While the Danish Investment Screening Act is about to be amended and evaluated, Greenland is planning to introduce national rules on screening of foreign investments. In other words, investment screening is evolving rapidly. Below, we have summarised the key points of recent and ongoing developments.
Investment screening underway in Greenland
On 21 February, the Greenland Government (Naalakkersuisut) presented Greenland's foreign, security and defence policy strategy for 2024-2033 called "Greenland in the World – Nothing about us without us". The strategy is the first of its kind since 2011 and has been in the pipeline for several years; it is an expression of Greenland's vision and desire for a more independent role in their collaboration with the surrounding world. However, Greenland is aware of the security policy risks, as expressed in Greenland's upcoming international trade policy, which will entail the implementation of a Greenlandic investment screening regime.
The purpose of the announced Investment Screening Act is expectedly to ensure that Greenland will always retain the ownership of, responsibility for and control of the Greenlandic society's basic critical infrastructure. This purpose originates from a wish to prevent the society's critical infrastructure from being owned by foreign operators, exactly as is the case for investment screening rules in other countries.
Our comments
Investment screening in particular has previously given rise to discussions between Denmark and Greenland because of the shared powers in this area, as foreign, defence and security policy is a matter for the Danish State, while trade and industry is a matter for the Greenland Self-Government. This is also the reason why the Danish Investment Screening Act does not apply in Greenland. The exact content of Greenland's Investment Screening Act is not yet known, but it is fairly certain that such Act will be adopted, as the presented foreign, security and defence policy strategy has been signed by four out of five parties in the Greenlandic Parliament (Inatsisartut). At Kromann Reumert, we closely monitor developments to be able to provide the best possible advice on potential investments in Greenland.
Increased control of critical technology and infrastructure underway in Denmark
In the Danish Government's legislative agenda for the 2023-2024 parliamentary year, the Minister for Industry, Business and Financial Affairs has announced a Bill amending both the Export Control Act and the Investment Screening Act. Expected to be introduced in February, the Bill aims to increase the control of critical technology and infrastructure as the Government wishes to increase the control of public tenders and collaborative research.
Our comments
With these amendments, the Government aims for a more comprehensive and detailed approach to assessing and controlling foreign investments and exports that could potentially affect national security interests. Depending on the proposed Bill, such amendments may affect both public procurement and collaborative research related to critical technology and infrastructure. We are closely monitoring developments because, as it is, it can be difficult for foreign investors to assess whether a target company's activities are considered to involve "critical technology" and "critical infrastructure". It is unlikely, though, that the Bill will be introduced in February as announced, as it has not yet been sent out for consultation.
Evaluation of the Investment Screening Act should be just round the corner
In connection with the adoption of the Investment Screening Act in 2021, the Government gave notice of their intention to perform an evaluation of the Act. In 2024, therefore, we look ahead to both the work on and the publication of the evaluation. The evaluation report is expected to include an overall description of the Act, including in particular the purpose and scope of the Act, a statistical analysis of the development of cases, broken down by case types, sectors and countries, views from relevant stakeholders, and general developments within this area in other countries.
The upcoming evaluation is expected to provide the basis for considering whether there is a need to clarify or amend the rules, including in light of the European Commission's announcement of various new initiatives relating to the screening of foreign investments in the European Union. Read our news article about the upcoming extension of the FDI Regulation.
Our comments
We expect that the upcoming evaluation will provide an in-depth understanding of the effectiveness and scope of the Act since its implementation. The evaluation is expected to shed light on how the Act has worked in practice, including its impact on investment flows to Denmark. The results of the evaluation can be decisive for assessing whether there is a need to adjust or clarify the legislation and its supervision to address any shortcomings or new security challenges.
Read Greenland's foreign, security and defence policy strategy for 2024-2033 (in Danish).
Read the Danish Government's legislative agenda for the 2023-2024 parliamentary year (in Danish).
Read the White Paper on Bill L 191 (in Danish).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
