We discuss when new laws governing investments and acquisitions that could impact national security will go onto the statute books, and how those affected (mainly investors and buyers) should prepare.

In our recent webinar leading practitioners from TLT, GSJ Advocaten in Belgium and Holla Legal and Tax in the Netherlands - got together to discuss imminent changes in the laws of all three countries relating to transactions which might raise national security concerns.

The UK is closest to adopting new rules, and has set a firm date for the National Security and Investment Act to become law: the 4th of January 2022. The application of the Act will be retrospective, so investments made in the sensitive areas of the economy covered by the Act will be reviewable by the Government back to November 2020. Corporate lawyers should already be considering the requirements in deals they are currently advising on, and looking back at recent completions to see if they could be affected.

Robert van Muijen of Holla explained the situation in the Netherlands. Draft legislation, entitled Wet Veiligheidstoets Investeringen, or the Investment Screening Bill, was presented to Parliament in the summer of 2021. It is expected to come into law in the course of 2022 but it will also have a retrospective effect from September 2021.

Federal Belgium has no specific legislation at the moment, other than the EU directive that provides a framework for member states if they decide to implement a screening mechanism and for exchanging information between the European Commission and the member states. A bill proposal has been introduced to the Federal Parliament which would require declaration of foreign investments of more than 10% of a company (in the case of a share deal) or more than 4.5 million euros (in the case of a direct investment), and the Flanders region has limited rules around foreign investment in public assets.

Due to Belgiums constitutional structure, an agreement will have to be reached between the Federal Government and the regions before such a screening mechanism could be made nationwide law, giving lawyers operating in the country a little more time than their UK or Dutch counterparts.

Only the UK so far has a mechanism for notifying the relevant government department (the Investment Screening Unit or ISU) of transactions that might come under the domain of the new law, and it is a temporary arrangement currently based on a draft form (available on the Government website), that should be completed and emailed to the ISU.  However, it is expected to be replaced with an online form when the UK Act comes into force. Nina Searle, a specialist in venture capital and fast growth companies at TLT, has already made a notification when advising on the acquisition of a direct supplier to the UK Ministry of Defence.  She said: The notification process was very collaborative with the ISU. They were open to supporting us with our questions.

During the process Ninas team queried the level of detail needed, and the ISU agreed to consider the notification without all the detail requested on the form being provided. She said: It's an iterative process, which is being refined during this consultation period ahead of the Act coming into force in the UK’.

Until the Act has legal effect, the ISU cannot give an assurance that any given transaction will not be the subject of a call-in notice.  However, an email confirming the unit’s view that the transaction was ‘unlikely to give rise to concerns necessitating the issue of a call-in notice’ was received within five weeks of the notification and there was no filing fee. The Act sets a 30 working day limit from acceptance of the notification by the ISU for the Secretary of State to issue a call-in notice or confirm that no further action will be taken under the Act in respect of the transaction.  If a call-in notice is issued, it triggers an assessment period of a further 30 working days, which can be extended by a further 45 working days if required, so a total of up to 105 days (which could be extended further with the agreement of the investor/acquirer).

In the Netherlands, screening will be carried out by the Bureau for Investment Screening (BTI) and approval is limited to eight weeks but with a possible extension of six months for investigation. Costs are expected to range between 9,000 euros for a simple case to 90,000 euros for a full inquest.

In Belgium limits have not yet been set but Bart Goossens, managing corporate partner at GSJ Advocaten and part of the webinar panel, fears that six months might not be out of the question.

All of the experts agreed that building notification time into project plans is key to success.

Date published

25 October 2021



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