If a foreign investor is prohibited by the host country's laws from owning a majority of a joint venture, another way to gain operational control is:

Question

Quizplus · Accepted Answer

Surrounding the joint venture with contractual obligations to the foreign investor would give them a greater degree of operational control without violating the host country's laws. This can be done through clauses such as requiring the joint venture to follow certain management practices or giving the foreign investor veto power over certain decisions. Option A (secretly investing in trust) may be illegal or unethical, and option B (using American management techniques with cumulative voting) may not be accepted or effective in the host country's culture.

If a Foreign Investor Is Prohibited by the Host Country's