The Belgian FDI screening regime, introduced by the Cooperation Agreement of November 30, 2022 ("Cooperation Agreement")1 became effective on July 1, 2023. Similar to many other European foreign direct investment ("FDI") screening regimes, it applies to both direct and indirect investments made by non-European Union ("EU") investors. To assist both present and prospective investors, along with their legal counsel, the Belgian Interfederal Screening Commission ("ISC"), issued draft guidelines on June 30, 2023, outlining the scope and procedure of the screening mechanism. While these draft guidelines offer helpful insights, certain aspects required further clarifications during the course of the rollout of the new regime.
To address this issue, the ISC recently published updated guidelines on April 4, 2024, in the form of an FAQ (the "Guidelines"). These Guidelines aim to c various aspects of the Belgian FDI screening mechanism and are considered by the ISC to be a dynamic document subject to continuous adaptation through new regulations and experience from the controlling authority.
The Guidelines provide significant clarifications for all stakeholders. Firstly, they refine the scope of the Cooperation Agreement by confirming that greenfield investments are not covered by the Belgian regime (Q5 of the Guidelines). They also specify that asset deals and branches of activity fall within its purview, requiring notification to the ISC in the event of a change of control to a non-EU investor (Q7 and Q8 of the Guidelines). It is also clarified that branch offices can under circumstances be considered as entities within the meaning of the Cooperation Agreement (Q9 of the Guidelines), which means that an investment in a foreign legal entity with a branch office in Belgium can fall within scope. Furthermore, they clarify that factors such as the price of the acquisition, revenue generated by the target (except for investments in the biotech sector), and market shares are not considered by the ISC when determining the necessity to file an application (Q11, Q12, and Q17 of the Guidelines). This specific clarification aligns with other EU regimes, such as the French one, which recently expanded its scope to include registered branches, thus ensuring added consistency and coherence in FDI regulations in Europe.
Additionally, the Guidelines elaborate on the Cooperation Agreement's investment thresholds (10% or 25% of voting rights) and their application in various scenarios depending on the sector and the Belgian target revenues. (Q23 to Q26 and Q30 of the Guidelines). They also clarify that if the acquisition of (a portion of the) voting rights is deferred or conditional, the notification of an investment is required as soon as there is certainty that the threshold (e.g., 10% or 25% of voting rights) shall be exceeded (Q28 and Q29 of the Guidelines). Additionally, the ISC utilizes a look-through approach to ascertain voting rights percentages, diluting the stake of the investor over the entire chain of control down to the Belgian entity, unless the foreign investor acquires control over the Belgian entity or its parent (Q35 of the Guidelines). Italy or Denmark have a similar look-through approach while in neighboring France, the relevant FDI authority identifies a chain of control from the direct invested entity down to the Belgian entity.
Regarding transaction structure, the Guidelines confirm that internal group restructuring does not exempt non-EU entities from filing requirements if the target is within scope which is likely to create additional administrative burden for the Belgian FDI authorities (Q39 of the Guidelines). However, in the case of internal restructuring operations with the same ultimate owner but involving multiple successive partial operations, each triggering a filing, only one application is necessary if they aim to achieve the same final objective (Q40 of the Guidelines).
Finally, the Guidelines, in the event of a global transaction, authorize the parties to carve out the Belgian business pending review by the ISC (Q45 of the Guidelines), and clarify that the duty to notify the ISC of an FDI arises upon signing the investment agreement (Q49 of the Guidelines), though there is no mention of a specific timeline to file (contrary to the Italian regime, which many interpret to require filing within 10 days from signing). They also indicate that an ex officio procedure is available to the ISC, even when the concerned investment was not subject to a mandatory application but could nonetheless raise concerns about national security, public order, or strategic interest (Q75 of the Guidelines), which suggests parties may wish to consider proactively and voluntarily filing in such circumstances.
Louis Roussier (White & Case, Associate, Paris) contributed to the development of this publication.
1 "Samenwerkingsakkoord van 30 november 2022 tot het invoeren van een mechanisme voor de screening van buitenlandse directe investeringen tussen de Federale Staat, het Vlaamse Gewest, het Waals Gewest, het Brussels Hoofdstedelijk Gewest, de Vlaamse Gemeenschap, de Franse Gemeenschap, de Duitstalige Gemeenschap, de Franse Gemeenschapscommissie en de Gemeenschappelijke Gemeenschapscommissie / Accord de coopération du 30 novembre 2022 visant à instaurer un mécanisme de filtrage des investissements directs étrangers entre l'État fédéral, la Région flamande, la Région wallonne, la Région de Bruxelles-Capitale, la Communauté flamande, la Communauté française, la Communauté germanophone, la Commission communautaire française et la Commission communautaire commune", Belgian Official Gazette, June 7, 2023.
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