Takeover Panel confirms reforms to address dual class share structures, IPO disclosures and share buybacks

On 3 July 2025 the Code Committee of the Takeover Panel (Panel) published a consultation paper, PCP 2025/1, proposing amendments to the Takeover Code (Code) to address the regulatory treatment of dual class share structures (DCSS), clarify disclosure obligations in relation to IPOs, and simplify the rules governing share buybacks. The consultation closed on 26 September 2025.

On 2 December 2025 the Panel published response statement RS 2025/1 confirming the changes to be made to the Code following the consultation under PCP 2025/1. The changes will be implemented substantially in the same form as set out in the consultation paper, namely to:

• introduce amendments to the mandatory offer regime, acceptance conditions, disclosure obligations and consultation requirements as they apply to companies with dual class share structures
• introduce a specific requirement for companies to make appropriate Code disclosure in their listing documentation and to codify the ability of the Panel to grant a Rule 9 dispensation by disclosure in certain circumstances, and
• make certain amendments to the Code’s provisions relating to buybacks.

The new rules will come into effect on Wednesday 4th February 2026. The Panel will also publish on its website on or before that date two new Notes to advisers in relation to IPOs and Rule 9 dispensations/waivers by disclosure (which will replace the current Note to advisers in relation to the disclosure of information on Rule 9 of the Takeover Code in Rule 9 waiver and IPO documents).

Takeover Panel publishes Practice Statements 35 and 36

On 3 July 2025 the Panel Executive published a new Practice Statement 35 (Profit forecasts, quantified financial benefits statements and investment research) and a new Practice Statement 36 (Unlisted share alternatives).

Practice Statement 35 clarifies the Executive’s approach to Rule 28 on profit forecasts and quantified financial benefits statement (QFBS), as well as Note 4 on Rule 20.1 regarding connected investment research. Where a one-off profit forecast is published after an approach but before the commencement of the offer period, the forecast must be repeated in the offer document, offeree board circular or any earlier offer-period document that refers to it, and must then be accompanied by the reports required under Rule 28.1(a). In urgent situations, the Executive may allow a QFBS to be published without the reports if the offeree consents, all Rule 28.6 disclosures are met, and a firm timetable (not exceeding 21 days, or earlier if a firm offer is announced) is set for obtaining the reports. Privately shared forecasts for due diligence are treated as published, though a dispensation may apply where they are later included in a proxy statement, as long as they are not used to support the offer’s merits and include proper explanatory notes. Forward-looking statements beyond three years are generally considered aspirational, whereas repeated statements within three years become forecasts. For forecasts covering periods beyond 15 months, directors’ confirmations may replace adviser reports, and similar flexibility applies where intervening periods may otherwise imply additional forecasts. Practice Statement 35 also reiterates that connected investment research must be pre-vetted, cannot include new forecasts or valuations unless already published under the Code, and may only receive a dispensation after announcement in limited circumstances, such as non-competitive recommended offers.

Practice Statement 36 provides guidance on structuring unlisted share alternatives to cash offers. It confirms that aggregate maximum and minimum acceptance levels may be set, and individual percentage-based elections are permitted, provided they do not breach the principle of equal shareholder treatment. The exchange ratio must be clearly stated per-share, with transparent disclosure of any rounding arrangements, including where fractional entitlements are rounded down or settled in cash. Any legal or regulatory restrictions must be narrowly applied to avoid preferential treatment. The offer document must describe the settlement mechanism and the rights attached to the unlisted shares, including economic, voting, governance, and pre-emption rights. Practice Statement 36 confirms that, under Rule 24.11, the offer document must include an estimate of the value of the unlisted share alternative prepared by an appropriate adviser (typically the offeror’s financial adviser), rather than an independent valuation in the strict sense.

