Key facts

Canada has an extensive and long-standing foreign investment regime. Given enforcement to date, national security should be top of mind for foreign investors. In April 2020 in light of the Covid-19 pandemic, Canada announced enhanced scrutiny for foreign investments in public health, the supply of critical goods and services, or those undertaken by state-owned enterprise investors. On 24 March 2021, the government issued updated national security guidelines which have formalized the broad approach to national security that has been in place during the pandemic and added detail on the key sensitive sectors for national security review purposes. 

Key thresholds

The Investment Canada Act (ICA) applies to all non-Canadians investing in or establishing a Canadian business.

An acquisition of control will be “notifiable” or “reviewable” depending on the transaction structure, non-Canadian’s identity, and target’s value/nature:

• “Notifiable”: transaction is below the applicable monetary threshold; requires filing a short notification either before, or within 30 days of closing.
• “Reviewable”: transaction is above the applicable monetary threshold; requires approval before closing and typically requires negotiation of undertakings with the Canadian government.

If an acquisition of a cultural business does not trigger the thresholds, a review may still be ordered.

In addition, all investments, regardless of size or whether control is acquired, can be reviewed on national security grounds, including the establishment of a new business. 

Control rules are complex, but generally: i) acquisition of a majority of the voting or undivided ownership interests of an entity constitutes control; and ii) there is a rebuttable presumption that the acquisition of at least 33.3% of voting shares of a corporation constitutes control.

Transactions covered by the rules

The filing requirements generally apply to (i) direct and indirect acquisitions of control of a Canadian business, (including minority share acquisitions of 33.3%, unless no control was acquired); and (ii) the establishment of a new Canadian business. The ICA rules apply to foreign investments in any sector.

Key sensitive sectors

Investments by state-owned enterprises; further, sensitive sectors include: military/defence; Canadian cultural heritage; public health; technology; sensitive personal data; critical minerals; critical mineral supply chains and critical infrastructure/goods/services, among others.

Key facts

Foreign investors should consider whether any of the below five foreign investment regimes in the PRC apply to their transactions. The key criterion is always whether a foreign investor is proposing to acquire a Chinese company / asset or is otherwise involved in an investment in the PRC. Several changes to the regimes came into effect on 1 January 2020 and 18 January 2021 (for NSR review). To date, no specific Covid-19 restrictions have been included in the legislation or regulations governing foreign investment in the PRC.

Key thresholds

National Security Review (NSR) - applies where:

• the target is in one of the applicable categories of the Foreign Investment Security Review Measures (Security Review Measures). If in a Category A sector (e.g. military or national security/defence), a pre-closing filing will be required, even if only a minority share is acquired. If in a Category B sector (e.g. key technologies, important energy or infrastructure; see further detail under “sensitive sectors” below), a pre-closing filing will only be required if actual control is obtained; and 
• the transaction is structured in a particular way (e.g. as a merger or acquisition of equity or assets of a Chinese domestic enterprise, an investment in a new project, or establishment of a new FIE, by a foreign investor either on its own or with other investors, or an investment directly or indirectly conducted by a foreign investor in China in any other form. 

Pre-closing approval by the Ministry of Commerce (MOFCOM) - for the acquisition of a Chinese entity where the “foreign” investor (i) is established or ultimately controlled by a Chinese domestic entity or Chinese individual and such domestic entity or individual is also affiliated with the target; (ii) is using offshore shares as the consideration for the acquisition; or (iii) acquires control of a famous brand or household name or control of an entity in a key industry.

Depending on the specific rules, “control” in the above contexts can include a shareholding of 50% (or a lower ownership percentage with significant influence over the target), or effective control of the target’s business policies, irrespective of shareholding.

Registration with the relevant bureau of the State Administration for Market Regulation ("SAMR") - required if the investment involves a direct change in the shareholding of a FIE or changes to its legal representative, directors, supervisors or manager. SAMR is also responsible for reviewing transactions where the target is active in a sector (“Restricted Sector”) covered by the national or respective FTZ “negative list”. Restricted Sectors limitations on foreign ownership/ management, as well as industry specific regulatory approvals/ filings, may apply.

