What are the different types of FDI?

• In general, there are four types of foreign direct investment (FDI):

– The first type of FDI is participation in the capital increase of a domestic company (including foreign-invested companies) or the acquisition of new shares by establishing a new corporate entity (individual or joint venture).
– The second type of foreign direct investment involves the acquisition of existing shares, that is, when foreigners acquire the shares of domestic or foreign-invested companies possessed by domestic shareholders.
– The third type takes the form of long-term loans, which means that the parent company in the home country extends long-term loans to the foreign-invested company with a maturity of more than five years.- The fourth type includes the acquisition of shares through M&A, which means:

• Acquiring shares through free capital increase of foreign-invested companies;
• Acquiring shares through the continued existence or new corporate identity of the merged company;
• Acquiring shares of a foreign-invested company through purchase, inheritance, capital increase or donation from a foreign investor;
• Acquiring shares through dividends from prior investments;
• Transformation, acquisition or exchange of convertible bonds, exchangeable bonds and depository receipts.