The Vifo Act and acquisitions: few prohibitions, but a serious deal risk
An acquisition or investment already requires considerable attention. This is particularly true if your business works with sensitive technology, important data or digital infrastructure relied on by customers, government bodies or vital sectors. In that case, the question quickly arises whether the Vifo Act requires a notification to the Bureau Toetsing Investeringen (BTI), the Dutch Investment Screening Bureau. That question will become even more relevant in the coming years, as the government intends to expand the scope of the Vifo Act. Most notified transactions are not prohibited, but a notification can still affect your deal process: from timing and the sale and purchase agreement to information provision and certainty around closing.
Why this matters now
The government is scrutinising transactions affecting national security and digital autonomy more closely. One example is the recent prohibition of the acquisition of Solvinity by Kyndryl. That case fell under the Dutch Act on Undesirable Control of Telecommunications, but the broader message is clear: strategic transactions are more likely to come under close scrutiny.
In addition, the Dutch government intends to expand the Vifo Act with effect from 1 January 2027. The proposed expansion concerns six technology areas: certain biotechnology, artificial intelligence, advanced materials, nanotechnology, sensor and navigation technology, and nuclear technology for medical use. This would bring more knowledge-intensive businesses within the scope of investment screening.
For larger businesses in particular, this means that price, financing and competition law are not the only issues to consider. You also need to know whether your transaction is, or will become, subject to investment screening.
This screening does not apply only to buyers from countries regarded as politically sensitive. A buyer from an allied country may also face questions if the target is important to Dutch infrastructure, technology, data or strategic knowledge.
Why does a BTI notification affect your deal process?
A BTI notification is required if an investment, merger or acquisition falls within the scope of the Vifo Act. What happens to your transaction if such a notification is required? Timing, information and arrangements between buyer and seller quickly become central issues. Who prepares the notification? What information is required? What do you agree if the BTI asks additional questions? And what does that mean for the period between signing and closing?
Deal structure also matters
The structure of the deal plays a major role in answering these questions. A notification is not relevant only to a conventional sale of shares. Other transactions also require attention where a party obtains influence over a business that falls within the scope of the rules.
Examples include a minority investment, convertible loan, security interest, internal restructuring or an arrangement concerning voting rights. On paper, such a transaction may appear limited. In practice, the influence obtained may still be sufficient to require an assessment of the notification obligation.
In private equity transactions, the BTI does not look only at the buyer named on paper. The fund structure, managing partner, limited partners and ultimate providers of capital may also be relevant if they have, or acquire, influence.
How often does the BTI intervene?
The BTI rarely prohibits transactions. In 2023, no completed transaction was prohibited and one case resulted in mitigation measures. Later public figures also show that formal intervention remains exceptional.
That is not, however, a reason to be complacent. A BTI process can have an impact even where the deal ultimately proceeds.
This may involve additional questions, delays, additional conditions or discussion about control. Sometimes parties adjust a transaction before a formal decision is reached. That is not always visible in the statistics, but it is certainly felt in the timetable.
What does this mean for signing and closing?
A BTI notification directly affects your deal timetable. The transaction will often be unable to proceed until it is clear whether it may go ahead. This affects the period between signing and closing.
For buyers, this creates uncertainty about financing, integration and strategic plans. For sellers, it creates uncertainty about proceeds, exit and communications with management, employees or other shareholders.
Reputation also matters. If a transaction becomes politically or socially sensitive, it is no longer only a matter of legal review. Trust, public interests and the way your business positions itself also become relevant.
Identify the notification requirement at an early stage
A BTI notification does not have to be a problem, provided you take it into account in good time. Most delays arise when parties discover only at a late stage that investment screening is required.
It is therefore worthwhile assessing the notification requirement during due diligence or when drafting the letter of intent. At that stage, there is still room to make arrangements on timing, information and responsibilities.
The sale and purchase agreement can then specify who will prepare the notification, what information each party will provide and what will happen if the BTI asks additional questions or imposes conditions on the transaction.
These questions provide direction
In an acquisition, investment or restructuring, three questions can quickly provide direction. They do not replace a legal assessment, but they can help identify at an early stage whether the Vifo Act requires attention.
1. Does the business carry out sensitive activities?
The legal description of the business does not always tell the whole story. In practice, what matters most is what the business actually does.
What technology does it use or develop? Which customers does it serve? Does it have access to important data, digital infrastructure or strategically sensitive contracts? Questions of this kind help assess whether a notification to the BTI may be required.
From 2027, this question is likely to become broader. Businesses working with, for example, AI, certain biotechnology, advanced materials, nanotechnology, sensor and navigation technology or nuclear technology for medical use would be well advised to take this into account in the initial assessment of a transaction.
2. What influence will the buyer obtain?
When considering control, it is easy to think first of a majority shareholding. However, influence can also arise in other ways.
Examples include voting rights, appointment rights, veto rights, financing arrangements or access to information. A minority interest may therefore also warrant a careful assessment of the notification requirement.
3. Is the deal sensitive?
Some transactions are legally straightforward but nevertheless affect broader interests. Examples include digital infrastructure, government services, sensitive data or technology that can also be used for military purposes.
In such situations, the legal structure is not the only relevant factor. The wider social and strategic context also matters. That is why it is advisable to identify these sensitivities at an early stage.
Allow for additional time
Even if the risk of a prohibition appears small, an assessment takes time. This does not necessarily have to block the deal, but it does require realistic planning.
Reviews often take several weeks to several months. The review period may sometimes be extended, for example because additional information is required or because the transaction proves more complex than expected.
A tight transaction timetable can still be achievable, but it helps to build in room for questions, additional documents and consultation. This prevents unnecessary pressure from building up shortly before closing.
Avoid surprises at closing
The Vifo Act is not a reason to approach every deal with suspicion. Most notified transactions pass the screening process. Larger businesses and investors should nevertheless take the notification requirement seriously.
This applies particularly where your business operates in a sector in which national security, digital resilience or technological independence plays a role. In that case, you will want to know in advance where you stand.
Are you unsure whether your acquisition, investment or restructuring must be notified to the BTI? Contact me or one of our other Company Law lawyers. We can provide practical advice on the notification requirement, the timetable and the arrangements needed to prepare your transaction properly.
Frequently asked questions
about the Vifo Act and the BTI
Can you sign an acquisition agreement before receiving BTI approval?
Yes, this is often possible, but closing can take place only once it is clear that the transaction may proceed. The sale and purchase agreement will then include a condition precedent. This provides that the deal will be completed only once the required approval or confirmation has been obtained.
Who must make the notification to the BTI?
In practice, the notification obligation usually rests with the parties involved jointly. Buyer and seller need each other in order to provide the correct information. It is therefore advisable to agree in the transaction documentation who will prepare the notification and who will provide which information.
How much time does a BTI notification take?
This varies from one transaction to another. A straightforward assessment will be quicker than a complex deal involving several shareholders, sensitive technology or foreign financing. The timetable should allow for several weeks to several months, particularly if the BTI asks additional questions.
Does the buyer's country of origin matter?
Yes, but the buyer's country of origin is not the only criterion. A buyer from an allied country may also raise questions if the target is important to vital processes, sensitive technology or data. The assessment is risk-based and considers the transaction as a whole.
What happens if the BTI imposes conditions?
The transaction may then generally proceed only if the parties comply with those conditions. They may concern access to information, governance, continuity or the protection of sensitive technology. Such conditions may affect the value, structure and implementation of the deal.