Takeover Panel enhances Rule 2.9 disclosure obligations for offer-period announcements

The Panel’s Code Committee has amended the Code to clarify and strengthen Rule 2.9 disclosure requirements during an offer period. Offeree companies and offerors (or publicly identified potential offerors) must announce details of all classes of relevant securities in issue, including International Securities Identification Numbers and the announcing party’s Legal Entity Identifier. The information must be announced by no later than 7.15 am on the next business day. The amendments will take effect on 4 February 2026.

Takeover Panel publishes 2024–2025 Annual Report

The Panel has published its 2024–25 Annual Report (the Report). The Report provides an overview of the Panel’s activities and those of its various committees over the past year. The Report comprises statements from the Chair and the Code Committee Chair, as well as a summary from the Director General on takeover activity during the year. It also includes the accounts for the year ended 31 March 2025 and statistics on takeover transactions regulated by the Panel.

The Report highlights several key aspects, including:

• between 4 September 2024 and 16 July 2025, the Code Committee met four times and published one Public Consultation Paper, one Response Statement and one rule-making Instrument
• the announcement of 57 firm offers, 12 of which were valued at over £1bn
• the introduction of a significant amendment to the Code, which refocused its application on companies registered in the UK, the Channel Islands or the Isle of Man, whose securities are (or have been within the past two years) admitted to trading on a UK regulated market, a UK multilateral trading facility, or a stock exchange in the Channel Islands or the Isle of Man. These amendments took effect on 3 February 2025, with transitional arrangements in place until 2 February 2027. This followed the publication of RS 2024/1 in November 2024, which set out the final changes adopted after the consultation in PCP 2024/1

UK Government announces series of reforms to overhaul the scope of the NSIA

On 22 July 2025, the UK Government launched a series of reforms and updates to overhaul the scope of the NSIA.

The proposed reforms

The aim of the proposed reforms is to cut red tape and facilitate where national security risks were shown to be low, by:

• removing certain internal reorganisations and the appointment of liquidators, special administrators and official receivers from scope (by introducing secondary legislation), and
• amending the definitions for Artificial Intelligence, Critical Suppliers to Government, Communications, Energy, Synthetic Biology mandatory sectors to clarify which transactions are in scope and remove those which are least likely to pose at risk to national security.

Meanwhile, new sectors will be created, and other sectors will be amended to capture new risks:

• new mandatory sector for water and sewerage supply
• standalone sectors for Critical Minerals and Semiconductors, and
• more stringent or broader definitions for sectors including Data Infrastructure and Suppliers to the Emergency Services.

The Government launched a consultation focusing on the 11 mandatory sectors being amended or proposed.

Many sectors were previously unclear and broadly defined, particularly AI and Data Infrastructure. This left some businesses unsure if a mandatory filing was required but choosing to submit one anyway given the consequences for failing to file (ie transactions being automatically void, fines and criminal sanctions).

The updated definitions also aim to more accurately target national security risks identified in the first three years of the NSIA, as well as expanding to newly identified risks. This includes the new Semiconductor sector, as well as Communications, Energy, and Critical Suppliers to the Government and Emergency Services.

The Government’s consultation closed on 14 October 2025. These changes are expected to be implemented around early 2026.

Annual Report 2025

On 22 July 2025, the Government also published its fourth NSIA Annual Report 2024-2025, looking at transactions notified or reviewed from 1 April 2024 to 31 March 2025.

The key points indicate that:

