(1)

The Union welcomes foreign investments as they contribute to growth by improving its competitiveness, creating jobs and economies of scale, and bringing in capital, technologies, innovation and expertise.

(2)

Article 3(5) of the Treaty on European Union (TEU) specifies that the Union, in its relations with the wider world, is to uphold and promote its values and interests and contribute to the protection of its citizens.

(3)

The Union and the Member States have an open investment environment, which is enshrined in the Treaty on the Functioning of the European Union (TFEU) and embedded in the Union and its Member States’ international commitments. However, Article 21(2) TEU states that the Union’s policies and actions aim to safeguard its values, fundamental interests, security, independence, and integrity. Those principles and objectives underpin the Union’s common commercial policy, as set out in Article 207 TFEU, including in relation to foreign investment. Within that context, under international commitments made in the World Trade Organization (WTO), the Organisation for Economic Co-operation and Development (OECD) and in trade and investment agreements concluded with third countries, it is possible for the Union or the Member States to restrict foreign direct investments on the grounds of security or public order, subject to certain requirements.

(4)

Pursuant to Regulation (EU) 2019/452 of the European Parliament and of the Council (4), a framework has been set up for the screening by Member States of foreign direct investments in the Union. In particular, that Regulation set out a cooperation mechanism enabling Member States and the Commission to exchange information on foreign direct investments and raise concerns about risks to security or public order. That cooperation mechanism required the Member State in which the foreign direct investment is taking place to give due consideration to the comments provided by other Member States and the opinion issued by the Commission in its screening decision.

(5)

The framework set up pursuant to Regulation (EU) 2019/452 has delivered on its objective to provide a formal mechanism for Member States and the Commission to exchange information on foreign direct investments and to raise awareness on cross-border risks to security or public order arising from certain foreign direct investments.

(6)

However, a new legislative instrument is needed to strengthen the efficiency and effectiveness of the screening of foreign direct investments and to ensure a higher degree of harmonisation across the Union. Such improvements are necessary due to the evolving nature of investment flows. The integration of global economies, combined with war and geopolitical tensions, has led to the emergence of new risks that need to be addressed by the Union and the Member States. On 20 June 2023, the Commission and the High Representative of the Union for Foreign Affairs and Security Policy adopted a joint communication entitled ‘European economic security strategy’, and, on 3 December 2025, they adopted a joint communication entitled ‘Strengthening EU economic security’. Those communications identify Foreign Direct Investment (FDI) screening as a tool to protect the Union against economic security risks. The communications underscore the need to address risks associated with the resilience of supply chains, access to critical infrastructure, technology leakage, and the weaponisation of economic dependencies or economic coercion.

(7)

Certain foreign investments that are not covered by Regulation (EU) 2019/452 could create risks for security or public order. Those risks concern, in particular, certain foreign investments carried out in Member States that do not yet have a screening mechanism in force, foreign investments carried out in Member States that do have a screening mechanism in force but the scope of which does not include certain sensitive foreign investments, and foreign investments that are made by foreign investors through a subsidiary established in the Union (‘intra-Union investments’) and that potentially present the same risks to security or public order as foreign investments made directly from third countries.

(8)

When a significant majority of Member States, but not all, had a legislative instrument in force that provided for a mechanism to screen foreign direct investments, the absence of a screening mechanism in certain Member States allowed problematic foreign investors wanting to invest in sensitive assets to invest in those Member States as a gateway into the internal market. Furthermore, in many Member States, national laws also extend screening to intra-Union investments. Among the Member States there are substantial differences as to the scope, thresholds and criteria used to assess whether a foreign investment is likely to negatively affect security or public order. There are also differences in screening procedures. This Regulation is aimed at reducing divergences on key elements of the screening mechanisms implemented at national level. In certain Member States, the foreign investment can be implemented before having received clearance with respect to the effect on security or public order. However, others require that the foreign investment is only finalised after authorisation under the screening mechanism. Such divergences create a problem for the smooth functioning of the internal market. For example, they create an uneven playing field and increase compliance costs for investors seeking to notify transactions in more than one Member State. Reducing divergence is crucial to ensuring predictability for investors in respect of the applicable national regimes and their characteristics, thereby reducing associated compliance costs. This is all the more relevant considering the level of integration of the internal market, which can result in a single transaction impacting multiple Member States across the Union. It is, for example, possible that a transaction aimed at the acquisition of an undertaking established under the laws of one Member State also affects the security or public order of another Member State, due to the supply chain structure or other economic elements connecting the Union target with other companies based in other Member States. In order to address such problems related to the integration of the internal market and in order to ensure greater consistency and predictability, it is appropriate that the criteria and elements to be used for the assessment of foreign investments are established through Union action. Thus, this Regulation is aimed at increasing the convergence of national rules applicable to the screening of foreign investments, including intra-Union investments, thereby creating a level-playing field, increasing certainty for foreign investors, and preventing the emergence of additional obstacles to the internal market.