Pre-closing approval by, or filing with, National Development and Reform Commission (“NDRC”) at the relevant level – required for industrial/ infrastructure projects invested by a foreign investor. Not required if the target is in a financial sector.

MOFCOM information reporting – MOFCOM has introduced new information reporting requirements for all FIEs which came into effect from 1 January 2020, replacing the previous filing-based system for establishment of, and changes to, FIEs.

Transactions covered by the rules

The regimes generally apply to share purchases and some asset purchases. In addition, the NSR can apply more broadly to an investment directly or indirectly conducted by a foreign investor in China in any other form. No further clarity is provided under the Security Review Measures or other relevant laws or regulations for what this catch-all clause may entail. By referencing to the NSR rules in relation to free trade zones, such other forms may cover contractual control, nominee or trust arrangements, reinvestments, offshore transactions, leasing, subscription of convertible bonds etc.

Key sensitive sectors

Certain industry sectors are categorised as prohibited for investment into China (e.g. fishery, publication and broadcasting). Sensitive sectors in the context of NSR review include: military or military supporting industry; the vicinity of military facilities or military industrial facilities; other businesses related to national defence / security; key technologies; major equipment manufacturing; important agriculture products; important energy and resources; important infrastructure and transportation services; important cultural products or services; important IT and Internet products or services; important financial services; and other important industries relating to national security.

For more information, see our publications below

• China’s revamped national security regime poses new challenges for foreign investors (March 2021)

Key facts

The European Union does not operate an own foreign investment review but coordinates and encourages the harmonisation of the national foreign investment review rules of its Member States.

To align the national investment reviews, the European Union adopted the FDI Screening Regulation, which became came into effect on 11 October 2020. The FDI Screening Regulation does not establish a fully harmonized foreign investment regime in the EU, nor intends to replace the national foreign investment regimes of the different Member States. Instead, it seeks to promote best practices, cooperation and information sharing regarding foreign investment control between the European Commission and the Member States.

As of 1 October 2021, 18 Member States have active foreign investment regimes, namely Austria, Czech Republic, Denmark, Finland, France, Germany, Hungary, Italy, Latvia, Lithuania, Malta, the Netherlands, Poland, Portugal, Romania, Slovenia, Slovak Republic and Spain.

Key thresholds

Since there is no separate foreign investment regime exercised by the European Union it does not contain specific acquisition thresholds and investments are not required to be notified to the European Commission. However, the European Commission can issue opinions in case the FDI might have an effect on security or public order in more than one Member State, or if it has relevant information in relation to the FDI. The opinions are non-binding on the Member States.

Transactions covered by the rules

The FDI Screening Regulation considers as foreign investment any kind by a foreign investor aiming to establish or maintain lasting and direct links to the target, including control over the target company. The FDI Screening Regulation addresses investments by third countries, i.e. non-Member States.

Key sensitive sectors

Critical infrastructure (energy, transport, water, health, communications, media, data processing or storage, aerospace, defence, electoral or financial infrastructure and sensitive facilities, as well as land and real estate crucial for the use of such infrastructure), critical technology (artificial intelligence, robotics, semiconductors, cyber security, aerospace, defence, dual use goods/services, energy storage, quantum technologies, nuclear technologies, nanotechnologies, biotechnologies), critical input suppliers (e.g. raw materials), food security, companies using and storing personal data, and media companies.

For more information, see our publications below

• The EU foreign investment screening mechanism four months on: a few observations on its operation (March 2021)
• EU foreign investment screening mechanism brings heightened transaction scrutiny (October 2020)
• Client Alert: Foreign Investment Control: the impact of Covid-19 and sectors to watch

Key facts

The French foreign investment regime is a long-standing and well-established mandatory regime. Where a transaction falls within the scope of the French foreign investment rules, a filing must be made to the Minister for the Economy to request an authorisation. The French foreign investment regime is suspensory, which means that the parties cannot close until they have obtained clearance from the Minister for the Economy. The Minister has the authority to authorise the transaction with or without conditions. The Minister also has the authority to block transactions by means of a reasoned decision.