• there was a 26% increase in the number of notifications submitted on the previous year and a 240% increase in final orders. Of the 143 notifications received, 95.5% were cleared with no further action
• 56 deals were called-in for in-depth review (including seven non-notified deals) – up from the previous year (41 call-in notices) but still representing a small proportion (4.5%) of notified deals
• 17 final orders were made (16 allowing deals to proceed subject to conditions, and one order to unwind) – up on five final orders in the previous year
• most notifications were just in three sectors – defence, critical suppliers to government and military and dual source. Similarly, almost all called in for further review were in defence (56%), critical suppliers to Government (21%) and military and dual-use (19%), but also in advanced materials, and
• the Government identified 60 offences of completing a notifiable acquisition without approval. No penalties were imposed, but companies were required to provide reassurance that steps have been taken to prevent any recurrence
• UK investors led the pack in terms of call-ins (48%), final notifications (34%), and final orders (64%). By contrast, for Chinese acquirers, both the proportion of call-ins (32% from 41%) and final notifications (23% from 48%) saw a steep decrease, consistent with the broader reduction in in-bound investment, though they still represented seven of the 11 final orders. UAE investors accounted for 14% of final orders (an increase from 2%)
• the timeline for acceptance of notifications remained broadly consistent (6-8 working days). Equally, decisions to call-in or clear notified acquisitions were taken within the statutory 30 working days (average 29)

Comment: This is the first major overhaul of businesses failing within the scope of the NSIA since it came into force in 2022. The reforms are an important part of the Government’s broader growth plan aimed at ensuring that the UK’s regulatory regimes do not disproportionality disincentivise much needed investment in critical sectors. The Government recognises that a key plank of stimulating economic growth and supporting UK jobs is a regime that is business-friendly, pro-innovation and facilitates investment while robustly protecting national security. The proposed reforms are intended to help achieve that.

UK Government blocks graphene joint venture with Chinese investor on national security grounds

On 21 August 2025, the UK Government issued a Final Order under section 26 of the NSIA prohibiting a proposed joint venture between Versarien plc (Versarien) and Anhui Boundary Innovative Materials Technology (BIMT). Versarien, a UK AIM-listed advanced materials company, and BIMT, a Chinese firm founded in 2024 and focused on battery technologies, proposed a joint venture that would combine BIMT’s graphene and related materials with Versarien’s related assets and expertise to develop new products for the automotive and battery sectors.

The proposed transaction, which would have transferred both physical assets and proprietary know-how relating to graphene, was prohibited by the Government on national security grounds, citing concerns about the transfer of sensitive, dual-using technology. The Final Order prevents the joint venture from acquiring or using Versarien’s tangible and intangible assets, including access to graphene-related expertise through UK academic partnerships and the wider graphene ecosystem. The Government described the prohibition as ‘necessary and proportionate’ to prevent exploitation of critical technologies.

Graphene’s importance lies in its exceptional strength, light weight, flexibility and conductivity, which give it broad dual-use potential in applications ranging from aerospace and defence (for example, lightweight armour, stealth coatings and advanced communications) to energy storage and electronics (for example, next-generation batteries, high-frequency transistors and quantum technologies). The Government determined that safeguards proposed by the parties would not adequately mitigate the risks, particularly given the potential for Chinese access to UK higher education research and Versarien’s overseas operations.

Comment: The Final Order reinforces that the NSIA applies not only to acquisitions of equity, but also acquisitions of assets and other exploitation rights, including intangible know-how, IP, data and collaboration access. In practice, this order serves as a reminder that structuring a transaction as a joint venture, licensing or technical-assistance arrangement does not avoid scrutiny under the NSIA if those arrangements confer the ability to use or direct the use of sensitive assets. It is also pertinent that Versarien is evidently in financial distress and that its financial position did not appear to impact the Government’s decision to prohibit the transaction.

UK Government conditionally clears IonQ/Oxford Ionics merger under the NSIA

On 11 September 2025, the Government approved IonQ Inc’s US$1.08bn acquisition of Oxford Ionics Limited under the NSIA, subject to conditions designed to safeguard UK quantum technology and expertise. IonQ, a US quantum computing company, and Oxford Ionics, a UK trapped-ion quantum computing specialist, received clearance through a final order requiring that:

• all current and future generations of Oxford Ionics’ hardware remain hosted in the UK for Government validation, and
• its core scientific, engineering and manufacturing functions, personnel and assets stay in the UK.

This deal was completed on 17 September 2025.

Comment: The decision illustrates the Government’s approach of encouraging foreign investment while protecting strategically important technologies and confirms the NSIA regime can apply even to acquisitions by allies such as US firms.

