DealLawyers.com Blog

Dechert recently published this white paper that provides an overview of the foreign direct investment and national security review regimes in the US, EU, China and other major jurisdictions.  Here’s an excerpt from the intro:

The national security and foreign direct investment (“FDI”) review landscape around the world is evolving rapidly. A pre-pandemic trend of active FDI reviews in countries around the world has gained momentum and resulted in the emergence of new FDI regimes. Not only have new FDI regimes proliferated, but also there has been a tightening of existing regimes with an ever-growing number of market sectors viewed as strategically important and thus subject to heightened scrutiny.

These trendlines have converged with a surge in global dealmaking, adding to regulatory complexity and resulting in a growing list of deals that need to navigate potential FDI and national security concerns. It is thus more important than ever to evaluate FDI screening risks early in the due diligence process, giving careful consideration to the risks and threats posed by buyers, investors and targets and to potential substantive (mitigation conditions) and procedural (timing) implications.

The white paper notes that although only about one-third of all countries have some form of FDI screening regulations, about 90% of the 38 OECD member countries have such regimes. That’s up from 60% a decade ago. It also points out that the increasing focus by major economies on safeguarding national security has resulted in an expansion of authority for existing national security review regimes and an ever-expanding list of sectors that are subject to scrutiny.

– John Jenkins