The Foreign Investment Regulation Review: Jurisdictional Summaries

Austria - view full chapter

Freshfields Bruckhaus Deringer

What is the nature of the review?
  • Public policy or national security, including crisis and public services.
Is it mandatory to file / wait for approval before closing?
Are there sanctions for non-compliance?
  • Mandatory filing for acquisitions of certain amounts of voting rights or other forms of control in an Austrian undertaking by a non-EU/EEA/Swiss investor if the target is active in certain sensitive sectors.
  • Sanctions for non-compliance include treatment of the transaction as void, and criminal and administrative penalties.
What are the review periods?
  • Approximately 70-80 days for a Phase I review (the authority must decide within one month following conclusion of EU cooperation mechanism proceedings, which typically end approximately one and a half months after submission of the application).
  • Another two months for an in-depth Phase II investigation.
Are there thresholds for notification / reviewability?
  • Indirect or direct acquisition of:
  • 10%, 25%, 50% of voting rights;
  • a controlling interest irrespective of specific shares of voting rights; or
  • a controlling interest of substantial assets in an Austrian undertaking by a non-EU/EEA/Swiss investor if the target is active in a sector considered sensitive from an FDI perspective.
  • No filing requirement if de minimis thresholds are not met (fewer than 10 employees and an annual turnover or an annual balance sheet total of under €2 million).
Undertakings/ commitments and other mitigation measures available to address concerns
  • Mitigating measures are not foreseen under Austrian FDI rules.
  • When evaluating if there is a threat to national security or public policy, the Austrian authority takes into account whether: (1) an acquiring person is controlled directly or indirectly by the government; (2) an acquiring person is or has been involved in activities that have or have had an impact on security or public policy in another EU Member State; and (3) there is a significant risk that an acquiring person is or has been involved in illegal or criminal activities.
Any other important considerations?
  • A new Austrian regime entered into force in summer 2020 bringing wide-ranging changes and leading to a significant increase of mandatory filings in Austria.
  • The sensitive sectors triggering an FDI filing requirement are now very broad with a focus on pharma, digitalisation and technology.
  • The Austrian regulator is taking a broad and active approach – also within the EU consultation mechanism.
  • In comparison to the old regime, the timing to obtain FDI approval has more than doubled to approximately 70-80 days for a Phase I review.

China - view full chapter

Freshfields Bruckhaus Deringer

What is the nature of the review?
  • Two separate regimes regulate foreign investment review in China: (1) the foreign investment regime (the FIR regime) and (2) the national security review regime (the NSR regime). The former regime is applicable to all foreign investment activities carried out directly or indirectly by foreign investors in China, while the latter regime only applies to foreign investment that impacts or is likely to impact national security.
Is it mandatory to file / wait for approval before closing?
Are there sanctions for non-compliance?
  • Both the FIR regime and the NSR regime are mandatory.
  • FIR regime: if a foreign investor invests in a prohibited sector or if a restricted foreign investment does not comply with relevant restrictions, depending on the status of the investment transaction, the foreign investor may be ordered by the authorities to discontinue the transaction, dispose of the shares or assets acquired, or unwind the transaction.
  • NSR regime: while there is no monetary penalty for failure to notify, the authority may ask the foreign investor to submit a filing and take any necessary actions to address the identified national security concerns, including but not limited to divesture of the acquired shares or assets.
What are the review periods?

The NSR regime periods are as follows:

