Chapter 5

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• Start-Up Standards
• The foreign investor whose application has been approved by
the host state is usually subject to some time limit in which to
start construction and/or begin operation
• Operational Reviews
• Once a foreign-owned enterprise is in full operation, it is
subject to periodic monitoring
• Modification of Foreign Investment Agreements
• Investment laws provide that any modification to an
investment agreement has to be approved by the host state

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• Protection of Subsidiaries
• Foreign investors are recognized as having the same right to
manage a company in a host state as do local persons and
companies
• Penalties for Noncompliance
• Investment laws establish a variety of penalties for foreign
investors who violate the law or fail to comply with an
investment agreement

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• Securities
• A share, participation, or other interest in an enterprise or
other property
• A debt obligation
• Trading in Securities
• Many nations limit the persons who may trade in securities
• These are brokers and dealers who have registered with a
commission that oversees traders and exchanges
• Securities Exchanges
• Marketplaces where member brokers and dealers buy and sell
securities on behalf of investors

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• Issuance of Securities
• For a corporation to offer securities to the public, it must
prepare and register a prospectus to accompany the offer
• Clearance and Settlement Procedures
• Procedure by which a buyer turns over the purchase price and
the seller turns over the securities in a securities transaction
• Insider Trading Regulations
• The use of material nonpublic information about a company or
the securities market to buy or sell securities for personal gain

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• Takeover Regulations
• The reason foreign raiders are successful in the United States
but unsuccessful elsewhere
• Securities regulations outside the United States are biased
against takeovers

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• International Enforcement Cooperation
• The U.S. SEC was among the first securities regulators to
receive the legal authority to assist their foreign counterparts
in investigations of securities fraud
• The SEC has the ability to provide access to nonpublic
information in its files with foreign persons
• The Convention on Insider Trading
• Extraterritorial Application of U.S. Securities Laws

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