New EU FDI Regulation will come into force in January 2028

Alert

10 July 2026

11 min read

After much political maneuvering, the final version of the new EU Screening Regulation has been published, setting new minimum standards for Member States’ national screening mechanisms across the EU and bolstering EU-level screening powers. Its requirements will apply from January 2028 – we take a look at the biggest impacts for national regimes and the investors that must navigate them.

Regulation 2019/452 (the Current FDI Regulation) became effective in 2020 – it encouraged Member States to establish national FDI screening regimes for inbound investments and established the EU Cooperation Mechanism to facilitate discussions of national notifications between Member States and the Commission.

Since its adoption, national screening mechanisms across the world have become an increasingly common consideration in cross-border transactions. In that context, the Union identified FDI screening as a key tool to protect the internal market against emerging global risks in its 2023 ‘European economic security strategy’ and its 2025 communication on ‘Strengthening EU economic security’. That recognition has culminated in Regulation 2026/1386 on the screening of foreign direct investments (the New FDI Regulation), which has now been published in the Official Journal of the EU.

Mandatory National Regimes requiring Pre-Authorisation of Notifiable Transactions

Where the Current FDI Regulation encouraged national screening mechanisms, the New FDI Regulation will mandate it for all Member States. This is largely moot given the cross-Union proliferation has seen all Member States adopt, or take steps towards adopting, national screening regimes already.

However, the New FDI Regulation will also require that those screening mechanisms operate a pre-authorisation model for transactions in scope and must confer a power to ‘call-in’ closed transactions for a period of not less than 15 months and not more than five years after closing on the screening authority.¹ Member States will need to notify their national screening mechanisms to the Commission by 17 January 2027, outlining what measures have been adopted (or adapted) to give effect to the New FDI Regulation’s requirements.

Greenfield investments and internal restructures

Greenfield investments, defined as investments carried out via the establishment of new facilities or companies,² are exempt from the New FDI Regulation’s mandatory requirements. Member States are, therefore, not required to screen these, although they can elect to do so. Likewise, the New FDI Regulation is explicit that internal restructurings are excluded from the scope of the New FDI Regulation, particularly those that do not lead to any increase in shares or otherwise confer additional rights on the foreign owner. However, restructurings that include a new legal entity established in a third country outside the Union that is not already represented in the upstream ownership chain of the Union target are within scope of the Regulation. Simple transfers within corporate structures where the ultimate beneficial owners remain unchanged, therefore, can be exempt from screening under the New FDI Regulation. Member States may continue to screen internal restructurings, therefore, but the New FDI Regulation does not require that they do so. For Member States using the New FDI Regulation as a template for a complete overhaul of their national regime, we can expect greenfield investments and internal restructurings may be omitted, with different approaches then coexisting at the Member State level.

Minimum Requirements: Sensitive Sectors

The Current FDI Regulation gives an illustrative list of sectors that “may be taken into consideration” by Member States.³ The New FDI Regulation is more prescriptive. It requires that Member States ensure that suspensory review applies to all transactions involving local targets that:

develop, produce or commercialise dual-use items;
develop, produce or commercialise defence products;
produce, conduct research into, or develop semiconductor or quantum technologies;
are a provider of essential services in transport, energy or digital infrastructure;
are active in exploration, extraction, processing, recycling or recovery of strategic raw materials;
are active in specifically targeted financial activities, including central counterparties;⁴ central securities depositories,⁵ operators of regulated markets,⁶ operators of payment systems,⁷ systemically important institutions,⁸ and global providers of specialised messaging services; and
own, develop or operate voter registration databases, voting systems, information systems designed to manage electoral operations, display election results or provide post-election reporting to certify and validate results.⁹

This list is intended to function as a lowest common denominator across the Union. Member States remain free to require screening of targets involved in a broader list of activities if they choose. Especially the inclusion of financial activities is expected to result in more scrutiny, given that financial activities – despite their economic importance – are currently out of scope of review in a number of Member States.

Assessment Standards: Defining Risk

Few national regimes define the precise nature of the risk assessment that will be carried out by national authorities, save to say that general assessments will be made of a transaction’s capacity to affect national security, public order, etc. The New FDI Regulation, however, aims to achieve a certain level of harmonisation in this assessment on the basis that a common set of criteria should ensure more uniform assessments.

It seeks to do this by requiring Member States to consider a transaction’s potential effects on:

projects and programmes of Union interest;
the availability of critical technologies (including outside the Union);
the protection and availability of intellectual property and other intangible assets;
the security, integrity, resilience and functioning of a critical entity or critical infrastructure (including the land or property necessary for the operation of that infrastructure);
the continuity of supply of critical inputs (including services);
the protection of sensitive data (including personal data);
the freedom and pluralism of the media;
the protection of electoral processes;
the protection of public health (including critical medicines);
the protection of food security (including large farming enterprises); and
the security of military facilities and other sensitive public facilities in the immediate geographical proximity of the Union target.¹⁰

While these are the potential areas of impact to be assessed, in terms of the type of impact relevant to a risk assessment, the New FDI Regulation stipulates that Member States will take into account the extent to which a third country investor is likely to leverage the investment to pursue particular actions to the detriment of the Union. The New FDI Regulation provides an illustrative list of what such detriment might look like, all of which need to be taken into account during the risk assessment.¹¹ These range from the extent to which the investment may enable a foreign investor to coerce a Member State to pursue a particular course of action to how or whether the investor has an “opaque” ownership structure,¹² defined as one in which the structure of an entity renders its ownership or control “unclear, concealed or difficult to ascertain”.¹³ As national FDI authorities do not generally provide any detail about the national security assessment, it is uncertain how it will be possible in practice to monitor the implementation of the criteria set in the New FDI Regulation.

