By: Nicaragua´s Corporate team
Foreign investment plays a crucial role in the economic development of any nation, and Nicaragua is no exception. Nicaragua’s legal framework has established two fundamental instruments: Law No. 1240, the Foreign Investment Law, and its regulatory enactment, Decree A.N. No. 8902.
I- Law No. 1240, the Foreign Investment Law
Published in La Gaceta, Official Gazette, No. 36, on Monday, February 24, 2025, Law No. 1240 serves as a key instrument within the legal framework for foreign investment in Nicaragua. This law establishes the general principles, rights, duties, and guarantees for foreign investors.
Among the most relevant aspects of Law No. 1240 are the following:
- Fundamental principles: The law enshrines principles such as non-discrimination between national and foreign investors, free transfer of capital, and protection against expropriation without just compensation, among others.
- Definition, among other concepts, of:
- Foreign investment: The law defines foreign investment as that which is made through the transfer of foreign capital to Nicaragua, without distinction of the investor’s nationality or place of residence, and which has materialized through the incorporation, acquisition, or participation in a commercial company.
- Strategic investment: This refers to foreign investment aligned with national development objectives and government plans. In the case of Strategic Investment, the foreign investor must sign a Strategic Investment Contract with the respective sectoral authority.
- Rights and incentives: Among the rights of foreign investors are the enjoyment, use, possession, and ownership of property related to the investment; free access to the purchase and sale of foreign currency; and the execution of international transfers abroad related to their invested capital or due to dissolution, among others. Incentives will be established in sectoral laws and other national regulations.
- Registration: The law establishes the necessity of registering foreign investments and obtaining the Unique Foreign Investment Registration Certificate (RUIE).
- Dispute resolution: Law No. 1240 stipulates that disputes arising from this law must first be resolved through consultations and amicable negotiation before the Ministry of Development, Industry, and Trade. The case may then be elevated to the National Foreign Investment Commission (CNIE). If a solution is not reached within thirty business days, the foreign investor may submit the dispute to the current national legal standards or through international arbitration, in accordance with international conventions or agreements to which Nicaragua is a party.
- Competent body: The law designates the Ministry of Development, Industry, and Trade (MIFIC) as the governing and promoting entity for foreign investments, outlining its general responsibilities in the matter.
II- Decree A.N. No. 8902, Regulations of Law No. 1240, Foreign Investment Law
Published in La Gaceta, Official Gazette, No. 99, on Wednesday, June 4, 2025, Decree A.N. No. 8902 serves as the regulation for Law No. 1240. Key aspects of this decree include:
- Detailed registration procedure: Foreign investor registration applications must be submitted to the MIFIC’s Investment Directorate, along with the corresponding application form, investment plan, draft articles of incorporation (when applicable), and a notarized certified copy of the investors’ identification.
For existing investors, Article 18, which is transitory, details the documents required by MIFIC for registration. All documents must be submitted in Spanish.
- Detailed registration procedure: Foreign investor registration applications must be submitted to the MIFIC’s Investment Directorate, along with the corresponding application form, investment plan, draft articles of incorporation (when applicable), and a notarized certified copy of the investors’ identification.
- Functions of MIFIC: Notable functions include the centralization and simplification of foreign investment registration and business formalization; granting the Unique Foreign Investment Registration Certificate (RUIE); monitoring the procedures for the materialization of strategic investments; monitoring compliance with foreign investor obligations; and the power to issue circulars, provisions, and other legal instruments to ensure the correct and effective application of the Law.
- Non-compliance with strategic investment registration: If investors fail to register, they will not be able to conduct economic activity in the country.
- Cancellation of the Unique Foreign Investment Registration (RUIE): The RUIE will be canceled when the investor ceases operations, after fulfilling their obligations; fails to comply with the provisions of the Foreign Investment Law and its regulations; or fails to comply with the provisions stipulated in the Strategic Investment Contract.
Together, Law No. 1240 and its regulations, Decree A.N. No. 8902, constitute the legislation that requires the registration of foreign investors and monitoring of these investments.