the protection of sensitive data (including personal data); media freedom and pluralism; public health (including the availability of critical medicines); food security (including substantial farming operations); and the protection of military and sensitive facilities based on geographical proximity to the target. ^ Expanding investor risk factors . The New Regulation expands the list of investor- related risk factors that Member States must consider. In addition to state-controlled investors and investors previously subject to prohibition decisions, the list now includes investors established in jurisdictions with deficient AML/CFT regimes or obligations to share information for intelligence purposes without due process or oversight mechanisms; investors previously subject to FDI remedies that were not complied with; investors linked to sanctioned entities or individuals; and investors with opaque ownership structures. ^ Guidelines on criteria relating to filing obligation and screening . The New Regulation envisions the Commission issuing non-binding guidelines to clarify its interpretation of the triggers for review, as well as the factors relevant to assessing whether an investment may pose risks to security and public order. These guidelines are intended to provide investors with greater clarity regarding the circumstances that could lead to a mandatory filing or own- initiative screening. ^ Aligning procedural aspects of FDI screening. The New Regulation requires that applicants “shall endeavor” to notify all relevant Member States on the same day and that Member States should use the cooperation mechanism to align various aspects such as timing, the date of adoption of their screening decision and any mitigating measures. Phase 1 reviews are capped at a maximum of 45 days (non- extendable), providing greater timeline certainty for investors. The New Regulation also restructures the cooperation mechanism into three categories: (i) Category 1, requiring
early notification within 15 days of filing where an EU mandatory sector applies and investor risk factors – such as state ownership, prior prohibition decisions, or sanctions links – are present; (ii) Category 2, requiring notification by day 45 where Phase 2 proceedings are initiated and the transaction has cross-border relevance due to target operations in other Member States; and (iii) Category 3, a catch-all for cases potentially affecting the public security of another Member State. Certain practical limitations remain: the New Regulation does not specify the extent to which Member States may stop the clock during Phase 1 or 2, or what information is required for a complete filing – leaving significant discretion to national authorities regarding information requests. ^ Defining the Commission’s advisory and investigative role . Although the original Reform Proposal had envisaged granting the Commission authority to impose mitigating measures or even prohibit investments where it disagreed with a Member State’s assessment, the agreed compromise text walks back this power, preserving ultimate decision-making authority at the Member State level. Under the New Regulation’s cooperation mechanism, Member States are obliged only to give “due consideration” to the Commission’s or other Member States’ opinion and in case of disagreement might be required to organize a meeting to discuss any risks identified or to explain the reasons for not intervening. ^ Establishing a central information database. A central database will be established containing granular information on cases and investors, including decision types (approval, conditional approval or prohibition), whether remedial measures were imposed, whether investors were previously reviewed, and investors’ existing holdings across Member States. Investors will not have direct access rights to their own data in the database. The new rules are meant to create a more predictable system for foreign investors, clarify
30
FDI and National Security Review
Powered by FlippingBook