FDI Surprises: When internal reorganizations set off alarms

At Eversheds Sutherland, we understand that Foreign Direct Investment (FDI) rules are often thought of in the context of external takeovers, where a foreign investor gains control over a local company. Yet, internal changes—like shifting assets or subsidiaries within a group, spin-offs, or restructuring ownership—can also trigger FDI filings. The complexity lies in the fact that even transactions staying entirely within the same group may activate scrutiny, particularly due to broad regulatory definitions designed to catch any shift in who actually holds control over a particular corporate entity. Consequently, businesses may find themselves subject to notification requirements even when the transaction is entirely contained within a corporate group and does not involve traditional external investment.

This article explores why and how internal reorganizations may require FDI filings, with jurisdiction-specific examples, legal bases, and guidance from regulators.

FDI regimes focus on control, not just ownership

The focus of FDI regimes is on control, not just formal ownership. Internal reorganizations can sometimes create unexpected hurdles for multinational groups. It is largely an administrative burden which may delay or disrupt internal restructuring operations if not built into the reorganisation timetable from the outset.

FDI screening is typically triggered when a foreign investor acquires control over a domestic business. Control can be defined in various ways, including majority ownership, significant voting rights, or the ability to appoint board members or influence strategic decisions. In many jurisdictions, crossing specific ownership thresholds—such as 10%, 25%, or 50% of voting rights—can also trigger a filing obligation. The underlying business sector also matters: companies involved in national security, infrastructure, advanced tech, dual-use goods, or sensitive data are especially likely to be reviewed. Importantly, even indirect foreign control—where a foreign entity is somewhere in the ownership chain—may be enough to trigger a review.

Internal reorganizations essentially refer to structural changes within a corporate group that do not involve external parties. These can include intra-group transfers of subsidiaries or assets, spin-offs, mergers between group entities, or changes in holding structures. For example, a company might transfer a domestic subsidiary from one group entity to another for tax or operational reasons. Although the ultimate parent company may remain the same, the legal entity that now controls the domestic business may be different—and if that entity is foreign or newly foreign-controlled, the transaction may fall within the scope of FDI screening laws.

Ultimately, internal reorganizations may prompt FDI review whenever a new, especially foreign, entity acquires influence or control over a domestic company—particularly if the company operates in sensitive sectors or crosses other regulatory thresholds. This trend reflects regulators’ growing focus on how control is exercised and whether a shift could affect national interests. For companies, this means internal transactions deserve the same FDI attention as external deals, even if they seem routine or purely internal at first glance.

Examples

Many regulatory authorities have not issued formal decisions or guidance regarding whether internal restructuring requires FDI filing notifications. However, certain jurisdictions—including Belgium, the Netherlands, Germany, and the UK—have provided such clarifications.

In Belgium, guidance is clear that if the activities of the group entity fall within scope of the Belgian FDI regime and a non-European affiliate acquires directly or indirectly 10% or 25 of the voting rights or control, a filing is triggered.

In France, a filing is generally not required if the ultimate controlling shareholder of the French business does not change following the reorganisation. However, if the reorganisation involves the transfer of a French branch abroad or a change of the controlling fund over a sensitive French business, such changes may trigger a filing.

International restructurings can also trigger FDI filing obligations in Germany. However, a narrow exemption applies if the ultimately controlling shareholder remains unchanged, the transaction is limited to internal restructuring, and no new shareholders from previously uninvolved jurisdictions are introduced. If the restructuring results in a new direct or indirect shareholder from a third country not previously involved, or if the potential for foreign influence over protected assets changes, the exemption does not apply and a filing may be required. The German authority typically assesses the entire ownership chain to determine whether the restructuring alters the risk profile or foreign influence over the domestic entity.

In the Netherlands, the relevant authority has published detailed guidance clarifying that internal reorganizations may trigger notification if they result in a change of control or significant influence. For example, if a Dutch company is transferred from one group entity to another and the acquiring entity is ultimately controlled by a different foreign shareholder, the transaction will trigger a filing. Even changes in shareholding or management structures—such as those involving trust offices or custodians—can trigger notification obligations. However, if the restructuring does not alter the ultimate sole shareholder, and no new foreign influence is introduced, the transaction may be exempt.

In the UK, internal reorganizations are not automatically exempt from FDI scrutiny. Even when the underlying ownership remains the same, a transaction can still trigger a mandatory notification if it involves certain “trigger events”—for instance, crossing shareholding thresholds of 25%, 50%, or 75%, or acquiring voting rights that enable control over company decisions. The UK government has recognised that many internal restructurings do not present any real risk to national security but still end up being reported. As a result, in July 2025 the UK government announced plans to introduce exemptions for specific low-risk internal reorganizations. Nevertheless, until these new rules are officially in place, any internal restructuring that gives a new entity control—even if it’s within the same corporate group—must still be reported.

Best practices for companies

Given the complexity and jurisdictional differences in FDI regimes, a proactive approach is helpful. Internal reorganizations should not be assumed to fall outside the scope of FDI screening simply because no external parties are involved. Regulatory authorities increasingly scrutinise changes that might impact national security or critical sectors, regardless of whether the transaction takes place within the same corporate group. This means that companies should remain aware of FDI requirements and seek advice when planning internal restructurings to avoid inadvertent breaches of notification obligations.

Some key take aways to consider:

• Start assessing the FDI rules early in the planning process for any internal reorganisation, as even seemingly routine changes may trigger notification requirements in some jurisdictions.
• Carefully map and document the ownership and control structure both before and after the transaction to determine whether a change of control or new foreign influence is introduced.
• Maintain thorough records explaining the rationale and internal character of the restructuring, which will help provide a defensible position to regulators if questions arise.
• Be aware that exemptions for low-risk internal restructurings may be available or forthcoming (such as in the UK), but until formally adopted, companies should assume that notification obligations could still apply.

Our International Corporate reorganizations (ICR) team at Eversheds Sutherland is ready to help you navigate the FDI implications. We are here to help you move forward securely and strategically. Let’s discuss how we can support your next reorganisation with confidence and clarity.