Investment Contracts Research Articles

Memories of colonial law: The inheritance of human capital and the location of joint ventures in early-reform China

Using a unique data set of Chinese foreign direct investment (FDI) contracts from the 1980s and early 1990s, we explore those mechanisms of historical persistence resulting from China's unique colonial experience. Adopting difference-in-differences as well as difference-in-difference-in-differences analysis within conditional logit, we provide evidence that foreign investors favored locating FDI in Chinese cities in which their home country had a colony in the 19th century and that a human-capital channel best explains this persistent impact of colonial experience. While alternative explanations for long-term persistence are not consistent with the empirical findings, the results suggest that legal human capital inherited from colonial times affected economic decisions after 1978. Thus, we attempt to advance the literature on history's long-lasting influence by proposing one particular mechanism of persistence—memory of legal institutions, or inheritance of legal human capital.

Initial Coin Offerings: When Are Tokens Securities in the EU and US?

This article presents a comparative analysis of the application of US and EU securities laws to initial coin offerings (ICOs), or token sales. An extensive token taxonomy framework is proposed to categorize digital assets in order to advance a more precise discussion on the legal classification and regulation of tokens. For the US, a full analysis of the application of the Howey test to different types of tokens gives insight into classification of tokens as a security (“investment contract”) under Section 2(a)(1) of the US Securities Act of 1933 and 3(a)(10) of the Securities Exchange Act of 1934. The analysis shows that most, if not all, so-called utility tokens can be classified as a security in the US. A possible ‘sufficiency-of-decentralization-test’ is also explored, while taking prior case law and the multiple dimensions of decentralization of blockchain projects into account. For EU financial law, the analysis in this paper focuses on the classification of tokens as ‘transferable securities’ under Art. 4(1)(44) of MIFiD II. The analysis shows that, in contrast to the US, pure utility tokens might not be deemed transferable securities under the EU securities regime. Across EU Member States however, large differences exist in terms of the legal classification of most tokens, which result from the freedom provided to EU Member States in transposing the MIFiD II definition of transferable securities into national law. The analysis in this paper provides insight into the two main approaches adhered to by EU Member States in the implementation of this definition, as well as their consequences for the legal classification of tokens. Conclusions are subsequently drawn on possible offering strategies adopted by issuers for future token sales and regulatory developments in the US and EU.

ANALISIS RETURN DAN RISIKO INVESTASI PADA REKSADANA SAHAM (Studi Pada Reksadana Saham yang terdaftar di Bursa Efek Indonesia Per.1.O1.2015-31.12.2017)

This study is a research aimed to knowing the return and risk of investment in stock mutual funds.
 The population used is stock mutual funds listed on the Indonesia Stock Exchange Period January 1, 2015 to December 31, 2017. The sampleused purposive sampling, which is a sample based on spesific criteria, that is mutual funds in the form of Collective Investment contracts and stock mutual funds that are open during the period 1 January 2015-31 December 2017.
 The results of the study show the amount of return is comparableof the risk. Pratama Sahamare the highest returns during 2015, Simas Saham Bertumbuh provides the lowest risk in 2015, Sucorinvest Equity Fund is the bestfund in 2016 with the highest return and the lowest risk. The highest return for 2017 is held by Sucorinvest Equity Fund products, but the lowest risk is owned by Simas Saham Unggulan.

Assessing ecological infrastructure investments

Conventional markets can underprovide ecosystem services. Deliberate creation of a market for ecosystem services [e.g., a payments for ecosystem services (PES) scheme] can close the gap. The new ecosystem service market alters behaviors and quantities of ecosystem service provided and reveals prices for the ecosystems service: a market-clearing equilibrium. Assessing the potential for PES programs, which often act as ecological infrastructure investment mechanisms, requires forecasting the market-clearing equilibrium. Forecasting the equilibrium is complicated, especially at relevant social and ecological scales. It requires greater disciplinary integration than valuing ecosystem services or computing the marginal cost of making a land-use change to produce a service. We conduct an ex ante benefit–cost assessment and forecast market-clearing prices and quantities for ecological infrastructure investment contracts in the Panama Canal Watershed. The Panama Canal Authority could offer contracts to private farmers to change land use to increase dry-season water flow and reduce sedimentation. A feasible voluntary contracting system yields a small program of about 1,840 ha of land conversion in a 279,000-ha watershed and generates a 4.9 benefit–cost ratio. Physical and social constraints limit market supply and scalability. Service delays, caused by lags between the time payments must be made and the time services stemming from ecosystem change are realized, hinder program feasibility. Targeting opportunities raise the benefit–cost ratio but reduce the hectares likely to be converted. We compare and contrast our results with prior state-of-the-art assessments on this system.

