EU adopts new regulation strengthening foreign investment screening

The European Parliament and the Council have adopted a Regulation establishing a harmonised EU framework for the screening of foreign investments to protect security and public order.

• Main action: The Regulation requires all Member States to establish screening mechanisms and to impose prior authorisation for foreign investments in sensitive areas (semiconductors, quantum, certain AI technologies, defence and dual‑use items, energy, transport, digital infrastructure, financial market infrastructure, voter registration systems and critical medicines). Key timelines and concrete measures include initial review within 45 calendar days, Commission to establish a secure and encrypted system and secure database (12 months), an online EU portal at the request of at least nine Member States, and application of the Regulation 18 months from entry into force. The Regulation also includes a reporting threshold that flags Union targets that received EUR 750 000 or more in Union grants within the preceding five years.
• Background and implementation details: The Regulation repeals Regulation (EU) 2019/452, expands scope to cover intra‑Union investments through subsidiaries controlled by third‑country investors, strengthens the cooperation mechanism (notifications, Member State comments, Commission opinions), requires Member States to upload screening outcomes to a secure database (including notifications since 12 October 2020), and mandates a Commission evaluation after 4 years and 6 months from entry into force (and every five years thereafter).