Canada
The Canadian government continues to scrutinize foreign investments by state-owned enterprises and state-linked private investors, especially if from "non-like-minded" countries.
Introduction
Partner|Washington, DC
Global Head of FDI Reviews and US National Security/CFIUS
Partner|Paris
Partner, FDI Reviews
Now in its eighth year of publication, White & Case's 2024 Foreign Direct Investment Reviews provides a comprehensive look at foreign direct investment (FDI) laws and regulations in more than 40 countries worldwide.
In this edition, we continue to offer key datapoints that can help inform parties and their advisors as they evaluate the new set of challenges presented by FDI screening requirements in cross-border transactions that span multiple countries.
FDI screening is continuously evolving, in fact, maturing. Stakeholders in the process, in particular FDI regulatory authorities in allied countries, are communicating and learning from each other. It is imperative to stay on top of the FDI requirements as transactions—be it mergers and acquisitions, investments, public equity offerings, debt structurings or financial restructurings—are negotiated. Understanding the potential remedies that could be required for approval and proper allocation of FDI risk are key ingredients in avoiding unpleasant surprises related to timing, certainty and business plan execution.
The number of national FDI regimes and regulatory enhancements is growing around the world, particularly in Europe, with no harmonization in terms of process and timelines. FDI regulators, at least from allied nations, are collaborating and learning from each other.
FDI regulators interpret their jurisdiction and authority broadly, especially if they believe it is in the national interest. Many regulators have "call-in," "ex officio," or "non-notified" authority. There is increasing coordination in the European Union (EU) between FDI authorities with the support of the European Commission.
Despite increased regulation, most cross-border transactions are successfully consummated, although there has been an increase in the number of cases clearing with remedies.
The origin of the investor remains a key concern for Western regulators. For example, China and Russia are included more and more in the Committee on Foreign Investment in the United States' regular Q&A, asking broader and more invasive questions.
Investors conducting cross-border business need to understand FDI restrictions as they are today, and how these laws are evolving over time, to avoid disruption to realizing synergies, achieving technological development and integration, and ultimately securing liquidity.
Americas
Mexico
FDI, whether undertaken directly or indirectly, is generally allowed without restrictions or without the need to obtain prior authorization from an administrative agency.
United States
Most deals are approved without mitigation, but the CFIUS landscape has continued evolving based on a combination of expanded jurisdiction, mandatory filings applying in certain cases, enhanced focus on a broad array of national security considerations, increased rates of mitigation, further attention on monitoring, compliance and enforcement, and a substantially increased pursuit of non-notified transactions.
EMEA
Europe
The European Commission continues to be a driver of FDI screening across the EU, with Member States now moving toward coordinated enforcement.
Austria
The wide scope, low trigger thresholds and extensive interpretation of the Austrian FDI regime require a thorough assessment and proactive planning of the M&A process.
Belgium
The Belgian FDI screening regime entered into force in July 2023. In its early days, investors and authorities alike are coming to grips with the new regime and the guidelines that help parties navigate it.
Bulgaria
A bill contemplating the creation of a foreign direct investment screening mechanism in Bulgaria is currently before the Bulgarian parliament.
Czech Republic
The new Czech Foreign Investments Screening Act took effect in May 2021, establishing the rights and duties of foreign investors and setting screening requirements for Czech targets.
Denmark
The scope of the Danish FDI regime is comprehensive and requires a careful assessment of investments and agreements involving Danish companies.
Estonia
Estonia's foreign direct investment screening mechanism entered into force on September 1, 2023.
Finland
FDI deals are generally not blocked in Finland.
France
French FDI screening continues to focus on foreign investments involving medical and biotech activities, food security activities or the treatment, storage and transmission of sensitive data. The nuclear ecosystem is subject to very close scrutiny.
Germany
Following numerous amendments over the past years, Germany's FDI review continued in full swing in 2023, with further significant updates expected in 2024.
Hungary
FDI screening in Hungary – forever changing regulation, no change in its importance.
Ireland
Ireland is expected to enact its FDI screening legislation in 2024.
