This summer, the Danish Investment Screening Act will be three years old, and the Ministry of Industry, Business and Financial Affairs is planning an evaluation of the Act. In preparation for this, the Danish Business Authority has published a retrospective offering statistics on cases processed since adoption of the Act and has also launched a public consultation to learn about stakeholders' experiences with the Act.

A look back at the DBA's processing of cases

For the purpose of the evaluation, the DBA has published a brief overview with some general information on the processing of cases in the period from 1 July 2021 up to and including 30 June 2023, as well as some preliminary experiences with the two phased administrative procedure that entered into force on 1 July 2023.

It shows that the DBA handled a total of 358 cases during this period. Of these, 231 were mandatory applications for authorisation to carry out a foreign investment or special economic agreement; 10 were voluntary notifications, and the remaining 117 cases were requests for pre-screening.

In one case, the DBA elected to authorise the investment subject to specific terms, while another case ended with the Minister for Industry, Business and Financial Affairs prohibiting the investment. All of the remaining cases were either approved without any conditions or dismissed because the DBA deemed them to be outside the scope of the Act.

In around half of the 117 cases involving requests for pre-screening, the DBA assessed that for the purposes of the Investment Screening Act they concerned neither critical technology nor critical infrastructure.

The vast majority of all cases relate to investments; only 44 of the applications, notifications and pre-screening requests received related to special financial agreements.

It is also worth noting that the particularly sensitive 'critical infrastructure' sector accounts for a large proportion of the statistics. More than 60 per cent of the FDI applications that the DBA received were for critical infrastructure. However, it is not clear from the data in how many of these cases the DBA agreed that the infrastructure was indeed critical and how many cases were closed without a formal decision because they fell outside the scope of the Act.

Also, the data shows that the vast majority of all cases processed after the introduction of the phased administrative procedure in the summer of 2023 were completed in phase 1. Only 7% of applications and notifications received continued into phase 2.

Consultation on relevant experiences

The DBA has also initiated a consultation to gather experiences with the Investment Screening Act, seeking to identify whether there is any need for adjustments.

In particular, the DBA would welcome comments as to whether anyone has identified any loopholes that need to be addressed; whether any businesses are experiencing unintended financial/administrative consequences; and whether there is a need for increased guidance from the DBA in specific areas.

In addition, the DBA has identified a number of topics that are considered to be particularly relevant to look into. Divided into four categories, these topics have a rather broad range:

Relating to 'Foreign direct investments'

  • The exemption clause in the Executive Order on Procedures for intra-group reorganisations
  • Special rules for listed companies, including in relation to e.g. voting rights and public takeover bids
  • Equivalent control by other means, including the rules on debt financing and the acquisition of assets of a company
  • Greenfield investments, including the exemption in the Executive Order on Applications for capital injections of DKK 75 million for up to three years after the formation
  • How to define 'critical infrastructure'

Relating to 'Special financial agreements'

  • The requirement of control or significant influence over a joint venture or a supply, operations or service agreement, respectively
  • The interaction between rules of procurement law and completion of a screening
  • The need for screening of the main supplier and the underlying supply chain
  • The need for screening of certain agreements using products/services from third countries that may pose a threat
  • How to define 'critical infrastructure'

Relating to 'Other critical technology'

  • The definition of critical technologies in light of the latest development in this field
  • Experience on whether the parties to the case can assess whether the Danish target company develops or manufactures the technologies mentioned in section 10 of the Executive Order Applications

Relating to "phased administrative procedure and procedure for application, notification and pre-screening"

  • Experience on the new two phased administrative procedure
  • The DBA's case processing time
  • The digital application portal
  • The application/notification form and the pre-screening request form

Read the full consultation material (in Danish). The deadline for submitting consultation responses was 11 April 2024, and we have provided input to a consultation response in collaboration with the Association of Danish Law Firms. Read the response (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.