On March 21, 2019, the European Commission published a regulation on screening framework for foreign direct investment ("FDI") into the EU (the "Regulation"). Although it enters into force on April 10, 2019, it will not apply until October 11, 2020.

The Regulation concerns Member States' mechanisms to screen FDI on the grounds of security and public order. It was adopted because the European Commission is concerned about the security risk posed by certain FDIs into strategic assets, technologies and infrastructure. The regulation may delay some FDIs, but it may also contribute to the unification of FDI monitoring standards.

Many Member States (including Poland) already have screening mechanisms. The novelties in the Regulation are:

  • Member States and the Commission will exchange information and issue comments and opinions related to specific FDIs in other Member States (cooperation procedure). In most cases, a Member State will need to wait until the cooperation procedure is finalized before it can adopt a decision on a given FDI.
  • The Commission will be able to screen FDIs affecting programmes of EU interest, including in the areas of research, transport, energy, telecommunications and space. It will issue an advisory opinion to the Member State where such FDI is planned.
  • Member States with screening mechanisms will need to comply with basic requirements, so that screening is transparent, non-discriminatory and provides adequate recourse.

The screening process will be particularly relevant in the following areas:

  • critical infrastructure – including energy, transport, communications, defense, health, electoral, financial and data storage infrastructure and sensitive facilities;
  • critical technologies – including artificial intelligence, robotics, semiconductors, cybersecurity, aerospace, defense, energy storage, quantum and nuclear technologies, as well as nanotechnologies and biotechnologies;
  • critical inputs – including energy or raw materials, as well as food security;
  • companies with access to sensitive information, including personal data, or the ability to control such information; and
  • freedom and pluralism of the media.

For any transaction by a non-EU company into the EU the Regulation and its possible impact will have to be given due consideration.

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