Insolvency officeholders may need clearance upon appointment to entity in an affected sector.

The National Security & Investment Act (NSI Act) came into force in early January, and market participants might reasonably have expected a common approach to the practice of mandatory and voluntary notifications to have bedded down by now. However, due to the breadth of the provisions, the lack of clarity in their application to ordinary course secured financing transactions, and the ramifications for a transaction of failing to notify, significant concerns remain in the market that transaction timetables and enforcement strategies will be adversely affected in situations in which there may be little obvious threat to national security.

Amid FDI screening regime expansion, deal teams have opportunities to capitalise on newly available exemptions, but must beware novel complexities.

By Jonathan Parker, Rachel K. Alpert, Stephanie Adams, Gillian Bourke, Zachary N. Eddington, Catherine Campbell, Tom Evans, and David Walker

US intervention in the proposed acquisition of hotel-software company StayNTouch by a Chinese investor and UK intervention in the acquisition of satellite telecommunications company Inmarsat plc by a private equity-led consortium reiterate the range of foreign direct investments (FDIs) that can draw government attention, and the disruptive impact that such attention can bring to sensitive deals.

A desire by governments to control investments by businesses from states perceived as hostile in key sectors (such as defence, critical infrastructure, and advanced technologies) has fuelled a widening of the range of investments being caught. Recent moves by governments to further tighten FDI screening rules in response to the COVID-19 crisis will only accelerate this trend.