  • 15 working days preliminary review period;
  • 30 working days general review period; and
  • 60 working days special review period (which can be extended in special circumstances).
Are there thresholds for notification / reviewability?
  • FIR regime: currently 22 industries on the negative list in relation to which foreign investment is prohibited and 11 restricted industries in relation to which foreign investors should usually team up with Chinese partners and follow certain requirements imposed by the negative list.
  • NSR regime applies to:
    • investments in military or military-related industries; or investments located near military facilities; or
    • acquisition of control over a Chinese target active in critical agriculture, critical energy and resources, significant equipment manufacturing, critical infrastructure, critical transportation services, critical culture products and services, critical IT-related or internet products and services, critical finance services, key technologies and other critical sectors. What is considered as ‘critical’ is not set out in any regulation, leaving broad discretion to the authority.
Undertakings/ commitments and other mitigation measures available to address concerns
  • If foreign investors fail to comply with investment access restrictions during the transaction stage, they may be required by authorities to rectify their non-compliance before they are allowed to continue the transaction.
  • In terms of the NSR regime, both structural and behavioural conditions may be explored if a foreign investment in China attracts national security concerns.
Any other important considerations?
  • The new PRC Foreign Investment Law, which took effect on 1 January 2020, contains a number of market-liberalising principles and has established the principle of national treatment for the foreign investments that are not captured by the negative list.
  • As regards the NSR regime, over the past two years, there has been greater scrutiny by the Chinese authorities over foreign investments that may impact national security. For foreign investments falling within covered sectors, the NSR Regime will no doubt add complexity and potentially impact deal timelines. Early identification of likely issues and planning of filing strategies are therefore critical to reduce uncertainties.

France - view full chapter

Freshfields Bruckhaus Deringer

What is the nature of the review?
  • National interest, namely public policy, public security, national defence interest, arms controls.
Is it mandatory to file / wait for approval before closing?
Are there sanctions for non-compliance?
  • Mandatory filing.
  • Suspensive effect.
  • Failure to obtain the approval of Minister of the Economy prior to completion of the transaction may result in the following sanctions:
    • the parties may be required to apply for prior authorisation, unwind the transaction or modify it;
    • pecuniary fines up to twice the value of the investment at stake or 10% of the annual turnover achieved by the target company, whichever is higher;
    • any agreement implementing the foreign investment without due authorisation from the Minister of the Economy may be deemed null and void; and
    • criminal sanctions may be imposed on the investor.
What are the review periods?
  • Phase I: 30 working days to clear the transaction.
  • Phase II: 45 additional working days to clear the transaction with or without conditions.
Are there thresholds for notification / reviewability?
  • No turnover or value-based thresholds for reviewability.
  • Filing required for non-EU or non-EEA investors in case of:
    • an acquisition of control of a French entity having sensitive activities;
    • an acquisition of part or all of a branch of a French company having sensitive activities;
    • exceeding 10% of voting rights in French listed company having sensitive activities; or
    • exceeding 25% of voting rights in a French company having sensitive activities.
  • Filing required for EU and EEA investors:
    • in case of an acquisition of control of a French entity having sensitive activities; or
    • in case of an acquisition of part or all of a branch of a French company having sensitive activities.
Undertakings/ commitments and other mitigation measures available to address concerns

Typical remedies that could be imposed by the Minister of the Economy include:

  • Ensuring the continuity of supply of sensitive products or services to sensitive clients.
  • Maintaining a reasonable level of investment in the target’s activities to ensure the continuity of its business.
  • Maintaining R&D office in France.
  • Maintaining industrial sites in France (e.g., production sites).
  • Ring-fencing sensitive information, site or technology to prevent investor access.
Any other important considerations?
  • A new Order dated 10 September 2021 on screening foreign investment was adopted on 22 September 2021. It amends the Order dated 31 December 2019 by adding a ninth high-tech sector to the list of critical technologies (R&D on technologies involved in renewable power generation).
  • The new Order will apply to all authorisation requests submitted from 1 January 2022.

Italy - view full chapter

Freshfields Bruckhaus Deringer

What is the nature of the review?
  • National security, public interest, security of supply.
Is it mandatory to file / wait for approval before closing?
Are there sanctions for non-compliance?
  • If the transaction falls within the scope of the Italian FDI regime, notification is mandatory.
  • Administrative fines ranging from a maximum of twice the value of the transaction to a minimum of 1% of the turnover of the undertakings concerned.
  • No criminal sanctions for individuals.
What are the review periods?

In relation to security/defence and transport/telecoms/energy sectors listed in Article 4, Paragraph 1, Regulation (EU) 2019/452:

  • 45 calendar days for review. In case of no decision, the acquisition/operation is authorised.
  • This term may be suspended if requests for information are issued (to the notifying parties for a maximum of 10 calendar days; to third parties for a maximum of 20 calendar days), for an overall maximum of 30 calendar days.

