The purpose of the bill Implementation Act screening regulation foreign direct investments, submitted on 22 June 2020, is to implement all necessary legal measures to effectively implement the obligations of Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments in the Union (PbEU 2019, L 79). The Regulation entails various obligations for the Netherlands that have been found to be impossible to implement with existing legal provisions or with the currently available organizational resources and structures of central government. The Regulation will apply from 11 October 2020. The Regulation provides a framework for Member States' screening of foreign direct investment into the Union for reasons of security or public order.
This bill regulates a number of matters that are necessary for the effective implementation of the obligations of the Regulation:
What is meant by "a foreign direct investment"?
Pursuant to Article 2 of the Regulation, a foreign direct investment includes 3 components:
The Regulation applies only to investments by investors from countries that are not Member States of the European Union, known as third countries. The Member States of the EEA (Iceland, Liechtenstein and Norway) also qualify as third countries under this Regulation. This also applies to countries with which a special association has been established, such as Turkey (and in another form Switzerland).
A distinction is made between direct investment and indirect investment. Indirect investments, such as portfolio investments, do not fall within the scope of the Regulation.
The point of contact
The Minister of Economic Affairs and Climate is the contact point (Article 2 of the proposal). The contact point as such does not collect or make decisions, but ensures that information shared with other Member States and shared by other Member States is exchanged. The contact point will be operational on 11 October 2020 and connected to the European network of contact points. Article 3 defines who is responsible for taking decisions in the context of the cooperation referred to in Articles 6 to 8 of the Regulation.
The cooperation mechanism
In order to comply with the obligations to be fulfilled under the cooperation mechanism set out in Articles 6 to 8 of the Regulation, the responsible minister must be provided with the necessary information. This is regulated in Article 4. The responsible minister uses data from the trade register, the land registry basic register and the public registers, other public registers established by law and public information. In addition, the parties listed in the third paragraph of Article 4 of the bill provide the responsible minister on request with all information that is necessary for the performance of the obligations referred to in Article 9, first and third paragraphs of the Regulation.
Article 4, fourth paragraph, of the proposal, stipulates that the responsible minister may also submit a written request to the General Intelligence and Security Service (AIVD) or the Military Intelligence and Security Service (MIVD) to provide information, insofar as this is necessary for the implementation of the obligations referred to in Article 9, paragraphs 1 and 3, of the Regulation.
Article 4, fifth paragraph, of the proposal states that the Member State may request the foreign investor or the company in which the foreign direct investment is planned or has been completed, to provide the information from the second paragraph of Article 9 of the Regulation.
Outside of bankruptcy, the information can be requested from the company itself on the basis of Article 9 (4) of the Regulation. In case of bankruptcy, according to Artcile 4, paragraph 6 of the proposal, the minister can request this information from the curator.
The screening mechanism and the investment test
In the Netherlands, only a limited number of statutory screening mechanisms currently apply to foreign direct investments in the Netherlands. One of the measures that the government is taking is an investment test for national security risks in takeovers and investments. The principles for an investment test on national security risks and the proposed process of how this test will be implemented. This bill for the implementation of the Regulation is structured in such a way that it leaves the necessary scope and connection for the introduction of investment tests on national security risks.
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NAZALI TAX & LEGAL |