Foreign Investment Act 2002
Act 22 of 2002
C
T
FOREIGN INVESTMENT ACT 2002
Foreign Investment Act 2002 Arrangement of Sections
Act 22 of 2002
to
Page 3
C
T
FOREIGN INVESTMENT ACT 2002
Arrangement of Sections
Section
1 Short title and commencement.........................................................................5
2 Interpretation....................................................................................................5
3 Investment by foreign investment businesses..................................................7
4 Reserved List and Restricted List ....................................................................7
5 Foreign investment registration certificate ......................................................7
6 Secretary’s functions........................................................................................7
7 Application for certificate ................................................................................8
8 Issue or refusal of certificate............................................................................8
9 Delegation........................................................................................................8
10 Duration of certificate ......................................................................................8
11 Cancellation of certificate ................................................................................8
12 Holder to be heard............................................................................................9
13 Transfer of certificate.......................................................................................9
14 Appeals ............................................................................................................9
15 Offences and penalties .....................................................................................9
16 Investment guarantees......................................................................................9
17 Transitional arrangements..............................................................................10
18 Regulations ....................................................................................................10
Foreign Investment Act 2002 Section 1
Act 22 of 2002
to
Page 5
C
T
FOREIGN INVESTMENT ACT 2002
Act 22 of 2002
AN ACT RELATING TO FOREIGN INVESTMENT
I assent,
TAUFA‘AHAU TUPOU IV,
14th April, 2003
[8th October, 2002]
BE IT ENACTED by the King and Legislative Assembly of Tonga in the Legislature
of the Kingdom as follows:
1 Short title and commencement
(1) This Act may be cited as the Foreign Investment Act 2002.
(2) This Act shall come into force on a day proclaimed by His Majesty
in Council.
2 Interpretation
In this Act, unless the context otherwise requires —
“certificate” means a foreign investment registration certificate under
section 8 and includes a restricted certificate;
Section 2 Foreign Investment Act 2002
Act 22 of 2002 Page 6
to
“Convention on Settlement of Investment Disputes” means the
Convention signed in Washington DC, United States of America on 3rd
February 1978 and ratified by the Kingdom of Tonga on 21st March 1990;
“foreign investment business” means a foreign investor carrying on any
activity for the purpose of generating revenue in trade, commerce or
industry, and includes any trade, profession or calling;
“foreign investment register” means the register of certificates under
section 6;
“foreign investor” means —
(a) in the case of an individual - a person who is not a Tongan subject
and does not reside in the Kingdom;
(b) in the case of a partnership or unincorporated joint venture - a
venture where a person who is not a Tongan subject controls more
than 25% of the investment;
(c) in the case of a company —
(i) a company incorporated in a country outside Tonga; or
(ii) a company incorporated in Tonga where a person who is not
a Tongan subject controls more than 25% of the company’s
voting shares;
“Minister” means the Minister of Labour, Commerce and Industries;
“Ministry” means the Ministry of Labour, Commerce and Industries;
“prohibited activity” means a business activity specified in Schedule 1 to
the Business Licences Act 2002;
“reserved activity” means a business activity included in the
Reserved List;
“Reserved List” means the list of business activities which may be
prescribed by the Regulations under this Act from time to time;
“restricted activity” means a business activity included in the
Restricted List;
“restricted certificate” means a foreign investment registration certificate
under section 8 in respect of a business activity which satisfies the
conditions prescribed for restricted activities;
“Restricted List” means the list of business activities which may be
prescribed by the Regulations under this Act from time to time;
“Secretary” means the Secretary for Labour, Commerce & Industries;
“Tongan investor” means a Tongan subject or body corporate
incorporated in Tonga.
Foreign Investment Act 2002 Section 3
Act 22 of 2002
to
Page 7
3 Investment by foreign investment businesses
(1) Subject to this Act, and any other law, a foreign investment business may
carry on any business activity in the Kingdom that is not —
(a) a reserved activity; or
(b) a prohibited activity.
(2) A foreign citizen may be employed by a person carrying on a reserved
activity if the foreign citizen is not prohibited from carrying on that
employment under the Immigration Act (Cap. 62) and any other law.
(3) Subject to section 5, a foreign investment business may carry on a
restricted activity if the foreign investment business satisfies the
conditions prescribed in the Regulations.
4 Reserved List and Restricted List
(1) The Minister shall establish and maintain a Reserved List setting out the
business activities which are reserved only for Tongan investors.
(2) The Minister shall establish and maintain a Restricted List setting out the
business activities which a foreign investment business may carry on
provided it satisfies the conditions prescribed in the Regulations.
5 Foreign investment registration certificate
(1) Every foreign investment business shall obtain and hold a valid foreign
investment registration certificate issued by the Secretary under this Act.
(2) A certificate shall be in the form prescribed in the Regulations.
