Foreign direct investment reviews 2019: A global perspective
A guide to navigating the rules for investing in countries that require foreign direct investment approval
The global tightening of restrictions on foreign direct investment (FDI) that culminated last year in the enactment of the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) in the United States continues apace in 2019. Some notable examples include the following: In April, the European Union established its new, more-stringent framework for foreign investment review rules (to become effective in October 2020). In May, France amended its framework to give the French government a larger palette of possible enforcement measures it can adapt and leverage. Other countries, including Australia, China, Germany and Japan, have continued to strengthen the oversight built into their FDI programs. And at the same time, jurisdictions across the globe have been actively promoting their openness to foreign investment even as they clamp down on cross-border investments in sensitive industries.
Yet again, investors can look to the US for a bellwether. In September, new draft regulations emerged from the Committee on Foreign Investment in the United States (CFIUS) that, once implemented, would complete the overhaul of the CFIUS review process. Once these new FIRRMA regulations are fully implemented, the CFIUS review process will transition from a largely voluntary system that impacted control transactions involving US businesses to one that reaches certain real estate transactions as well as certain minority investments in US businesses that involve critical technologies, critical infrastructure or sensitive personal data. In some cases, filings will also be mandatory.
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.