Foreign investment regulation has become increasingly relevant for the execution of M&A deals and even broader transactions. More and more countries are adopting foreign investment regimes to protect their national assets and critical industries. This makes it important to carefully assess implications and risks early on.
Governments have recently taken significant steps in tightening restrictions and are increasingly willing to scrutinize transactions. The thresholds for intervention have been lowered and the range of industry sectors affected is growing. This can have a considerable effect on deal planning and execution.
The unprecedented pace of change in legislation and policy therefore requires strategic planning and specialist advice to navigate the complex regulatory environment successfully.
Norton Rose Fulbright, from 50+ offices on four continents, together with its co-counsel, has a uniquely global perspective on the evolving landscape of FDI screening regimes. We are proud to offer this summary of FDI screening regimes in key jurisdictions around the world. Please use the below links to access brief summaries of the current FDI rules and contact information for national experts.
Naturally, these summaries are intended to provide general information only. They are not intended to be complete or to constitute legal advice by any Norton Rose Fulbright entity or other contributor. For specific advice, please do not hesitate to contact the undersigned, the authors of the relevant national summaries or your usual contact at Norton Rose Fulbright.
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On January 1, 2021, major reforms were effected to the Australian foreign investment framework, which apply to any foreign investments subject to the Foreign Acquisitions and Takeovers Act 1975 (the Act) occurring on or after January 1, 2021.
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On 25 July 2020, the Austrian Federal Investment Control Act (Investitionskontrollgesetz – ICA) came into effect. It significantly expanded the scope of foreign investment screening in Austria. Most cases concern the following sectors: health, data processing or storage and information technology.
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Belgium has introduced its first foreign investment screening regime of general application
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Aiming to promote high-quality development amid the COVID-19 pandemic and economic slowdown, China has made progress to move strategically towards further opening up its markets to foreign investors.
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Foreign direct investment review in Canada is regulated by the federal government under the Investment Canada Act (ICA). For the most part, the ICA provides that foreign investments fall under the jurisdiction of the Minister of Innovation, Science and Economic Development (Minister of Innovation, Science and Industry). The Minister of Canadian Heritage is charged with reviewing investments that involve a Canadian cultural business.
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Foreign direct investment screening procedures in the Czech Republic are governed by the Czech Act No. 34/2021 Coll. on the Screening of Foreign Investments (the "Czech FDI Act").
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The European Union (EU) framework for foreign direct investment (FDI) screening is set out in Regulation 2019/452 (as amended, the FDI Regulation). The FDI Regulation does not create an EU-level FDI screening mechanism but sets out minimum requirements for Member States’ FDI screening mechanisms and creates a framework for the European Commission (EC) and national authorities to share information and views.
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The Finnish Act on the Screening of Corporate Acquisitions (172/2020, as amended, the "Screening Act") provides the framework for the Ministry of Employment and Economic Affairs of Finland (the "Ministry") to review and, when necessary, to restrict, acquisitions of Finnish corporate entities by foreign investors where the target's business operations are considered to be of "key national interest" and the acquisition could endanger such an interest.
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France, which has had an FDI screening mechanism since 1966, has in the last two years further strengthened and clarified it through successive reforms.
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Recent years have seen a significant increase in foreign investment screening procedures in Germany as statistics published by the Ministry in March 2022 confirm. A large number of these cases concern information and communication technology as well as the healthcare sector.
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Currently, there are two different sets of foreign direct investment control (“FDI”) screening mechanisms in effect in Hungary.
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Foreign investment in India is governed by the Foreign Exchange Management Act, 1999 and the rules and regulations thereunder (“FEMA”), including the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (as amended from time to time) (the “NDI Rules”).
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In Indonesia, the primary legislation governing foreign direct investments (FDI) is Law No. 27 of 2007 regarding Capital Investment (as amended). FDIs are under the supervision and auspices of the Ministry of Investment / Investment Coordinating Board (BKPM).
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Under the Italian foreign investment regime (set forth in Law Decree No. 21 of March 15, 2012, as amended (the “FDI Decree”), and in several implementing measures), the Italian government has the power to impose conditions on, or veto, investments in Italian companies and assets in strategic sectors when such investments may jeopardize the national security or other public interests (often referred to as the “golden power”).
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Foreign direct investments (FDI) in Japan are regulated by the Foreign Exchange and Foreign Trade Act (the FEFTA). Over the past few years, there have been major amendments to the FEFTA, with the most recent amendments coming into effect on May 10, 2022.
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On 1 September 2023, the Luxembourg law of 14 July 2023 establishing a mechanism for the national screening of foreign direct investments (the Law) entered into force.
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In Mexico, foreign direct investments (FDI) are regulated by the Foreign Investment Law (FIL).
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On 18 May 2022, the Dutch Parliament adopted a law that introduces a generally applicable foreign direct investment screening regime (the Act). The purpose is to complement the existing sectoral screening regimes in electricity, gas and telecommunication sectors.
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The Portuguese rules on foreign direct investment are governed by Decree-Law no. 138/2014 (FDI Law).
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In April 2022, Romania introduced an overhaul of its foreign direct investment (“FDI”) regime through Government Emergency Ordinance no. 46/2022 on measures for applying EU Regulation 2019/452 establishing a framework for the examination of foreign direct investment in the Union (the “EU FDI Regulation”) and amending Competition Law no. 21/1996 (“GEO 46/2022”).
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Slovakia has a new foreign direct investment regime introduced by Act No. 497/2022 Coll. on Screening of Foreign Direct Investments (the „FDI Act”), which will take effect on March 1, 2023. The new rules do not apply to investments completed prior to this date.
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In 2020, the Slovenian Parliament adopted rules regarding foreign direct investments. The topic was included in the Act Determining the Intervention Measures to Mitigate and Remedy the Consequences of the COVID-19 Epidemic, that entered into force on May 31, 2020.
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Over the past two years, Spain has significantly strengthened its foreign investment screening mechanism, and all acquisitions by foreign investors (as defined below) of a Spanish entity active in a strategic sector are subject to prior authorisation by the Ministry of Industry, Commerce and Tourism (“MoICT”).
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In Turkey, companies with foreign ownership (FDI Companies) must notify foreign direct investments (FDI) to the Ministry of Industry and Technology (the Ministry), but approval is only required to establish a liaison office. In certain sectors, however, FDI is prohibited or restricted.
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The UK introduced a new more extensive national security regime in 2022 when the National Security and Investment Act 2021 came into force on January 4, 2022.
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The foreign investment review landscape in the United States has, over the course of the past year, grown more complicated as new regulations under the Foreign Investment Risk Review Modernization Act (FIRRMA) have been implemented and new enforcement tools and resources have been allocated.
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On March 6, 2024, the US Securities and Exchange Commission (SEC) adopted final rules by a 3-2 vote that would require domestic and foreign registrants to provide climate-related disclosures in their registration statements and annual reports (the Final Rules).
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