Key thresholds

There are no turnover thresholds under the French foreign investment regime, and a filing may be required even where the turnover of the French target is very low. The requirement for prior approval is also not dependent on the importance of the activity at issue, compared to the overall activities of the target. For instance, a single government contract may be sufficient to trigger a filing obligation and a case-by-case assessment is required in each case.

Transactions covered by the rules

A filing to the Minister for the Economy will be triggered if a “foreign investor” (including French nationals residing outside France) acquires control, exceeds 25% of voting rights (save for investors from the European Union) or acquires all or part of the assets of a French law entity operating in certain sectors.

Since 6 August 2020, an additional threshold at which the foreign investment screening regime is triggered has been implemented, at 10% of voting rights for non-EU investors acquiring shares in listed companies.

Key sensitive sectors

Sensitive sectors include: defence, energy, water, transport, space, electronic communications, police, health, agricultural products that contribute to national food safety objectives, print and online press services for political and general information, quantum technologies, energy storage and technologies involved in the production of renewable energy.

The list of sectors falling within the scope of the French foreign investment regime can be extended by decree (i.e., almost overnight) when needed (e.g. the Alstom/General Electric merger).

With effect from 1 April 2020, the list of sensitive sectors is now the same for all foreign investors, regardless of whether they are located within or outside the European Union.

For more information, see our publication below

• Client Alert: Foreign Investments in France: last step of the reform (January 2020)
• Renewables and the French FI regime: why keep filing? (October 2021)

Key facts

The German regime is a long-standing regime which underwent major changes in the past four years, including a significant extension of its scope of application sanctions. Depending on the type of sector affected, it may kick when acquiring 10% or more of voting rights and requires a mandatory filing for a wide range of transactions. Whether German foreign investment review is applicable depends on (i) the origin of the investor, (ii) the sensitivity of the targets activities in Germany and (iii) the share of voting rights acquired.

Most recently, we have seen a number of very significant reforms. The main changes are (i) 16 new sectors were added to the sectors in scope of a mandatory and suspensory filing requirement, (ii) the concept of atypical control was included to capture transactions below the relevant thresholds if the investors has certain additional rights, (iii) additional thresholds for follow-on acquisitions by the same investor were included, and  (iv) the introduction of severe sanctions including imprisonment of up to five years in case of intent or fines in case of negligence of up to EUR 500,000.

Key thresholds

The German foreign investment regime distinguishes between acquisitions triggering a mandatory filing requirement and those which only fall under a voluntary filing regime:

1. Specific mandatory filings are required for investments by non-German investors in the defence sector, certain infrastructure for processing state classified information and other highly sensitive (military related) activities (so-called mandatory sector specific review).
2. Further, mandatory filings are required for investments by non-EU/EFTA investors in critical infrastructures (a broad concept applying to many sectors where the target’s activities exceed certain quantitative thresholds aligned with the average demand of 500,000 people), software specifically developed for critical infrastructure operations, as well as other sectors which the Ministry for Economic Affairs and Energy considers of particular relevance including cloud computing; telematics infrastructure; media; state communication infrastructure; personal protective equipment; essential drugs; medical devices; in-vitro diagnostics; satellite systems; artificial intelligence; automated and autonomous driving; robotics; semiconductors; IT security; aerospace;  quantum technologies; additive manufacturing; wireless or wireline data networks; smart meter; IT for specific sensitive locations; mining of rare earth metals and similar raw material; large scale agricultural activities (so-called mandatory cross sector review).
3. Outside of the above-named sectors triggering a mandatory filing, a voluntary filing is possible. However, if no voluntary filing is made, the transaction can still be called-in within five years after signing and, thus, a voluntary notification may be advisable depending on the sensitivity of the target’s activities for early deal certainty.

Transactions covered by the rules

For transactions falling in the mandatory category, a filing is required in case that a non- EU/EFTA investor acquires (indirectly/directly) voting rights in the German target exceeding specific thresholds. The threshold depends on the exact target activity and is either 10% or 20%. In case of certain highly sensitive target business activities, this regime applies to all non-German investors.

The voluntary filing regime applies for (indirect/direct acquisition of 25% of voting rights in the German target by non-EU/non-EFTA investors.

