Must foreign investment be registered? Where?

Yes. Foreign investment must be registered at the relevant national agency for investors to enjoy the right to use freely convertible currency when sending abroad the total of the capital earned based on the recorded investment, as well as the total amount of dividends and proven net profits earned with their registered investments, pursuant to Article 20 under Legislative Decree Nº 662. PROINVERSION is the authorized agency to register foreign investments.

Can an investor or company waive a Legal Stability Agreement?

Yes, after informing PROINVERSION.

What is the consequence of terminating a Legal Stability Agreement?

Failure to comply with the requirements spelled out in the agreements, as appropriate, automatically cancel the rights given by the juridical stability agreement.

Where can I find the forms for a Legal Stability Agreement?

They may be downloaded from PROINVERSION’s website at http://www.proinversion.gob.pe or picked up from PROINVERSION’s offices at: Paseo de la República 3361 - Piso 9 / Lima 27 - Peru.

How long does it take to sign a Legal Stability Agreements?

Approximately 30 days starting on the date when the request was received at PROINVERSION’s Reception Desk.

What is the procedure to request the signing of the Legal Stability Agreement?

National and foreign investors who wish to be protected by a stability regime must file a request with PROINVERSION, the national authorized agency for this purpose. In addition to filling out the corresponding forms, the following must be enclosed.

a. A document certifying the investor’s incorporation in its country of domicile notarized before the Ministry of Foreign Affairs (only for foreign investors).

b. A power of attorney detailing the authority of the organization’s representatives to enter into agreements on behalf of their represented party, or a notarized copy thereof. Powers of attorney issued abroad must be properly authenticated.

c. Identity document of the representative signing the Agreement.

d. Copy of the articles of incorporation (“Testimonio de la Escritura de Constitución Social”) of the company receiving the investment, properly registered at the corresponding registry.

For companies where the investors’ contribution will be used to set up the Company, the notarized Articles of Incorporation must be included.

What is required to sign a Legal Stability Agreement?

Investors who wish to sign a Juridical Stability Contract with the State must make a capital contribution through the National Financial System to a company existing or to be organized under Peruvian lay, or sign an agreement to make a venture capital investment with a third party for an amount not under US$10,000,000 (Ten million and 00/100 Dollars of the United States of America) in the mining and hydrocarbon industry, and not under US$5,000,000 (Five million and 00/100 Dollars of the United States of America) in other industries.

Who can request the signing of the Legal Stability?

Any investor, whether Peruvian or foreign, who commits to comply with Peruvian law and companies existing or to be organized in Peru to which new foreign capital contributions are made pursuant to Article 11 of Legislative Degree Nº 662.

What is a Legal Stability?

A Legal Stability Agreement is a mechanism through which the Peruvian State, represented by PROINVERSION, the National authorized organization for dealing with investment matters, assures investors and companies where they make their investments the stability of the tax system in place at the time when the agreement was signed; the stability of the regime allowing the free availability of foreign currency, under rights spelled out in Articles 7 and 9 of Legislative Decree 662, as well as the stability of the non-discrimination rights pursuant with Article 2 of the same legislative decree.

Companies already operating in Peru organized with foreign capital contributions pursuant to Article 11 of Legislative Decree Nº 662 may enjoy stability under any of the existing labour hiring arrangements, and the special stability granted for export industries, such as temporary admission, industrial, commercial and tourist free zones, and others that may be created in the future.

What types of companies can be organied in Peru?

Pursuant to Article 5 of Legislative Decree Nº 757, the Peruvian State allows establishing companies to perform any of the economic activities, and under any of the types of organization, authorized by Peruvian law.

Is there a limit for capital repatriation?

No. Article 7 under Legislative Decree Nº 662 establishes that foreign investors may send their entire investment capital and earnings, including revenues from stock, participation or rights’ sales; capital reductions; partial or total liquidation of companies; and the entire dividends or proven net earnings from their investments, as well as their earnings from the use or enjoyment of assets physically located in Peru and registered before the national authorized agency, for which they will be allowed to use freely convertible currency without any prior authorization from any central or decentralized government organization or authority, the Regional Governments or the Municipal Governments, after paying the corresponding taxes.

What are the rights of foreign investors?

Peruvian law grants foreign investors the following rights: freedom to buy shares from national investors; free remittance of earnings and dividends; free capital repatriation; unrestricted access to local credits; freedom to hire technology and to pay back royalties; freedom to hire investment insurance abroad; possibility to sign juridical stability agreements for their investments in Peru with the Peruvian State.

Do foreign investors have free access to all sector of the economy?

Article 6 under Supreme Decree Nº 162-92-EF authorizes foreign investors to carry out any economic activity of their choice to the extent this activity is not defined by the law as a crime and provided they comply with all constitutional precepts, laws and treaties. Not included in this consideration are activities in reserved natural protected areas and manufacturing of war weapons, pursuant to Article 6 of Legislative Decree Nº 757.

Few activities are closed to foreign investment. Participation in the media, air and land transportation, and private security and surveillance are reserved exclusively to Peruvian investors or require a majority share of Peruvian investors.

Is property by foreign investors restricted?

