2021 Transaction Year in Review and 2022 Forecast: FDI Regimes Continue to Expand and Heighten Transaction Review Around the World | Jones Day


China has stepped up its efforts to review global transactions that may involve national security concerns using its Foreign Investment Security Review (“FISR”) process. On December 19, 2020, China’s National Development and Reform Commission (“NDRC”) and China’s Ministry of Commerce jointly issued the Measures on Foreign Investment Security Review (“FISR Measures”) to monitor foreign investment in sensitive industrial sectors. These “sensitive sectors” include sectors related to defense and security and sectors related to, inter alia, important agricultural products, energy and resources. Although the number of transactions reviewed under the FISR has increased, public disclosure of details has been limited to date. Compared to other regulatory procedures, the FISR is characterized by broader jurisdiction, greater regulator discretion, and less visibility and predictability. Accordingly, parties to a transaction subject to FISR are likely to face increased uncertainty where such approval is a condition of closing the transaction. We generally recommend parties conduct a preliminary FISR assessment early in the transaction to understand the potential impact on closing.


Australia’s foreign investment approval regime can encompass a very wide range of transactions (including foreign-to-foreign transactions and internal reorganizations). It remains essential that foreign investors carefully assess all transactions involving the direct or indirect acquisition of interests in Australian entities, assets or land to confirm whether Foreign Investment Review Board (“FIRB”) approval ) must be requested on a mandatory or voluntary basis. Major reforms came into effect on January 1, 2021, which further broadened the scope of the FIRB. These reforms include new mandatory FIRB approval requirements for investments involving a “national security enterprise” or certain real estate designated as “national security land.” In addition, the Australian Treasurer can now, up to 10 years after closing, “call” transactions for review and potential orders (including divestment orders); In the same vein, a new FIRB voluntary approval regime has been introduced to mitigate this risk. In addition, the reforms include exemptions and exclusions for certain private fund vehicles and foreign lenders, significant changes to the FIRB application fee regime, and increased penalties for non-compliance with the FIRB regime.

United States

The Committee on Foreign Investment in the United States (“CFIUS”) continued to take a vigorous approach to its recently expanded regulatory mandate. Several notable trends of recent years are poised to continue into 2022. The parties to the transaction have increasingly opted to file CFIUS filings (abbreviated filings), and CFIUS looks set to be more willing to conclude agreements based on CFIUS statements. CFIUS has demonstrated a continued focus on negotiating measures to mitigate national security concerns and monitoring compliance with these measures post-closure. CFIUS appears to have increased its review of unnotified transactions, reporting in its latest annual report that it reviewed 117 transactions in 2020 that were not notified by the parties to the transaction.

CFIUS also appears to be expanding the range of industries where it has reviewed information or requested filings, including for transactions involving educational services, publishing, healthcare, pharmaceutical and drug manufacturing, data processing and hosting, financial services, transportation, utilities and others. professional and technical services. In addition, CFIUS is currently evaluating whether to expand the list of “excluded” countries that receive preferential treatment under CFIUS regulations, although any expansion is likely to be slow.

The triggers for a mandatory CFIUS filing (or potential CFIUS expectation or voluntary filing request) are not always intuitive. They may require a detailed examination of a US company’s products, services and assets, as well as the investor’s ultimate ownership and control. With CFIUS having new powers, additional staff, and a broad mandate for bipartisan action, attention to these factors early in the agreement design and due diligence process can help parties identify and spread risk and ensure a smooth path to closure.


Negotiators must also navigate the increasingly complex investment control landscape in Europe, with many jurisdictions introducing new investment control regimes or expanding the scope of existing ones. This is in addition to increased levels of cooperation and information sharing between jurisdictions following the EU FDI screening regulation which came into force last year. There are also a number of important developments on the horizon with new regulatory authorization requirements in the UK, Netherlands, Belgium and Ireland (amongst others) due to be introduced in 2022.

Investors are facing increasingly aggressive enforcement from governments across a wide range of sectors and are concerned about investors from more different countries. For example, an amendment to Germany’s FDI regulations from 2022 will broaden the definition of critical infrastructure investments subject to mandatory pre-closing review to include a wider variety of activities in traditional covered sectors such as energy, telecommunications and transport, as well as in new sectors such as software, finance, insurance and health. Investment bans or conditions have also been imposed on investors from the United States, Canada and Australia, in addition to jurisdictions that are traditionally meant to be subject to greater scrutiny, such as China.

Read the full 2021 transactional year review and 2022 forecast.

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