Law 36/2008 of 18 December on modification of the law 2/2008, of 8 April, foreign investment in the Principality of Andorra since the General Council at its session of 18 December 2008 approved the following: law 36/2008 of 18 December on modification of the law 2/2008, of 8 April, foreign investment in the Principality of Andorra preamble the General Council in its session of 8 April 2008 approved the law 2/2008 foreign investment in the Principality of Andorra. Although the law has not yet gone into force because of the vacatio period established schools in the final provision, since its publication in the official bulletin of the Principality of Andorra from May 7, 2008 (No. 37, 20) have created doubts in relation to the interpretation to be done in respect of the procedure of authorization of direct foreign investments. At the same time, we have seen problems of interpretation as to the degree of liberalisation of direct foreign investments consisting of participation in Andorran companies whose object activities are not listed in either annex I or annex II of the law.

These interpretative doubts affect essential elements of the law and, consequently, we must solve them.

In accordance with the preamble of the law 2/2008, which States that one of the objectives of the said legal text is significantly increase the current degree of liberalization of foreign investments in the Principality of Andorra; and also consistently with the content of the interventions of the parliamentary groups who voted in favour of the adoption of the law 2/2008, made in the course of the session of the General Council of 8 April 2008, the regime that they have to follow the direct foreign investments consisting of participation in Andorran companies whose object activities are not listed in either annex I or annex II of the law 2/2008 While the General Council did not approve the plan referred to in the third additional provision, it should be the same as the set for the companies that have to activities listed in annex I when foreign participation is less than 50 per cent, while with the precision that foreign participation in its share capital or its political rights may not be either or the same or greater than fifty percent.

It should also specify the wording of article 9 of the law 2/2008 for the purpose of determining any percentage of foreign direct investment is subject to the prior authorization of the Government.

Likewise, it is worth clarifying the wording of paragraphs 3 and 4 of article 1 of the same law 2/2008 in the sense that the consideration of foreign investment is determined by the residence with economic rights. With this precision also interpretative doubts are resolved so that the modified text keep a total coherence both with the rest of the same article 1, as in general, with the whole of the law.

Finally, it believes that it is an excessive rigidity and at the same time, irrelevant for the purpose of the content and the purpose of the law, the provision of a direct and concrete assignment of the Ministry of economy as a Ministry responsible for foreign investment. For this reason, replaced references to the Ministry of economy to the Ministry responsible for foreign investment.

The law consists of 11 articles, each of which modifies the preamble, an article or a provision of the law 2/2008, of 8 April, foreign investment in the Principality of Andorra, and a final provision that establishes its entry into force.

Article 1 amendment to the preamble modifies the last paragraph of the preamble, which is worded as follows: "The chapters VI and VII contain, respectively, the rules regarding the competences and procedures and to the formalisation and registration of foreign investments. In relation to the competition and the procedure to authorize foreign investments subject to this requirement, the law attributes in all cases to the Government, with the previous report of the Ministry competent in matters of foreign investment, and expressly fixed the criteria that can be found the decision to grant or refuse the authorisation, and to limit the degree of discretion of this governmental decision. Once authorization, foreign investment has been made within the deadline established in the same authorization or the set generally in the law and, in any case, should be formalised in a public document notarized and was declared in the register of investment. ".

Article 2 amendment to article 1.3 modifies paragraph 3 of article 1. Definition, which is worded as follows: "3. Likewise are foreign investments in the Principality of Andorra investments made by Andorran companies with foreign participation in the capital or in their voting rights, by a percentage equal to or greater than 50 percent, and by branches or establishments in Andorra of non-residents through the participation in Andorran companies.".

Article 3 amendment to article 1.4 modifies the section 4 of article 1. Definition, which is worded as follows: "4. The investments made by individuals with effective and permanent residence in Andorra with economic rights they acquire the status of foreign investment when people referred to move their residence abroad. Likewise, foreign investments made by non-resident natural persons in Andorra lost this condition when these people acquire the residence with economic rights in the Principality. ".

Article 4 modification of article 9 modifies article 9. Regime, which is worded as follows: ' 1. Is necessary prior authorisation from the Government, in accordance with article 1.5 of this law and article 20.3 of the law 20/2007, of 18 October, corporations and limited liability, to make direct investments consisting of participation in Andorran companies to deploy any of the activities set out in the annex and when foreign participation in the capital or in their voting rights is less than 50 percent.

2. In addition to the requirements set forth in the preceding paragraph, the Government, in accordance with the provisions of article 18 of this law, you can authorize direct investments consisting of participation in Andorran companies up to 100 percent of the share capital or voting rights, as long as you deploy any of the


activities set out in the annex and, when foreign participation in the capital or in their voting rights is greater than or equal to 50 per cent, or in annex II whatever foreign participation in the share capital or voting rights.