Article 71 of the Peruvian Constitution establishes that foreign individuals or companies enjoy the same status as Peruvian nationals. However, within 15 kilometers from Peruvian borders, foreigners may not, under no consideration whatsoever, buy or own mines, land, forests, waters, fuels or energy sources, whether directly or indirectly, individually or through companies, subject to loss of their property on behalf of the Peruvian State. Not included are cases of public need explicitly stated through a supreme decree approved by the Ministers’ Cabinet, pursuant to existing law.

What type of investment does the Peruvian State recognize as foreign?

Investments from abroad in revenue-generating economic activities of any of the following types are considered as foreign investment:

a) Contributions by foreign individuals or companies channelled through the National Financial System to to the capital of a new or existing company organized under any of the types of corporate arrangements described in the General Company Act, in freely convertible currency or in physical or tangible assets, such as industrial facilities, new and refurbished machinery or equipment, replacements, spares and parts, raw materials and throughputs.

b) Investments in local currency using resources authorized to be sent abroad.

c) Conversion of private foreign obligation into shares.

d) Reinvestments pursuant to existing law.

e) Investments in goods physically located within the territory of Peru.

f) Intangible technology contributions, such as brands, industrial models, technical assistance and patented and not patented technical knowledge as materialized in physical goods, technical documentation and instructions.

g) Investment for the purchase of listed financial securities, documents and papers, or bank deposit certificates in local or foreign currency.

h) Resources used to enter into joint ventures or others that give the foreign investor some participation in a company’s production capacity, without this involving a capital contribution but rather a venture of a commercial nature enforced through a contract by means of which the foreign investor provides goods or services to the receiving company in exchange for a share of the physical output, the global amount of sales, or the net profits of the receiving company. These investments are subject to existing tax law, and

i) Any other type of foreign investment contributing to national development;

Which is the principle governing legislation on foreign investment?

Foreign investment in Peru is based on National Treatment and Non-Discrimination Treatment. .

Does foreign investor need any authorization to invest in Peru?

No, they don't.

Which is the national entity devoted to foreign investment in Peru?

The national competent entity devoted to foreign investment in Peru is Proinversion, created by Supreme Decree Nº 27-2002-PCM. It is in charge of proposing and executing national policy on foreign investment, centralizing promotion activities carried out by public entities, providing advisory services to investors, and registering foreign direct investment flows.

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Private Investment

How is private investment encouraged?

Private investment is encouraged in several ways. Two particularly important schemes, both charged to the Private Investment Promotion Board (PROINVERSION), are privatizations and concessions. They constitute an important component of Peru’s economic reform and modernization program.

Initially, the Government promoted privatizations to redefine the roles of the State and the private sector in the economy and to increase the efficiency of resource allocation, and goods and services’ production.

In the present second stage, special attention is paid to concession projects. The purposes of these concessions include improving and creating infrastructure with private sector involvement and enhancing service quality, coverage and end-user access.

PROINVERSION’s role is to identify investment opportunities in projects that may be developed by private investors, prepare and facilitate the required feasibility studies, and to disseminate these projects among potential investors through road shows, direct and indirect contacts (trade and diplomatic missions) and other efforts.

Real Estate

If the 30 day payment period ends on a Saturday, Sunday or holiday, when should the payment for the property be made?

The payment should be made on the last business day before the deadline.

What are natural days?

Natural days are calendar days.

For direct property sales, the guarantee deposit is equivalent to 10% of the reference Price or the bidding Price?

Paragraph 10 of the Direct Sales Regulations states the Guarantee Deposit is equivalent to 10% of the Reference Price.

Can Proinversion deliver the technical and legal documents for a property on sale?

Through its Real Estate Affairs Unit, Proinversion can deliver copies of the technical and legal documents interested parties may need to ascertain the property´s physical condition and registration status.

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Transparency

What is the cost of filing a challenge?

Challenges can be made free of cost.

When is information considered public?

(A) Public information is any type of information documentation that was prepared using government funds used for making administrative decisions, as well as the minutes of official meetings.

How long does it take for the organization to fill a request for information?

Pursuant to regulations in place, seven business days as from the filing of the request. However, the organization may exceptionally take an additional five business days for gathering unusually rare information. If so, before the initial deadline expires the organization must notify in writing of its reasons for extending the deadline.

Do requests for public information have to be filed personally at the organization's reception desk?

One way to request information is by filing a request through the Document Reception Unit (reception desk) using a form approved by the Regulations under Law 27806 for Transparent and Open access to Public Information D.S. Nº 072-2003-PCM. The regulations are available at the reception desk. Other written requests are possible provided they include at least the following information

a) Full name
b) Identity document number
c) Telephone and electronic mail address
d) Brief and accurate request
e) Name of organization or division where the information is kept, if available
f) If the request is filed at the reception desk, signature and fingerprint (for people unable to sign)

Can any citizen have access to the organization's information?

(A) Anybody can request documentation and information without need to provide an explanation provided the information is public and not qualified as reserved, classified, or confidential pursuant to Articles 15, 16 and 17 of the Conformed Text of Law 27806 for Transparent and Open Access to Public Information

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