Asset deals and internal restructuring are in scope of the foreign investment rules in Germany with only limited safe harbours.

Depending on the sector, follow-on acquisitions by the same investor may trigger a new foreign investment review when the total voting shares by an investor exceed 20%, 25%, 40%, 50% or 75%.

Key sensitive sectors

Sensitive sectors include: Defence, healthcare, medical devices and diagnostic equipment, biotechnology, defence, robotics, semiconductors, cybersecurity, aerospace, quantum technologies, nuclear technologies, artificial intelligence, nano technologies, supply of critical inputs (energy or raw materials as well as for food safety), access to sensitive information (including personal data), media, telematics, dual use services/goods, cloud computing, additive manufacturing, automated and autonomous driving, critical infrastructures such as energy, water, IT and telecommunication, finance and insurance, transport and food. Further, investments in certain companies of the “German Mittelstand”, in particular the so called “hidden champions” may attract higher scrutiny.

For more information, see our publications below

• The future of German foreign investment control is here… Part I: More transactions subject to mandatory filing requirements (April 2021)
• The future of German foreign investment control is here… Part II: Good News and Bad News (May 2021)
• The future of German foreign investment control is here… Part III: Coping with the rising tide (May 2021)

Key facts

The Golden Powers Regulation (GPR) is the main set of rules on foreign investments in Italy. The GPR originally only provided for a mandatory filing in a limited number of sectors, i.e. defence, national security, energy, transport and communications. However, over the years, the scope of application has been substantially extended to additional sectors, including 5G technologies and the sectors outlined in the EU Screening Regulation.

In April 2021, the Italian Government strengthened its foreign investment rules, the so-called ’golden power’ rules. The reform further extended the scope to the other sensitive sectors outlined in the EU Screening Regulation as well as to the financial, credit and insurance sectors.

Key thresholds

New notification requirements, introduced due to Covid-19 and in force at least until 31 December 2022, now cover:

1. non-Italian investors acquiring control over strategic companies in the abovementioned sectors (Strategic Companies); and
2. non-EU investors acquiring 10% or more of the capital of Strategic Companies, provided that the overall value of the investment is equal to or greater than EUR 1 million.

Lower thresholds apply for acquisitions of shareholdings in a Strategic Company active in the defence or national security sectors, with the minimum threshold being 3% of their corporate capital or voting rights.

Transactions covered by the rules

Transactions covered include share or asset deals, as well as resolutions, acts or transactions having, directly or indirectly, an impact on the relevant assets and relationships of a Strategic Company.

Intra-group transactions are not exempted. In addition, a notification obligation can also be triggered by resolutions/acts/transactions not linked to an M&A deal, including resolutions of a Strategic Company concerning, among other things, its relocation outside Italy or its dissolution, or amendments to its corporate object or to certain clauses of its Articles of Association.

Key sensitive sectors

Sensitive sectors include defence, national security, energy, transport, communications, finance, credit, insurance, steel, agri-food sectors and 5G technologies, personal data, media, aerospace, water, health, data processing or storage, electoral or financial infrastructure and sensitive facilities, as well as land and real estate crucial for the use of such infrastructure, dual use items and technologies, artificial intelligence, robotics, semiconductors, cybersecurity, energy storage, quantum and nuclear technologies as well as nanotechnologies and biotechnologies.

For more information, see our publication below

• The ever-widening scope of the Italian FI rules: What should we expect over the coming months? (April 2021)
• Client Alert: The Covid-19 emergency leads to a new Decree strengthening foreign investment control screenings in Italy (April 2020)

Key facts

The Japanese foreign investment scheme is a mandatory regime. Foreign investors are required either (i) to obtain a pre-closing approval or (ii) file a post-closing notification depending on the identity of the acquirer and the nature of the Japanese business subject to the investment. If pre-closing approval is required, closing is not permitted before the local clearance and the statutory review period is 30 calendar days.

In light of the impact of Covid-19, the Japanese government intends to add healthcare as a sensitive sector.

