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ARTICLE · 10 APRIL 2019

New EU Framework For Screening Foreign Direct Investment

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The EU framework for screening foreign direct investment (FDI) (Framework) was published on 21 March 2019.

European UnionGovernment, Public Sector

The EU framework for screening foreign direct investment (FDI) (Framework)1 was published on 21 March 2019. It enters into force on 10 April 2019 and applies across all Member States from 11 October 2020. Investors from non-EU countries, such as China, Brazil and Russia, should therefore factor the Framework into planning their relevant transactions, including procedure and timetables.

The Framework is the first EU measure to screen FDI on grounds of security and public order. It brings the EU in line with other jurisdictions, including China, Japan and the US, which operate well-established screening mechanisms. However, the Framework does not make the European Commission (EC) the decision-maker for FDI approvals within the EU. The final decision-making power continues to rest with the Member State(s) concerned. Fourteen Member States currently have their own FDI screening mechanisms. Others, like the UK, are considering strengthening their national regimes.

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