(9)

In order to ensure a consistent approach to foreign investment screening across the Union, all Member States should be required to screen foreign investments on the grounds of security or public order. Furthermore, the core elements of national screening mechanisms should be harmonised. That minimum harmonisation should include an obligation for Member States to ensure that foreign investments targeting entities operating in a specific set of sensitive areas are screened. That obligation should ensure that certain sensitive foreign investments are screened in all Member States. Moreover, this Regulation should further harmonise and clarify the procedures under the cooperation mechanism and the interaction between the screening mechanisms and the cooperation mechanism. In particular, it is appropriate to ensure that all screening mechanisms include an initial review which should not last more than 45 calendar days from the date on which the filing is deemed complete by the screening authority. Therefore, for the purposes of this Regulation, a definition of ‘filing’ should be introduced that captures both the initial submission of documentation required as well as the assessment of whether a request is deemed complete. Where necessary, an in-depth investigation should be carried out. In addition, the timelines for notification through the cooperation mechanism should be harmonised, and the steps for the procedure under the cooperation mechanism, particularly with respect to the provision of comments by Member States and the issuance of Commission opinions, should be better aligned. Such harmonisation and alignment would allow situations where the timelines of national procedures are not aligned, and which could therefore delay a transaction, to be addressed. There should be a certain level of harmonisation of the criteria which Member States and the Commission should consider when assessing whether a foreign investment is likely to negatively affect security or public order. That common set of criteria should include the security, integrity, resilience and functioning of critical entities, the availability of critical technologies or the continuity of supply of critical inputs. The common set of criteria would ensure a more uniform assessment of the likely negative effect of foreign investments on security or public order while preserving the possibility for Member States to take into account further criteria which can differ between Member States.

(10)

The screening of foreign investments should be carried out in accordance with this Regulation. Such screening should take into account all information available and should adhere to the principle of proportionality. It should respect the objective of preserving an open investment environment and the internal market. Moreover, the screening of foreign investments should comply with Union law, and in particular with Articles 49 and 63 TFEU. Any restrictions on the freedom of establishment or the free movement of capital that could result from screening mechanisms or screening decisions, such as the imposition of mitigating measures or the prohibition or unwinding of a foreign investment, should be justified by reasons of public policy or public security, including genuine and sufficiently serious threats to a fundamental interest of society. Such reasons of public policy or public security include risks to the functioning of the institutions and essential public services, to the supply of essential products or services or to the survival of the population, risks of a serious disturbance to foreign relations or to peaceful coexistence of nations, or risks to military interests.

(11)

To enable the cooperation mechanism established by this Regulation to function efficiently and effectively, it is necessary to define a common minimum scope of foreign investments that all Member States should screen.

(12)

It is necessary to make the Member State in which a foreign investment is planned to be or is completed (‘host Member State’) more accountable to the Commission and to those Member States that express duly justified concerns for security or public order.

(13)

The common framework set out in this Regulation should be without prejudice to the sole responsibility of each Member State to safeguard its national security as provided for in Article 4(2) TEU. That common framework should also be without prejudice to the protection of Member States’ essential security interests in accordance with Article 346 TFEU.

(14)

This Regulation should cover foreign investments that create or maintain lasting and direct links between foreign investors, including State bodies, and Union targets carrying out an economic activity in a Member State. This Regulation should apply where foreign investments are carried out directly by a foreign investor or are intra-Union investments. However, it should not cover the acquisition of company securities intended purely for financial investment without any intention to influence the management or control of the company (portfolio investments).

(15)

Lasting and direct links between the foreign investor and a Union target are created where the foreign investor acquires effective participation in the management or control of the Union target. This is certainly the case where the foreign investor acquires decisive influence over the Union target, meaning the capacity to solely or jointly determine the commercial policy of the Union target either de facto or de jure. However, effective participation in the management or control of the Union target might also exist where the foreign investor, without having decisive influence over the Union target, can nonetheless materially impact its commercial policy, behaviour or decisions, for example through shareholding, voting rights, contracts, including leverage resulting from supplier relationships, and significant board representation.

(16)

Acquisitions through resolution tools under the resolution frameworks concerned (for banks, central counterparties or insurance or reinsurance undertakings) should be excluded from the scope of this Regulation. In such circumstances, time is of the essence and decisions are often made overnight. The screening procedures provided for in this Regulation could hinder the ability to provide a timely response. In order to avoid financial stability risks, resolution transactions should therefore be excluded. Resolution authorities should take into account, to the extent possible, the objective of this Regulation when performing resolution actions with the involvement of a foreign investor, in particular when strategic assets are involved.