Stabilization Clauses in Investment Contracts in Light of the Sovereign Power of the State to Legislate — The Case of Southern Africa

Stabilization Clauses in Investment Contracts in Light of the Sovereign Power of the State to Legislate — The Case of Southern Africa

Assets on the Blockchain: An Empirical Study of Tokenomics

Digital tokens linked to financial and economic ventures may have multiple functions and uses. In this work, we examine the relationship between various token functions and the market price of the corresponding token. We consider 86 venture related blockchain tokens, and develop the analysis through a stepwise testing of four hypotheses using panel ordinary least squares with cluster-robust standard errors. We find that token functions are statistically significant in relation to token prices. In the absence of an established legal framework, we argue that our results complements recent regulatory actions identifying tokens to be investment contracts in a common venture. This is an original manuscript of an article published by Elsevier in Information Economics and Policy, available online: https://doi.org/10.1016/j.infoecopol.2020.100881.

Are Equity Crowdfunding Investors Active Investors?

A common assumption is that entrepreneurs retain more control of their venture when opting for equity crowdfunding (ECF) rather than venture capital. In this article, we investigate the relevance of cash-flow, control, and exit rights awarded to crowd investors in Germany, where more flexible ECF contracts are offered than in many other countries. In Germany, many of the rights used in venture capital investment contracts are also prevalent in ECF contracts. We find that crowd investors are asked to pay higher prices if they receive more cash-flow and exit rights, consistent with the view that these rights are valuable to the crowd. However, we find no evidence that these rights affect campaign outcome, the likelihood of securing follow-on funding, or the insolvency likelihood of the venture. We interpret this as indirect evidence that crowd investors are passive. Furthermore, crowd investors neither actively trigger insolvency proceedings nor mention the enforcement of their contractual rights in investor communication blogs or popular media. These results are in contrast with control rights theory and the results documented for venture capital contracts. Our research thus suggests that crowd investors are rather passive investors whose control rights are either ineffective or not exercised.

Financial Stability Effects of Foreign-Exchange Risk Migration

When firms trade forward contracts with banks to protect foreign currency cash flows against exchange rate movements, foreign exchange risk migrates to the banking sector. We show how this migrated risk may induce systemic repercussions with severe implications for the real economy. For identification, we exploit the Brexit referendum in June 2016 as a quasi-natural experiment in combination with detailed microdata on forward contracts and the credit register in Germany. Before the referendum, firms substantially increased their use of derivatives in response to the heightened uncertainty; banks, in providing these contracts, did not fully intermediate the risk and retained a large share of it on their own books. The depreciation of the British pound in response to the referendum’s outcome posed a shock to the capital of ex-ante exposed banks. Banks, especially weakly capitalized ones, absorbed these losses by cutting back credit to all firms, including those unlikely to have had any exchange rate exposure to begin with. Firms that had ex-ante borrowing relationships with banks facing losses experienced a larger reduction in credit and a greater decline in investment compared with their industry peers, thereby contributing to the aggregate investment contraction. We also find these effects to be more pronounced for small firms, which is consistent with credit market frictions being rooted in asymmetric information problems.

Zaštita temeljnih ljudskih prava pred međunarodnim investicijskim arbitražama kroz poseban osvrt na pravo na vodu

The concept of human rights penetrates into all spheres of law, acting as a protective mechanism against the abuse of rights by States and other entities. Human rights are a counterweight to the development of the neoliberal expansionism, embodied in the regime of foreign investment protection through international investment contracts. When states enter into such contracts, they bring along the previous commitments, in particular the obligation of protecting human rights. However, this obligation is not merely the result of existing international treaties because states are also obliged to to respect the higher rank norms of international law (jus cogens norms), which include the fundamental human rights, concentrated around the right to life. In such a legal framework, there is a notable increasing conflict between the protection of foreign investors' rights in international investment disputes and the protection of fundamental human rights. The right to water, as an indirect right to life, is a special indicator of this conflict in the practice of international investment tribunals. The issue of supremacy of rights is raised, particularly concerning the question which obligations have priority under international law: the protection of foreign investments or the protection of fundamental human rights, and especially the right to water? The hitherto practice of international investment tribunals is diverse and inconsistent in this regard; as such, it does not provide a clear answer to this key question.