Process and Procedures

Timelines and review processes vary significantly across the Union at present. The New FDI Regulation sets out minimum procedural phases in an effort to address that divergence. These include:

An “initial review period” of 45 calendar days to determine if a transaction is likely to negatively affect security or public order;¹⁴
A “subsequent in-depth investigation” where risks are identified during initial screening;¹⁵ and
The right to pursue a judicial appeal against screening decisions.¹⁶

The EU Cooperation Mechanism: Intra-EU Screening and the Role of the Commission

The Cooperation Mechanism

The Current EU Screening Regulation established the EU Cooperation Mechanism to facilitate the exchange of information and concerns on particular transactions between the Member States and the Commission. The Current EU Screening Regulation required the notifying Member State to give “due consideration” to comments provided by other Member States and the Commission. The mechanism also created a forum via which requests for information (RFIs) could be posed via the notifying Member State.

Which transactions are referred to the EU Cooperation Mechanism is a decision effectively left to the Member States under the Current FDI Regulation, and the Member States have adopted different approaches to date.

Under the New FDI Regulation, the Member States will be required to notify a transaction that has triggered notification due to the target’s activities in the specified list of sensitive sectors. Member States must also refer transactions where:

the investing entity is directly or indirectly controlled by a foreign government;
the investing entity, or any entity in its broader group, is subject to Union sanctions; and/or
the investing entity, or any entity in its broader group, was involved in a previous investment that was either blocked or subject to conditions with which the investor failed to comply.¹⁷

Any transactions that a Member State has subjected to an in-depth investigation under its national mechanism must also be referred to the EU Cooperation Mechanism if it involves a target that (a) is active in a project or programme of Union interest or (b) is part of a group with subsidiaries in at least one other Member State.¹⁸

Once referred, other Member States and the Commission can issue RFIs, provide comments and/or issue an opinion to the referring Member States. Upon receipt of such comments or opinions, a meeting can also be requested to discuss how best to address the risks identified. Regardless, the referring Member States must give “due consideration” to comments or opinions and will circulate an advance summary of their final decision, including the extent of the consideration given to others’ comments and opinions and, where applicable, the reason for any disagreement with those comments.¹⁹ National timelines must be adopted to allow for these processes.

The New FDI Regulation also seeks to create alignment in the way in which both investors and Member States engage with national mechanisms. Where a transaction triggers in multiple Member States, it requires that investors will endeavour to make all national filings on the same day and that Member States will “coordinate closely throughout the process and, in particular, endeavour to align the timing of their respective screening procedures”.²⁰ This requirement is likely to raise a number of practical challenges given the absence of procedural harmonization between Member States and the complexity of multijurisdictional transactions. For instance, there is currently no alignment on the trigger event to file (i.e., whether a signed SPA is required or not) and certain Member States require the parties to file within a specific deadline from the signing of a binding agreement.

Information requirements

The New FDI Regulation also defines quite an extensive level of minimum standard of information that Member States must provide for transactions that it refers to the EU Cooperation Mechanism. This includes items such as the investment funding and funding sources.²¹ For Member States that will need to adapt their regimes anyway, it is foreseeable that this information list will become the standard for all notifications.

The New FDI Regulation also expects Member States to have broad information-gathering powers. Member States may request information from “any other natural or legal person either within the chain of control of the foreign investor or within the chain of control of the Union target”.²² This is in addition to the ability to request another Member State (or the Commission) to gather information from a natural or legal person in another Member State’s territory.²³

Again, the requirement is limited to notifications referred to the EU Cooperation Mechanism, but that is not a distinction that national authorities will necessarily adhere to in creating those powers.

What’s next?

Member States will have just over 18 months to adapt their national regimes to its requirements before it becomes applicable in January 2028. The New FDI Regulation will not apply to transactions that have already closed or which have already been notified under any existing regimes as of that date. The next step, therefore, will be a national exercise by national authorities to review the extent to which national mechanisms need to be adapted to meet the New FDI Regulation’s minimum standards. We expect that the New FDI Regulation will overall bring more alignment to the FDI national approaches across the EU over time.

_{1 New EU Screening Regulation, Article 4(4).
2 New EU Screening Regulation, Article 2(2).}
_{3 Current EU Screening Regulation, Article 4(1).
4 As defined in Regulation 648/2012 on OTC derivatives, central counterparties and trade repositories.
5 As defined in Regulation 909/2014 on improving securities settlement in the EU.
6 As defined in Directive 2014/65 on markets in financial instruments.
7 If designated as such under Directive 98/26 on settlement finality in payment and securities settlement system.
8 Within the meaning of Directive 2013/36 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms.
9 New EU Screening Regulation, Article 15.
10 New EU Screening Regulation, Article 19.
11 New EU Screening Regulation, Article 19.
12 New EU Screening Regulation, Article 19(2)(a) and (e).
13 New EU Screening Regulation, Article 2(8).
14 New EU Screening Regulation, Article 4(2)(a).
15 New EU Screening Regulation, Article 4(2)(b).
16 New EU Screening Regulation, Article 4(7).
17 New EU Screening Regulation, Article 5(1).
18 New EU Screening Regulation, Article 5(2).
19 New EU Screening Regulation, Article 12.
20 New EU Screening Regulation, Article 7(d).
21 New EU Screening Regulation, Article 15(1)(c).
22 New EU Screening Regulation, Article 15(3).
23 New EU Screening Regulation, Article 16(1) and (2).
24 New EU Screening Regulation, para. 66.}

_{White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.}

_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}