Key thresholds

Pre-closing approval is required for any direct investment by a foreign investor in a Japanese company:

• active in sensitive sectors (or whose Japanese subsidiary is active in sensitive sectors) and not listed on the Japanese stock exchange, regardless of the level of the shareholding or voting rights.
• active in sensitive sectors (or whose Japanese subsidiary is active in sensitive sectors) resulting in the acquirer holding 1% or more of the shares or voting rights. For pure investment purposes (where the investor does not appoint officers to, or get involved in the business of, the Japanese company in any way), the 1% threshold may be raised up to 10% or more depending on the business of the foreign investor and/or the Japanese listed company, in which case a post-closing notification is required. Japan’s Finance Ministry has published a list of companies operating in core national security industries to come under this new foreign direct investment-notification threshold, which has been applicable since 7 June 2020 (available here).

Post-closing notification is required for any direct investment by a foreign investment in a Japanese company that is active solely in non-sensitive sectors resulting in a holding of 10% or more of the shares or voting rights.

The acquisition of a foreign entity that already holds a Japanese company does not trigger a filing.

Transactions covered by the rules

Foreign investment into Japan includes but not limited to:

• Direct acquisitions of shares or equity in a Japanese company by a foreign investor. This includes the shares or equity held by a party which has a special relationship with the foreign investor.
• Acquisitions of business (including merger, company split and business transfer) of a Japanese company by a foreign investor.
• Consent to the appointment of directors from the consenting foreign investor or a substantial change in the business purpose of a Japanese corporation.
• Establishment of a branch in Japan or a substantial change in the kind of business purpose of the branch in Japan.
• Loan to a legal person having its principal office in Japan where the term of the loan exceeds one year and the amount of the loan exceeds JPY 100 million equivalent.
• Acquisition of bonds whose maturity date is more than 1 year in the future and where the outstanding balance of bonds issued by such company and held by one foreign investor exceed JPY 100 million equivalent.
• Discretionary investment in the shares of a listed Japanese company of 1% or more.

Also, internal re-organisations may be captured if the direct parent company changes and the new parent company is a foreign investor.

Key sensitive sectors

Key sensitive sectors are:

• Businesses which are likely to impair national security, disturb the maintenance of public order or hinder the protection of public safety (i.e. manufacture of weapons, aircrafts, artificial satellites/rockets, nuclear materials, electronic devices and IT related goods (e.g. circuits, semiconductors, optimal/magnetic discs, mobile phones, computers), software, cyber security,  healthcare (i) manufacturing medicines or pharmaceutical products (including intermediate products) for infectious diseases; and (ii) manufacturing highly-managed pharmaceutical devices). Critical minerals including rare earth and construction business regarding certain remote islands (Okino-Tori-shima, Minami-Tori-shima) have been added to this list which will be applicable to transactions effecting from 4 November 2021); and
• Businesses which are likely to have significant adverse effect on the smooth operation of economy (for example, agriculture, forestry, fisheries, petroleum, aerospace, electric/gas/water utilities, telecommunications, leather manufacturing and transportation);

Key facts

The Russian foreign investment regime only applies if the transaction results in an acquisition (direct/indirect) of any shares or rights in respect of a Russian entity or its assets. Key complications stem from the broad (60+) list of sensitive sectors and certain pre-transaction clearances potentially taking 6-12 months or longer to obtain. Thresholds are strictest for entities engaged in activities related to natural resources and fishing (Strategic Subsoil Entity and Strategic Fishing Entity). Certain transactions are prohibited entirely, and clearance may not be obtained.

Key thresholds

Pre-closing approval is required for (among other things) the acquisition (including intra-group) of:

• over 25% of shares or blocking rights in respect of any Russian entity if the investor is controlled by a foreign state or international organisation;
• control over a Strategic (including Subsoil and Fishing) Entities by an Ordinary Investor;
• over 25% of shares or blocking rights in respect of a Strategic Entity (over 5% of shares or blocking rights in respect of a Strategic Subsoil / Fishing Entity) by a Restricted Investor;
• any shares in a Strategic Subsoil / Fishing Entity if the investor already holds over 25% in it;
• certain assets of a Strategic (including Subsoil and Fishing) Entity by an Ordinary Investor. 

“Control” is defined broadly and depends on the type of Russian target entity and the type of foreign investor, lowest thresholds are envisaged for Subsoil Strategic / Fishing Entities.

