International business law ch. 18

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International business law ch. 18

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

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