New Foreign Direct Investment Regulation in Sweden: ‘Have we gone too far?’
The British-Swedish Chamber of Commerce, in cooperation with AmCham Sweden and Cirio Advokatbyrå, hosted this virtual seminar about Foreign Direct Investments (FDI), from a Swedish and International Perspective on 14 June 2021. At this seminar, we talked about the FDI Rules in the Nordics, the UK, and the U.S., the policymakers’ approach to FDI, the consequences of national FDI Rules which differ in substance in most countries, the political agenda, and the effect on the transactions and liquidity of assets.
Date: 14 June 2021
Time: 16.00 – 17.00 CEST
Venue: Virtual Event
Not least as a response to Covid changes in Foreign Direct Investment Rules (FDI), the adoption of FDI Rules has continued at a rapid pace around the World.
Today, the majority of the EU Member States have introduced or strengthened the rules or are on the verge of introducing new rules protecting critical national assets. In Europe, the EU and member states have introduced new measures, including the EU’s FDI Screening Regulation that covers investments in a range of critical infrastructure, critical technology, critical inputs, sensitive data and media, but has no specific trigger threshold (leaving member states free to review almost any investment by a non-EU entity).
The fact that there is no coordination as regards type of risk assessment, type transactions, thresholds for notifications, etc has led to a very scattered picture and a situation that does not create regulatory foreseeability.
The definition of what constitutes critical infrastructure is vague and even though there are attempts made to more clearly define the assets and data in question it is to be decided by the various Regulators and will change over time not least due to technology changes.
In recent years, there has been a paradigm shift in the importance and frequency of foreign investment reviews as part of the deal process and such changes are not transitory in nature but will also affect M&A transactions after the pandemic.
All parties involved in M&A transactions need regulatory clarity or have the possibility to make intelligent decisions as regards risks, timetable, and terms and conditions for the transactions. FDI Rules have increased the Regulatory risks, and this could impact a number of features of deal-making. Coordination among jurisdictions is necessary and this can take place through both formal mechanisms, such as the EU FDI screening regulation, and informal exchange among countries.
This coordination is likely to increase sharing of best practices and alerting states of transactions affecting also other countries. Despite increasing coordination among jurisdictions, the risk of divergent outcomes remains given differences in rules, thresholds, and geopolitical considerations across FDI regimes.