Adoption of a FDI screening mechanism

01 May 2021

The Act on the Examination of Foreign Investment was adopted on 19 January 2021 and will enter into force on 1 May 2021. It introduced an FDI screening mechanism with line with the European Union standards. According to the new law, any foreign investor defined as non-EU investor shall obtain a permit prior to executing its investment in Czechia, if it acquires an effective control. Such a control is either: 1) a right to exercise at least 10% of the voting rights, 2) a membership in the supervisory or management body, 3) an ability to dispose of ownership rights to assets through which the economic activity is carried out, or 4) another level of control enabling access to information, systems or technologies.

The screening is particularly targeting foreign investment in: a) production, research, development and innovation of military equipment; b) operators of the critical infrastructure (energy, water, food and agriculture, health, transport, communication and information systems, financial market and currency, emergency services and public administration sectors); c) administrators of the critical information infrastructure relating to information and communication systems and basic service systems, d) manufacturing and development of dual-use items.

In other sectors, the Ministry of Industry and Trade ma initiate screening proceedings, when an investment may endanger the security or internal or public order.