USA – Treasury publishes CFIUS Enforcement and Penalty Guidelines
On 20 October 2022 the Department of the Treasury, as Chair of the Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”), has released the first-ever CFIUS Enforcement and Penalty Guidelines. The Guidelines provide the public with information about how the Committee assesses violations of the laws and regulations that govern transaction parties, including potential breaches of CFIUS mitigation agreements. In addition to that the document informs about the factors that CFIUS may consider when imposing a penalty, including aggravating and mitigating factors.
For further information you may consult the Guidelines here.
Luxembourg – New draft bill to screen non-EU Foreign Direct Investments
The Parliament in Luxembourg is currently considering a draft bill that will introduce a foreign direct investment (FDI) screening mechanism. The bill targets foreign companies that want to take control of national companies in “critical sectors”. This means concretely the sectors of energy, transport, water, health, communications, technology, aerospace, defense, finance and media. Luxembourg would be the next EU member state to implement the EU (FDI) regulation and to present its first FDI regime. It is important to notice that the new law will not apply to transactions between EU Member States, but only to third country companies. It is considered to be a response to the rising number of high-profile acquisitions by Russian and Chinese players in the last years.
The bill is considered to be voted by the end of the year.
Poland – Paper launch: Review of FDI in Poland 2022
On 18 October 2022 Richard Hunter and Hector Lozada published their review of FDI in Poland 2022 for The Asian Institute of Research. The article sheds light on recent events that relate to participation in FDI activities in Poland in light of the Law on Freedom of Economic Activity (LFEA), the Act on Control of Certain Investments and the Amendments thereto, which provide for the rules on foreign participation in the Polish market and later restrictions on the purchase of Polish assets by discrete categories of investors. The authors conclude that Poland is at a crossroads: While the country has been seen as welcoming investors for over 30 years, the current (constitutional) conflicts with the EU mean that this could now change. The next few years will show whether Poland manages to resolve its internal conflicts or whether foreign investors lose their confidence.
The paper is accessible here.
Germany – Cabinet agrees on compromise over Chinese port bid
On 26 October 2022 the German Cabinet has agreed on a compromise over the bid for the port from the Chinese company Cosco that wants to acquire stakes in a Hamburg port terminal. According to the official press release, the Chinese state-owned company Cosco can only acquire a share of less than 25% in HHLA Container Terminal Tollerort GmbH. Any further acquisition above this threshold is prohibited. In addition, special rights are prohibited. This shall prevent a strategic participation in HHLA CTT and reduces the acquisition to a purely financial participation. The reason for the partial prohibition is that the Ministry considers the existence of a threat to public order and safety. If the acquirer Cosco wishes to acquire further shares at a later date, any acquisition transaction exceeding the 25% threshold will trigger a new investment test.
The official press release is available in German here.