Business
Foreign Investment Act permits at national and state level
Companies register under national corporations law, and foreign investors need a permit. Because states regulate business activity too, most projects require both national and state approval.
Key rules
- Jurisdiction — Shared. National registration and foreign investment permits sit alongside state business licences and state foreign investment regimes.
Governing law
- FSM Code, title 32Commerce and Trade
- Foreign Investment Act 1997
- FSM Code, title 36corporations, partnerships and associations
- Banking Act 1980
In practice
Registration is straightforward on paper but the layering is what catches investors. The Foreign Investment Act 1997 requires a foreign investor to obtain a national permit, and each state operates its own licensing and in several cases its own foreign investment regime, so approvals must be assembled at both levels for the specific state where the activity occurs. Certain sectors are reserved to citizens. The decisive constraint is not corporate but proprietary: because non-citizens cannot own land, every commercial project is built on a lease, and the lease negotiation with customary owners is usually the critical path rather than the incorporation. Banking is nationally regulated, and the US dollar is legal tender, so there is no exchange-control layer.