Legal Regulation of Public-Private Partnership Supporting the Development of Energy-Efficient Lighting Industry

The paper is devoted to certain forms of public and private partnership in the sphere of light technologies, special investment contracts, regional investment contracts, industrial parks, and industrial clusters. It studies the prospects of the development of general and special lighting considering the rise of population and its needs in high­quality social, medical and educational services. Authors analyze specific conditions of granting tax preferences to innovative companies that help to stimulate the production of high­tech goods. The authors explain why legal definitions of regional investment projects and special investment contracts need clarification. The paper specifies the conditions for setting up new productions in the territories of advanced economic development. The options of unification of legal mechanism, which regulates the creation and support of industrial parks and industrial clusters, are offered.

Joint optimal decision of the shared distribution system through revenue-sharing and cooperative investment contracts

PurposeThe rapid development of e-commerce has caused not only explosive growth of the express delivery industry, but also ever-greater operational pressures. Models from the sharing economy may provide new ideas for operational improvement. The purpose of this paper is to consider an optimization method that reduces costs and increases efficiency. The proposed method enables a shared distribution system based on revenue-sharing and cooperative investment contracts.Design/methodology/approachThe authors design a two-echelon supply chain (SC) of the shared distribution system with one shared distribution company and N express companies. In this SC, the express companies provide only inter-city transportation, and they outsource internal-city transportation to a shared distribution company. This distribution system differs from that of the traditional express delivery industry. The traditional system of delivery requires large numbers of empty trips (with no load to deliver), because the operating mode of urban distribution has been the franchise. To offer greater efficiency and performance, the authors introduce the sharing economy mode of express delivery. The authors examine the potential of a joint optimal decision-making strategy that involves revenue-sharing and cooperative investment contracts based on an order flow proportion (OFP) and a revenue-sharing factor (RSF). In this shared distribution system, the most important innovation is that all of the express companies jointly invest in and establish a shared distribution company based on OFP or RSF principles.FindingsThe profitability of an SC with revenue-sharing contracts based on an OFP system is much higher than that of a decentralized SC, and it is very close to the profitability of a centralized SC. In SCs with revenue-sharing contracts that are based on RSFs, there are many possible combinations of RSFs that can increase the overall profitability. The analyses indicate that the OFP system offers the best solution in designing revenue-sharing contracts based on RSFs.Practical implicationsThis study indicates that revenue-sharing contracts based on both OFP and RSF principles can increase overall SC returns by 0.21 to 0.44 percent. In sum total, this improvement could mean a 0.84 to 1.76bn Yuan increase in revenues for the 400+ bn-Yuan express delivery industry.Originality/valueThe authors find that a combination of equity investment and SC coordination contracts makes the cooperation between SC members much more stable. Through this kind of shared distribution system, the scale of economy can further reduce the costs and increase the efficiency of the express delivery industry.

PERAN ARBITRASE ICSID DALAM KERANGKA PENANAMAN MODAL DI INDONESIA

At present many foreign investment contracts are made by the State subdivisions and State companies on one side with foreign private companies on the other. For countries that want to carry out a lot of business contracts in the field of foreign investment, which of course must provide stimulating incentives for investment, including the provision of supervision of foreign companies, because foreign investment means getting knowledge, experience, technical and managerial fields. The main considerations of foreign investment to carry out business contracts are basically their market expansion, besides the low production costs due to relatively cheaper labor costs, tax-free facilities (tax holidays) and other facilities free of charge by the capital receiving countries ( host states).

Virtual or Crypto Currencies and the Securities Laws

Over the years, a wide variety of nontraditional investments from orange groves to earthworms and scotch whiskey have been held to be securities. The securities laws’ definition is expansive because of its inclusion of “investment contract” in the statutory definition and the courts’ interpretation of that phrase. This article concludes that under most, if not all, circumstances, virtual or crypto currencies are likely to be securities. The article also explains the consequences under the securities laws of classifying a virtual or crypto currency as a security.

