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The Laws about ZEDE in Honduras

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summary of the laws that regulates the ZEDE in honduras

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The Laws about ZEDE in Honduras

  1. 1. Zones of Employment and Economic Development (ZEDE) Marvin Espinal Lawyer MBA & Public Notary
  2. 2. What are the Zones of Employment and Economic Development (ZEDE)?
  3. 3. Zones Employment and Economic Development (ZEDE) are a new administrative division of the Republic of Honduras subject to central government and provided with considerable autonomy with its own political, administrative, economic and judicial system, clear market rules that allow high levels of competitiveness. The creation of these same aims to attract investment and create jobs in uninhabited areas of the country or municipalities applying for conversion to ZEDE by referendum (if necessary).
  4. 4. Are there other places in the world like the ZEDE?
  5. 5. They do exist. In fact, they have as a reference the experience of the Special Administrative Regions of China (Hong Kong, Shenzhen, Shanghai Macao), in addition to East and Southeast Asia as it is South Korea (Songdo) and Singapore. Due to the economic success that these places have had, countries like: Japan, Cuba and North Korea are establishing similar legislation in order to recreate the economic miracle that has happened in the cities mentioned above.
  6. 6. The Honduran Constitution The Right to own property & ZEDE
  7. 7. Article 103 The State recognizes, guarantees, and promotes the existence of private property in its broadest sense as a social function and without further limitations than those established by law for reasons of necessity or public interest.
  8. 8. Article 106 No one may be deprived of his property except by reason of public need or interest defined by law or a decision based on law, and shall not take place without assessed prior compensation. In the event of war or internal disorder, it is not necessary that the compensation be paid in advance; however, the corresponding payment shall be made not later than two years after the termination of the state of emergency.
  9. 9. CHAPTER XI: THE DEPARTMENTAL AND MUNICIPAL SYSTEM Article 294 The national territory shall be divided into departments. Their establishment and boundaries shall be determined by the National Congress. The departments shall be divided into autonomous municipalities administered by corporations elected by the people, according to law. Without prejudice to that established in the previous paragraphs, the National Congress may create zones subject to special regimes in accordance with Article 329 of this Constitution.
  10. 10. TITLE VI: THE ECONOMIC REGIME CHAPTER I: THE ECONOMIC SYSTEM Article 329 ZONES OF EMPLOYMENT AND ECONOMIC DEVELOPMENT: The state may establish zones of the country subject to special regimes which shall have juridical personality, and are subject to a special fiscal regime and may incur obligations which do not require the guarantee or collateral of the state in solidarity, and may create contracts until the fulfillment of their timely objectives and during various governments.
  11. 11. Article 329 ZONES OF EMPLOYMENT AND ECONOMIC DEVELOPMENT: They shall enjoy functional and administrative autonomy that shall include the functions, abilities, and obligations that the Constitution and the laws confer on the municipalities. The creation of a zone subject to a special regime is the exclusive power of the National Congress, by a qualified majority, given an approving plebiscite by two thirds in accordance with that established in article five of the Constitution.
  12. 12. Article 329 ZONES OF EMPLOYMENT AND ECONOMIC DEVELOPMENT: This requirement is not necessary for special regimes created in zones of low population density. A zone of low population density means those in which the number of permanent inhabitants per square kilometer is less than the average for rural zones calculated by the National Institute of Statistics, which shall issue the corresponding ruling.
  13. 13. The zones are subject to the national legislation in all topics related to sovereignty, application of justice, national defense, foreign relations, electoral matters, and issuance of identification documents and passports. For the creation and operation of these zones the National Congress must approve an Organic Law, which may only be modified, reformed, interpreted or revoked by a favorable two thirds of the members of the National Congress.
  14. 14. The celebration of a referendum or plebiscite by the people who inhabit the zone subject to the special regime is also necessary when its population is greater than one hundred thousand inhabitants. The Organic Law shall expressly establish the applicable regulations. The authorities of the zones subject to special regimes have the obligation of adopting the best national and international practices to guarantee the existence and permanence of the social, economic, and legal environment adequate in order to be competitive at the international level.
  15. 15. Organic Law of the areas of Zones of Employment and Economic Development (ZEDE)
