THE EUROPEAN UNION STRENGTHENS FDI SCREENING

Regulation (EU) 2026/1386 on the screening of foreign direct investments (FDI), in force since 16 July 2026, repeals Regulation (EU) 2019/452, which was implemented in Romania by Government Emergency Ordinance No. 46/2022, as subsequently amended and supplemented. The new Regulation provides for an 18-month transitional period to allow Member States to adapt their national legislation and administrative screening mechanisms.

By way of exception, certain provisions — particularly those concerning the notification of national measures, the common information form, the secure European infrastructure for data exchange and the delegated powers of the European Commission — have applied since 16 July 2026.

From voluntary cooperation to mandatory screening

Regulation (EU) 2026/1386 establishes a cooperation mechanism between the Member States and the European Commission. Each Member State will therefore be required to have in place a national mechanism for screening foreign investments likely to negatively affect security or public order and to exchange relevant information concerning such investments.

Member States may adopt specific national provisions supplementing those laid down in the Regulation, provided that those provisions do not undermine the Regulation’s objectives.

Investments carried out through entities established in the Union

The new Regulation incorporates and makes mandatory the approach set out by the European Commission in its proposal of 24 January 2024. Under this approach, the screening of foreign direct investments (FDI) must also cover investments carried out through a subsidiary established in the Union where that subsidiary is controlled by third-country investors.

Consequently, transactions that appear to be intra-Union transactions may be subject to screening where economic control is, in fact, exercised from a country outside the European Union.

The Regulation defines a “foreign investment” as “an investment of any kind, carried out either by a foreign investor itself or through a foreign investor’s subsidiary in the Union, aiming to establish or to maintain lasting and direct links between the foreign investor and a Union target, to which the foreign investor makes capital available in order to carry out an economic activity in a Member State, enabling effective participation in the management or control of that Union target”.

The Regulation also defines a “foreign investor” as a natural person who is not a national of a Member State or an undertaking or an entity established or otherwise organised under the laws of a third country.

At the same time, for the purposes of the Regulation, the “beneficial owner” of the FDI may be one or more natural persons, a legal person, an entity or a trust that directly owns or controls a foreign investor or an EU target entity, that ultimately benefits from the foreign investment, or on whose behalf the foreign investment is made or control over that foreign investment is exercised.

A common minimum scope of strategic sectors

The new Regulation establishes a minimum scope of investments that must be subject to prior authorisation. This scope covers Union undertakings that develop, manufacture or market dual-use items, military equipment or sensitive technologies. The Regulation covers, in particular, technologies regarded as critical to the Union’s economic security : semiconductor technologies, quantum technologies, certain artificial intelligence technologies and other technology areas listed in the Annex to the Regulation.

Compared with the previous Regulation, the key change lies in the introduction of a mandatory common minimum scope. Member States will no longer be free to decide whether these categories of investments should be screened. They will be required to include them within the scope of their national screening mechanisms.

Critical infrastructure, energy, transport and the digital sector

The mandatory scope also covers critical infrastructure in the transport, energy and digital infrastructure sectors where such infrastructure is considered critical following a risk-based, targeted assessment carried out at national level. This approach is particularly relevant to investments in networks, platforms, data centres, energy infrastructure, transport systems, strategic operators and essential services.

Strategic raw materials

The new Regulation also covers certain activities relating to strategic raw materials. These include the exploration, extraction, processing, recycling, recovery or stockpiling of such raw materials.

The financial sector brought within the mandatory scope

The financial sector is also covered in respect of certain entities regarded as systemically important. The Regulation expressly refers to central counterparties, central securities depositories, operators of regulated markets, operators of payment systems other than central banks, other systemically important institutions and global providers of specialised financial messaging services.

Electoral infrastructure: a new category of sensitive assets

One significant development concerns electoral infrastructure. Investments in entities that own, develop or operate voter registration databases, voting systems or other information systems specifically designed to manage electoral operations will be subject to prior authorisation. This provision establishes a direct link between foreign investment, democratic security and the protection of electoral processes. It reflects the Union’s concerns regarding the risks of foreign influence, access to sensitive data and technological vulnerabilities affecting electoral systems.

Prior authorisation before completion of the investment

Foreign investments subject to a prior authorisation requirement must be filed and screened before completion of the transaction. Member States must ensure that such investments are submitted to the screening authority for authorisation and review before they are completed.

