Foreign Direct Investment screening in Denmark – One Year with the Danish FDI Regime

On 19 March 2019, the EU Regulation regarding the establishment of a framework for screening of foreign direct investments in the European Union was adopted (the “FDI Screening Regulation”). The FDI Screening Regulation did not in itself introduce any screening mechanisms in the Member States, nor did it impose an obligation on the Member States to establish any screening mechanism. Instead, the FDI Screening Regulation established a framework for coordinating screening mechanisms throughout the EU to protect sensitive European companies from foreign investments and influence.

The FDI Screening Regulation imposes an obligation on the Member States to share specific information about the foreign investments undergoing screening in a Member State, i.e., investments by investors residing in jurisdictions outside of the EU that may affect the security or public order within the EU. Furthermore, the framework establishes a right for the Commission to request information regarding foreign investments in a Member State not subject to screening. The FDI Screening Regulation therefore establishes a system, whereby the Member States and the Commission are allowed to present comments to ongoing investments in other Member States to which the receiving Member State is obligated to pay due consideration.

In order to establish the screening mechanism and procedures necessary to be able to screen and potentially block foreign investments within critical sectors in Denmark, and to be able to process any comments from Member States and/or the Commission under the FDI Screening Regulation, a general screening mechanism has been adopted in Denmark taking effect from 1 July 2021 with the Act on Screening a Foreign Investment (the “FDI Act”), which applies to all foreign investments closing after 1 September 2021. This article will describe the Danish regime and reflect on the practical administration of the FDI Act after its 1-year anniversary.

The FDI Act was introduced with the primary purpose to ensure that foreign investments in Denmark are screened on the grounds of national security and public order and to set the basis for a potential blocking or mitigating actions towards the foreign investment.

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