Editor’s Introduction

A transformed regulatory landscape

Foreign direct investment (FDI) has been a key feature of globalisation and the growth of the global economy. For much of the late 20th century and into the early 21st, the policy consensus held that open capital markets were broadly beneficial — that the free movement of capital across borders generated wealth, transferred technology, deepened supply chains, and tightened bonds between states.

Investment screening regimes existed in a number of jurisdictions, but they were the exception rather than the rule, often narrowly scoped, and rarely the first thing on a deal lawyer’s mind.

However, several factors have combined to transform the FDI landscape over the course of the past decade, leading to a proliferation of investment screening controls and increasing complexity for deal lawyers:

• A shifting geopolitical order. The geopolitical context in which cross-border investment takes place is changing rapidly and in ways that fundamentally alter how governments assess incoming capital. The post-Cold War era of relatively stable multilateral cooperation has given way to an environment defined by strategic competition between major powers, fragmented alliances, and renewed concerns about sovereign vulnerability. Increasingly, governments have become concerned about the security of critical infrastructure and supply chains, prompting them to reassess what it means for a foreign entity to exert influence over nationally significant assets. In this environment, the identity of an investor — including its ownership structure, its ultimate beneficial ownership, and any state connections — has become as scrutinised as the target itself.
• National security, economic security, and industrial strategy. Traditional FDI regimes were framed around national security in a relatively conventional sense — the protection of defence capabilities, critical infrastructure, and classified information. That framing has expanded substantially. Governments are now explicitly concerned with economic security and industrial security as distinct and co-equal objectives. Supply chain resilience, the retention of domestic capability in key industries, and the prevention of foreign dominance in sectors deemed essential to a nation’s long-term economic competitiveness are now openly cited as grounds for intervention. The scope of what constitutes a threat to national security has been interpreted broadly, and regulators have shown a willingness to act accordingly.
• Technological transformation and sensitive technology. A key factor driving the transformation of the FDI landscape has been the rapid pace of technological development and the strategic significance now attached to technological leadership. Artificial intelligence, semiconductor manufacturing, quantum computing, advanced biotechnology, and dual-use technologies more broadly have become the subject of intense governmental attention. Control over the development, production, and supply of key technology is understood by major powers as central to both economic and military advantage. This has given rise not only to tightened FDI screening in technology sectors but also to export control regimes, outbound investment restrictions, and whole-of-government approaches to technology that cross the boundaries of traditional regulatory disciplines.

As a result of these factors, the scope of FDI regimes has expanded markedly. Many jurisdictions that previously operated no formal screening mechanism have introduced one. Those that already had regimes have frequently broadened them — lowering equity thresholds, extending review to minority investments and certain asset acquisitions, widening the range of sectors subject to scrutiny, and introducing mechanisms to capture transactions that might otherwise fall beneath the notification threshold. The trajectory across jurisdictions is consistently in the direction of broader reach, not narrower.

One of the most significant practical shifts has been the move of FDI review from the periphery of a transaction to a central consideration. It is now commonplace for deal teams to assess FDI risk as an early-stage matter-of-course exercise rather than as an afterthought. Screening mechanisms that were once exercised infrequently and with limited scope are now invoked routinely, often with outcomes that determine whether a transaction proceeds at all. Filing obligations, review timelines, and the prospect of conditions or prohibitions are routinely factored into deal structures, timetables, conditions precedent, and regulatory risk allocation in transaction documents. Where FDI approval once featured rarely in merger control schedules, it now appears alongside merger control clearance as a standard fixture of cross-border M&A. The volume of formal filings, voluntary notifications, and government-initiated reviews has grown substantially year on year across multiple jurisdictions.

The landscape has therefore changed dramatically in recent years and today it is one that is almost unrecognisable from the one that prevailed even a decade ago. Understanding FDI controls is no longer a specialist concern for a handful of practitioners advising on defence-adjacent deals. It is a core competency for any lawyer, compliance professional, investor, or corporate finance adviser involved in cross-border transactions.

This guide is written for that audience. It is a practical guide to the current generation of FDI control regimes — how they work, where they apply, how they interact, and how to navigate them effectively.

The law in this edition is as stated in September 2026.