EU adopted its regulation establishing a framework for the screening of foreign direct investments into the Union

On 10 April 2019, a new Regulation of the European Union entered into force establishing a framework for FDI screening. It creates a cooperation regime between Member States and the European Commission enabling information sharing, requiring certain notifications, providing relevant opinions and setting minimum requirements to be implemented in relation to national FDI screening mechanisms.

The regulation provides a non-exclusive list of factors to be considered by Member States in determining whether a foreign direct investment is likely to affect security or public order, by assessing its impact on: critical infrastructure, critical technologies, the supply of critical inputs, such as energy or raw materials, access to sensitive information or the ability to control information, or the freedom and pluralism of the media.

Additionally, the Commission is entitled to provide its opinions on screened investments, when there is a threat that security or public order of more than one Member State is involved or when interests of the whole EU may be endangered. This applies particularly to European projects like Galileo, Horizon 2020, TransEuropean Networks and the European Defence Industrial Development Programme.

The Regulation does not require Member States to maintain or introduce FDI screening in their respective jurisdictions.

• Type:

  • Entry and establishment (Approval and admission)

• Industry:

  • Not industry specific

• Sources:

  • EURO-Lex, Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union, https://eur-lex.europa.eu/eli/reg/2019/452/oj, 21 Mar 2019