CMS Expert Guide to Foreign Investment Screening Laws in Belgium

The Belgian FDI regime is provided for in a cooperation agreement that was concluded on 30 November 2022 by the Federal State, the Regions and the Communities and later ratified by the relevant parliaments. It entered into force on 1 July 2023.

Further, Regulation (EU) 2019/452 (EU FDI Screening regulation) is applicable in Belgium.

The Belgian FDI regime applies to asset deals and share deals/acquisition of voting rights.

Whether a transaction is caught depends on a combination of four factors:

1. the type of transaction (certain acquisitions of voting rights and certain asset deals),
2. the nationality of the foreign investor,
3. the activities of the Belgian target which must be active in a sensitive national sector relating to critical infrastructures, technologies, raw materials, energy or defence and
4. in some cases the turnover of the Belgian target entity.

Share deals falling in one of the two following categories are caught if, as a result of the transaction, a foreign person holds, directly or indirectly certain amounts of voting rights in a Belgian entity:

• First category : investments aimed at acquiring directly or indirectly 25% or more of the voting rights in a Belgian entity active in certain sensitive sectors (see below 2.3). If the Belgian target is active in the biotechnology sector, the transaction is only caught if the Belgian target had an annual turnover of at least EUR 25 million in the financial year preceding the acquisition;
• Second category : investments aimed at acquiring directly or indirectly 10% or more of the voting rights in a Belgian entity active in specific sensitive sectors (see below 2.3) are caught if the Belgian target had an annual turnover of at least EUR 100 million during the financial year preceding the acquisition of the voting rights.

In case of indirect acquisitions/investments, the calculation of the voting rights will take into consideration the proportion of voting rights in the direct invested company. For instance, the foreign investor B holds 60% of the voting rights of the Belgian company A. The foreign investor C acquires 30% of the voting rights of company B. Investor C does not have any link to other shareholders of company A or B. Investor C will be considered detaining 18% of the voting rights of company A.

Asset deals are submitted to the notification obligation if they lead to a change of control over assets relating to the sensitive activies (see section 2.3).

Intra-group restructurings are, in principle, within the scope of the Belgian FDI regime. Greenfield investments are out of scope of the Belgian FDI screening.

The Belgian FDI regime only applies to investments by “foreign persons”, which are defined as:  

1. any natural person, even of EU Member State nationality, whose main residence is outside the EU or
2. any non-EU company incorporated or otherwise organised in accordance with the law of a non-EU Member State and having its registered office or principal place of business in a non-EU Member State or
3. any undertaking of which one of the beneficial owners (UBO) pursuant to Articles 1:33-1:36 of the Companies and Associations Code and pursuant to the Act of 18 September 2017 on the prevention of money laundering and terrorist financing and on the restriction of the use of cash, has its principal residence outside the EU.

The Belgian FDI regime covers thus direct and indirect acquisitions/investments. An indirect acquisition does not require that the indirect shareholder controls the downstream indirect and direct shareholders of the actual acquiror of assets of / voting rights in the Belgian target.

The Belgian FDI regime sets out two categories of sensitive sectors :

• First category (transaction caught if leading to the holding of 25% or more of the voting rights in the Belgian target):
  • critical infrastructure relating to energy, transport, water, health, electronic communications and digital infrastructure, media, data processing, aerospace, defence, electoral infrastructure, financial infrastructure, etc.;
  • technologies or raw materials that are essential for public security, defence, public order, dual-use products and technologies of strategic importance (e.g. artificial intelligence, robotics, semiconductors and nuclear technology);
  • the supply of basic goods related to food security, energy or raw materials;
  • access to or control of sensitive information, including personal data;
  • the private security sector;
  • freedom and pluralism of the media; or
  • technologies of strategic interest in the biotechnology sector.
• Second category (transactions caught if leading to the holding of 10% or more of the voting rights in the Belgian target):
  • defence (including dual-use goods);
  • energy;
  • cybersecurity; 
  • electronic communications; or
  • digital infrastructure.

If the transaction falls within the scope of the Belgian FDI regime (see above 2), filing is mandatory and the transaction must not be closed prior to clearance.

The Belgian FDI regime foresees the following substantive tests:

• Will the foreign investment undermine the continuity of the vital processes of the above-mentioned sectors and whether failure or disruption would lead to serious societal disturbances and constitute a threat to national security, strategic interests and the quality of life of the Belgian population?
• Will the foreign investment undermine the integrity or exclusivity of the knowledge and information associated with these vital processes and the highly sensitive technology required for this purpose? Or
• Will the foreign investment create or foster strategic dependencies?

FDI proceedings are coordinated by the Interfederal Screening Committee which is composed of 12 representatives of the different Belgian governments of the Federal State, the Regions and Communities.

The direct acquirer is responsible for filing.

Following submission of a mandatory notification (“phase 1”), the Interfederal Screening Committee has 30 days to either clear the transaction or initiate the screening procedure.

The screening procedure (“phase 2”) is initiated in around 5% of all cases. The in-depth proceedings last in principle 28 days but may be extended up to 4 months in the case of formal requests for information, hearings and negotiations of mitigation agreements (commitments to address concerns the members of the Interfederal Screening Committee may have).

If the Interfederal Screening Committee does not issue a decision at the end of the preliminary procedure or the screening procedure, the transaction is deemed cleared.

No fees are imposed for the notification of a transaction.

FDI proceedings are not public and the Interfederal Screening Committee does not publish its individual decisions.

The ISC must prepare an annual report on the screened foreign investments and measures or negative decisions that were adopted, without the sensitive information that were submitted in the procedures.

A foreign investor that fails to comply with the notification procedure may risk an administrative fine of up to 30% of the value of the investment.

In the case of a late notification (up to 12 months of the implementation of the transaction), the fine may be up to 10% of the value of the investment.

The fine is calculated on the value of the investment relating to the Belgian target.