First Annual Report on Belgian Foreign Direct Investment Screening Published
- 07/10/2024
- News
On 30 September 2024, the Federal Public Service Economy published its first annual report (the Report) on the screening of foreign direct investments (FDI) and the operations of the Belgian Interfederal Screening Committee (the ISC). The Report offers insights into the first year of implementation of the Belgian FDI screening mechanism, which has been in place since 1 July 2023 (See, Client Alert of 30 June 2023).
Smooth Process for Most
The Report shows that the procedure has run smoothly for most notifications with only few delays and, so far, no conditions or blocking decisions.
Between 1 July 2023 and 30 June 2024, the ISC handled 68 notifications. 53 of these were approved without any accompanying measures while the remaining 15 files were still pending on 30 June 2024. As a result, no investments have been blocked or made subject to measures during the first year of FDI screening.
The ISC also opened its first retroactive ex officio investigation, but closed it without imposing any measures.
Interestingly, only five notifications gave rise to a second in-depth screening phase. One of these was closed after 52 days, while the others were still pending on 30 June 2024.
The Report shows the importance of filing a complete notification. In 44% of the cases, the ISC accepted the filing on the same day or on the day following submission. By contrast, 13 filings were not immediately accepted due to missing information, resulting in an overall average period of six days between submission and the ISC’s acceptance of the filing. This finding points to a significant delay for filings which were initially regarded as incomplete.
In addition, the majority of notifications are approved within the statutory time period of 30 days, without clock-stops. Only 4 notifications received requests for additional information during the notification process, resulting in an average processing time of 31 days as from acceptance of the filing.
Prevalence of US and UK Investors
The majority of the notified investments originate from the United States, accounting for 43.4% of the notifications, followed by the UK with 29%. Other investors’ countries of origin lag far behind as demonstrated in the table below.
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Types of Notified Investments
The sectors targeted most by the notifications were data (15.1%), healthcare (15.1%), digital infrastructure (11.6%), transport (10.5%), and electronic communication (8.1%):
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While notifiable acquisitions fall in a range between investments conferring control and stakes of only 25% (or in some cases even 10%) of voting rights, the Report indicates that the majority of notifications involved acquisitions of control. In addition, most investments notified to the ISC are transactions in which the Belgian target forms part of a larger acquisition. Just over 23% of notified investments concerned transactions in which a Belgian entity was the principal target.
Additionally, 11 notifications concerned internal restructurings, in respect of which 9 did not result in a new ultimate beneficial owner. This raises the question whether such notifications are meaningful from the perspective of controlling foreign investment in the Belgian economy.
Outlook
The Report indicates that the Belgian stakeholder jurisdictions may start discussions about improving the current FDI screening mechanism. The Report also refers to the upcoming changes to the EU FDI Regulation (See, VBB on Competition Law, Volume 2024, No. 2, p. 5).