Pre-closing disclosure of beneficiaries

A foreign investor, not controlled by foreign state(s) or international organisation(s), can acquire certain shares and assets of certain strategic (including Subsoil and Fishing) entities only after if such investor officially discloses its UBOs to the Russian regulator before the transaction.

Post-closing notification is required for:

• acquisition – direct/indirect, including intra-group - by an investor of 5% or more of shares of a Strategic Entity (including Subsoil and Fishing);
• completion of the transaction or action for which pre-closing approval was received.

Prohibited transactions

Restricted Investors are prohibited from:

• establishing control over Strategic (including Subsoil / Fishing) Entities;
• acquiring over 25% of certain assets of a Strategic (including Subsoil / Fishing) Entity.

Further restrictions, including clearance requirements and prohibitions to acquire, in sensitive industries such as media, insurance, banking, air & space, etc. may apply, but are not covered herein.

Prohibited transactions

Restricted Investors are prohibited from:

• establishing control over Strategic (including Subsoil / Fishing) Entities;
• acquiring over 25% of certain assets of a Strategic (including Subsoil / Fishing) Entity.

Further restrictions, including clearance requirements and prohibitions to acquire, in sensitive industries such as media, insurance, banking, air & space, etc. may apply, but are not covered herein.

Types of Foreign Investors and Russian Targets

Strategic Entity: Russian entity engaged in an activity of “strategic significance” for Russia.

Subsoil Strategic Entity: Russian entity which carries out geological studies, exploration and/or extraction of subsoil resources on land plots of federal significance. Following a series of court decisions, an entity which provides oilfield services on land plots of federal significance (even if not directly including geological studies, exploration and/or extraction of resources), is also a Subsoil Strategic Entity.

Strategic Fishing Entity: Russian entity which is engaged in extraction (fishing) of aquatic biological resources.

Restricted Investor: foreign states, international organisations, foreign investors which had not disclosed their beneficiaries to the regulator and any entity controlled by them (including by several such investors in aggregate).

Ordinary Investor: entity controlled by non-Russian citizens or companies (or Russian citizens with a foreign citizenship) and not controlled by Restricted Investors (after a completed UBO disclosure).

Key sensitive sectors

Over 60 different industries are regarded of “strategic significance”, as well as traditionally sensitive industries such as media, insurance, banking, air & space, etc.

Key facts

Since March 2020, Spain has two alternative regimes of foreign investment screening:

1. A general regime, applicable to non-EU or non-EFTA investors, under which the acquisition of 10% or more of the shares in a Spanish company (or control of such company by any means) is subject to prior authorisation (from the Council of Ministers or, if the transaction value is below EUR 5 million, from the Directorate General of International Trade and Investment) if (a) the target company operates in a sensitive sector or (b) the foreign investor has certain characteristics (i.e. is controlled by a foreign government, has previous sensitive investments or has a history of illegal activity).
2. A temporary regime, applicable to non-Spanish EU or EFTA investors, under which the acquisition of 10% or more of the shares in a Spanish company (or control of such company by any means) is subject to prior authorisation (from the Council of Ministers or, if the transaction value is below EUR 5 million, from the Directorate General of International Trade and Investment) if (a) the target company operates in a sensitive sector, and (b) the target company is listed in Spain or the value of the investment is more than €500 million. This regime applies until 31 December 2021, but it could be extended.

Key thresholds

• For the purposes of the general regime, foreign investments are defined as investments carried out, in Spain, by investors who are residents of countries outside the EU/EFTA, or by residents in the EU/EFTA whose beneficial owners are foreign investors (i.e. where the foreign investor possesses or ultimately controls, directly or indirectly, more than 25% of the capital or voting rights in the investor, or where by other means it exercises direct or indirect control of the investor), in cases where, as result of the transaction, the foreign investor reaches ownership of 10% or more of the Spanish company, or acquires control of that company.
• Under the temporary regime, the same notion applies mutatis mutandi: covered investments are those carried out by residents of EU/EFTA countries (other than Spain) or by Spanish residents whose beneficial owners are (non-Spanish) EU/EFTA investors (i.e. where such investor possesses or ultimately control, directly or indirectly, more than 25% of the capital or voting rights in the investor, or where by other means it exercises direct or indirect control of the investor) where, as result of the transaction, the foreign investor reaches ownership of 10% or more of the Spanish company, or acquires control of that company.
• For an investment under the temporary regime to trigger approval, the target company or the transaction must also meet the following conditions or thresholds:
• The target must be a listed company in Spain (“companies listed in Spain are those whose shares are, in whole or in part, traded on a Spanish regulated market and have their registered office in Spain”), or
• The “investment value” must be more than €500 million.

