On March 21, 2019, the European Union ("EU") published Regulation (EU) 2019/452 of March 19, 2019, establishing a framework for the screening of foreign direct investments (“FDI”) into the EU (“the FDI Screening Regulation”). The publication follows the political agreement reached by the European Commission, the Council and the European Parliament in November 2018 and the adoption of the final text by these institutions in February and March 2019.
The FDI Screening Regulation will enter into force on Wednesday April 11, 2019, i.e., on the twentieth day following that of its publication. However, the provisions of the regulation will only apply as of October 11, 2020, i.e., 18 months after its entry into force. Investments that have not been subjected to screening and that are completed before April 10, 2019, will not be subject to the provisions of the regulation. Investments completed after that date may still be subject to screening based on Article 7 of the regulation, even if the provisions of the regulation will only apply as of October 11, 2020.
The FDI Screening Regulation does not establish a centralized EU-wide screening mechanism for FDI, as the Committee on Foreign Investment in the United States (“CFIUS”) has for the United States. The regulation does not require EU member states to implement an FDI screening mechanism. However, where such a mechanism exists or is to be adopted at the EU member state level, it must meet certain basic screening requirements, such as judicial review of decisions, non-discrimination between different third countries and transparency.
For a more comprehensive discussion of the content of the EU FDI Screening Regulation, please see our earlier Legal Updates.1
1 https://www.mayerbrown.com/en/perspectives-events/publications/2018/12/eu-agrees-on-fdi-screening-framework; https://www.mayerbrown.com/european-commission-proposes-framework-for-fdi-screening-mechanism-09-15-2017/; and https://www.mayerbrown.com/the-eus-proposed-framework-for-fdi-screening-mechanism--status-and-prospects-for-adoption-10-04-2018/.