The summer period was marked by a particular focus and scrutiny by authorities on transactions involving investors from China, which is typically considered a “risk” jurisdiction from an EU FDI and FSR perspective. Four decisions highlighted below are an important reminder for companies to carefully asses the FDI and FSR risks when engaging with and receiving investments from Chinese investors. It shows that authorities can and do scrutinise the same transaction using different regulatory frameworks:…
Introduction In April and May 2024, the scope of the ex-officio procedure was significantly expanded in updated guidelines published by the Belgian FDI authority, whereas the broad interpretation of ex-officio power by the Dutch FDI regulator was limited by a district court ruling. In the UK, the scope of ex-officio powers remains unchanged, but recently updated guidelines clarify in greater detail the cases where it may be applied. This highlights the divergence of approach of…
Introduction: New FDI regimes with divergent approaches In February 2024, Bulgaria adopted a new FDI screening regime, while Ireland published guidance on its new FDI regime, which are expected to enter into force in June and September 2024, respectively. The two differing approaches of the two new regimes illustrate the inconsistency of substantive and procedural FDI rules across the EU. While the Bulgarian FDI regime employs a “catch-all” approach with low thresholds and broad powers,…
The start of 2024 has seen the European Commission announce a new EU-wide legislative proposal, and the Italian and UK governments both issued two noteworthy enforcement decisions. In the EU, the European Commission published a proposal to update the 2019 EU Foreign Direct Investment Screening Regulation. The aim of the reform is to enable a clearer and more open line of communication between a national FDI authority and companies that have submitted an FDI filing.…
FDI enforcement in 2023 has been caught between two different public policy aims: the first is a willingness of authorities to expand their FDI regimes to review more investments; and the second, is a greater interest in and attention to the consistency and proportionality of such intervention. We have set out below the three main trends for companies to be aware of in relation to the enforcement of FDI rules and how they may affect…
As a result of national security concerns, the decision-making of national FDI regimes in the EU is not transparent and there are no obligations for authorities to publish their decision or the reasons behind it. However, authorities will often publish annual reports which provide a better understanding of national trends and decision-making. Two such reports were published at the end of September/October 2023. In September 2023, the German Federal Ministry for Economic Affairs and Climate…
FDI enforcement in Europe continues to increase, with authorities focusing on acquisitions relating to strategic assets and infrastructure. Companies and advisors should take this increased scrutiny into account when drafting corporate documents, and ensure that they have a clear strategy in place to obtain FDI clearances in a timely manner. The two major FDI investigations in Europe in September both concerned share acquisitions of strategic assets. First, in the face of concerns raised by national…
On 13 July 2023, in Case C-106/22, the European Court of Justice (ECJ) delivered its decision in relation to a preliminary reference submitted by the Budapest High Court. In the context of companies that often have a cross-border ownership structure extending outside of the EU, the ECJ concluded that the fact that a parent company registered in a third country has a majority control over an EU-based investor does not mean that the EU FDI…
On 2 September 2022, the European Commission published its second report on FDI screening, and the first one to cover an entire calendar year following the commencement of the EU FDI Screening Regulation in October 2020 (see our previous posts here and here). Since then, the Commission notes that it has screened over 740 transactions under its FDI mechanism and found that the “vast majority” of transactions did not pose a problem from a security…
Only 8 out of 265 foreign investments notified under the EU Foreign Direct Investment (“FDI”) Screening Regulation (“Regulation”) have resulted in mitigation measures, according to the first annual report on the Regulation. The Regulation was launched in October 2020 with the aim of improving cooperation between Member States and enabling governments to better monitor FDI in strategic industries, for example critical technology, infrastructure, healthcare and infrastructure (see our previous post on the Regulation here). The…