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foreign direct investment

A foreign direct investment (FDI) is an investment in which an individual or business owns 10% or more of the voting stock (a controlling interest) of a company in a foreign country. If an investor owns less than 10% of the company the International Monetary Fund (IMF) considers the investment a part of the individual’s stock portfolio and not an FDI.

In Texas, as in the rest of the United States, foreign direct investment (FDI) is subject to a combination of federal laws and regulations. The key federal agencies involved in overseeing FDI include the Committee on Foreign Investment in the United States (CFIUS), which reviews transactions that could result in control of a U.S. business by a foreign person to determine the effect on national security. For an investment to be considered an FDI under the guidelines of the International Monetary Fund (IMF), an individual or business must own at least 10% of the voting stock of a company in the foreign country, which in this case would be the United States. Ownership of less than 10% is generally considered a portfolio investment and not FDI. Texas does not have specific statutes that separately regulate FDI; rather, it follows federal guidelines and regulations. Additionally, Texas may offer various incentives for foreign investors, and such investments are also subject to U.S. tax laws and regulations.

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