High Court dismisses second judicial review challenge to FTDI divestment order made under the NSIA

On 25 July 2025, the High Court issued its judgment in FTDI Holding Limited, R (on application of) v Chancellor of the Duchy of Lancaster, an application for judicial review brought by the Chinese state-linked investment firm FTDI Holding Limited (FTDIHL) challenging the Government’s order requiring it to divest its 80.2% share in Future Technology Devices Limited (FTDI). The High Court dismissed all FTDI’s grounds of challenge except the grounds that no or insufficient reasons were given for making the final order but held that this failure did not invalidate the final order.

Background

On 7 December 2021, before the NSIA came into force, FTDIHL acquired an 80.2% share in FTDI, a semi-conductor company specialising in USB technology. On 22 November 2023, the Government called the transaction in for review and, on 5 November 2024, made a final order required FTDI Holding Limited to dispose of its shareholding in full. This was on the basis that the transaction gave rise to national security risks relating to: (i) the transfer of UK developed semiconductor technology and IP to China; and (ii) the potential for FTDI’s ownership to be used to disrupt national infrastructure.

As the underlying transaction took place in 2021, the review took place under the ‘look back’ provision under the NSIA. These provisions enable the Government to review transactions completed between 12 November 2020 and the commencement of the NSIA on 4 January 2022, provided other thresholds are met.

On 3 December 2024, FTDIHL sought judicial review of the final order (including a request for interim relief against the order), rejected in February 2025. It challenged the final order on multiple grounds, including procedural unfairness, lack of reasons, breach of the European Convention on Human Rights (ECHR), irrationality and timing under the NSIA.

The High Court’s judgment

The High Court rejected FTDIHL’s claim that the call-in notice had been issued out of time. Although junior Investment Security Unit (ISU) officials had access to information about the acquisition earlier, the High Court accepted that there was no sufficient awareness within ISU that the transaction might raise NSIA concerns until May 2023. As a result, the statutory six-month window to issue a call-in notice was met. The High Court also confirmed that service of the notice on FTDI, accompanied by instructions to forward it to FTDIHL, was sufficient to meet the requirements under the NSIA Service Regulations.

Although the High Court assumed, without deciding, that the final order amounted to a deprivation of possessions under Article 1 of Protocol 1 of the ECHR, it found the measure proportionate and justified in the public interest. It gave significant weight to the Secretary of State’s assessment of the national security risk posed by Chinese state-backed control over FTDI, particularly in relation to potential disruption to UK critical national infrastructure. The High Court rejected FTDIHL’s contention that a less intrusive remedy could have addressed the concern, accepting that only full divestment would suffice.

In relation to procedural fairness and Article 6 rights, the High Court concluded that the process was fair, despite national security constraints. Although certain material had been withheld from FTDIHL, the Secretary of State had disclosed enough of the gist of the national security risks to allow a meaningful response. After reviewing both open and closed evidence, the High Court was satisfied that fairness had been achieved.

Finally, the High Court found that the Secretary of State had failed to comply with the duty under section 28 of the NSIA to provide reasons for the final order. The language used was largely formulaic and failed to explain the choice of divestment as a remedy. However, the High Court declined to invalidate the order on this basis, noting that the Secretary of State had engaged with the issues in detail and had relied on extensive supporting material in reaching the decision.

In conclusion, the High Court upheld the divestment order made under the NSIA, confirming the wide scope of executive discretion in protecting national security through intervention in corporate transactions. While it stressed the importance of statutory procedural compliance, the judgment also underscores the limited scope for judicial intervention where national security is credibly asserted and assessed.

Comment: Challenging a decision under the NSIA is extremely difficult. Courts give the Government broad discretion in matters of national security and do not require full transparency. Parties must contest decisions without seeing all the evidence, and the lack of explanation in the final order is not considered a legal flaw, reducing pressure for greater openness.