In relation to the 5G sector:

  • 30 calendar days for review. In case of no decision, the operation is authorised.
  • This term may be extended up to 20 calendar days (in case of risk to the integrity of networks and their data), which may be further extended (only once) for another period of 20 calendar days (in particularly complex cases) for an overall total maximum of 40 calendar days.
  • This term may be suspended if requests for information are issued to the parties (until a response is received, and for a maximum of 10 calendar days) and to third parties (until a response is received, and for a maximum of 20 calendar days).

Other EU Member States and the European Commission may submit non-binding observations or an opinion and interact with the Italian government. In such circumstances this may have the effect of further extending the review period.

Are there thresholds for notification / reviewability?
  • No turnover thresholds for reviewability.

Until the end of the transitory regime, in relation to most sectors (except for security/defence, where minority acquisitions (greater than 3% for listed companies and greater than 5% for unlisted companies) are always subject to a notification requirement, even in the case of an EU acquirer) the duty to notify under the Italian FDI rules applies:

  • To EU acquirers, in relation to direct/indirect acquisitions of a controlling interest.
  • To non-EU acquirers in relation to direct/indirect acquisitions of minority stakes (at least 10% shareholding), and when the following shareholding thresholds are exceeded: 15%, 20%, 25%, 50%, provided the value of the acquired stake exceeds €1 million.

Once the transitory regime terminates, the standard regime will apply and Italian FDI rules regarding acquisitions in sectors other than national security/defence will be applicable only in the event of a non-EU acquirer and only in relation to acquisitions of a controlling interest.

In relation to the 5G sector, the Italian FDI regime applies:

  • To acquisitions of assets (including equipment) and also in relation to the provision of services.
  • Only to non-EU acquirers.

Undertakings/ commitments and other mitigation measures available to address concerns

Typical remedies include:

  • Ensuring quality/security of supply.
  • Appointing an Italian national in certain key strategic functions.
  • Keeping facilities – and in particular R&D and production facilities – in Italy.
  • Maintaining any existing cooperation/commitment with Italian and European public institutions.
  • Informing the Italian PMO of proposed transfers of intellectual property rights;
  • Maintaining investments and employee numbers in certain strategic functions (typically R&D).
  • Restricting the use of governance rights that may block investments in certain strategic areas in Italy.
Any other important considerations?
  • Other government departments (such as the Ministry of Defence, Ministry of Transport, Ministry of economic development etc.) are involved in the national security assessment.

Japan - view full chapter

Freshfields Bruckhaus Deringer

What is the nature of the review?
  • National security, public policy and public safety, benefit to the local economy.
Is it mandatory to file / wait for approval before closing?
Are there sanctions for non-compliance?
  • Mandatory and suspensory for investments in designated sensitive industries by foreign investors (pre-closing notifications).
  • Mandatory but not suspensory for investments outside designated sensitive industries (post-closing reports).
  • Completing a transaction without mandatory prior approval may result in criminal fines for corporations and individuals, who may also face imprisonment.
  • Additional criminal sanctions apply for non-compliance with government recommendations and orders.
What are the review periods?
  • For pre-closing notifications: 30 calendar days initial screening period and possible extension of the suspensory period up to five months.
  • For post-closing reports: no review period.
Are there thresholds for notification / reviewability?
  • No turnover-based thresholds for reviewability.
  • Value-based thresholds for loans of money to Japanese corporations and acquisition of private placement bonds issued by Japanese corporations.
  • Dependent on level of control acquired.

Mandatory filings

  • Acquisition of 1% or more of shares or voting rights of listed companies.
  • Acquisition of shares or equity of unlisted companies from a domestic investor (or a foreign investor if the target company conducts certain ‘designated businesses’).
Undertakings/ commitments and other mitigation measures available to address concerns
  • No undertakings or commitments and other mitigation measures have been taken under the Forex Act in Japan, nor are they explicitly provided for in the Act.
Any other important considerations?
  • If the Minister of Finance and other relevant ministers find that a foreign investment is likely to compromise national security, etc., they may order the foreign investor to change or withdraw the investment. If the foreign investor does not follow the order, the relevant ministers may order the foreign investor to dispose of all or part of the shares or equity acquired through the investment or take other necessary measures.

