment by import of goods without exchange cover requires the preliminary approval of FIRCE and SISCOMEX.