New Belgium FDI Screening Tool Could Cause 'Significant' Investment Delays, Firm Says
Belgium recently announced a new foreign direct investment screening regime, which is expected to have a “significant impact on deal certainty” for investors outside the EU, Crowell & Moring said in a June 22 alert. The alert outlines transactions that may be captured by the regime, the screening procedures, how reviews will be conducted and more.
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The new regime, which is expected to take effect Jan. 1 after being approved by Belgium's parliaments, will create a new Interfederal Screening Commission, which will serve as a “one-stop-shop” for FDI screening notifications that exceed certain “uniform notification thresholds,” the firm said. The regime was created to review investments that could affect Belgium’s “national security, public order and strategic interests.”
The screening could capture any foreign investment from outside the EU where the foreign investor “directly or indirectly” acquires 25% or more of the voting rights in a Belgian entity involved in certain strategic areas of the country’s economy, Crowell said. Those areas include critical infrastructure, certain essential technologies or raw materials, supplies of critical inputs, sensitive information and others.
The commission also will have the authority to review certain transactions where a foreign investor acquires 10% or more of the voting rights in a Belgian entity with activities in the country’s defense, energy, cybersecurity, electronic communications or digital infrastructure sectors, the firm said. Greenfield investments will not be captured.
Crowell said the new process could “significantly delay the implementation of deals,” particularly due to the “standstill obligation during the review process” and the lack of a statutory timetable for the "preliminary phase." Other investments may be subject to both FDI screening and merger control procedures, the firm said, which would add “significant complexity.” Belgium could also open investigations into completed deals up to five years after their closing and could seek to unwind those investments.