Mexico - view full chapter

Hogan Lovells

What is the nature of the review?Foreign Investments Regulations in Mexico.
Is it mandatory to file / wait for approval before closing?
Are there sanctions for non-compliance?
  • Foreign investors require authorisation from the National Commission of Foreign Investments (CNIE) when (1) acquiring a local entity with assets worth over a certain threshold updated periodically by the CNIE (currently around US$1 billion), or (2) entering into activities that are restricted for the government or Mexican investors (e.g., energy industry, hydrocarbons). As a general rule, these restricted transactions are few and far between, and around 95% of all transactions do not require approval.
  • Non-compliance can result in certain fines that may range from 1,000 to 5,000 daily minimum salaries in value.
  • In addition, the CNIE may revoke any authorisation, rendering the transaction null and void.
What are the review periods?
  • Pursuant to the Foreign Investments Law, the CNIE must provide its answer within 45 business days of the filing. When no response is given within this time frame, the request will be deemed approved.
  • Other required filings (such as notices concerning transfers of shares, certain yearly financial information) are merely an administrative process for statistical purposes, and there are no review periods. The CNIE does not generally have review authority for the information provided, unless clear mistakes are contained in the forms filed by the responsible party.
  • If mistakes are made in the filings, usually an updated form will be filed as soon as practicable (without the authority providing any extension to the statutory times for filing).
Are there thresholds for notification / reviewability?
  • Generally speaking, foreign investors require prior approval when (1) acquiring a local entity with assets worth over a certain threshold updated periodically by the CNIE (currently around US$1 billion) or (2) entering into any restricted industry sector, such as hydrocarbons, aerospace, etc. The CNIE will reply within 45 business days or the request will be deemed granted.
Undertakings/ commitments and other mitigation measures available to address concerns

Key mitigation measures include:

  • Maintaining a majority of Mexican investment in the target entity, to avoid having to request prior authorisation (contingent on the exact nature of the target industry sector).
  • Providing for approval from the CNIE as a condition precedent for closing.
Any other important considerations?
  • It is important to always conduct a preliminary analysis of the value of the underlying transaction, as well as the specific industry sector, to determine if any foreign investment restrictions will apply.
  • If restrictions do apply, legal counsel must prepare and file all relevant requests and supporting documentation as promptly as possible, to allow the authority time to (1) approve the underlying transaction, or (2) request further supporting documents or information.

Netherlands - view full chapter

Freshfields Bruckhaus Deringer

What is the nature of the review?
  • National security (regime expected to enter into effect in 2022), public interest (sector-specific regimes only: healthcare, telecommunications and energy).
Is it mandatory to file / wait for approval before closing?
Are there sanctions for non-compliance?
  • Under the anticipated national security regime and existing sector-specific regimes, a mandatory filing requirement applies to investments prior to completion, regardless of the nationality of the acquirer.
  • The regimes applicable to the energy and telecommunications sectors do not have suspensory effect, but the notification must be made at least four months (energy) or eight weeks (telecommunications) prior to completion.
  • The anticipated national security regime and existing healthcare-specific regime have suspensory effect.
  • Failure to notify a transaction may result in administrative sanctions for corporations.
What are the review periods?
  • National security regime and telecommunications: eight weeks extendable by six months (subject to stop-the-clock).
  • Energy: four months.
  • Healthcare: four weeks.

Are there thresholds for notification / reviewability?

  • No turnover or value-based thresholds for reviewability.
  • Notification requirement depends on control rights acquired and local activities of the target or acquirer.
Undertakings/ commitments and other mitigation measures available to address concerns

Key mitigation measures include:

  • Maintaining a minimum level of Dutch ownership or board and management appointments.
  • Ring-fencing sensitive information, technology or operational sites.
  • Restrictions on future share, asset or IP transfers.
  • Maintaining existing sensitive capabilities, contracts or supply chains.

Any other important considerations?

  • New national security screening regime expected to enter into effect in 2022 with potential retrospective application to transactions completed after 9 September 2021 –  the government may call in for review any transactions from this earlier date that have not been subject to formal review under the existing screening regime.