UK Competition and Markets Authority (CMA) prohibits for a second time Spreadex/Sporting Index merger

On 19 September 2025, the CMA issued its remittal final report again requiring Spreadex to sell Sporting Index, following an earlier judgment of the Competition Appeal Tribunal (CAT) to overturn and remit the case back to the CMA. The CMA had originally found in November 2024 that the merger created a substantial lessening of competition in the UK’s licensed online sports spread betting market, but the CAT identified errors in that Phase 2 report. After reconsidering the case with fresh and revised evidence, the CMA reaffirmed that the deal eliminates Spreadex’s only rival, risking poorer user experience, fewer products and higher prices. It concluded that divestiture of Sporting Index remains the only effective remedy. On 24 September 2025, the CMA published a notice proposing to accept final undertakings requiring Spreadex to sell Sporting Index to an approved buyer within a set timeframe, inviting comments by 1 October 2025. On 3 October 2025 the notice of acceptance of final undertakings (in remittal) was published, and remedy group appointed.

Comment: The CMA decision marks a relatively rare but stark reminder of the risks of opting to notify merger activity in the UK, where the regime remains voluntary but far from toothless. Although CMA deal unwinds have been uncommon in recent years (most recently in the Cerelia/Jus-Rol merger (2023)), they can be costly, as forced divestments often result in financial losses and the need to reverse integration efforts.

CMA publishes its updated guidance on merger procedure

On 28 October 2025, the CMA published its updated merger guidance on jurisdiction and procedure (Guidance), which implements the CMA’s ‘4Ps’ strategic framework (of pace, predictability, proportionality and process) and seek to ensure that merger control supports the Government’s economic growth objective. The Guidance is accompanied by a new Merger Notice template and revised guidance on the CMA’s mergers intelligence function. Together, these changes are designed to streamline reviews, enhance transparency, and improve engagement with merging parties.

Updates to the merger review process and timelines

Following longer deal timelines for Phase 2 cases in the UK, the CMA has committed to limiting pre-notification to typically 40 working days (down from an average of 65 working days) and aims to clear straightforward phase 1 cases within 25 working days (down from 40 working days). To meet these targets, the CMA will require more comprehensive draft Merger Notices, including supporting internal documents and third-party contracts, before opening pre-notification. Merging parties will be invited to lead ‘teach-in’ sessions for the CMA cases team early in the process, followed by two informal update calls to enhance engagement and focus on key issues.

Clarification on jurisdictional tests

The Guidance refines the CMA’s approach to the material influence and share of supply tests. The CMA confirms that shareholdings above 25% will generally confer material influence, while holdings below 25% may do so only where supported by additional rights, with less than 15% qualifying only in exceptional circumstances. For the share of supply test, the CMA will usually rely on the value or volume of sales and will assess goods or services relevant to potential competition concerns, consistent with the CAT’s Sabre judgment, which found that the purpose of the share of supply test is to ‘identify a merger which does not meet the turnover test, but in respect of which there is a sufficient prospect of a competition concern arising from an overlap in relevant commercial activity as to render it worthy of investigation’.

‘Wait and see’ approach for global mergers

The CMA signals a new willingness to adopt a ‘wait and see’ approach for global transactions where reviews by other regulators are likely to address UK concerns. This is intended to reduce duplication and focus resources on mergers with clear UK-specific impacts, although practical application remains uncertain.

Updated Merger Notice and remedies

The revised Merger Notice template expands upfront information requirements, including documentation on deal rationale, process and internal decision-making. It now requires disclosure of internal documents for horizontal overlaps (15% or more) and vertical or adjacent links (30% or more). The CMA’s parallel consultation on merger remedies (see above) also indicates greater openness to behavioural remedies at phase 1 and earlier remedy discussions to facilitate conditional clearances.