6 Secretary’s functions
(1) The Secretary shall be responsible for —
(a) the co-ordination of the Reserved List and the Restricted List;
(b) the receipt and processing of applications for certificates;
(c) the issuing of certificates;
(d) establishing and maintaining a register of certificates;
(e) the monitoring of foreign investments in Tonga; and
(f) ensuring compliance by foreign investment businesses with this Act
and the Regulations.
Section 7 Foreign Investment Act 2002
Act 22 of 2002 Page 8
to
7 Application for certificate
An application for a certificate shall be made in the prescribed form.
8 Issue or refusal of certificate
(1) Subject to subsection (2), the Secretary shall consider each application
and determine as soon as practicable whether to refuse the application or
issue a certificate.
(2) A certificate shall not be issued in respect of a business activity that is a
prohibited activity, a reserved activity, or a restricted activity which does
not meet the conditions applicable to such a business activity.
(3) The Secretary shall inform an unsuccessful applicant in writing of the
grounds upon which his application has been refused.
(4) A restricted certificate issued under subsection (1) shall be endorsed with
the list of the prescribed conditions.
9 Delegation
The Secretary may, in writing, delegate any or all of his powers under this Act to
one or more officers of the Ministry.
10 Duration of certificate
(1) Subject to section 11 a certificate shall be valid from the date of its issue
until the termination of its business activity.
(2) A certificate shall cease to be valid if the business activity for which it is
issued does not commence within 1 year of the date of the
certificate’s issue.
11 Cancellation of certificate
A certificate may be cancelled by the Secretary if —
(a) the application contained any material misrepresentation or
false statement;
(b) the foreign investment business carries on a prohibited activity or a
restricted activity; or
(c) any condition imposed under this Act or the Regulations is breached.
Foreign Investment Act 2002 Section 12
Act 22 of 2002
to
Page 9
12 Holder to be heard
No certificate under this Act shall be cancelled without the certificate holder first
having been given an opportunity to be heard by the Secretary.
13 Transfer of certificate
(1) A foreign investment business which holds a certificate may apply to the
Secretary for approval to transfer the certificate to another foreign
investment business.
(2) An application under subsection (1) shall be made in accordance with the
form and method prescribed in the Regulations.
(3) The Secretary shall not approve an application to transfer a certificate
unless the foreign investment business to which it is to be transferred
satisfies the criteria of this Act.
14 Appeals
(1) A foreign investment business which is refused a certificate may appeal to
the Minister who shall nominate and appoint an Arbitrator to determine
the appeal.
(2) The Arbitrator shall give a written decision determining the appeal and
that decision shall be final and binding on the foreign investment business
and the Secretary.
(3) A foreign investment business whose certificate is cancelled by the
Secretary under section 11 may appeal to the Supreme Court against the
decision to cancel the certificate and any such cancellation shall be
suspended pending the outcome of the appeal.
15 Offences and penalties
Any person who contravenes any of the provisions of this Act commits an
offence, and is liable upon conviction to a fine not exceeding $10,000 and in
default of payment to imprisonment for a period not exceeding 18 months.
16 Investment guarantees
(1) The provisions of the Arbitration Act 1996 (UK) shall apply to any
arbitration under this Act.
(2) Subject to this Act and any other laws, the Convention on the Settlement
of Investment Disputes shall have the force of law in Tonga.
Section 17 Foreign Investment Act 2002
Act 22 of 2002 Page 10
to
(3) The property of a foreign investment business which holds a certificate
shall not be acquired compulsorily without just compensation.
(4) A foreign investment business which holds a certificate shall be entitled to
the protection of clause 4 of the Constitution of Tonga.
(5) Subject to any laws relating to taxation or exchange control, a foreign
investment business which holds a certificate may transfer capital and
income of its business to outside of Tonga.
17 Transitional arrangements
(1) Every foreign investment business carrying on a business in Tonga on the
date that this Act commences may apply to the Secretary for a certificate
within 12 months of that date.
(2) The Secretary may approve a written application for an extension of the
time period under subsection (1) for a further period not exceeding
12 months.
18 Regulations
(1) The Minister may with the consent of Cabinet make regulations for the
proper and efficient administration of this Act.
(2) Without limiting the power in subsection (1), regulations may be made for
the following purposes —
(a) the inclusion, deletion, amendment or clarification of any business
activity in the Reserved List;
(b) the inclusion, deletion, amendment or clarification of any business
activity in the Restricted List;
(c) prescribing conditions which may apply generally or to a particular
business activity;
(d) prescribing the procedure for making an application for a
certificate;
(e) prescribing the procedure for the transfer of a certificate;
(f) the fees payable under this Act;
(g) the forms required under this Act;
(h) the procedures for applying for amendment of certificates and
entries in the foreign investment register and the circumstances in
which such applications may or shall be made.
Passed in the Legislative Assembly this 8th day of October, 2002.
