CELIS Update on Investment Screening – November/December 2021
UK – Further secondary legislation intended to clarify certain aspects under the National Security and Investment Act published
On 16 November 2021, the government published further secondary legislation to clarify certain aspects under the National Security and Investment Act, the latter entering into force on 4 January 2022. The secondary legislation sets out the acquisitions of qualifying entities subject to the mandatory notification requirements, the methods for the calculation of turnovers in order to determine the amount of a potential penalty (in case of non-compliance), form and content of notification forms as well as a procedure for document transfer.
For further information on the secondary legislation clarifying certain aspects under the National Security and Investment Act as well as on the act itself, you may consult the website of the government here.
EU – European Commission publishes First Annual Report on the screening of foreign direct investments into the Union
On 23 November 2021, the European Commission (EC) published the First Annual Report on the Screening of Foreign Direct Investment into the Union. The report examines the application of the EU-FDI Screening Regulation. In addition to data on foreign direct investment flows in the EU, the report mainly contains an overview of legislative developments in the area of investment screening in the Member States and their investment screening activities in 2020.
For further information regarding the issues presented in the report, you may have a look at an earlier post on it here.
Spain – Liberalisation of intra-EU investments further suspended to the end of 2022
On 24 November 2021, the government of Spain published the Royal Decree-Law 27/2021 extending measures to support economic recovery (“Royal Decree-Law”). Among other things and as a consequence of the COVID-19 Pandemic, the Royal Decree-Law suspends the liberalisation of intra-EU investments, which has been suspended on several occasions since November 2020, further to the end of the year 2022. Thus, EU/EFTA investors acquiring at least 10% in a Spanish company or as a result of a transaction the control (more than 25% in total) over such a company are required to notify and await approval of the Spanish authorities. This only applies to the acquisition of companies operating in a strategic sector or if the investment exceeds the volume of € 500 million.
If you want to know more about the above-explained transitional regime and the Royal Decree-Law, you may consult it in Spanish here.
France – Lowering of threshold for the screening of foreign direct investments in France extended for one more year
On 29 November 2021, Bruno Le Maire, Minister for the Economy, Finance and Recovery has requested in a press release that the lowering of the threshold for the screening of foreign direct investments in listed French companies from 25% to 10% of voting rights, which was due to end on 31 December 2021, shall be maintained until 31 December 2022. Since July 2020 and due to the COVID-19 Pandemic, the lowered threshold should ensure the protection of security and public order interests throughout the health crisis. In contrast to Spain, the measure does only apply non-EU investors and to listed French companies. The request for extension has been confirmed by decree no. 2021-1758 of 22 December 2021 extending the temporary lowering of the threshold for the screening of foreign direct investments in French companies whose shares are admitted to trading on a regulated market.
If you are interested in getting to know more, you may consult the press release in French here, or the decree in French as well here.
EU – European Commission adds further programmes to the list of projects and programmes of “Union interest” under EU-FDI Screening Regulation
On 3 December 2021, the Commission delegated Regulation (EU) 2021/2126 of 29 September 2021 has been published. It amends the Annex to Regulation (EU) 2019/452, commonly known as the “EU-FDI Screening Regulation” by adding further programmes to the list of projects and programmes of “Union interest” under the EU-FDI Screening Regulation.
For more information, you may consult an earlier post on the publication of the Regulation here.
Australia – Expansion of critical infrastructures through the Security Legislation Amendment (Critical Infrastructure) Act 2021
On 7 December 2021, the Security Legislation Amendment (Critical Infrastructure) Act 2021 was registered on the Federal Register of Legislation. According to Foreign Investment Review Board “[i]t expands the number of critical infrastructure assets under the Security of Critical Infrastructure Act 2018, with flow-on implications for notification requirements under the Foreign Acquisitions and Takeovers Act 1975”.
For further information, you may consult the Security Legislation Amendment (Critical Infrastructure) Act 2021 directly, here.
Academic Paper – “The EU Foreign Direct Investment Screening Regulation: in Search of a Clear Concept of FDI”
Bas J. de Jong is analysing the definition of FDI under the EU-FDI Screening Regulation and arguing that it is not precise enough regarding the relevant threshold in terms of equity ownership or voting power. In particular, he alleges a lack of definition for situations in which investors are cooperating. In order to solve these problems, the paper consults definitions and concepts in other EU instruments such as the Takeover Directive in order to discuss their relevance for the EU-FDI Screening Regulation.
You may consult the paper here.