North Macedonia does not have a foreign investment screening regime comparable to those now emerging in the European Union in light of the EU FDI Screening Regulation, but operates a single-sector authorisation system specifically covering the defence sector. Additionally, there is mandatory registration of all direct investments made by non-residents.
Legal basis
The Foreign Exchange Operations Act (Official Gazette of RM, nos. 34/2001, 49/2001, 103/2001, 51/2003, 81/2008, 24/2011, 135/2011, 188/2013, 97/2015, 153/2015,
23/2016, and Official Gazette of RNM, no. 110/2021) and the Act on Development, Production and Trade of Military Goods (Official Gazette of RNM, no. 298/21).
Filing requirement
The filing regime in the defence sector encompasses investments into a company active in the development and production of military equipment, by a foreign legal entity.
Regarding the mandatory registration of direct investments, which is administrative / statistical in nature, the following is considered a direct investment as per the Foreign Exchange Operations Act:
- incorporating a company or increasing the registered capital of a company in full ownership of the investor, establishing a subsidiary or acquiring full ownership over an existing company;
- participation in a new or already existing company if the investor holds or acquires more than a 10 % share in the registered capital of the company, exceeding 10 % of the voting rights;
- a long-term loan of five or more years of maturity, if the loan from the investor is intended for a company that it owns in full; and
- a long-term loan with five or more years of maturity, if the loan is intended to establish lasting economic relations if granted among entities associated in a mutual economic venture.
Relevant sectors
Approval is necessary for all foreign investments that concern investments into a company active in the development and production of military equipment.
Registration is mandatory for all direct investments as defined above, as well as for modifications of existing investments.
Process and timetable
Competent authority: Ministry of Economy for investments into the defence sector. Registration is carried out by the Registry for Direct Investments ("RDI").
Mandatory filing requirement: Yes
Filing deadline: There is no deadline prescribed for the submission of a request to the Ministry of Economy. The deadline for notifying a direct investment is 60 days from the date of the transaction which constitutes the legal basis for making the direct investment.
Responsibility for filing: The responsibility for making a filing regarding investments in the field of development and production of military equipment lies with the foreign investor. The obligation to register the foreign direct investment lies upon the resident company in which the foreign investor has invested.
Sanctions: Failure to obtain approval for investments in the field of development and production of military equipment entails the following penalties:
- EUR 4,000 to EUR 8,000 for a resident that enables a foreign investment without previous approval from the Ministry of Economy;
- EUR 500 to EUR 1,000 for the responsible person within the resident company;
- a one- to five-year ban on carrying out production and trade of military equipment for the company, i.e. a one- to five- year ban for the responsible person; and
- confiscation of the objects with which the misdemeanour was committed.
Failure to register a direct investment with the RDI entails the following penalties:
- a fine ranging from EUR 250 to EUR 15,000 for the resident company;
- a fine ranging from EUR 100 to EUR 800 for the manager of the resident company.
Also, the transfer of profit, as well as the transfer of financial resources generated from the sale of shares held in the Macedonian company (or its liquidation), is conditioned by previous appropriate registration of the foreign investment with the RDI.
Length of the proceedings: Regarding investments into the defence sector, the Ministry of Economy is obliged to carry out the review and issue a decision at the latest within 60 days from the date of a complete request. There is no deadline prescribed for the RDI to issue a decision.
FDI Screening in Czech Republic.
FDI Screening in Bosnia & Herzegovina.
By Danijel Stevanovic, Partner at Moravcevic Vojnovic i Partneri in cooperation with Schoenherr
