Foreign Direct Investment (FDI) filings are an increasingly important piece of the regulatory jigsaw for cross-border M&A. Our newly updated report on Foreign Investment: Rising Tides of Politics in Regulation considers both the current landscape and new restrictions due to take effect by the end of 2020 – including the proposed new standalone FDI regime in the UK, and enhanced regimes in the US, France and Japan. We also set out practical advice on how to navigate FDI controls through effective deal planning and execution.
Against a background of mounting protectionist rhetoric, countries traditionally open to investment (such as the US, UK and Australia) are moving towards stricter public interest and FDI scrutiny of M&A. The focus now stretches well beyond acquisitions by Chinese companies, and the concept of “national security” continues to be extended, to include critical infrastructure, communications assets, advanced technology and data. This trend reflects some big shifts in the global economy, as well as the political mood. It is likely to be structural, rather than cyclical, and shows signs of accelerating.
At the same time, the historical “level playing field” frustration when it comes to FDI restrictions has turned. Asian countries, in particular China and India, have progressively opened parts of their economies to FDI and have streamlined their screening processes.
The result is a fluid and uncertain environment, in which it is more important than ever for foreign investors to understand both the legal framework and political and policy contexts they are operating in. Co-ordinating a consistent global approach to any FDI filings required is key to minimising deal risk.
Alongside this report, we are publishing an updated interactive map and country-by-country guide summarising the FDI/public interest control processes and trends in key jurisdictions, an essential guide when considering potential deal hotspots, available on request.
Please email FDIPublications@hsf.com to receive a full copy of the guide.
The contents of this publication, current at the date of publication set out above, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
© Herbert Smith Freehills 2020