Foreign investment screening in the Netherlands: Mergers and acquisitions are also affected by the regulations
Against the backdrop of a changing global landscape, the Netherlands already adopted the Screening of Investments, Mergers and Acquisitions Act in 2023. The act is based on the European FDI (Foreign Direct Investment) Screening Regulation. The Ecovis lawyers explain the implications of the law.
The purpose of the Screening of Investments, Mergers and Acquisitions Act (Wet veiligheidstoets investeringen, fusies en overnames, or “Vifo Act”) is to protect Dutch national security by assessing investments in specific Dutch companies that are active in vital sectors, managers of a business campus or companies active in the field of sensitive technologies. Sensitive technologies include dual-use technologies that can be used for both civil and military applications, such as quantum and photonics technology.
Scope of the Vifo Act
The Vifo Act is defined not only by the nature of the transaction, but also by the strategic relevance of the activities concerned. It applies where a proposed transaction results in a change of control or the acquisition of significant influence over an undertaking that falls within its scope.
Transactions must be reported
Transactions that fall within the scope of the Vifo Act must be notified to the investment screening agency (BTI), prior to closing (the actual delivery of the shares or transfer of assets). The BTI reports to the Dutch Minister of Economic Affairs, who ultimately decides whether a transaction may proceed.
The reporting obligation applies to the acquirer and the target company, because all parties involved in the proposed activity may have essential information for the assessment.
We answer your questions regarding planned transactions in the Netherlands in accordance with the Vifo Act.
Marc W. van Rijnsoever LL.M., Lawyer (Advocaat), Partner, Kienhuis Legal N.V. – Member of ECOVIS International, Utrecht, Netherlands
Heavy fines possible
If parties complete the transaction before receiving notification from the BTI that no assessment decision is required, these parties may run the risk of an administrative fine of up to EUR 1,100,000 or 10% of the company’s turnover. The Vifo Act makes it possible to impose the fine on the acquirer, the target company or both. In addition, the parties may also be ultimately obliged to report the transaction. The Dutch Minister of Economic Affairs may order this within three months of becoming aware of the acquisition activity. Under certain circumstances, the minister may require the parties to annul the transaction or take other (corporate) measures.
Practice and experience so far
The BTI screening team conducted 83 investigations in 2024 (source: BTI Annual Report 2024). Fourteen investigations had already been started in 2023 and continued into 2024, and in 2024, 69 new notifications were made under the investment screening system. Fourteen of these were found not to fall within the scope of the Vifo Act or were withdrawn by the notifier. In addition, 14 opinions were issued on whether a transaction fell within the scope of the Vifo Act. This is double the number issued in 2023.
Based on the results of the investigations, unconditional approval was granted in 48 cases. In 4 cases, the investigation led to a review decision. After extensive investigation, 3 of these were approved with conditions. In 1 case, this proved impossible and the Dutch Minister of Economic Affairs, in agreement with the Minister of Justice and Security, was forced to prohibit the transaction. At the moment, we are awaiting the numbers for 2025.
What companies should know: an outlook
The BTI regularly publishes documents clarifying questions of interpretation. Furthermore, it is expected that the scope of the Vifo Act will be significantly expanded to other sectors, which means that more companies will be subject to a Vifo Act reporting obligation. For example, it is expected that biotechnology, artificial intelligence, advanced materials technology, nanotechnology, sensor and navigation technology, and nuclear technology for medical use (medical isotopes) will also be classified as highly sensitive technologies. The list of dual-use products classified as highly sensitive will also be expanded.