Italy
Italy's Golden Power Law is now more than 10 years old and is continuously expanding its reach.
Latvia
The law in Latvia provides for sectoral FDI regimes for specific corporate M&A, real estate dealings and gambling companies.
Lithuania
All investments concerning national security are under the scope of review.
Luxembourg
In 2023, Luxembourg adopted a national screening mechanism for foreign direct investments.
Malta
Malta's FDI regime regulates transactions that must be notified to the authorities and, in some cases, will be subject to screening.
Middle East
The Middle East continues to welcome foreign investment, subject to licensing approvals and ownership thresholds for certain business sectors or in certain geographical zones.
Netherlands
The Netherlands, complementing its existing sector-specific regulations, has introduced a general investment screening mechanism to enhance the protection of its national security across a broader range of sectors.
Norway
The foreign direct investment regime in Norway is subject to upcoming changes, with further changes expected to come.
Poland
The Polish FDI regime – ambiguous rules, no blocking decisions and evolving market practice.
Portugal
In Portugal, transactions involving acquisition of control over strategic assets by entities residing outside the EU or the EEA may be subject to FDI screening.
Romania
The Romanian regime regarding foreign direct investment appears to have become more stable in 2023, but continues to surprise.
Russian Federation
Russian laws regulating foreign investments have been considerably amended in 2023 to extend the scope of the laws as well as to strengthen control in this sphere.
Slovakia
The new Foreign Investments Screening Act entered into force in Slovakia on March 1, 2023.
Slovenia
Since May 31, 2020, certain foreign investments into Slovenian companies can be subject to foreign direct investments review. Incorporation of new companies and business units can also be screened.
Spain
Certain foreign direct investments in Spain are subject to scrutiny under the Law 19/2003 (Law on the movement of capital and foreign economic transactions and on certain measures for the prevention of money laundering). These restrictions started back in 2020 and, since then, additional formalities have been introduced, specifically by the new FDI regulation, which entered into force on September 1, 2023.
Sweden
In December 2023, Sweden adopted and implemented a new FDI regime, meaning that a general FDI screening mechanism now applies in relation to investments in certain Swedish businesses.
Switzerland
Historically, Switzerland has been very liberal regarding foreign investments. However, there has recently been increased political pressure to create a more structured legal regime for foreign investment.
Türkiye
Making Türkiye an attractive investment destination continues to be a priority for the government.
United Arab Emirates
Foreign direct investment is permissible in the UAE, subject to applicable licensing and ownership conditions.
United Kingdom
The UK introduced new legislation governing FDI in 2022, which also captures domestic investment in certain sectors.
Western Balkans
The Western Balkan region (Balkan countries out of European Union) remain increasingly accessible to foreign investment, without established Foreign Direct Investment ("FDI") screening mechanism, with limited requirements for licensing approvals and ownership thresholds, apart from specific sectors.
Asia-Pacific
Australia
Australia's stringent foreign investment regulations, overseen by the Treasurer and FIRB, safeguard national interests and security. The framework, including the Foreign Acquisitions and Takeovers Act 1975 and recent updates like the Australia-UK Free Trade Agreement, emphasizes transparency and accountability, with new penalties and registration requirements enhancing oversight and compliance.
China
While restricting the data transfer relating to national security, China issued guidelines to further optimize its foreign investment environment.
India
India continues to be an attractive destination for foreign investment, ranking as the world's eighth-largest recipient of FDI in 2023.
Japan
Certain businesses related to "Specifically Designated Critical Commodities" have been designated "core" sectors subject to Japan's FDI regime, FEFTA.
Republic of Korea
The Republic of Korea continues to welcome foreign investment, with the government actively seeking to ease regulations and update the regulatory framework to be in line with global standards.
New Zealand
After a number of years of amendments under the OIA from 2018 to 2021, New Zealand has seen a period of stabilization of the overseas investment regime. However, following the recent election and change of government in New Zealand, further changes are expected to better support investments in build-to-rent housing developments.
Taiwan
Taiwan continues to promote FDI under a two-track screening mechanism for foreign and PRC investors.
