New Foreign Investment Law




Caracas, December 1, 2014




I         STATUTE

In Official Gazette of the Bolivarian Republic of Venezuela No. 6,152, Special Issue dated November 18, 2014 that went into circulation on November 28, 2014, was published Executive Decree No. 1438, dated November 17, 2014, with Rank, Value and Force of Foreign Investment Law.

The new Law became effective on November 18, 2014, the same day it was published in the Official Gazette.

This Law was declared to be in the public interest.


          This is a new Foreign Investment Law, not an amendment of the previous law.

The Law revokes the former foreign investment regime, which had rules arising from the former Andean Pact (currently the Andean Community of Nations), as well as rules enacted by the former President of the Republic between 1999 and 2002.

            Among the revoked provisions are:

    • Executive Decree No. 1103 on the Common Treatment of Foreign Capitals and Trademarks, Patents, Licenses and Royalties published in Official Gazette No. 34,930 dated March 25, 1992;
    • Executive Decree No. 2095 on the Common Treatment of Foreign Capitals and Trademarks, Patents, Licenses and Royalties published in Official Gazette No. 34,930 published in Official Gazette No. 34,930 dated March 25, 1992; and
    • Executive Decree No. 356 with Rank, Value and Force of Law to Foster and Protect Investments published in Official Gazette No. 5,390 dated October 22, 1999, as well as Decree No. 1,867 which contained the Regulations thereto, published in Official Gazette No. 37,489 dated July 22, 2002.


            The most important aspects are listed below:

  1. Agencies
    • The governing body shall be the People’s Power Ministry with authority on trading matters.
    • The Superintendency of Foreign Investments (SIEX, after its Spanish initials) disappears and the agency in charge of implementing the regime shall be the National Foreign Trade Center (CENCOEX, after the Spanish initials). The transition shall be completed within a period of six (6) months.
    • The penalizing agency shall be the People’s Power Ministry with authority in financial matters.
    • The domestic entities and agencies with authority on the sectors of oil and mining, banking, securities and insurance shall act in conjunction with the CENCOEX.
    • There will be an Advisory Committee chaired by the president of CENCOEX that will have fifteen principal members and their respective alternates in representation of the various public entities and agencies related to this area.
  1. Purpose

The purpose is to establish the principles, policies and procedures that shall govern foreign investors and investments that produce goods and services of any of their categories in order to achieve the harmonic and sustainable development of the nation, fostering a productive and varied contribution from foreign sources that contributes to develop the country’s productive potentialities, in agreement with the Constitution of the Bolivarian Republic of Venezuela, the laws and the Plan of the Homeland, in order to consolidate a framework that will promote, favor and grant predictability to investment.

  1. Subjects of the Law
    • Foreign companies, their affiliates, subsidiaries or related companies, as well as other foreign forms of organization with economic and productive purposes that make investments in the national territory;
    • Supranational companies (companies whose purposes and operation are subject to a strategic plan of two or more countries…);
    • Private, public and mixed companies and their affiliates, subsidiaries and related companies and other organizations with economic and productive purposes that receive foreign investment;
    • Natural persons, either domestic or foreign, domiciled abroad, who make foreign investments in the national territory; and
    • Foreign natural persons residing in Venezuela who make foreign investments.
  1. Definitions

Article 6 of the Law contains a long list of definitions of: Investment; Domestic Investment; Foreign Investment; Reinvestment; Foreign Investor; Domestic Investor; Domestic Company that receives Foreign Investment; Foreign Company; Affiliated Company; Subsidiary or Related Company; Supranational companies and Technology Transfer.

We make emphasis on the following definitions:

  • Foreign Investment: Productive investment carried out through contributions made by foreign investors that are made up of tangible and intangible resources for purposes of their becoming part of the shareholders’ equity of the parties receiving the foreign investment in the national territory. The contributions can be:
  1. Foreign investment in foreign currency and/or any other means of exchange or compensation existing under the framework of Latin American and Caribbean integration.
  2. Capital assets, either tangible or intangible, such as industrial plants, new or overhauled machinery, new or overhauled industrial equipment, raw materials and semi-finished products that are part of the productive process of the party receiving the investment. Overhauled assets must maintain the same relationship between the value of the investment and the useful life as would apply for new assets; this relationship shall be determined by experts appointed for that purpose by the National Foreign Trade Center.
  3. Immaterial or intangible assets consisting of trademarks, product marks, patents of invention, utility models, industrial designs or drawings and copyright, as well as every industrial or intellectual property right provided for in the Constitution of the Bolivarian Republic of Venezuela and the laws that govern this matter. Also included are technical assistance and know-how referring to processes, procedures or methods to manufacture products, duly supported by the physical delivery of technical documents, handbooks and instructions. The intangible assets mentioned shall be considered to be foreign investment when the assignment thereof is carried out between companies that are not directly or indirectly related, following the registration of the assignment agreement with the appropriate national agency in charge of intellectual property matters, provided that the assignment of rights includes the effective transfer of ownership of the immaterial or intangible assets to the party receiving the investment.
  • Domestic Company Receiving Foreign Investment: Companies, cooperatives, social ownership companies and other forms of productive economic organization defined by the national legislation fifty-one percent (51%) or more of whose capital stock belongs primarily to domestic investors, classified as such by the National Foreign Trade Center.
  • Foreign Company: Companies as well as other foreign forms of organization for economic and productive purposes fifty-one percent (51%) or more of whose capital stock belongs to foreign investors, classified as such by the National Foreign Trade Center.