Surveying the SIB economy: Social impact bonds, “local” challenges, and shifting markets in urban social problems

ABSTRACT Confronted with the challenge of how to address complex urban problems in a climate of fiscal austerity, many governments around the world have turned to a new funding tool: the social impact bond (SIB). Pioneered in the UK in 2010, SIBs are investment contracts in which investors offer upfront funding for preventative social programs, with government agreeing to repay the investment and provide a return if these programs meet specified outcomes. Though SIBs have been the focus of a growing policy and academic literature, little is known about the work of building the SIB market infrastructure, the actors performing this labor, and the challenges and struggles encountered along the way. Drawing from the results of a larger 3-year study of SIBs in Canada, the United States, and the UK, this article maps out the essential features of each respective “SIB economy” and examines how the unique struggles encountered in each context reflect key tensions between the “financial” and the “local”; between urban financial elites and the logics of risk/return, standardization, and scale; and the local nature, contexts, and contingencies of urban social problems and related markets in social and public services. The result is a different lens through which to evaluate the nature, limitations, and future of social impact bonds.

Industrial Policy Priorities of Russia in the Context of Challenges of the Fourth Industrial Revolution. Part 2

The article emphasizes the relevance of the digital economy development as one of the most important directions of the fourth industrial revolution. It is significant for a breakthrough in science and technology, social and economic development. I prove that the industrial policy is a reliable instrument for supporting digital economy. The following factors define the priorities of industrial policy: the level of socio-economic development of the country, the existing model of economic development, an image of the country’s future. I consider the evolution of the industrial policy priorities in Russia. In current situation, the essentially new priority is the support of digital economy. I find that pro-active digital economy formulation and management in collaboration of all branches of the government as well as the development of digital economy together with sector programmes and programmes of innovative development, etc. are of great importance. I have suggested steps, which could make the Industry Development Fund to support the new priorities connected with digital economy development. Furthermore, I have developed proposals on adjusting provisions, which define the possibility to apply special investment contracts for stimulating the digital economy development. I have defined the main directions of staffing the digital economy. The article emphasizes that «digital transformation of the industry» radically changes the idea targets and subjects of industrial policy. So-called related industries, as the association of goods, individuals, and technologies within the industrial system, the structures based on such special type of business models as technological platforms and the human needs become a new targets of the industrial policy. During the fourth industrial revolution, a system of interaction between federal and regional authorities and various business associations as well as civil society institutions becomes the main subject of industrial policy. This predetermines a multi-actor character of the industrial policy. The requirements to leaders of the state and business structures have increased. Therefore, their responsibility for preventing negative social and ethical consequences of the implementation of new technology solutions.

The Principle of Good Faith in The Choice of Law of Foreign Direct Investment Contracts in Indonesia

Applying the principle of good faith in the choice of law is one of the most common problems of international business contract, particularly in foreign direct investment contracts. The implementation of the principle of good faith in the choice of law increasingly reduced by the emergence of some problems in the investment contract, which of course, the most aggrieved entities are domestic investors who also host country. The choice of law has an important role in the contract because it concerns the interests of each of the parties, and the principle of good faith as a priority principle of international contract law should be applied as the basis for determining the choice of law for the parties to a contract. This paper examines the principle of good faith in the choice of law to realize justice among the parties with different laws, especially on private and public investment contracts between foreign investors and domestic investors in Indonesia, in the process of formation, implementation, or post-contract. This paper is legal research that is normative, meaning that this research is based on the prevailing laws and regulations in Indonesia. Then, the approach used is statute approach and conceptual approach. So it is expected that between the rules and the concept of existing topics will be aligned. Keywords: Choice of Law, Foreign Direct Investment Contracts, Principles of Good Faith.