3. Also you must obtain the prior permission of the Government to make direct investments consisting of the provision or extension of branch offices whatever the nature of the business activities through the branch you want to deploy.

4. However the direct investments who want to make credit or financial institutions abroad in any sector of the Andorran economy cannot exceed either directly or indirectly of the percentage of participation in the share capital set forth in article 2 letter e) of the law regulating the powers of the various operational components of the financial system.

5. Once the authorization, in accordance with what is established in this article, are subject to prior administrative authorisation, amendment of the corporate purpose, the increase of the share capital, the increase in the percentage of foreign participation or modification of any condition that the authorization had been imposed.

6. The Ministry of economy may require, in general or particular, to Andorran companies participated by foreigners and in branches in the Principality of people or non-resident companies, submit an annual report, in the period and with the content as established by the current regulations. ".

Article 5 amendment of article 11 modifies article 11. Regime, which is worded as follows: "investments in portfolio are free and are not subject to the duty of prior authorization request or the duty of registering as established in article 20, or the duty of declaration subsequent to the completion of the investment in the investment Record. However, it requires the prior authorization of the Government the subscription of shares in a venture capital fund or real estate, all or part of the assets of which are invested, respectively, in shares in Andorran companies or in real estate located in the Principality, as long as the percentage of foreign participation allowed by the Fund exceeds 50 per 100. For this purpose, and in any case, the managing bodies of these funds, prior to granting the public deed of incorporation of a mandatory background before a notary have to indicate to the Government of Andorra, the percentage of the maximum foreign investment that allows each Fund, with the understanding that it has to get her permission to constitute them. ".

Article 6 amendment of article 16 modifies the article 16. The Government, which is worded as follows: "the Government, after the report of the Ministry competent in matters of foreign investment, to grant the authorization, or deny it, to make foreign investments in the Principality of Andorra, in accordance with the provisions of this law, are subject to their prior permission.".

Article 7 Amendment of article 17.1 and 17.2 modifies the paragraph 1 of article 17. Procedure, which is worded as follows: "1. The requests for authorization of foreign investment have been presented to the Government. It is essential that the Government, before issuing their decision, get a report of the Ministry competent in the area of foreign investment related to each application for foreign investment. "." 2. In the case of direct investments relating to the fourth paragraph of article 9, the previous report mentioned in the previous section must be issued by the INAF. ".

Article 8 amendment of article 21 modifies article 21. Declaration and registration, which is worded as follows: "except in cases where this law does not require the subsequent declaration in the registry of investments, the holders of foreign investment and, if this is the case, the notary who will be authorised the public document in which will formalize or, in default of the above, the Andorran banking entities through which you made payments or collections resulting from the investment and the rest of the operating components of the financial system , are required to declare foreign investments and its liquidation the registration of investments in a maximum period of fifteen days of the granting of the public document. This declaration must be made by the official form and is mandatory regardless of the fact that foreign investment requires prior permission of the Government. ".

Article 9 amendment of the second additional provision modifies the second additional provision, which is written in the following way: "you create the registry of investments, part of the Ministry in matters of foreign investment, with the purpose and the skills contained in this law. The Government, by regulation, may regulate operation. ".

Article 10 amendment of the third additional provision modifies the third additional provision, which is written as follows: "the Government, in accordance with the needs of the economy, must draw up and submit to the General Council, no earlier than two years and not later than six, a plan that establishes the timeframe and the conditions of opening to foreign investment in sectors of the economy that are not included in the annexes of this law. The implementation of the plan referred to by the Government can only be carried out if you get the favorable decision of the General Council. Meanwhile, foreign direct investment consisting of participation in Andorran companies whose object activities are not listed in either annex I or annex II of this law, they apply the same regime established in article 9.1, while foreign participation in its share capital or its political rights cannot be in any case or equal or greater than 50 percent. ".

Article 11 Amendment of paragraph 3 of the first transitional provision modifies the paragraph 3 of the first transitional provision, which is worded as follows: ' 3. Within a period of three months from the closing date of its exercise, the companies mentioned in the first paragraph of the previous section must be presented in front of the Ministry responsible for foreign investment a detailed report of all kinds and forms of investments established in this law and their liquidation who have performed in the Principality during the year. ".

Final provision this law shall enter into force the day after being published in the official bulletin of the Principality of Andorra.

Casa de la Vall, December 18, 2008, Joan Gabriel i Estany


Syndic General Us the co-princes the sancionem and promulguem and let's get the publication in the official bulletin of the Principality of Andorra.

Joan Enric Vives Sicília Nicolas Sarkozy President of the French Republic and the Bishop of Urgell Co-prince of Andorra Co-prince of Andorra