Foreign Direct Investment Screening in Europe and the Middle East

One effect of the COVID-19 pandemic has been to accelerate the implementation of new or stricter controls on inward-bound foreign direct investment activity ("FDI"), particularly in the European Union. For example, in March 2020, the European Commission issued revised guidance encouraging EU Member States to make full use of their FDI screening regimes. More recently, the French, Dutch, German, Italian, Spanish and British governments all tightened their respective FDI screening regimes. 

These new measures are frequently designed to protect domestic businesses involved in sectors affecting health, medicines, medical equipment, security, public order, and businesses which operate in strategically important sectors and/or which might be vulnerable to foreign takeover as a result of the economic and other consequences of the pandemic.

The consequence is that foreign investors considering FDI will face increased scrutiny and will need to pay close attention to the FDI regimes in countries in which they are seeking to invest. Particularly for multijurisdictional transactions which involve more than one screening regime, it will be important to adopt, and work with legal advisers that are able to manage, a well-coordinated and strategic approach to navigating through those regimes.

This overview describes the main features of the FDI screening regimes at the EU level, and in certain key jurisdictions in Europe and the Middle East.

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