EU strengthens its foreign investment screening framework
The EU has today published its updated rules on foreign investment screening, strengthening its ability to identify and collectively address risks stemming from foreign investments to the Union’s security and public order. The updated framework will enhance the protection of critical sectors, assets and technologies in a coherent way, while maintaining the EU’s general openness to foreign investment.
The updated rules introduce mandatory screening mechanisms in all Member States, ensuring a more robust approach to screening foreign investments. The Regulation broadens the coverage and now includes, among others, indirect foreign investment. It also extends screening to EU-based investors that are ultimately controlled by an individual or entity from a non-EU country. It introduces a minimum scope for national screening mechanisms, including investments in sensitive and strategic areas such as dual-use items, critical technologies, critical raw materials, financial services, transport, energy, and electoral infrastructure.
The updated framework also sets a common minimum level of harmonisation on procedural aspects, such as timelines for national screening processes. It also establishes a filtering criteria to ensure that only cases that present high risks to security and public order are notified under the EU cooperation mechanism and reinforces transparency through better information-sharing on the outcomes of national screening procedures.
The updated Foreign Investment Screening Regulation will enter into force 20 days after its publication today in the Official Journal. EU Member States will have 18 months to implement the Regulation’s minimum requirements.
Maros Šefčovič, EU Commissioner for Trade and Economic Security, said: “The revised foreign investment screening framework is another significant step in the EU’s efforts to further reinforce our economic security toolbox. It allows the EU and its Member States to identify and address risks stemming from foreign investments that may affect security or public order, while safeguarding critical technologies, infrastructure and the resilience of supply chains. At the same time, it preserves the EU’s openness to foreign investment and helps keep it a safe and attractive place to do business.”
