The Netherlands has enacted a comprehensive foreign direct investment (FDI) screening mechanism through the Security Screening of Investment, Mergers and Acquisitions Act (Wet Veiligheidstoets investeringen, fusies en overnames) ("the FDI Act"), effective since June 1, 2023. This new regime introduces mandatory notifications for investments in target undertakings operating in designated vital sectors and sensitive technologies within the country.
The FDI Act entails a notification obligation along with a standstill requirement, encompassing a screening mechanism for specific acquisition activities related to target undertakings. It applies to acquisitions that lead to a change of control, mergers, full function joint ventures, split-offs, asset acquisitions, and other legal acts resulting in control changes. Furthermore, the Act includes provisions for acquiring significant influence in target companies engaged in highly sensitive technologies.
Key Points of the FDI Act:
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Comprehensive Screening Mechanism: The FDI Act was introduced to bolster national security interests and counter undesirable takeovers and investments, particularly in light of vulnerabilities exposed by the COVID-19 pandemic.
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Broad Investment Scope: The FDI Act covers a wide range of investment activities, including acquisitions, mergers, joint ventures, split-offs, asset acquisitions, and control changes.
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"Country-Neutral" Approach: Unlike some other EU member states, the FDI Act applies to investments not only from non-EU investors but also within the EU and even within the Netherlands.
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Designated Sectors: The FDI Act applies to undertakings operating in sectors classified as "vital suppliers," operators of high-tech business campuses, and those engaged in high-end sensitive technology.
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Vital Suppliers: The list of vital sectors currently includes nuclear energy, gas and extractable energy, transportation (Schiphol and the Port of Rotterdam), heat transport networks, and banking and financial sectors. The list may expand through governmental decree.
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High-Tech (Business) Campus Operators: Companies managing areas with strategic technological activities are categorized as high-tech business campus operators under the FDI Act.
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High-End Sensitive Technology: Businesses dealing with military goods and dual-use goods in accordance with the Dual-Use Regulation are considered active in high-end sensitive technology. A governmental decree has further defined sensitive technology categories.
The FDI Act marks a significant step toward strengthening foreign investment oversight in the Netherlands. By introducing a comprehensive screening mechanism, the country aims to safeguard its national interests while facilitating an environment conducive to responsible foreign investments.
