Navigating national security reviews worldwide
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As national security reviews of foreign direct investment (FDI) grow into a global phenomenon, understanding the rules and pitfalls of the applicable FDI regimes is quickly becoming evermore critical in cross-border transactions.
Governments worldwide are focusing greater scrutiny on FDI into their countries. In particular, an increasing number of cross-border transactions are getting caught in the net of national security reviews that are being either strengthened or newly established across the globe.
In 2017, there are ongoing calls and steps being taken worldwide to broaden this scrutiny. Just by way of example, in the United States, a set of bills were introduced in the US Congress that propose to expand the scope and reach of the Committee on Foreign Investment in the United States (CFIUS). In Australia, the Critical Infrastructure Centre was established to address the Australian government's concerns about investors with access to and control of Australian critical infrastructure. And in Germany, the scope of sector-specific reviews was extended to key defense technologies. China's new Cybersecurity Law went into effect, providing additional national security review and standards for companies engaged in or seeking to engage in network and data operations in China.
Because it is critical for cross-border investors to know in detail each country's current requirements, we have updated the report on national security reviews we published last year, which covered the United States, France, Germany, the Russian Federation, Australia and China, and added new chapters on Canada, the European Union, Finland, Italy, the United Kingdom, and Japan to reflect the widespread changes occurring worldwide.
Deals are generally approved, but reviews are often taking longer and transactions are being scrutinized rigorously. To read the article, please click here.
While few deals are challenged in Canada, national security reviews are becoming more common and complex. To read the article, please click here.
European investment screening "light"—First steps toward European investment controls. To read the article, please click here.
Deals are generally not blocked in Finland. To read the article, please click here.
Following the Montebourg Decree in 2014, the scope of activities covered by national security reviews has been significantly extended to several key industries. To read the article, please click here.
Stricter regime for reviews of inbound transactions applied by the Federal Ministry for Economic Affairs and Energy. To read the article, please click here.
Deals are generally not blocked by the Italian government. However, in connection with the clearance process, conditions may be imposed that have a significant impact on the investment. To read the article, please click here.
2017 amendments to Russian foreign investment laws potentially require approval of any transaction by any foreign investor regarding any Russian company to ensure national defense and state security. To read the article, please click here.
National security interventions have, with one exception, involved defense considerations. To read the article, please click here.
Australia requires a wide variety of investments by foreign businesses to be reviewed and approved before completion. To read the article, please click here.
China is attempting to implement a more structured and comprehensive system to keep a closer eye on economic deals that might have security implications. To read the article, please click here.
Past deals have almost all been approved, but 2017 amendments to FEFTA widened the scope of review and strengthened enforcement mechanisms. To read the article, please click here.
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