Clifford Chance

On the 19th of April 2022, the cross-sector foreign direct investment screening act ("Act", Wet veiligheidstoets investeringen, fusies en overnames) was passed in the Dutch House of Representatives (in Dutch: Tweede Kamer) without a dissenting vote and therefore with widespread political backing. The original proposal has already been discussed in detail here.

Short recap: the Act will serve as a review mechanism for investments that could pose a risk to the national security of the Netherlands. The proposed Act captures undertakings that are active in vital processes or sensitive technologies in the Netherlands.

Noteworthy amendments

Two amendments are noteworthy. The essence of the Act will remain the same, but its scope has slightly been widened and parliament has claimed an increased role.

The first amendment will bring high-tech campuses within the scope of the Act. High-tech campuses are considered of economic and strategic importance to the Netherlands as it often involves public-private cooperation in the area of innovation and technological advancement. The sale of the High-Tech Campus Eindhoven to a Singaporean state-owned company for which no national security or similar review has taken place has been widely criticized in the Netherlands and has thus led directly to the inclusion of this new category of activities by way of parliamentary amendment.

The second amendment regards the process of how categories of business activities (e.g. agri-food) may be added to the list of vital processes or sensitive technologies by ministerial decree. The Minister typically enjoys wide discretion in adopting ministerial decrees, but Parliament effectively demanded more oversight due to the (geo)political nature such designations can have. Such a ministerial decree will therefore not be enacted before four weeks have lapsed after the draft has been submitted to Parliament. The latter may during that time discuss and comment if it thus deems appropriate.

Going forward and expected timetable

The Minister indicated that the draft ministerial decrees that will supplement the Act in adding categories of vital processes and sensitive technologies will be circulated for internet consultation before the summer of 2022

Now that the Act has been passed in the House of Representatives, it will still need to be passed by the Senate. The appropriate senate committee will discuss the necessary procedure on 10 May 2022, but given the widespread political support it seems likely that also the Senate will swiftly vote in favour. Accordingly, our expectation is that the Act will enter into force during the second half of 2022. All relevant Dutch M&A activities should thus anticipate the Act and its implications with increased focus as national security in the Netherlands will increasingly seriously impact many transactions. This may include some that have already taken place due to the retroactive effect included in the Act. In short, the mandatory filing obligation will only apply to transactions that take place after the date when the regime comes into force, but the Minister will have powers to call in and review any qualifying transaction that closed after 8 September 2020. There is no formal mechanism to ascertain whether a transaction may risk being called in retroactively, but we see the Minister providing guidance when requested informally in case-specific circumstances.