Comment

The Guidance consolidates the CMA’s ‘4Ps’ across merger control, promising faster and more transparent procedures while maintaining robust scrutiny. Although the CMA aims to improve predictability and engagement, merging parties should continue to plan early, prepare detailed submissions and expect rigorous review in complex or high-profile cases. However, we have already been seeing a softening of merger control in the UK, with the CMA favouring Phase I solutions and taking a more targeted approach to cross-border deals, intervening primarily where other regulators are actively reviewing, following the government’s strategic steer towards lighter-touch enforcement.

CMA expected review of approach to merger efficiencies 

At a conference in early December 2025, Joel Bamford, executive director of mergers at the CMA announced that the CMA will review its approach to merger efficiencies in 2026. The review will start by seeking views from interested parties, especially in relation to the framework for the assessment of efficiencies and the type of evidence that companies can provide.

CMA publishes revised guidance on merger remedies

On 19 December 2025, the CMA published its revised merger remedies guidance.

The CMA decided to update its analytical approach to procedures for assessing merger remedies as part of its work to improve the 4Ps of the merger control regime (pace, predictability, proportionality, and process) to drive growth, investment and business confidence.

A consultation on a draft of the revised guidance was launched on 16 October 2025, following an earlier call for evidence in March 2025.

In the revised remedies guidance:

• The CMA has retained its established framework for assessing merger remedies continuing to evaluate effectiveness first and proportionality second, while providing clearer and more detailed guidance on how these tests are applied.
• The CMA has softened its stance on behavioural remedies, removing the presumption against them at phase 1 and recognising they may be effective where certain conditions are met, although structural remedies remain generally preferred and behavioural remedies must still satisfy the ‘clear-cut’ standard.
• The CMA continues to distinguish between enabling and controlling behavioural remedies, but now acknowledges that some enabling remedies (such as IP licensing) may promote entry and rivalry in a manner similar to structural solutions.

The revised guidance also expands on the CMA’s approach to complex and carve-out divestitures, customer benefits, and the role of trustees and independent experts, and provides enhanced procedural guidance on engaging with CMA on remedies, including fast-track and ‘fix-it-first’ cases.

The updated guidance applies to merger cases where the phase 1 investigation started on or after 19 December 2025.

Comment

Overall, the changes incorporated in the revised guidance should be seen as a welcome and positive development. However, none of them are truly groundbreaking, with some shifts in approach set out in the revised guidance having already been observable in certain high-profile decisions over the last year such as in Vodafone/Three and Schlumberger/ChampionX. These decisions confirm a more open-minded approach to behavioural remedies, reflected in the revised guidance that removes the phase 1 presumption against them, while maintaining a clear preference for structural remedies and scepticism toward controlling measures. The revised guidance provides clarity on complex divestments, acceptable behavioural remedies, and proportionality, signalling increased predictability and the importance of early, well-designed remedies for UK-facing mergers.

Commission consults on revised merger guidelines

Between 8 May 2025 and 3 September 2025, the Commission carried out a General Consultation on its Merger Guidelines. Roughly 117 submissions were made during the consultation, with many calling for broader consideration of innovation and sustainability efficiencies in mergers.  Innovation and growth are likely to be central to the reforms, with the EC expected to publish draft revised guidance in 2026 clarifying how resilience, defence and security factor into merger reviews, whether through existing frameworks, separate public interest tests, FDI integration, or sector-specific rules.

Commission sends statement of objections to Vivendi in merger gun-jumping investigation

On 18 July 2025, the EU Commission issued a statement of objections (preliminary statement of case) for multiple alleged breaches of the EU Merger Regulation by Vivendi, centring on premature implementation of its acquisition of Lagardère (commonly referred to as ‘gun-jumping’).

Under the Merger Regulation, a concentration with an EU dimension must be notified to the Commission and must not be implemented until it has been approved by the Commission (standstill obligation'). In addition, in the context of a conditional clearance, the Commission specifies certain conditions and obligations intended to ensure that the companies comply with the commitments they have entered into to obtain clearance. 