Russia - view full chapter

Freshfields Bruckhaus Deringer

What is the nature of the review?
  • National security.
Is it mandatory to file / wait for approval before closing?
Are there sanctions for non-compliance?
  • Mandatory to file and, where prior clearance is required, to wait for approval before closing.
  • Certain transactions require, either in addition to or instead of prior clearance, post-completion notifications.
  • In certain cases to avoid a filing it may be sufficient to disclose the foreign investor’s beneficial owners and controlling parties to the Federal Antimonopoly Service (FAS) prior to closing.
  • Completing a transaction without mandatory prior clearance or failure to submit a post-completion notification when required risks invalidation of the transaction, imposition of a fine (including on officers) or other negative consequences (or all three).
  • All sanctions are administrative or civil.
What are the review periods?
  • As a matter of law, the review period can last up to six months but, in practice, may last longer. On average, the review can be expected to be completed within four to five months.
Are there thresholds for notification / reviewability?
  • The notifiability requirements are triggered, subject to specific thresholds and other tests set by law, by direct or indirect acquisition by a foreign investor of the shares or rights in, or the fixed assets of, a Russian company that qualifies as a strategic entity associated with one of 47 categories of strategic activities listed in law.
  • Transactions which affect companies that are not strategic entities but where the foreign investor is owned or controlled by the government or an international organisation may also trigger the filing requirements.
  • Generally, the regime is complicated and includes several sub-regimes that vary significantly in terms of specific restrictions, notification thresholds and other matters.
  • The government may also require that a foreign investment filing be made even if the formal tests provided for by the law are not met.

Undertakings/ commitments and other mitigation measures available to address concerns

  • The transaction can be cleared on condition that the foreign investor assumes certain obligations under the agreement it will need to enter into with the FAS.
  • Agreements are offered to foreign investors by the FAS on a ‘take it or leave it’ basis. A foreign investor cannot offer any undertakings or commitments on its own initiative.
  • The law contains a list of 15 specific obligations that the foreign investor may be required to assume under the agreement with the FAS, including:
    • to form the governing bodies of the strategic entity from among persons who, under Russian Federation law, may be granted access to state secrets;
    • in case of war or a state of emergency, to take such action as may be required by the relevant laws;
    • to maintain the average number of employees during a certain period; and
    • to process in the territory of Russia all minerals extracted by a strategic mining company.
  • However, the list is not exhaustive, and the government commission in charge of foreign investments has the right to impose any other obligations it may deem appropriate.
Any other important considerations?
  • Under Russian merger control rules, if a transaction that triggers a merger filing also requires foreign investment clearance, the competition authority will not issue merger control clearance until foreign investment clearance is in place.
  • Other government departments (such as the Ministry of Defence and the Federal Security Service) are or may be involved in the national security assessment.
  • The Strategic Law is an evolving statute. New amendments extending the filing requirements are being considered.

Spain - view full chapter

Freshfields Bruckhaus Deringer

What is the nature of the review?
  • Public policy, public safety and public health.
Is it mandatory to file / wait for approval before closing?
Are there sanctions for non-compliance?
  • Mandatory filing requirement if certain criteria are satisfied.
  • Suspensory regime: prior approval is required to close the transaction.
  • An investment carried out without the required prior approval: (1) is invalid and without legal effect; and (2) the investor may be subject to fines of between €30,000 and the transaction’s financial value, plus public or private admonition.
What are the review periods?
  • Ordinary procedure: up to six months.
  • Fast-track procedure: 30 days.
Are there thresholds for notification / reviewability?

Mandatory filing requirement if the investment satisfies the following cumulative criteria:

  • The investment is made by a foreign investor:
    • a non-EU/EFTA resident; or
    • an EU/EFTA resident beneficially owned by a non-EU/EFTA resident; and
  • The investment qualifies as foreign direct investment:
    • the investment results in the investor holding at least 10 per cent of the share capital of a Spanish company; or
    • the investor acquires control of a Spanish company; and
  • The investment fulfils either:
    • objective criteria: the target is active in certain ‘strategic sectors’; or
    • subjective criteria: the investor meets certain features.
Undertakings/ commitments and other mitigation measures available to address concerns
  • Remedies may be imposed on grounds of public policy, security or health. In principle, such remedies could take any form and be adapted to the specific nature of each transaction.
Any other important considerations?
  • Limited precedents to date and very limited visibility on the remedial action of the Council of Ministers because there is no public access to its decisions.

