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Foreign direct investment reviews 2023: A global perspective

What's inside

A guide to navigating the rules for investing in countries that require foreign direct investment approval.

Introduction

Now in its seventh year of annual publication, White & Case's Foreign Direct Investment Reviews provides a comprehensive look into rapidly evolving foreign direct investment (FDI) laws and regulations in approximately 40 national jurisdictions and two regions. This 2023 edition includes more than 15 new jurisdictions in addition to those covered in previous editions and summarizes high-level principles in the European Union and Middle East. Our expansion in coverage reflects the rapid global proliferation of FDI regimes and our market leading position in the field.

FDI regimes are wide-reaching in scope, from national security to public health and safety, law and order, technological superiority, and continuity and integrity of critical supply chains. They are divergent with respect to jurisdictional triggers across countries, and are almost always a black-box process.

The following are some general observations, in large part based on the 2022 CFIUS and EU annual reports:

  • The number of FDI regimes and regulatory enhancements is growing around the world, particularly in Europe. In 2021 and 2022, four EU Member States—Czech Republic, Denmark, Netherlands and Slovakia—implemented new FDI regimes, and in 2023, Sweden and Belgium are slated to adopt FDI screening measures (in addition to non-member Switzerland).
  • FDI regulators, at least from allied nations, are collaborating and learning from each other. CFIUS reported at its first annual conference in 2022 that it continues to host training sessions for US allies so that they can adopt similar regimes.
  • 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.
  • 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 CFIUS's 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.

We would like to extend a special thank-you to all of our external authors, who have provided some insightful commentary on the FDI regimes in a number of important jurisdictions. The names of these individual contributors and their law firms are provided throughout this publication.

We would also like to extend a special thank-you to James Hsiao of our Hong Kong office and Tim Sensenig of our Washington, DC office for their tireless efforts and dedication to the publication of this edition.

Americas

Canada

The Canadian government announced a strict framework to evaluate foreign investments in the critical minerals sector by state-owned enterprises and state-linked private investors, especially if from “non-likeminded” countries.

canada fdi 2022

Mexico

Foreign direct investments, whether undertaken directly or indirectly, are generally allowed without restrictions or without the need to obtain prior authorization from an administrative agency.

mexico fdi 2022

United States

Most deals are approved, but expanded jurisdiction, mandatory filings applying in certain cases, enhanced focus on national security considerations, and a substantially increased pursuit of non-notified transactions have changed the landscape.

United States of America

EMEA

Europe

Driven by the European Commission's guidance, Member States keep expanding their investment screening regimes. A similar trend is observed in Europe at large.

european union fdi 2022

Austria

In Austria, the Austrian Federal Investment Control Act (Investitionskontrollgesetz or the ICA) introduced a new, fully fledged regime for the screening of Foreign Direct Investments (FDI) and came into effect on July 25, 2020. With its wide scope of application and extensive interpretation by the competent authority, the number of screened investments has soared.

austria fdi 2022

Belgium

Belgium implements an FDI screening regime by July 1, 2023.

Belgium

Czech Republic

The new Foreign Investments Screening Act took effect in May 2021, and completed its first full year in operation in 2022.

czech republic fdi 2022

Denmark

The scope of the Danish FDI regime is comprehensive and requires a careful assessment of investments and agreements involving Danish companies.

denmark fdi 2022

Estonia

Estonia will have in place an FDI review regime by September 2023.

estonia fdi 2022

Finland

Deals are generally not blocked in Finland.

10_finland_square_800x800_0.jpg

France

In France, FDI screening authorities have issued new guidelines to improve the transparency of the FDI process.

france fdi 2022

Germany

The Federal Ministry for Economic Affairs and Energy continues to tighten FDI control, but the investment climate remains liberal in principle.

germany fdi 2022

Hungary

The need for FDI screening remains in focus for deals with Hungarian dimensions.

hungary fdi 2022

Ireland

Ireland anticipates adopting and implementing an FDI screening regime by Q1 2023.

ireland fdi 2022

Italy

Italian "Golden Power Law:" Ten years old and continuously expanding its reach.

Italy

Republic of Latvia

The Russian Federation's invasion of Ukraine has precipitated the inclusion of provisions blocking Russian and Belarussian nationals from direct investment in a number of sectors.

Latvia

Lithuania

All investments concerning national security are under the scope of review.

Lithuania

Luxembourg

Luxembourg has introduced a bill of law to regulate foreign direct investments. The law is currently being discussed before the Luxembourg Parliament.

Luxembourg

Malta

Malta's recently introduced FDI regime captures a substantial number of transactions that must be notified to the authorities and, in some cases, will be subject to screening.

Malta

Middle East

The Middle East continues opening to foreign investment, subject to licensing approvals and ownership thresholds for certain business sectors or in certain geographical zones.

Middle East

Netherlands

The Netherlands prepares for its first effective year of new FDI regulation.

Netherlands

Norway

Changes in the geopolitical situation have resulted in increased awareness of security threats caused by strategic acquisitions and access to sensitive technology. The ongoing review of the FDI regulations in Norway is expected to result in more effective mechanisms to identify and deal with security threats in transactions and investors should be prepared to take this into account when planning future investments in Norwegian companies that engage in sensitive activities.

Norway

Poland

The Polish FDI regime governing the acquisitions of covered entities by non-EEA and non-OECD buyers has been extended until July 2025.

Poland

Portugal

Transactions involving foreign natural or legal persons that allow direct or indirect control over strategic assets may be subject to FDI screening.

Portugal

Romania

The Romanian regime regarding foreign direct investment has undergone a major change in 2022, when new legislation was enacted, and is aimed at implementing relevant European Union legislation.

