Is your company thinking about EU investment? Pay attention to these new rules

The law firm Morrison & Foerster is warning clients about how the European Union is about to take a more active role in the screening of foreign direct investment. Last month, the EU established a framework for foreign investment screening, including a coordination mechanism between the EU and its member states. The new rules don’t take effect until October 2020,  national governments amend their local rules in anticipation of the EU rule rollout. The firm says that individual countries will screen the investments, but because the new rules permit comments by other members and the European Commission, it will add another layer of complexity.

The new law focuses on investments in critical infrastructure such as energy, health, media, telecommunication, and transport, and in critical technologies including, for example, data-driven businesses, robotics, and artificial intelligence. The authors of the MoFo client note say that the rules reflect concern about the sale of key technologies to foreign investors, governments, and government-funded entities. It comes as a reaction to investments made by Chinese investors in the past few years. .

Following the implementation of new EU rules and future screening regimes of the member Sstates, dealmakers and foreign investors will have to take into account increased notification requirements, extended timelines for screening procedures, and the regulators’ ability to consider additional factors such as the impact on critical technologies and the involvement of foreign governments.

You can read the entire client note here.