Foreign Investment

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The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2024”.

In 2024, boards of directors face a well-established, complex and active global foreign direct investment (FDI) landscape in which transactions will regularly trigger multijurisdictional FDI filing and approval processes.  This is the case not only with respect to well-known FDI review regimes such as the Committee on Foreign Investment in the United States (CFIUS), but also with newly established, modified, and/or expanded non-U.S. FDI review regimes, particularly in Europe.  Indeed, as governments around the world have become increasingly empowered and willing to scrutinize, and in some cases prevent, transactions they deem objectionable, FDI approvals have become a significant regulatory issue for many cross-border transactions.Continue Reading FDI Review Regimes are Well-Established and Active; Outbound Investment Regimes are on the Horizon

  • The UK Government consults on changes to the National Security and Investment Act.
  • The new Irish FDI regime was signed into law and is expected to come into force in Q2 2024.
  • An update on the state of Dutch FDI review confirms active enforcement and adds clarification on retro-active application.
  • Seemingly small but impactful changes of the French FDI regime ahead.
  • German courts overrule FDI decisions of the German FDI authority. Judicial protection is possible, but more likely succeed on the basis of procedural breaches.
  • The Italian Government vetoes an acquisition in the defense sector by French Safran.
  • The European Commission published its third annual report on EU FDI screening, providing an overview of FDI enforcement trends and statistics and also published the results of its consultation on the evaluation and revision of the EU FDI screening regulation.

Continue Reading Cleary Gottlieb FDI Newsletter: November – December 2023

On December 7, 2023, the U.S. and Mexican governments signed a Memorandum of Intent (“MOI”) agreeing to cooperate and bolster foreign investment screening.  Both countries have expressed a commitment to establish a bilateral working group for the exchange of information and best practices on foreign investment, with the goal of helping Mexico develop a CFIUS-like screening regime and strengthening the collective security of the United States and Mexico.    Continue Reading United States and Mexico to Bolster Cooperation in Foreign Direct Investment Screening

Foreign direct investment policies around the globe continue to adjust to the changing geo-political environment. In particular, the US and the European Union as well as certain Member States are in the process of revising their investment screening regimes, including the introduction of new tools such as outbound investment screening and the European Foreign Subsidies Regulation. Generally, the focus of these policy adjustments is on Chinese investments.Continue Reading The evaluation of the German FDI Regime – Cornerstones of potential revisions revealed

Investments in Luxembourg entities closed after September 1, 2023—including those signed beforehand—will need to factor in potential FDI filings in the Grand Duchy.  The Luxembourg FDI law establishes a mandatory screening system for non-EEA investments made on a lasting basis in legal entities incorporated in Luxembourg and carrying out critical activities.  Luxembourg follows in the footsteps of its Benelux counterparts that introduced new FDI regimes in the past two months.[1]Continue Reading Benelux FDI: Luxembourg FDI Screening Regime Enters Into Force

More than halfway through 2023, there is no easing in sight on the FDI front.

  • The game-changing EU Foreign Subsidies Regulation took effect. The first legislation of its kind ever entered into by a trading bloc.
  • FDI regimes in two key EU jurisdiction, The Netherlands and Belgium, have come into force, introducing far reaching screening mechanisms.
  • At the same time, the ECJ renders a decision that has the potential to counteract overly extensive FDI review practices of EU Member States.
  • Current practice trends and policy developments in the EU and on national level foreshadow tighter scrutiny of foreign direct investments in Europe.

Continue Reading Cleary Gottlieb FDI Newsletter: May–July 2023

Since the current Italian cabinet was sworn-in in October 2022, it has applied the Italian foreign direct investment (“FDI”) regime in a few relevant cases, which appear to be the bellwether of the new government’s approach to FDI review.Continue Reading Italian FDI, When the Government May Rewrite Corporate Governance

The first few months of 2023 have seen significant developments in the FDI landscape that will have a major impact on cross-border transactions. Deal makers need to be aware that the scope of FDI control is increasing:

  • With the United States taking major steps towards implementing an outbound FDI screening mechanism (which are echoed in Europe) and the European Commission further developing the EU Foreign Subsidies Regulation, new game changing regulatory frameworks take clearer shape.
  • Following the EU Commission’s calling of recent years, by the end of the year almost all EU member States will have adopted a national FDI screening regime.
  • On 27 April 2023, the UK Government published updated guidance that reflects its developing practice. Since January 2022, five transactions have been prohibited and 10 deals have been cleared subject to remedies.

Continue Reading Cleary Gottlieb FDI Newsletter: January–April 2023

Foreign direct investment (“FDI”) control has historically been centred on inbound FDI, meaning investment inflow into a country.  The tide is turning, as the United States seems ready to introduce an outbound FDI control mechanism, whereby capital outflow towards certain countries will be subjected to a screening process.  Similarly, the European Commission (“Commission”) 2023 Work Programme indicates that the EC will “examine whether additional tools are necessary in respect of outbound strategic investments controls”, and is “prepared to revise the EU’s FDI screening regulation.”Continue Reading Outbound Investment Screening Regime—EU May Follow In U.S. Footsteps