M&A Year in Review 2023 brochure - Flipbook - Page 81
| M&A Outlook | 2024
Regulatory
FDI Regimes
FDI rules will see meaningful developments across
Europe, the United States, and beyond in 2024. New
FDI regimes come into force in business hubs, such
as Ireland, and there will be revisions to the FDI
rules in important jurisdictions for global
transactions, such as the UK, France, and Germany.
Also in the EU, the European Commission’s
proposed revisions to the coordination mechanism
of the bloc, if implemented, could result in more
harmonized procedures among EU Member States.
We also expect an expanded reach for national
security screenings in 2024. In addition to reviewing
standard acquisitions of shares or assets, agencies
will focus on non-traditional transactions, such as
greenfield investments, IP transfers, minority
stakes,
transactions
involving
sanctioned
individuals, and internal reorganizations. As a
result, FDI proceedings will become more complex
and time-consuming, risking delays to closing
timelines and even requiring remedies to close
certain transactions. In response to these
developments, parties to transactions in certain
jurisdictions are more likely to litigate against
intervention decisions by national agencies,
particularly as some companies have succeeded in
overturning prohibitions.
We expect that the Committee on Foreign
Investment in the United States (CFIUS) will
continue to scrutinize foreign investments in U.S.
businesses, including controlling and noncontrolling
investments in U.S. businesses with national security
sensitivities or supply chain vulnerabilities.
We also expect CFIUS will continue to ramp up its
review of completed transactions that have not been
notified to the Committee, particularly if the
transactions involve U.S. businesses dealing in critical
technologies, critical infrastructure, or sensitive
personal data, and to increase its enforcement of
compliance with mitigation agreements.
In a significant new development, the Biden
Administration appears to be on the verge of
establishing an outbound investment program that,
on national security grounds, will prohibit or require
notification of certain U.S. outbound investments in
three Chinese advanced technology sectors: (i)
semiconductors/microelectronics, (ii) quantum
computing, and (iii) artificial intelligence. We expect
that the U.S. Treasury Department will issue a final
rulemaking for the outbound investment program
at some point during 2024.
While many jurisdictions in Europe, the United
States, and Australia have become extremely strict
in enforcing their FDI regimes, other jurisdictions in
Asia (including China), the Middle East, Africa, and
Latin America less frequently require FDI filings of
global transactions, except where core defense assets
or certain other sensitive sectors are involved (such
as the postal, compulsory education, and certain
other sectors in China). Given the more difficult
economic situation in these jurisdictions, we expect
this lenience to continue as many economies do not
want to jeopardize foreign investment.
See our Global FDI Legal Guide for more insights.
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