(17)

Restructuring operations within a corporate group should fall outside of the scope of application of this Regulation where such operations are conducted solely for the purpose of the internal reorganisation, for example through merger or division, of a Union target or of the corporate group to which the Union target belongs, without resulting in any changes in the beneficial ownership of the Union target. In particular, internal restructurings should be excluded from the scope of application where: they do not result in the acquisition of ownership or control by a new foreign investor over the Union target or over a company that directly or indirectly owns or controls that Union target; they do not lead to an increase in the shares held by foreign investors; and they do not confer additional rights on foreign investors that could lead to a change in the effective participation of one or more foreign investors in the management or control of the Union target. However, internal restructurings which entail the introduction of a new legal entity, established in a third country that is not already represented in the upstream ownership chain of the Union target, could create security risks and should therefore be included within the scope of this Regulation. For instance, such an entity could be subject to the law of a third country that imposes obligations on natural or legal persons to share information for intelligence purposes without due process or oversight mechanisms.

(18)

Regulation (EU) 2019/452 only covers foreign direct investments made directly by foreign investors in the Union. However, it is necessary to extend the scope of application of this Regulation to foreign investments made between Member States that are carried out through an undertaking that is established in a Member State and that is controlled, directly or indirectly, by a foreign investor (‘foreign investor’s subsidiary in the Union’). Those foreign investments carry the same specific risks to security or public order as foreign direct investments carried out through a legal entity not established in the Union, because the controlling foreign investor has power and influence over the Union target even if exercised through the foreign investor’s subsidiary in the Union. Those specific risks could be caused by the jurisdiction to which the foreign investor is subject or by the influence from the government or non-state actors of a third country. Such risks are not caused by foreign investments carried out by investors that are not controlled, directly or indirectly, by a third-country person or entity. It is therefore appropriate to include in the scope of application of this Regulation foreign investments made through a foreign investor’s subsidiary in the Union but not investments made by other Union investors, in particular to ensure that foreign investments creating a lasting link between the foreign investor and the Union target, whether carried out directly by a foreign investor or through an entity established in the Union and controlled by a foreign investor, are consistently covered. This would increase the consistency and predictability of screening rules across Member States, which in turn would reduce compliance costs for foreign investors and remove the incentive to invest in Member States where such transactions are not screened.

(19)

To ensure a proper assessment of whether a foreign investment is likely to negatively affect security or public order, it is important for the term ‘beneficial owner’ to capture the true holders of influence, whether directly or indirectly, over a foreign investor or Union target. In the case of trusts, the legal ownership lies with the trust as such, but the economic benefit is for the natural person or persons on whose behalf the trust operates. For this reason, the definition of ‘beneficial owner’ should also capture those who ultimately benefit from the foreign investment, particularly beneficiaries of a trust. However, it is necessary to take into account the fact that foreign investors can sometimes be a front for the person actually behind the foreign investment. Similarly, foreign investors can sometimes be coerced by other actors who are ultimately able to exert influence over the foreign investment. Thus, the definition of ‘beneficial owner’ should also include natural persons on whose behalf the foreign investment is made or on whose behalf the control over that foreign investment is exercised. In general, a single natural person is the beneficial owner of a foreign investor. However, it cannot be excluded that there could be more than one person, such as in the case of spouses or other family members. Likewise, it is necessary to take into account situations where it is not possible to identify the natural person, including in the case of publicly traded companies. In such situations, the legal person, entity or trust at the highest identifiable level in the upstream ownership chain or chain of control of the foreign investor or Union target should be considered as the beneficial owner.

(20)

This Regulation only provides for core elements of the screening mechanisms. Thus, Member States should be able to adopt national provisions that are complementary to or are more specific than the provisions of this Regulation. For example, Member States should be able to specify thresholds of voting rights acquired by investors triggering the screening of foreign investments. Member States should be able to extend the scope of their national screening mechanism to include foreign investments in sectors not covered by the common minimum scope. Where a Member State opts to extend the scope of its screening mechanism beyond the common minimum scope, screening should comply with this Regulation, provided that it falls within the scope of this Regulation.

(21)

In order to ensure consistent and predictable screening procedures, it is appropriate to lay down the essential features of the screening mechanisms to be implemented by Member States. Those features should at least include the minimum scope of the transactions to be subject to a prior authorisation requirement, the division of the screening procedure into an initial review and an in-depth investigation, deadlines for the screening, a public annual report, the possibility for parties subject to the screening decision to seek judicial recourse against such decisions, and the ability of screening authorities to effectively address cases of non-compliance or circumvention. Rules and procedures relating to screening mechanisms should be transparent and should not discriminate between third countries.

