• In recent years, the investment policy landscape has become more complex as nations respond to national security threats, state development strategies and geopolitical risks. Covid-19 created a major economic shock worldwide, prompting some countries to take an even more stringent approach, with a focus on protecting the security of supply of inputs.
• Many jurisdictions continue to tighten their screening rules or are introducing robust new measures to protect strategically important or sensitive national assets, creating a wave of increased regulation. The EU introduced a framework for screening FDI into the EU in 2020 aimed at enhancing cooperation and information sharing between the EU Commission and EU Member States as part of its strategy to protect an increasingly vulnerable regional economy from hostile takeovers by non-EU players. Meanwhile the UK has now had its own self-standing foreign investment screening regime in place for over a year. During that time the UK government has shown it is ready to impose stringent conditions on transactions that raise national security concerns, and has already prohibited a number of deals.
• All investors, regardless of their country of origin, need to proactively manage stakeholder interests as part of their deal strategy. While most transactions have a high likelihood of being approved, those in strategic sectors may encounter more scrutiny and face a prolonged approval process. Taking the time to understand the rules and identify a regulatory strategy early in the deal process can minimise the risk of delays, last-minute changes to the deal structure or even failed transactions.
• See our full article here.
This article first appeared in the January 2023 issue of Business Law International (Vol 24, No 1), and is reproduced by kind permission of the International Bar Association, London, UK. © International Bar Association.