Each Member State’s national authorisation procedure must comprise at least two phases. The first phase consists of an initial review, which must be completed within 45 calendar days from the date on which the filing is deemed complete. During this phase, the screening authority determines whether an in-depth investigation is required. Where a likely negative effect on security or public order cannot be ruled out, the request for authorisation proceeds to the second phase. Although the procedure governing the initial review is harmonised, the Regulation leaves Member States a degree of discretion regarding the more complex in-depth investigation phase.

Ex post screening of non-notified investments

The Regulation also introduces the possibility of conducting an ex post screening of investments that were not subject to prior authorisation. National authorities may, on their own initiative, screen foreign investments falling within the scope of the screening mechanisms but are not subject to a prior authorisation requirement, within a period of no less than 15 months and no more than five years following completion of the investment.

In the case of investments that should have been authorised but were either not notified or were notified only after completion, the competent authority must be empowered, for a period of at least 24 months following completion, to verify the investment and adopt a screening decision in respect thereof.

Strengthened cooperation at Union level

Member States must notify the European Commission and the other Member States of certain foreign investments undergoing screening. Notification is mandatory, for example, where the investment falls within the common minimum scope and the foreign investor is directly or indirectly controlled by the government of a third country; is subject to restrictive measures adopted by the Union; or has previously carried out an investment that was prohibited or authorised subject to mitigating measures with which it failed to comply.

Under the new provisions, notification through the cooperation mechanism is triggered only where specific criteria relating either to the sector concerned, as set out in Article 4 (15), or to the foreign investor, as provided for in Article 5, are met.

Under the previous framework, every foreign investment undergoing screening had to be notified. Notification is also required where the Member State opens an in-depth investigation and the Union target participates in a project or programme of Union interest or belongs to a group of undertakings operating in several Member States.

Multi-country transactions: coordinated filings

For transactions requiring notification in more than one Member State, the applicant must make the relevant filings in all Member States concerned on the same day and indicate the existence of the other filings. The Member States concerned must coordinate their procedures and seek to align the timing of their screening decisions.

This provision is particularly relevant to M&A transactions involving targets, subsidiaries or assets located in several Member States.

A more active role for the European Commission

The European Commission and the Member States may respectively issue duly reasoned opinions or provide duly reasoned comments concerning a foreign investment undergoing screening where there are grounds indicating a likely negative effect on security or public order or a potential impact on a project or programme of Union interest.

The Commission may also recommend mitigating measures. The final screening decision nevertheless remains the responsibility of the Member State screening the foreign investment.

More detailed information on the investor and the transaction

The Regulation lays down minimum requirements concerning the information to be provided to the other Member States as part of the notification procedure for an investment. This information includes, in particular, details concerning the foreign investor, the beneficial owner, the ownership structure, the value and financing of the investment, the source of financing, the planned date of completion, the activities of the company, the structure of the corporate group before and after the transaction, and any links with projects or programmes of Union interest.

The information must also specify whether, during the preceding five years, the Union target received at least one Union subsidy amounting to EUR 750,000 or more.

Within 18 months of the entry into force of the Regulation, the European Commission will, by means of an implementing act, establish the form to be used for providing the above information. Secure and encrypted system, online Union portal and secure database Information exchanged between Member States, and between Member States and the Commission, will be transmitted through a secure and encrypted system. The Commission must establish this system within 12 months of the entry into force of the Regulation. At the request of at least nine Member States, the Commission will establish an online Union portal for the electronic filing of foreign investments with screening authorities and for communications between the natural or legal persons making a filing and those authorities. The online Union portal will not automatically be mandatory for all Member States. It may, however, become an accessible instrument for notifying cross-border transactions. The portal must become operational within 12 months of the request.

Procedural safeguards for investors

The Regulation provides that the rules and procedures governing the screening of foreign investments must be transparent and must not discriminate as between third countries and Member States. Furthermore, parties affected by a foreign investment screening decision must have the right to an effective judicial remedy. Before any decision is adopted authorising a foreign investment subject to mitigating measures (which may include changes to the proposed governance structure of the target entity, restrictions on the voting rights conferred on the foreign investor, or conditions governing access to sensitive technologies or information) or prohibiting or unwinding the investment, the parties concerned must be given an opportunity to express their views.

Repeal of Regulation (EU) 2019/452 and transitional provisions

Regulation (EU) 2019/452 will be repealed with effect from the date of application of the new Regulation, namely 18 months after its entry into force. However, the former Regulation will continue to apply to foreign direct investments that are already undergoing screening or that were completed on or before the date of application of the new Regulation.