  16. 16. Article 1.- The areas of employment and economic Development, hereinafter referred to as ZEDE, are an inalienable part of the state of Honduras, subject to the Constitution of the Republic and the national Government in matters related to sovereignty, enforcement of justice, Territory, National defense, Foreign affairs, electoral issues, issuance of identity documents and passports, as is Established in article 329, in its seventh paragraph of the Constitution of the Republic.
  17. 17. The areas of employment and economic Development (ZEDE), have legal status, are authorized to establish their own policy and regulations, created for the purpose of accelerating Fulfilling the goals of the nation Plan and facilitating conditions that allow the country to insert into world markets under highly competitive and stable rules.
  18. 18. Article 3.- The zones of employment and economic Development (ZEDE) enjoy functional and administrative autonomy that includes the functions, faculties and obligations that the Constitution of the Republic and the laws confer to the municipalities. They shall have autonomous and independent courts with exclusive competence, those which may adopt legal systems or traditions from other parts of the world, and must ensure the constitutional principles of protection of human rights. Acts and contracts that are held or issued within the areas of employment and economic Development (ZEDE), are fully valid in the rest of the country and abroad in accordance with the bylaws of reciprocity.
  19. 19. Article 8.-The normative hierarchy applicable in the zones of employment and economic Development (ZEDE) shall be as follows: 1. The Constitution of the Republic in whatever applies; 2. International treaties held by the State of Honduras as applicable; 3. This organic law on the areas of employment and economic Development (ZEDE); 4. The laws set out in the final provisions of this organic law; and, 5. The internal regulations emanating from the authorities of the areas of employment and economic Development (ZEDE) or incorporated therein.
  20. 20. Article 45.-In accordance with the Established in article 329 of the Constitution of the Republic, this organic law may only be amended, reformed, interpreted or repealed by two thirds (2/3) favorable of the members of the National Congress. It will also be necessary to celebrate a Referendum or plebiscite to persons living in the area subject to special regime when their population exceeds one hundred thousand inhabitants. If the repeal of this organic law occurs, it will be kept in force for the period indicated in The clause or Contract of legal stability signed with natural persons or Legal entities that reside or invest in the areas of employment and economic Development (ZEDE). The transition period may not be less than ten (10) years, during which time the rights of inhabitants and investors in the areas of employment and economic Development (ZEDE) will be kept in effect.
  21. 21. Committee for the adoption of Best practices(CAMP) Technical Secretariat(ST) ADMINISTRSTIVE ORGANIZATION OF THE ZEDE
  22. 22. Member of the Committee for the adoption of Best practices Decreto Legislativo No. 368-2013
  23. 23. REQUIREMENTS TO BECOME PART OF THE ZEDE REGIME Article 39 of the Enabling Law of the ZEDE’s gives CAMP the authority to incorporate projects into the ZEDE regime. The requirements are the following ones: 1)An opinion issued by the National Statistics Institute on what is considered a low density coastal area. The opinion states that a low density area is any place with less than 35 persons living in a 1 km2 2)Other requirements issued by CAMP on what it will review to grant authorization. Those requirements consist of: 1. Presentation of a feasibility study; 2. Evidence of financial capacity; and, 3. A master development plan.
  24. 24. Aside from these two elements the enabling law requires that the group interested in creating a ZEDE has to own the land that it’s going to develop. The owner of the land has to appear before a notary stating that it has the intention to enter the ZEDE regime. If CAMP decides to incorporate the project into the ZEDE regime, that deed is registered in a special registry of land under ZEDE regime that CAMP has to create. The acceptance and review process of request to incorporate to the ZEDE regime will begin on May 3rd, 2016. It will be done by an ad-hoc committee integrated by members of CAMP that don’t reside in Honduras. The review process will be finalized within the next 30 days after the reception of a complete proposal.
  25. 25. The ad-hoc committee has the authority to ask for clarifications on the proposals presented before them and establish yearly fees for the services CAMP will provide to that ZEDE during the life of the project. The projects incorporated to the regime have to begin within a year of their registration. A six month extension can be granted. After a project is incorporated into the ZEDE regime, the developer of the project have to propose a Technical Secretary who would be appointed by CAMP.
  26. 26. Marvin Espinal marvinespinalhn@gmail.com abogado@marvinespinal.com

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