On 9 June 2023, the Commission had conditionally approved the transaction, subject to an upfront buyer remedy requiring Vivendi to divest certain assets and refrain from closing until approval of the purchasers of the divested businesses. However, the Commission alleges that Vivendi infringed the standstill obligation and remedy conditions across all stages of the transaction:

• pre-notification
• between notification and conditional clearance, and
• following conditional clearance but prior to fulfilment of the upfront buyer condition.

Specifically, the Commission claims Vivendi exercised influence over Lagardère’s editorial strategy, staffing decisions at Paris Match and Journal du Dimanche, and programming and HR matters at Europe 1 radio station. These alleged interventions, if substantiated, would constitute unlawful integration prior to merger clearance.

Comment: This case underscores the importance of maintaining strict operation and informational separation between merging entities until full regulatory approval is secured. Legal and compliance teams should ensure appropriate safeguards and training are in place to prevent inadvertent breaches.

Commission publishes fifth annual FDI screening report

On 14 October 2025, the EU Commission published its fifth annual report (relating to 2024) on the screening of foreign direct investment (FDI) into the EU.

Increasing percentage of no-issue reviews

The Report reveals a paradox: while foreign direct investment into the EU decreased by 8.4% in 2024, authorisation requests submitted to Member States surged by 73%. Despite the surge in authorisations at the Member State level, notifications to the Commission decreased by 2% from the year prior (from 488 to 477).

Divergence across Member States

Outcomes remained remarkably consistent with previous years: 86% of investments formally screened by Member States in 2024 were authorised without conditions (compared to 85% in 2023), 9% were approved with conditions or mitigating measures (down from 10% in 2023), 1% were blocked, and 4% withdrawn before a formal decision.

While these stable figures confirm the EU has generally remained open to foreign investment, this is not uniform across Member States. France, for example, reported that 54% of its authorisation decisions in 2024 were subject to conditions - much higher than the EU average of 9%.

Greater focus on critical technology and defence

Around 10% of cases triggered follow-up questions from other Member States, and while 92% were closed within two weeks, the remainder required in-depth assessment—half involving manufacturing (linked to supply chain or technology security concerns) and 37% defence-related, up from 26% in 2023.

Implementation of FDI screening

By the end of 2025, 25 of 27 EU Member States have national FDI screening regimes, but significant variations remain between them, including differences in scope, timelines, and notification procedures.

Comment: Although overall intervention remains limited, expanding national regimes and proposed reforms to strengthen the EU FDI cooperation mechanism are increasing regulatory complexity and lengthening reviews for sensitive transactions, particularly those involving critical technologies or defence. Cross-border investors now face a greater likelihood of multi-jurisdictional filings, more extensive information requests (especially in technology-linked sectors) and a growing need to plan early for potential mitigation commitments.

Reforms to EU FDI Screening Regulation agreed

On 12 December 2025, the Council and Parliament reached political agreement on reforms to the EU FDI Screening Regulation. Expected changes include:

• Extending the scope to cover investment by EU entities ultimately owned by non-EU investors.
• Mandatory FDI legislation and screening - but Member States have the last say in authorisations.
• A defined list of sensitive sectors. Expect mandatory screening for dual-use items, military equipment, cutting-edge tech (AI systems under the EU AI Act, quantum tech, semiconductors), critical raw materials, critical infrastructure (energy, transport, digital), electoral systems, and select financial entities.

The following changes, which were proposed earlier in the reform process, are unlikely to be included:

• Mandatory screening of greenfield investments. Earlier drafts pushed Member States to screen greenfield projects, but the updated Council proposal excluded greenfield foreign investments from the minimum scope.
• Commission power to launch reviews. The EC's proposed 'own initiative" procedure – allowing Brussels to review unnotified deals – was killed by Member States earlier this year.

The provisional agreement needs formal sign-off from both the Council and Parliament. Then the text will need to be finalised by lawyers, translated, and published in the Official Journal of the EU before it enters into force, likely in Q1/Q2 2026, with the new rules expected to take effect late 2027.