The former regime classified companies as foreign, mixed or domestic, depending on their stockholding interests and administrative control.  This Law divides them in two categories, each according to who is the holder of fifty-one percent (51%) interest.  The question remains on how a company with 50% foreign investment and 50% domestic investment would be classified.

  1. Development sectors and reserved sectors

Foreign investment may be made in any area, sector or economic activity lawful under the Venezuelan legislation that enhances the growth of the economic and productive capabilities of the populated centers where it becomes established, and contributes to the social development of the inhabitants while respecting and improving the environment and public health.

The State reserves to itself the development of strategic sectors and may establish investment regimes with the participation of foreign capital in percentages other than the Law provides for.



The former reserve to domestic entities of the sectors listed in Decree 2095 was removed: television, radio broadcasting, Spanish-language newspapers and professional services whose practice is governed by domestic laws.

  1. Elements that constitute foreign investment

Foreign investment must be embodied by assets present in this country and must consist of equipment, inputs and other tangible goods and other assets required for beginning productive operations representing at least 75% of the total amount of the investment.

  1. Minimum amount and value of foreign investment

One million United States dollars (USD 1,000,000) at the official exchange rate in force.

CENCOEX may admit lower amounts in justified cases.

In case of investment in foreign currency the value of the investment shall be determined in agreement with the official exchange rate at the time the exchange transaction is carried out, and it shall be accounted for by filing the vouchers with the CENCOEX.


In our opinion, under the current foreign exchange system, the “official” rate mentioned above shall be that of SICAD II, pursuant to the provisions of Article 15 of Foreign Exchange Agreement No. 28 dated April 3, 2014.

  1. Incentives

The Office of the President of the Republic may establish incentives, favorable conditions or specific benefits to promote and encourage foreign investment that will contribute to the transformation and development of the Venezuelan socio-productive model.

  1. Date when foreign investors’ rights become effective. requirements and penalties

As of the date the Foreign Investment Registration is granted.

For this purpose the foreign investment must be registered with the CENCOEX and the company must secure the certificate of registration and the classification of the company and keep them updated.

CENCOEX can cancel the Foreign Investment certificate and apply preventive measures and impose fines in case of violation of the Law. The agency has broad compliance verification and inspection powers in this regard.

Fines for failure to comply may range between 1,000 and 100,000 tax units according to the gravity of the case.  In case of repeat offenses the fine shall be doubled.

  1. Minimum permanence of the foreign investment in the country

Five (5) years as of the granting of the Foreign Investment Registration.

  1. Rule of law

Foreign investment shall be afforded clear, precise and established rules in order to guarantee equality under the law.

However, in case of special legal circumstances, the Executive Branch of Power may apply measures in relation to investment and/or technology transfer, as well as limit remittances abroad for invested capital and dividends.

  1. General conditions to foreign investment

Every foreign investment must meet thirteen (13) conditions listed in Article 31 of the Law.


Among these conditions, the Law provides that failure to give notice to CENCOEX of any investment in domestic or foreign companies made subsequent to registering the initial foreign investment, through the purchase or assignment of stock and other property titles, credits, mergers, acquisitions or any other way that does not entail the investment of actual capital but only a financial operation, shall cause the annulment of the operation in question.

  1. Distribution of net profits in legal tender

The distribution of profits may be carried out without restriction. In the event of a partial distribution the difference shall go to the company account earmarked for reinvestment.

Profits may be reinvested and shall be deemed to be foreign investment following registration with the CENCOEX.

  1. Remittance of profits

Annual remittances of proven profits or dividends are limited to 80%.  Said profits or dividends must come from the registered foreign investment and updated in freely convertible foreign currency, after complying with the purpose or the investment.


This limitation takes us back to the beginnings of the foreign investment regime, in 1974, when the amount that could be remitted was limited to a percentage of the registered investment. The balance remained in an accounting entry called “re-investment account.”

  1. Repatriation of capital

The cash proceeds from the sale of the stock or the investment within the national territory, as well as from capital reductions, may be remitted to the home country.

  1. Repatriation in case of the liquidation of the company

The Law provides that the proceeds from the sale within this country of the stock or the investment as well as the proceeds from a capital reduction may be totally or partially remitted to the home country; but in the case of liquidation of the company only up to 85% of the total foreign investment may be remitted abroad.

In this regard the exception is made in the sense that, in case of liquidation of the company that receives foreign investment, foreign investors shall be entitled to remit to their home country the registered foreign investment, provided that said liquidation is done as a result of the sale of the company directly to domestic investors and that CENCOEX verifies the full productive and commercial operation of the receiving company, with the permanence of the assets and technological know-how entailed by the investment.


The Law does not state where the remaining 15% in the case at hand will go. Perhaps the Regulations will clarify this matter.

  1. Regulations

CENCOEX shall draw up within a period of one (1) year the Regulations to the Law and within a period of six (6) months shall issue the directives required in relation to transfers abroad in the case of foreign investment so as to implement the foreign exchange framework for this purpose.

  1. Jurisdiction

Foreign investment shall be placed under the jurisdiction of the Venezuela courts.

The Republic may participate and use other conflict resolution mechanisms created under the framework of Latin American and Caribbean integration.


This removes the possibility of conflict resolution through arbitration, whether domestic or international, that was provided for in the now revoked Law to Promote and Protect Investments.

The foregoing summarizes the basic aspects of the new Law.   Please feel free to contact us for clarifying any doubt in this regard or elaborating on any aspect.

Yours truly,


Farid Antakly K

All rights reserved. This work is a contribution of BENSON, PEREZ MATOS, ANTAKLY & WATTS to its clients on legal topics of their interest for purposes of providing orientation. It must not be interpreted as a specific legal opinion.