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National security reviews 2018: A global perspective

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A guide to navigating the rules for investing in countries that require national security approval

Navigating national security reviews worldwide

As governments in various countries tighten their grip on national security reviews of foreign direct investment, the need for better assessment and calibration of the associated regulatory risk in cross-border transactions is greater than ever before

Nowhere is this trend more evident than in the United States, with the August passage of the Foreign Investment Risk Review Modernization Act (FIRRMA), which expanded the range of transactions that are subject to review by the Committee on Foreign Investment in the United States (CFIUS), and the more recent release of a pilot program under FIRRMA that instituted mandatory declarations for a broad range of transactions and put in place penalties—up to the full value of the transaction—for failure to comply. With CFIUS set to clamp down still further in coming months, CFIUS compliance is rapidly moving to the very top of the due diligence list for cross-border transactions involving US businesses.

The US is far from alone. As you will read in the pages that follow, the European Union, United Kingdom, Germany, France, China and other nations are also incrementally ratcheting up their reviews. In the UK, for instance, the government is proposing radical new legislation to allow it to intervene in cases that raise potential national security concerns. The UK government itself estimates that, under the new law, approximately 50 cases a year may end up with some form of remedy to address such concerns. In France, the new PACTE law is likely to strengthen the sanctions mechanism, extend the list of sectors subject to review and introduce some transparency into the process through annual reporting on a no-name basis of reviewed cases.

The pages that follow offer a common-sense guide to investing in major jurisdictions, a snapshot of recent regulatory changes in each, and guidance on making sound investment decisions in a time fraught with regulatory uncertainty.


United States

Deals are generally approved, but a new law increases the number and types of deals reviewed.

circuit board


While few deals are challenged in Canada, national security reviews are becoming more common and complex

satellite dishes

European Union

Proposed European foreign direct investment regulation— a first step toward harmonized European investment controls

aerial view of a river through a city in Western Europe


Deals are generally not blocked in Finland.

Helsinki, FInland


New legislation has been proposed to expand the scope of French national security reviews, especially in the technology sector, and to strengthen the powers of French authorities to impose sanctions

solar panels


Federal Ministry for Economic Affairs and Energy is enforcing a stricter regime for foreign direct investment reviews

Frankfurt, Germany


Deals are generally not blocked by the Italian government. However, in connection with the clearance process, conditions may be imposed that can have a significant impact on the investment

Milan, Italy

Russian Federation

New amendments potentially require foreign investors to disclose information about beneficiaries, beneficial owners and controlling persons as part of pre-clearance

nuclear power plant

United Kingdom

National security interventions have, with one exception, involved defense considerations

Laser in a quantum optics lab


Australia requires a wide variety of investments by foreign businesses to be reviewed and approved before completion

electric plant  transformer


China is attempting to implement a more structured and comprehensive system to keep a closer eye on economic deals that might have security implications

data center


Japan’s implementation of the 2017 amendments to FEFTA must be watched closely to see whether Japan will adopt a more aggressive stance

Tokyo Station

National security reviews 2018: Finland

Deals are generally not blocked in Finland

3 min read

The Finnish government views foreign ownership positively as a catalyst for increasing internationalization and competitiveness.

The Finnish government views foreign ownership positively as a catalyst for increasing internationalization and competitiveness. Deals are only restricted when they meet very specific criteria. The objective of the Finnish Act on Monitoring Foreign Ownership (172/2012), also known as the "Monitoring Act," is to assess foreign investments for their potential impact on national interests. When it is deemed necessary to protect national defense and safeguard public order and security, the government may restrict the transfer of influence to foreigners, foreign organizations and foundations. The Monitoring Act has a special focus on defense industry companies, including dual-use companies.


Under the Monitoring Act, a "corporate acquisition" occurs when a foreign owner gains control of at least one tenth, one third or one half of the aggregate number of votes conferred by all shares in a Finnish company—or otherwise secures a holding that confers decision-making authority.

All corporate acquisitions concerning the defense and dual-use sectors require advance approval by Finnish authorities. Deals not related to defense may also be covered by the Monitoring Act if the company being acquired is considered critical for securing vital functions of society. In such cases, investors are not required to submit an application prior to completing a transaction—but in practice applications are always submitted prior to completion. The government intentionally does not define the phrase "enterprise considered critical for securing vital functions of society" because the definition evolves over time.

For the defense and dual-use sectors, monitoring covers all foreign owners. For enterprises considered critical for securing vital functions of society, monitoring only applies to foreign owners residing or domiciled outside the EU or the European Free Trade Association.

If the Monitoring Act is breached, the transaction can be declared null and void.


The review process starts when an investor submits an application to the Ministry of Economic Affairs and Employment. There are no formal requirements for the layout of the application, but the ministry has published instructions for preparing one. It is critical that the application is made by the potential foreign owner, not a Finnish holding company already set up by the potential new owner. After receipt of the application, the Ministry of Economic Affairs and Employment asks for input from other branches of government.

If the Ministry of Economic Affairs and Employment finds that the transaction may endanger a key national interest, it transfers the matter to the government's plenary session for resolution. The government's plenary session then makes the decision about whether to restrict or approve the deal, depending on whether it believes the deal poses a threat to national interest.

However, if the Ministry of Economic Affairs and Employment considers that a transaction does not endanger a key national interest, it approves the transaction. The vast majority of transactions submitted to date have been approved by virtue of this rule.

All applications are urgently processed by the Ministry of Economic Affairs and Employment. The Monitoring Act states that a transaction is deemed to have been approved if the Ministry of Economic Affairs and Employment does not make a decision on an in-depth review within six weeks, or if the application has not been transferred to the Government's plenary session within three months dating from the day when all necessary materials were received. In practice, the process with the Ministry of Economic Affairs and Employment usually takes six to eight weeks.


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National security reviews 2018: A global perspective


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