The Future FDI Screening Mechanism In Belgium: Current Outlook

• Published date: 09 June 2022
• Subject Matter: Government, Public Sector, Inward/ Foreign Investment
• Law Firm: Astrea
• Author: Mr Steven De Schrijver

The rise of FDI monitoring in the European Union

Although Belgium is a relatively small country, it maintains a fifth positon in the ranking of European countries for foreign direct investment (FDI) (2021). It attracts large investments in strategic sectors such as technology and life sciences. The importance of monitoring such investments from a national security point of view has increased in recent years. To streamline efforts across the European Union to introduce such FDI monitoring mechanisms, a European Regulation of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union was introduced, setting out a number of core principles for member states to draft their mechanisms and to facilitate cooperation between member states when screening foreign investments.

To which foreign investment will the Belgian mechanism apply?

The regional government of Flanders already introduced a limited FDI screening mechanism in 2019 which applies to public institutions and authorities under control of the Flemish government. No FDI screening mechanism is currently in force in the regions of Brussels and Wallonia. Our contribution does not further discuss this mechanism, but focuses on the federal rules that have been proposed and will target a broader range of investments.

On 23 February 2021, the Belgian Federal Government issued a first proposed law to introduce a screening mechanism for direct foreign investments in Belgium which have an impact on the national security interests and strategic sectors. This law is still under discussion in Parliament, but already provides the first principles with which foreign investors will have to deal with in the near future.

The screening mechanism will only apply to natural or legal persons from countries outside the European Union who invest in Belgium. Under the following cumulative conditions such foreign investor will have to notify the investment to the screening commission (which will operate under the authority of the federal Minister for Economic Affairs):

• if no voting rights in an entity is acquired: the value of the investment must be equal to or greater to 4.500.000 EUR; or
• if voting rights in an entity are required: the investor must directly or indirectly obtain 10% or more of the voting rights, or must obtain the right to appoint a majority of the directors of the entity;
• and the investment is made in one or more of the following domains
  • critical infrastructure, both...