United States - view full chapter

Freshfields Bruckhaus Deringer

What is the nature of the review?
  • National security.
Is it mandatory to file / wait for approval before closing?
Are there sanctions for non-compliance?
  • Mandatory filing if target manufactures, designs, develops or tests critical technology that requires a licence to export to the acquirer, or additionally where a foreign government investor acquires a substantial interest in a target with critical technology, critical infrastructure or sensitive personal data.
  • Legally, only a filing not an approval requirement.
  • Other investments subject to call-in authorities.
  • Civil fine for parties to the transaction for failure to file.
What are the review periods?
  • Declaration: 30 calendar days.
  • Notice: 45 calendar day initial review period followed by 45 calendar day investigation period if warranted and, if required, a 15 calendar day presidential review period.

Are there thresholds for notification / reviewability?

  • No turnover or value-based thresholds.
  • CFIUS has jurisdiction over any transaction that could result in foreign control (broadly construed) of a US business, or if it is a TID (technology, infrastructure, data) US business, then also any covered investment in such business.
  • A filing is mandated only with respect to a subset of transactions subject to jurisdiction; others can be filed voluntarily.

Undertakings/ commitments and other mitigation measures available to address concerns

  • CFIUS may seek any remedy necessary to resolve identified national security concerns other than as already provided for in existing law.
  • Mitigation is transaction-specific, but most agreements include some standard terms around maintenance of security policies, a security officer, annual reporting and auditing requirements.
  • Other examples include:
    • maintaining a minimum level of US ownership or board and management appointments;
    • ring-fencing sensitive information, technology or operational sites; and
    • maintaining existing sensitive capabilities, contracts and supply chains.

Any other important considerations?

  • Scope of what constitutes critical technology subject to the mandatory regime may expand as additional technology may be designated as ‘emerging and foundational technology’.

United Kingdom - view full chapter

Freshfields Bruckhaus Deringer

What is the nature of the review?
  • National security.
Is it mandatory to file / wait for approval before closing?
Are there sanctions for non-compliance?
  • Mandatory filing for certain acquisitions of shares or voting rights in 17 industry sectors where pre-approval is required before closing.
  • Other investments (including in the wider economy and asset transactions) are subject to call-in by the UK government and may be notified voluntarily.
  • Completing a transaction without mandatory pre-approval may result in criminal sanctions for corporations, individuals or both.
  • Additional criminal sanctions apply for non-compliance with government orders and information requests.
What are the review periods?
  • 30 working days initial screening period.
  • 30 working days assessment period extendable by 45 working days (or longer as agreed with the parties).
Are there thresholds for notification / reviewability?
  • No turnover or value-based thresholds for reviewability.

Mandatory filings

  • Applies to investments that involve:
  • a (share) transaction that allows the investor to acquire in excess of 25%, 50% or 75% of shares or voting rights in the target entity, or acquire voting rights that allow it to pass or block resolutions;
  • one of 17 specified industry sectors; and
  • a UK-based entity, or an overseas entity that is active in or supplies goods or services into the UK.

Voluntary filings

  • Applies to most other investments bestowing at least material influence over an entity (including levels of control above) or ability to use or control an asset, where there is a UK nexus.
Undertakings/ commitments and other mitigation measures available to address concerns

Key mitigation measures include:

  • Maintaining a minimum level of UK ownership or board or management appointments.
  • Ring-fencing sensitive information, technology or operational sites.
  • Restrictions on future share, asset or IP transfers.
  • Maintaining existing sensitive capabilities, contracts or supply chains.
Any other important considerations?
  • New national security screening regime under the National Security and Investment Act 2021 enters into force on 4 January 2022 with potential retrospective application to transactions completed from 12 November 2020 – the government may call in for review any transactions from this earlier date that have not been subject to formal review under previous screening regime.
  • Prior to 4 January 2022, existing screening mechanism continues to apply as part of the normal merger control review process.
  • Other government departments (such as the Ministry of Defence) may be consulted in the national security assessment.

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