If such investments also meet the additional requirements under each regime (see “Transactions covered by the rules” below), they will require prior approval by the Spanish Council of Ministers or, if the transaction value is below EUR 5 million, from a Directorate General of International Trade and Investment.

Transactions covered by the rules

Under the general regime, transactions covered are investments by non-EU/EFTA investors (above the thresholds and with the conditions mentioned above) that meet either of the two following alternative criteria:

• the investment is made in one of the sectors that affect “public order, public security and public health” (for a detailed explanation, see “Key Sensitive Sectors” below; for example, critical technologies and dual-use items: artificial intelligence, robotics, semi-conductors, cybersecurity, quantum technology, aerospace, defence, energy, nuclear technologies, nanotechnologies and biotechnologies); or
• regardless of the sector of the investment, the foreign investor is controlled directly or indirectly by the Government of a third country or is or has been involved in administrative or judicial proceedings in another Member State, its State of origin or a foreign State for criminal or illegal activities or has made investments or has invested in the past in an EU company within one of the sectors “affecting security, public order” (listed above).

Under the temporary regime, transactions covered are investments by non-Spanish EU/EFTA investors (above the thresholds and with the conditions mentioned above) in one of the sectors that affect “public order, public security and public health” (for example, critical technologies and dual-use items: artificial intelligence, robotics, semi-conductors, cybersecurity, quantum technology, aerospace, defence, energy, nuclear technologies, nanotechnologies and biotechnologies). Under this regime, the characteristics of the investor are not relevant.

Key sensitive sectors

The following sectors are considered sensitive:

1. Critical physical or virtual infrastructure (including transport infrastructure) and the key land and property used (The content of the catalogue of critical infrastructure is secret).
2. Critical technologies and dual-use products, or key technologies for leadership or industrial capabilities, or technologies developed under programs or projects of particular interest for Spain, including: telecommunications, artificial intelligence, robotics, semiconductors, cyber security, aerospace, defence, energy storage, quantum and nuclear technologies, nanotechnology, biotechnologies, advanced materials, and advanced manufacturing systems.
3. Supply of critical inputs. In particular: energy, strategic connectivity services, raw materials and food security. All transactions in these sectors and within any activity are subject to the new screening rules.
4. Sectors with access to confidential information. In particular: personal data, or those with the capacity to control such information.
5. Media.

The Spanish government may extend this regime to other sectors if it considers that they may affect public security, public order or public health, but this extension has not done so yet.

For more information, see our publications below

• Client Alert: Changes in foreign investment screening rules in Spain (April 2020)

Key facts

The new National Security and Investment Act (NSI Act) entered into force on 4 January 2022.

The NSI Act establishes a new screening regime for investments in the UK, with a mandatory notification obligation for 17 of the most sensitive sectors and a voluntary regime for other areas of the economy (coupled with a broad power for UKG to “call in” transactions for review). The NSI Act has an incredibly broad jurisdictional scope and no de minimis turnover, monetary value or market share thresholds. The NSI Act has retroactive effect in that any transaction closing after 11 November 2020 could be “called in” for review by the Secretary of State.

The public interest grounds of intervention under the Enterprise Act 2002 relating to media plurality, public health and financial stability continues to apply but the national security ground for intervention has been repealed, now that the much more far-reaching NSI Act has come into effect.

Key thresholds

For the mandatory regime, a “trigger event” arises where a person acquires more than 25%, 50% and 75% of votes or shares in an in-scope entity (or is able to secure or prevent the passage of any class of resolution governing the entity’s affairs).

