EU adopts renewed foreign investment framework

The 2019 EU FDI Regulation resulted in a rapidly expanding number of FDI regimes across Europe. FDI filings are now outpacing merger control notifications, a trend Eversheds Sutherland has been tracking through its DealSCREEN platform. The revised EU FDI Regulation, formally adopted by all legislative bodies since 8 June 2026, drives greater alignment and coordination. Member States have around 18 months from publication in the Official Journal (i.e. by 2028) to bring their regimes in line.

Key changes to national screening regimes

All Member States have introduced screening regimes, most recently Greece, Ireland and Croatia. The revised framework updates rules on scope, substantive assessment and procedure.

Scope of national FDI screening regimes

The revised FDI Regulation introduces a minimum scope of target activities that must be covered across all Member States, including:

• the development, production or commercialisation of dual-use items and items on the EU common military list;

• the production of, or R&D for semiconductors, quantum technologies and AI technologies;

• activities in the transport, energy or digital infrastructure sectors in so far as these are considered critical by the relevant Member State;

• the exploration, extraction, processing, recycling, recovery or stockpiling of certain strategic raw materials;

• financial services in as far as the entity acts as a central counterparty, central securities depository, operator of regulated markets, operator of payment systems excluding central banks, other systemically important institutions, or a global provider of specialised financial messaging services; and

• the ownership, development or operation of certain systems or databases relating to elections, including systems for election reporting, counting and validating election results.

The revised FDI Regulation also addresses a perceived loophole in some Member States by requiring national regimes to cover acquisitions by non-European investors structured through EU-based subsidiaries acting as the direct acquiring entity. The revised framework does not bring greenfield investments in scope and applies to internal restructurings only in as far as a new non-EU entity is introduced in the upstream ownership chain of an EU-legal entity.

Substantive assessment by national FDI screening authorities

Member States retain discretion to assess risks to security or public order. However, the revised FDI Regulation sets out broad factors that national authorities and the European Commission must consider. For example, the availability and protection of IP and critical technologies; the security and functioning of critical infrastructure; and the continuity of critical inputs and services. Authorities must also assess the investor’s profile and conduct, e.g. whether the investor is subject to EU sanctions, has opaque ownership structures, or is linked to a non-EU country.

Procedural harmonisation of national FDI reviews

The revised framework introduces minimum procedural standards to enhance consistency, predictability and coordination of national screening processes. These include structured review timelines, post-closing intervention powers, and greater coordination of parallel filings.

All Member States will be required to adopt a two-stage review process. Several already operate such a mechanism comprising: a first phase to assess whether a transaction raises potential concerns, and a second in-depth phase that may lead to commitments or prohibition. The first phase cannot take more than 45 calendar days. No statutory deadline is imposed for the second phase.

Member States must also introduce call-in powers enabling review of transactions that were not notified but should have been. As a baseline, these powers extend to two years following completion, or between 15 months and five years where national security or public order may be affected.

Where a transaction triggers FDI notifications in several Member States, all filings must be submitted on the same day. National authorities are expected to align their reviews on: timing; factual assessment, based on a consistent understanding of the transaction structure and shared information through the EU cooperation mechanism (see below); and (iii) risk evaluation, taking due account of other Member States’ positions and input from the European Commission.

Principles of good administration and due process

All national screening regimes must adhere to principles of good administration and due process. This includes transparent procedures, protection of confidential information, the right to seek effective judicial recourse against screening decisions, and non-discrimination between non-EU investors.

Increased EU oversight and enhanced cooperation

The revised FDI framework strengthens the EU-level cooperation mechanism. While decision-making authority remains at national level, the role of the European Commission and other Member States will become more structured and potentially more impactful. The cooperation mechanism is triggered when a Member State notifies a screened investment. Under the revised framework, where concerns are raised, the notifying Member State can be asked to convene a coordination meeting to discuss identified risks before adopting a final decision. To support this, the European Commission will establish a secure communications system and a centralised database of previously notified transactions and screening outcomes dating back to October 2020.

Comment

The revised EU FDI Regulation is not a technical refinement, it is a policy signal that the EU regards investment screening as a permanent and increasingly central pillar of its economic security toolkit. The European Commission’s proposed Industrial Accelerator Act signals that this trajectory will continue, using investment controls not only to screen risks but to shape industrial outcomes in strategic sectors.

While the revised FDI Regulation does not displace Member State autonomy, it materially raises the baseline for minimum harmonisation. With mandatory screening in all Member States, a common minimum scope, structured two-phase reviews, wider call-in powers and more formalised coordination of parallel filings, FDI review moves firmly into mainstream deal execution.

The key issue for dealmakers is no longer simply whether a filing is required. The real questions are where regulatory pressure will concentrate, which jurisdiction will dictate timing, and how FDI interacts with merger control and the EU Foreign Subsidies Regulation in determining the critical path to closing. Eversheds Sutherland DealSCREEN data indeed shows that FDI filings are not only outpacing merger control but FDI regimes are also expanding their reach and some are becoming more interventionist.

Finally, while the revised framework will not apply before 2028, we expect that a number of Member States will incorporate the revisions sooner as many regimes are undergoing review.

Further reading on the EU FDI Regulation

FDI in Europe: are Member States prioritising investment over national security?

FDI in Europe: New report reveals increasing number of notifications and sectors screened but the unconditional approval rate remains high

DealSCREEN: https://ezine.eversheds-sutherland.com/dealscreen/