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Foreign investment monitor

Issue 8
May 2024

Welcome to our eighth Foreign investment monitor

In this edition, we delve into the evolving landscape of foreign direct investment (FDI) and national security regulations worldwide.

As nations strive to balance economic growth with dynamic security concerns, new regulatory measures present both challenges and opportunities for investors and businesses.

Our analysis begins with a write-up of the recent UC Berkeley Law webinar, CFIUS’ Impact on Cross-Border Deals, in which the speakers, including Freshfields’ Aimen Mir, Brian Reissaus and Andrea Merediz Basham, discussed the US government’s evolving view of national security and practical strategies for evaluating deal opportunities, mitigating deal execution risk and managing the CFIUS process.

We then turn our attention to Singapore's newly introduced Significant Investments Review Act (SIRA). This legislation aims to harmonize the influx of foreign investment with national security imperatives by introducing a stringent notification and approval process for ownership changes in critical sectors. SIRA endeavors to protect vital industries while maintaining Singapore’s business-friendly reputation.

We also explore the role of legal challenges to FDI decisions. Despite increasing government interventions, such challenges remain rare due to the confidential nature of national security issues, the broad discretion afforded to governments, and the complexities of legal recourse.

Next, we shift our focus to Europe, where the European Commission has proposed significant changes to the EU’s FDI screening process. This proposed regulation aims to streamline and coordinate FDI procedures across Member States, especially for multi-country transactions. It expands the scope to include post-closing screenings of sensitive sectors and strives to harmonize procedures while acknowledging persistent differences in Member States' practices.

Further, we examine the active enforcement of the new EU Foreign Subsidies Regulation (FSR). The European Commission has initiated numerous investigations, particularly targeting Chinese companies and state-owned enterprises, to ensure compliance with the FSR.

Lastly, we cover the UK government’s forthcoming reforms to its National Security and Investment regime. These reforms aim to enhance clarity and predictability for businesses by updating sector definitions and reviewing the notification process. Despite calls for more significant changes, the UK government remains cautious, maintaining flexibility in its national security assessments.

As you navigate this edition, we hope these insights deepen your understanding of the complex and dynamic interplay between foreign investment and national security. Should you wish to discuss any FDI issues in more detail, we would be delighted to arrange a meeting.

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Please get in touch with us or your usual Freshfields contact if you would like to discuss these or any other regulatory issues in more detail.

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