Over the past years and particularly in 2019 the debate regarding the need for the member states of the European Union to place a limit upon or to establish formulas of control over the purchase of so-called strategic companies, by non-community companies, especially Chinese companies has gained momentum, with cases which acquired considerable public relevance such as the acquisition of the German robotic company Kuka.

The EU Regulation 2019/452 for the control of foreign investment established a series of rules for allowing the control of non-community investment in certain sectors. Furthermore, given the Covid-19 Pandemic, pursuant to a Communication dated 13thMarch 2020, the Commission indicated that the Member States must be alert and use instruments to prevent the crisis from causing a loss of essential assets and technology. And on 26th April 2020 the European Commission issued guidelines directed at the Member States for the protection of strategic assets in Europe, requesting them to fully use their control mechanisms for foreign investment. The root of this deployment of indications is the fear that companies from vital sectors may come under the control of third countries, causing an effect of technological desertification in Europe. It must be taken into account that the monetary volume of the operations is not always the most relevant to merit investment control, instead the object of the acquisition is of greater importance, that is to say, it is common for this to be technology or business or industrial know-how in the hands of medium-sized or small companies, whose acquisition represents a modest amount of money, although they have great growth potential and significant technological know-how.

In Spain, the Royal-Decree-law 8/2020 of 18th March 2020 passed some provisions which suspended the liberalised foreign investment regime existing up until then (a simple communication except in rare cases), in order to implement a system of control prior to the direct foreign investment. The regulations were slightly modified, and the definitive version entered into force on 2ndApril 2020. The following is a summary of the main aspects thereof:

  • Direct Foreign Investment is considered to be that which implies the acquisition of at least 10% of the share capital of a foreign company, or when as a result of legal investment business or a company operation, the investor comes to manage or effectively participate in the management of the company. Furthermore, at least one of the following circumstances must concur:

a) that the investor is a resident from outside the EU and the European Free Trade Association (EFTA) (Lichtenstein, Switzerland, Norway and Iceland; and perhaps soon the United Kingdom shall be added).

b) that the investor is an entity which is resident in the EU or EFTA, and its beneficial owner is resident outside these territories. It is deemed that beneficial ownership exists when the beneficial owner possesses or controls – whether directly or indirectly – at least 25% of capital or voting rights of the investor or exercises direct or indirect control thereover.

  • Because of the sector in which they operate, the regime of liberalisation of business acquisitions affecting public order, public security and public health is suspended. Basically, these are the following sectors:

a) Critical infrastructure, covering energy, transport, water, health, media, including land and properties which are key for the use of such infrastructure.

b) Critical technology and dual-use products. In practice, and despite the description of EU Regulation 428/2009, it is difficult to put a limit on this concept given that, for example, there are a considerable amount of products which have an inoffensive use and at the same time a military use.

c) Energy supplies, hydrocarbons or raw materials.

d) Sectors with acc