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Host Country Regulation: Corporate Law, Taxation, and Currency Risk
Chapter 18
Regulation
Who is the host country?The issues that concern less developed
countries are not necessarily the same as those of more developed countries.
Why?Hint: look to history
What kind of investment is it? Passive investments are treated differently
thanactive investments.
Why? What are examples of each?
Currency RiskIn whose currency is an
international loan paid, the lender’s or the borrower’s?
How can currency risk be hedged?– What is arbitrage? . . . a
currency swap? – What is countertrade?
Differentiate between barter, counterpurchase, offsets, and buy-backs.
Buying Foreign Stock
• 1. What is an American Depository Receipt?
• 2. How is insider trading handled?• 3. How much disclosure is required in
the particular market?• 4. How much influence can a foreign
investor assert? (i.e. getting a seat on the board of a Japanese company).
Subsidiary or Branch?
• 1. A subsidiary is a separate corporation whose stock is owned by the parent company.
• 2. A branch is just a division of the home corporation.
• 3. The differences affect tort liability and tax liability.
• 4. Which is more important, form or substance?
• 5. What is the transfer pricing problem?• 6. What are foreign sales corporations
and extraterritorial income?
The End