Belgium Introduces New Foreign Direct Investment Screening Mechanism

Enhanced National Security Measures in Belgium

The Belgian government has recently introduced a new screening mechanism for foreign direct investment (FDI) in the country. This move aims to enhance national security and protect public order by scrutinizing investments from non-EU countries, including China and the US.

Establishment of the Inter-federal Screening Commission

On November 30, 2022, the federal and federated authorities signed a Cooperation Agreement on FDI Screening, establishing an Inter-federal Screening Commission (ISC) to assess potential threats posed by foreign investors. The ISC will review investments exceeding certain turnover thresholds in strategic sectors such as energy, transport, water, health, electronic communications, and digital infrastructure.

Scope of the Screening Mechanism

The notification obligation applies to investments aimed at acquiring directly or indirectly 25% or more of the voting rights in a Belgian entity in sectors such as:

• Critical infrastructure
• Technologies or raw materials essential for public security, defence, and public order
• Supply of basic goods related to food security, energy, or raw materials
• Access to or control of sensitive information, including personal data
• Private security
• Freedom and pluralism of the media
• Technologies of strategic interest in the biotech sector

Screening Procedure

The screening procedure consists of two phases:

1. Assessment: The ISC will have to decide within a period of 30 days whether further examination is necessary.
2. Screening: If necessary, the ISC will proceed to the second phase, where ministers may either approve the planned investment, approve it subject to conditions, or block it if necessary to protect national security and public order or strategic interests.

Sanctions for Non-compliance

The Cooperation Agreement provides for considerable sanctions for foreign investors who fail to comply with the procedure, including administrative fines up to 10-30% of the investment’s value.

Statistics on the Screening Mechanism

According to an estimate by the federal administration, this first phase should concern 70 to 80 transactions per year. Conditions may only be imposed or a planned investment blocked if it is necessary to protect national security and public order or strategic interests of the federated entities.