The National Foreign Direct Investment Screening Office Act in the context of mergers and acquisitions

Abstract

The research examines the ramifications of the National Foreign Direct Investment Screening Office Act on mergers and acquisitions (‘M&As’). The author aims to ascertain the efficacy of the measures incorporated in Maltese Law governing the screening of foreign direct investments (‘FDI’) to ensure the proper functioning of the screening mechanism. Pursuant to the EU Regulation the ultimate decision whether an FDI threatens public order and security falls within the purview of the member states hosting the investment. They possess the authority to determine whether to authorize, restrict or unwind an FDI on grounds of public policy and security. It is imperative that procedures adopted by member states relating to the screening of such investments are carried out in a transparent manner and should not discriminate against third countries. The author introduces the subject by providing insight to the notion of FDI as delineated in Regulation 2019/452, emphasising particular deficiencies in the drafting thereof. The author contends that the efficacy of the FDI Screening Mechanism and Cooperation Mechanism established by Regulation 2019/452 is largely contingent upon the adoption of such mechanisms by all member states and the harmonisation of minimum standards and requirements in FDI procedures across the Union. The author conducts an analysis of the incorporation of the Regulation into Maltese Law as seen by way of the National Foreign Direct Investment Screening Office Act, to determine the extent to which the implemented screening mechanism operates optimally, as well as its influence on M&As. Finally, a non-exhaustive list of recommendations will be proposed, aiming to offer guidance to the Commission and consequently the Maltese Authority in moving forward with the European Union’s primary objective of harmonising rules and procedures governing FDI within the Union.