FDI review regimes are stepped up globally and enhanced enforcement; U.S. outbound investment regime goes into effect

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By 2025, directors will face a global foreign direct investment landscape that is well-established and active. The regulatory review process will continue to grow and develop. The Committee on Foreign Investment in the U.S. issued a final regulation last year that enhanced its mitigation and enforcement powers. The non-U.S. FDI regimes have become more active in recent years, especially in Europe. A number of new regimes have been implemented and a growing number of transactions are subject to regulatory scrutiny. In March 2024, the European Commission proposed a new EU FDI Screening Regulation that aims to overhaul existing EU FDI regulations. As concern grows over access to and control over artificial intelligence (AI), semiconductors and other advanced and critical technologies, FDI approvals have become a significant regulatory issue for many cross-border transactions.

On January 2, 2025, the long-awaited U.S. Outbound Investment Security Program (the Program) became effective. Under the Program, U.S. citizens are prohibited from engaging or are required to notify the U.S. Department of the Treasury about a wide range of transactions that involve entities engaged in certain activities related to semiconductors, microelectronics and quantum information technologies, and AI systems, in “countries of concerns” (currently limited to China Hong Kong and Macau). The European Commission started a consultation process in early 2024 to develop an outbound investment review programme focused on the risk that “emerging technologies” could leak. They plan to publish a proposal for policy responses towards the end 2025.

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