Regulation (EU) 2019/452 - Establishing a Framework for Screening of Foreign Direct Investments into the European Union

On the 11 April 2019 Regulation 2019/452/EU on the screening of foreign direct investment into the European Union came into effect. The Regulation was introduced as part of a continuing shift towards a greater level of transparency in international investment throughout the EU.  The provisions of the Regulation are set to apply from the 11 October 2020. Information to be transferred: The introduction of the Regulation allows the establishment of a contact point betwe... On the 11 April 2019 Regulation 2019/452/EU on the screening of foreign direct investment into the European Union came into effect. The Regulation was introduced as part of a continuing shift towards a greater level of transparency in international investment throughout the EU.  The provisions of the Regulation are set to apply from the 11 October 2020. Information to be transferred: The introduction of the Regulation allows the establishment of a contact point between each Member State and the Commission to allow for the transfer of information in respect to Foreign Direct Investment . This information includes:

• the investor’s identity and target company;
• the countries in which the investor and target company currently operate;
• the source of funding and;
• the value of investment.

The exchange of such information gives both the Commission and Member States the opportunity to highlight concerns where they see fit. In circumstances whereby an investment may affect a project of interest within the European Union or may act as a threat to either the security or public order of more than one Member State, the Commission is authorised to issue an opinion. The opinion of the Commission will be non-binding however, Member States are urged to give them “due consideration”. Scope of the Regulation: The Regulation does not place an obligation on individual Member States to establish a framework for FDI however, it notes specific requirements that must be adhered to should a Member State wish to adopt or maintain a screening framework at a national level. Currently, there are 14 Member States that have a national framework for the screening of FDIs including the United Kingdom, France and Germany. These countries were under obligation to submit their screening mechanism before the Commission by the 10 May 2019. Going forward, any amendments that are made to a national screening framework must be reported to the Commission within a thirty day period from the date of implementation.