The voluntary regime:

• In addition to the trigger events under the mandatory regime, a different threshold applies for acquisitions involving “material influence”. This is a familiar concept from the UK merger control context (and can be triggered by acquisitions of shareholdings as low as 10-15%).
• For assets, a person gains control where they acquire a right or interest and, as a result, is able either to (i) use the asset, or use it to a greater extent than prior to the acquisition, or (ii) direct or control how the asset is used, or direct or control how the asset is used to a greater extent than prior to the acquisition.

There are no turnover, transaction value or market share safe harbours under the NSI Act.

The regime captures international transactions where the target has activities in the UK and/or supplies goods or services in the UK. There is no need for a target to have a UK-incorporated subsidiary.

The NSI Act applies to both UK and overseas investors.

Transactions covered by the rules

The mandatory regime under the NSI Act only applies to share acquisitions. Conversely, the voluntary regime (and call-in power) also captures asset acquisitions. Qualifying assets include a broad range of assets such as land, tangible moveable property and, with respect to IP, any idea, information, or technique with industrial, commercial or other economic value.

Key sensitive sectors

The 17 sensitive sectors subject to mandatory notification are as follows: advanced materials; advanced robotics; artificial intelligence; civil nuclear; communications; computing hardware; critical suppliers to government; critical suppliers to the emergency services; cryptographic authentication; data infrastructure; defence; energy; military and dual-use; quantum technologies; satellite and space technologies; synthetic biology and transport.

For more information, see our publications below

• National Security and Investment Act to take effect on 4 January 2022 (July 2021)
• UK National Security Regime passes Parliament: implications for deal doers before commencement later this year (May 2021)
• Client alert: CFIUK? UK introduces National Security and Investment Bill (November 2020)

Key facts

The US is one of the most mature foreign investment regimes and has a long track record of enforcement. Most reviews are conducted by the Committee on Foreign Investment in the United States (CFIUS), which reviews foreign investments in US businesses and real estate.

No specific Covid-19 restrictions have been included in the legislation or regulations governing CFIUS. CFIUS retains broad authority over acquisitions of control of Covid-19 related businesses but may have limited authority to mandate pre-closing filings involving these businesses or to assert jurisdiction over noncontrolling investments. CFIUS can initiate its own reviews of transactions over which it has jurisdiction if the parties do not submit voluntary filings.

Key thresholds

CFIUS principally reviews foreign acquisitions of control of US businesses, including US operations of non-US companies. CFIUS also reviews non-controlling investments, coupled with governance/information access rights, in US businesses engaged in critical technology, critical infrastructure, or sensitive personal data of US citizens (TID Businesses). Pre-closing CFIUS filings are mandatory for 25% voting interests in TID Businesses if a foreign government holds a 49% voting interest in the investor. CFIUS filings are also required for critical technology investments of any size if (i) the foreign investor receives control or certain governance/information access rights; and (ii) certain industries identified as sensitive are involved. The industry test is expected to be replaced with one based on the need for export licenses to share the target’s technology with the foreign investor or certain affiliates.

Transactions covered by the rules

Control is defined imprecisely by CFIUS as the power, direct or indirect, whether or not exercised, to use majority ownership, a dominant minority interest, board representation, contractual rights, or other arrangements to determine, direct, or decide important matters affecting a US business. A limited number of minority shareholder protections are excepted from the definition of control rights. CFIUS interprets the definition broadly and has found control when an investor has sought a less than 20% voting interest coupled with only one board representative.

Key sensitive sectors

Sensitive sectors include: Critical technologies (certain export-controlled technologies), critical infrastructure (specific communications, energy, transport, and financial infrastructure, plus certain strategic materials and industrial resources), and sensitive personal data of US citizens (e.g., genetic data or other personally identifiable data including financial, health, security, or other qualitative factors).

For more information, see our publications below

• CFIUS Offers Hope for Chinese Acquisitions Involving Personal Data – but the Department of Commerce May Be Taking It Away (December 2021)
• Using Carve-Outs to Limit CFIUS Exposure (October 2021)
• CFIUS’s 2020 Annual Report to Congress: A Better Look at the Process Under FIRRMA (July 2021)