The new Regulation will likewise not apply to other foreign investments that are already undergoing screening or that were completed on or before that date.

Impact on the specific legislation applicable in Romania

Romania already has a national FDI screening mechanism, governed by GEO No. 46/2022, as subsequently amended and supplemented, which incorporates several elements also reflected in the new EU Regulation. These include:

• A prior authorisation mechanism. Foreign investors and, in certain cases, EU investors must submit an application for authorisation before completing an investment where the transaction falls within the scope of GEO No. 46/2022. This approach is consistent with the new EU Regulation, which makes FDI screening a minimum requirement for all Member State.
• A value threshold of EUR 5 million for investments subject to Commission for the Examination of Foreign Direct Investments (CEISD) review. This threshold is not absolute. Investments below the threshold may also be review where, by reason of their nature or potential effects, they are likely to negatively affect national security or public order or to have an impact on projects or programmes of interest to the EU.
• Screening measures applicable to fragmented transactions. Several interdependent transactions carried out within a one-year period by the same person or between the same entities may be treated as a single investment and made subject to FDI screening.
• The extension of the Romanian screening mechanism to asset deals under GEO No. 17/2026. The mechanism covers not only acquisitions of shares or equity interests, but also acquisitions of tangible or intangible assets in sensitive sectors.
• A list of sensitive sectors. This specific legislation already contains such a list, in addition to the list of sectors subject of FDI screening under Supreme Council of National Defence (CSAT) No. 73/2012 concerning the application of Article 46(9) of Competition Law No. 21/1996, which lists the sectors relevant from q national security perspective. These sectors include critical and advanced technologies, critical infrastructure, the pharmaceutical sector, defence and the defence industry, and the agri-food sector. The list specifically covers artificial intelligence, robotics, semiconductors, cybersecurity, quantum technologies, nuclear technologies, biotechnologies, energy infrastructure, transport, healthcare, communications, data processing and storage, and electoral and financial infrastructure. In principle, these sectors are already covered by the new Regulation. However, Romania will need to make further amendments to ensure full alignment with the Regulation, including with respect to strategic raw materials and certain critical financial infrastructures.
• Ex post review. Where an investment has been completed without the required authorisation and negatively affects national security or public order, CEISD may propose that the Government impose structural or behavioural measures intended to restore the situation existing before completion of the investment. This approach is consistent with the requirements of the new EU Regulation, which strengthens the possibility of ex post screening of non-notified investments.
• Conditional authorisation of FDI. CEISD may propose that the investment be approved subject to structural or behavioural commitments by the investor. In such cases, the investment may be completed or maintained only in compliance with the conditions laid down in a Government Decision. This corresponds to the approach under the EU framework, according to which identified risks may be addressed through mitigating measures and not solely by prohibiting the transaction.
• Cooperation with EU institutions. Where an investment may affect projects or programmes of Union interest, CEISD must take into account the European Commission’s opinion issued through the EU cooperation mechanism.

The national authorisation procedure is relatively clear. The investor submits a request for authorisation. CEISD examines the filing and may request additional information. The investor must respond within 30 calendar days. This period may be extended by 15 calendar days in duly justified cases. Following its assessment, CEISD may propose one of three outcomes: authorisation of the investment, authorisation subject to conditions or rejection of the request. In straightforward cases, the investment is authorised by an order issued by the Prime Minister’s Chancellery. Where the investment is authorised subject to conditions or the request is rejected, a decision is adopted by the Government. In complex cases, CEISD may open an in-depth investigation. At CEISD level, the investigation must be completed within 90 calendar days. This period may be extended once by no more than 45 calendar days. In certain cases, the Supreme Council of National Defence (CSAT) may be consulted. Its opinion must then be provided within no more than 90 calendar days from the date of the request.

GEO No. 17/2026 also introduces digitalisation measures. Requests for authorisation will be managed through an IT application developed by the Prime Minister’s Chancellery in cooperation with the Special Telecommunications Service (STS). This national solution will nevertheless need to be coordinated with the secure and encrypted information-exchange system, the secure European database and any online Union portal established under the new EU Regulation.

Another practical issue concerns the interaction between foreign investment screening and merger control. In complex transactions, the assessment conducted by CEISD may affect the timetable of the merger-control procedure and, consequently, the timing of completion of the investment. The two procedures must therefore be considered together from the transaction-structuring stage.