PENGARUH PEMBIAYAAN DAN TINGKAT BAGI HASIL TERHADAP TINGKAT KESEJAHTERAAN DI INDONESIA DILIHAT DARI PERTUMBUHAN PDB

The purpose of this study is to assess empirically the effect of financing channeled by the Sharia Bank and the profit-sharing rate to GDP growth. With this research is also expected to explain that sharia banks are still new when compared with conventional banking also have an influence on the economy in Indonesia.The material used in this study is the financing variables are funding provided by a party to other parties to support the planned investment both alone and institutions. Financing variables in this research is all financing channeled by syariah bank. The profit-sharing variable is the form of return (the acquisition of business activity) of the investment contract from time to time, uncertain and not fixed on a Sharia bank. The size of the acquisition depends on the results of the business actually obtained by the Sharia bank. As well as the variable GDP (Gross Domestic Product) is the market value of all final goods and services produced within a country within a certain period of time. Data obseration used is data of those variables in the last 11 years that is year 2001 s / d 2011. Data obtained from BPS Indonesia and Bank Indonesia.The data analysis used is classical assumption test which includes: Normality Test, Autocorrelation Test, Heterokedasity Test, Multicolinearity Test besides also using Multiple Linear Regression Test and Partial Test, Simultaneous Significance Test (F statistic Test) and Coefficient of Determination (adjusted ). To test above the researcher using SPSS software program version 16.The result of research got R-Square value 0,666 or 66,6% means that 66.6% of GDP variable can be influenced by financing variable and profit sharing and 33,4% is explained by other variable which not examined. From the calculation proves that the financing channeled by sharia banks has no significant effect to the welfare of the community (seen from GDP growth) while the profit sharing rate has a significant influence on the welfare of the community. Keywords: financing, profit sharing, welfare

Regulation of Initial Coin Offerings: Reconciling US and EU Securities Laws

Initial Coin Offerings (ICOs) are currently the hottest topic in the financial markets. They typically use blockchain technology to offer so-called ‘tokens’ that can confer various rights. Experts estimate that the amount of money raised via ICOs will reach US$ 20 billion by the end of 2018. Commentators have described the ICO bonanza as a new gold rush. Nevertheless, the legal framework for ICOs remains unclear because traditional securities regulation is designed for classical securities that are traded on a stock exchange. In late 2017, the US Securities and Exchange Commission released two statements that highlighted that tokens may be subject to US securities regulation if they meet the requirements for ‘investment contract’ as laid out in the Howey test. However, regulators in Asia and Europe remain quite vague on the issue. In this article we analyze the legal framework for ICOs in the European Union. It is our view that investment tokens (including hybrid tokens with some investment functions) are ‘transferable securities’ under Directive 2014/65/EU on Markets in Financial Instruments. Despite resting on a highly dissimilar definition, the financial markets law of the European Union, if applied correctly, applies to token classifications – this is comparable with the US Securities and Exchange Commission’s approach. The result would be a similar framework in two of the most vibrant regions for ICOs. It would be a first step towards a harmonized application of securities laws to ICOs, avoiding regulatory patchwork and a possible ‘race to the bottom’.

Savings Investments in Sharia Banks in the Perspective of Shariah Economic Law (Case Study at “Bank Syariah Bukopin”)

There are three motives a person to save funds through savings in the Conventional Bank: security, plans and investment. Implementation of interest system in Conventional banks is a very fundamental constraint for a Muslim to invest his funds in the bank. Because in the view of the scholars of the flower system is identical with the usury (riba) that is forbidden in Islam. It turns out long before the birth of money storage system in conventional bank interest, in classical fiqh literature known the concept and theory of al wadiah and mudharabah which is substantially no differences from the savings and investment savings offered by conventional banks. This paper discusses the theory, concepts and implementation of al wadiah as non-interest investment savings applied in sharia bank in the perspective of shariah economic law, by looking at case examples of the saving products of Bank Syariah Bukopin (BSB). It was found that all investment contracts in savings products offered by BSB were in accordance with the principles of shariah; as outlined in the Qur'an and Sunnah as the basis of Shariah, as well as Law Number 21 Year 2008 and Law no. 10 year 1998, Bank Indonesia Regulation (Peraturan Bank Indonesia [PBI]), Compilation of Islamic Economic Law (Kompilasi Hukum Ekonomi Syariah [KHES]) and Fatwa of National Sharia Board (Dewan Syariah Indonesia [DSN]) Indonesian Council of Ulama (Majelis Ulama Indonesia [MUI])

Hedging and Cash Flows in the Presence of Taxes and Expenses in Life and Pension Insurance

In investment and insurance contracts, certain stipulated payments may depend on the hedging strategy. We study the problem of calculation, hedging and valuation of such cash flows, by considering a payment process in a setup with taxes and investment costs that are functions of the investment returns or the current value of the hedging strategy. We determine the market value of the combined liability and decompose the value into the tax part, the investment cost part and the benefit part, and we determine the associated hedging strategies. Moreover, we identify the expected future tax payments and investment cost cash flows. Our results show that the current Danish insurance accounting practice for taxes is in general conservative, when considered in an idealized setting with symmetric and continuously-paid taxes. Finally, we consider the special case of affine interest rates, where explicit results can be obtained, and study some numerical results.