Romania

Russian Federation

The Federal Antimonopoly Service (FAS) tends to impose increased scrutiny in the sphere of foreign investments and has developed a number of amendments to the foreign investments laws that are aimed at eliminating legislative gaps in this sphere.

Russian Federation

Slovakia

On November 29, 2022, Slovakia, for the first time, adopted full-fledged foreign direct investment legislation. This legislation is effective as of March 1, 2023.

Slovakia

Slovenia

Since May 31, 2020, certain foreign investments into Slovenian companies can be subject to review. Acquisition of real estate related to critical infrastructure may also be subject to review.

Slovenia

Spain

The restrictions imposed by the Spanish government on foreign direct investments during the COVID-19 outbreak have remained after the pandemic.

Spain

Sweden

Other than security-related screening, Sweden is currently still without a general FDI screening mechanism.

Sweden

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.

Switzerland

Türkiye

Making Türkiye an attractive investment destination continues to be a priority for the government.

Turkiye

United Arab Emirates

Foreign direct investment is permissible in the UAE, subject to applicable licensing and ownership conditions.

UAE

United Kingdom

The UK’s National Security & Investment Act has now been in place for a year and has already made its mark, prohibiting deals on national security grounds and also requiring remedies in cases that are not subject to the mandatory notification requirement.  We expect a continued tough approach over the next year as global geo-political tensions bring national security concerns to the fore.

UK

Asia-Pacific

Australia

Australia requires a wide variety of investments by foreign investors to be reviewed and approved before completion of the investment.

Australia

China

China has further developed its national security regulatory regime by promulgating measures on cybersecurity review and security assessment of cross-border data transfer.

China

India

India continues to be an attractive destination for foreign investment, ranking as the world's seventh-largest recipient of FDI in 2021.

India

Japan

The Japanese government continues to review filings and refine its approach under the FDI regime following the 2019 amendments.

Japan

Korea

Korea is increasing the level of scrutiny of foreign investments due to growing concerns over the transfer of sensitive technologies.

Korea

New Zealand

Recent legislative reforms have increased the New Zealand government's ability to take national interest considerations into account, but have also looked to exclude lower-risk transactions from consent requirements.

New Zealand

Taiwan

All FDIs are subject to prior approval, but the investment climate is welcoming and liberal.

Taiwan
United Arab Emirates

Foreign direct investment reviews 2023: United Arab Emirates

Foreign direct investment is permissible in the UAE, subject to applicable licensing and ownership conditions.

Insight
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3 min read

Recent legislative changes demonstrate significant progress in liberalizing the extent to which foreign investors can invest in companies onshore in the UAE (defined below); however, foreign direct investment continues to be primarily targeted toward the UAE's financial and non-financial free zones. With respect to onshore companies in the UAE, prior to any acquisition, an investor should consider the nature of the intended business activities and the extent to which foreign ownership of businesses carrying out such activities is permitted.

  • For the purposes of corporate law, the UAE comprises two jurisdictions:
    • Offshore UAE – comprising: (i) the two financial free zones (being the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM)); and (ii) various non-financial free zones (of which there are more than three dozen)
    • Onshore UAE – being the geographical space that falls within the UAE's borders but outside of offshore UAE
  • Foreign investment remains primarily targeted toward offshore companies in the UAE, as the financial and non-financial free zones permit 100 percent foreign ownership. For FDI into offshore companies in the UAE, the applicable laws and regulations in the relevant offshore jurisdiction will need to be considered
  • Until recently, there were significant restrictions with respect to foreign ownership in onshore companies in the UAE. Such restrictions meant that a foreign investor could hold a maximum of 49 percent of the share capital of an onshore limited liability company in the UAE, with a UAE national or company holding (at a minimum) 51 percent of the company's shares
  • Recent legislative amendments have relaxed these restrictions regarding certain business activities. Thus, where foreign ownership in an onshore company in the UAE is being considered, the following three possibilities are now available:
    • Positive List activities – 100% foreign ownership is permitted in businesses that conduct activities set out on lists of approved commercial activities (Positive Lists) published by the UAE's Departments of Economic Development (DED). The DEDs act alongside the UAE's Ministry of Economy, as the primary regulatory bodies governing the establishment, licensing and operation of onshore companies in the UAE, including for companies where foreign ownership is intended
    • Strategic Impact Activities – UAE Cabinet Decision No.55/2021 sets out a list of strategic impact activities (the Strategic Impact List) that are of an increased commercially sensitive nature and that attract higher levels of regulatory supervision, such as activities of a military nature, financial services activities or telecommunications activities (among others). Any investor, including foreign investors, intending to invest into a company carrying out an activity set out in the Strategic Impact List must notify to the relevant UAE regulatory authority to understand whether the regulatory authority will permit it to acquire the shares in/incorporate the relevant company
    • 49/51 percent – Where a company's activity falls neither on a Positive List, nor on the Strategic Impact List, the previous foreign ownership restrictions (i.e., 49 percent foreign ownership: 51 percent Emirati ownership) is understood to apply, although this is not expressly stated in applicable UAE law
  • With respect to the transfer or acquisition of any shares in a UAE company, an extensive KYC check will be undertaken on the proposed investor and its ultimate beneficial ownership, including every entity in the chain
  • Breaches of the laws governing foreign ownership in onshore UAE may result in the imposition of fines or imprisonment. Moreover, the Ministry of Economy or competent authority, as the case may be, may request to dissolve a company if incorporated or if it performs an activity in violation of the provisions governing foreign ownership. In practice, the UAE is a jurisdiction where cooperation from relevant authorities is required on an ongoing basis in order to operate a business

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This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.

© 2023 White & Case LLP

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