Foreign investors who, for many years, eagerly awaited the ability to establish majority or wholly owned businesses in the United Arab Emirates (“UAE”) outside the free zones can prepare their bait—but cannot go fishing yet.

Following an announcement made by the UAE Council of Ministers earlier this year, the long-awaited Foreign Direct Investment Law was issued in September 2018 through federal Legislative Decree No. 19 of 2018 (the “Foreign Direct Investment Law”). While not repealing the restrictions on foreign ownership under the federal Commercial Companies Law No. 2 of 2015 (the “Commercial Companies Law”), the Foreign Direct Investment Law sets forth a framework entitling foreign investors to apply for a special status for their UAE-based investment vehicles that would accord them certain derogations from the provisions of the Commercial Companies Law, including in relation to the limit on foreign ownership. The new law does not relax foreign ownership limitations across the board.

In the memorandum, we summarize the key provisions introduced by the new Foreign Direct Investment Law and analyze the potential impact on the investment landscape in the UAE.

As both shareholder activists, and the companies they target, become more geographically diverse, it is increasingly important for legal and corporate practitioners to understand the legal framework and emerging trends of shareholder activism in the various international jurisdictions facing activism. The Shareholder Rights and Activism Review is designed as a primer on these aspects of shareholder activism in such jurisdictions.

Please click here to read Cleary partner Michael J. Ulmer’s chapter on Germany.

On October 10, 2018, the Department of the Treasury issued interim regulations (“Interim Regulations”) for the Committee on Foreign Investment in the United States (“CFIUS”) to conduct a pilot program implementing provisions relating to critical technologies of the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”), which recently amended the Exon-Florio amendments to the Defense Production Act of 1950 (together, “Exon-Florio”). The Department of the Treasury also released amendments to CFIUS’s regulations effective October 11, 2018 to implement the immediately effective portions of FIRRMA.

Section 1727(c) of FIRRMA authorizes CFIUS to conduct one or more pilot programs to implement any authority provided pursuant to any provision of, or amendment made by, FIRRMA that did not take effect immediately upon enactment. The newly issued Interim Regulations bring into effect a pilot program implementing enhanced, and in many cases mandatory, review of transactions involving “critical technologies” (generally, export-controlled technologies) used by the target in, or designed by the target for, one or more of a list of specified industries. The pilot program takes effect on November 10, 2018.

Please click here to read the full alert memorandum.

The record breaking heat this past summer left M&A activities cold. Signa and Hudson’s Bay agree on a merger between Karstadt and Kaufhof. Signa takes over the lead role. In addition, Signa acquires significant real estate properties from Hudson’s Bay. Via Warwick, Morgan Stanley submits a takeover offer for all shares of the logistics company VTG. Haniel prepares its withdrawal from retailer group Metro with the disposal of a 7.3% share participation and the granting of a call option for an additional 15.2% of the group’s shares to the Czech firm EP Global Commerce. The acquirer secures an additional 9% Metro package from the co-shareholder Ceconomy. The Hymer family sells its RV business, valued at approx. EUR 2.1 billion, to its competitor Thor Industries. Schwarz Group’s entry into Tönsmeier, a waste disposal company, could alter the recycling business in Germany. Continue Reading

German law corporate acquisition agreements and real estate purchase agreements often include broad exclusions of liability.  However, pursuant to Section 444 of the German Civil Code (Bürgerliches Gesetzbuch), a seller is subject to statutory (non-excludable) liability if and to the extent the seller fraudulently concealed a defect of the sold asset.  To that end, it is often decisive whether the seller was required to inform the buyer about the defect in question. Continue Reading German Federal Court of Justice on Seller Disclosure Obligations: Extensive Disclosure Required in Environmental Context

On August 1, 2018 the U.S. Senate joined the U.S. House of Representatives in agreeing to a conference report that sent the National Defense Authorization Act for Fiscal Year 2019 (“NDAA”), which incorporated a version of the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”), to the U.S. President for his signature. The President is expected to sign the NDAA.

FIRRMA updates the statute authorizing reviews of foreign investment by the Committee on Foreign Investment in the United States (“CFIUS”) to reflect changes in CFIUS’s practice over the ten years since the last significant reform, expands CFIUS’s jurisdiction, and makes significant procedural alterations to the CFIUS process. Introduced to “modernize and strengthen” review of foreign investment in the United States, FIRRMA cements a relatively aggressive approach to foreign investment review. However, ultimately, FIRRMA’s changes to current CFIUS practice are modest, and many of the changes merely codify practices in place since the later years of the Obama Administration.

Please click here to read the full alert memorandum.

On June 26, 2018, the U.S. House of Representatives passed its version of the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”). Just over a week earlier, the U.S. Senate passed the National Defense Authorization Act for Fiscal Year 2019, which incorporated its version of FIRRMA. The bills, which passed their respective chambers by very wide margins, would update the statute authorizing reviews of foreign investment by the Committee on Foreign Investment in the United States (“CFIUS”) to reflect changes in CFIUS’s practice over the ten years since the last significant reform, expand CFIUS’s jurisdiction, and make significant procedural alterations to the CFIUS process. Introduced to “modernize and strengthen” review of foreign investment in the United States, FIRRMA would cement a relatively aggressive approach to foreign investment review. However, ultimately FIRRMA’s changes to current CFIUS practice are modest, and many of the changes merely codify practices in place since the later years of the Obama Administration.

Please click here to read the full alert memorandum.

Major transactions are driving the German M&A market. After several fruitless attempts, Deutsche Telekom and Softbank entered into a business combination agreement to merge T-Mobile US with its rival, Sprint. German building materials maker Knauf agrees the $ 7 billion takeover of competitor USG, while Merck sells its OTC business to Procter & Gamble for around € 3.4 billion. Vonovia continues to drive the consolidation of the residential property market, submitting a takeover bid of around € 900 million for Swedish real estate company Victoria Park. Daimler and BMW combine their mobility businesses, including car-sharing subsidaries Car2Go and DriveNow, forming five joint ventures in total. Continue Reading

In Varjabedian v. Emulex, the Ninth Circuit recently held that plaintiffs bringing claims under Section 14(e) of the Securities Exchange Act of 1934 (“Exchange Act”)—which prohibits misstatements, omissions or fraudulent conduct in connection with a tender offer—need only show that defendants acted negligently, rather than with scienter.

This decision marks a conspicuous divergence from the decisions of every other circuit court to consider the issue.  Those other courts have uniformly held that Section 14(e) claims require a plaintiff to demonstrate that defendants acted knowingly or with a reckless disregard of the truth, a significantly higher burden.  The Ninth Circuit’s ruling, thus, sets up a clear circuit split that may necessitate resolution by the Supreme Court.  In the meantime, however, it remains to be seen whether there will be a migration of tender-offer litigation to the Ninth Circuit.

Please click here to read the full alert memorandum.