(22)

To enhance transparency and predictability in screening procedures, screening authorities should, where applicable and without undue delay, inform the person who made the filing of the completeness of that filing. The provision of that information should not preclude the screening authority from requesting further information or posing additional questions after confirming the completeness of the filing and should be without prejudice to the possibility for screening authorities to inform the person who made the filing of other important procedural milestones.

(23)

The screening authority and the Commission should be able to take into consideration relevant information received from stakeholders, including economic operators, civil society organisations and social partners, such as trade unions, concerning a foreign investment. Such information could lead to the initiation of a screening procedure by the host Member State. For that purpose, the screening authority and the Commission should make publicly available the contact details through which stakeholders are able to submit information concerning foreign investments in a confidential manner.

(24)

To ensure a consistent and effective level of protection of security and public order throughout the Union, it is necessary to provide for minimum harmonisation of the scope of screening mechanisms. Member States should be required to screen foreign investments where the Union target is active in sectors or activities that are of particular relevance for security, defence, the integrity of democratic processes, the resilience of essential services or the safeguarding of vital societal functions. Establishing such a common minimum scope of screening mechanisms is necessary to ensure that foreign investments likely to negatively affect security or public order are identified irrespective of the Member States in which the Union targets are located, thereby strengthening the effectiveness of the cooperation mechanism while preserving Member States’ sole responsibility for national security.

(25)

The common minimum scope should include foreign investments in Union targets that develop, produce or commercialise dual-use items listed in Annex I to Regulation (EU) 2021/821 of the European Parliament and of the Council (5) or military goods and technologies listed in the Annex to Directive 2009/43/EC of the European Parliament and of the Council (6), given the inherent risks linked to the transfer of control over defence-related capabilities, technologies and know-how, which are vital for maintaining security. The common minimum scope should also cover foreign investments in Union targets that produce, conduct research in or develop semiconductor or quantum technologies, or conduct research in or develop certain artificial intelligence technologies, in view of their strategic importance and their enabling role across a wide range of applications critical for security. Furthermore, Member States should screen foreign investments in Union targets exercising certain activities related to strategic raw materials listed in Section I of Annex I to Regulation (EU) 2024/1252 of the European Parliament and of the Council (7), namely exploration, extraction, processing, recycling, recovery or stockpiling. Foreign control over such activities can create risks of supply disruption, strategic dependency or undue leverage. Moreover, Member States should screen foreign investments in Union targets that own, develop or operate voter registration databases, voting systems and other relevant information systems. In addition, foreign investments in certain financial market infrastructure and systemically important financial entities, including central counterparties, central securities depositories, operators of regulated markets, operators of payment systems other than central banks, other systemically important institutions and global providers of specialised financial messaging services, should also be screened, given the central role of that infrastructure and those entities in the stability, integrity and resilience of the Union financial system and taking into account the objectives of the savings and investments union.

(26)

The common minimum scope should also include foreign investments in Union targets that are active in the transport, energy or digital infrastructure sectors but only to the extent that they are considered critical following a risk-based, targeted assessment carried out by the Member State where they are established. That assessment should take into account national security and vital societal functions, in light of the essential services provided by the Union target concerned. Member States should retain discretion to designate the entities concerned within those sectors and should, where appropriate, take into account risk assessments carried out pursuant to Directive (EU) 2022/2557 of the European Parliament and of the Council (8). In order to ensure predictability for foreign investors, entities should be able to ascertain, if necessary after having contacted the competent screening authority, whether they are considered as critical for the purposes of this Regulation. Moreover, Member States should regularly reassess which Union targets should be considered as critical for the purposes of this Regulation. Examples of entities to be assessed include, firstly, in the energy sector: energy storage facility as defined in Directive (EU) 2019/944 of the European Parliament and of the Council (9) and gas transmission system operators within the meaning of Directive (EU) 2024/1788 of the European Parliament and of the Council (10); secondly, in the transport sector: airports as defined in Directive 2009/12/EC of the European Parliament and of the Council (11), including the core airports listed in Regulation (EU) 2024/1679 of the European Parliament and of the Council (12) and entities operating ancillary installations contained within the airports, when those installations are essential for the security and continuity of operations of such airports, managing bodies of ports as defined in Regulation (EU) 2017/352 of the European Parliament and of the Council (13), in relation to core ports listed in Regulation (EU) 2024/1679, providers of port services as defined in Regulation (EU) 2017/352, and other entities within the core ports when those other entities are essential for the security and continuity of operations of such core ports; and thirdly, in the digital infrastructure sector: providers of cloud computing services and providers of public electronic communications networks.

(27)

To adequately protect security and public order and ensure the effectiveness of the cooperation mechanism, it is necessary for all Member States to carry out ex ante screening of foreign investments falling within the common minimum scope. A prior authorisation requirement is essential, as many risks associated with foreign investments materialise at the moment that the foreign investor obtains an effective participation in the management or control and cannot be effectively mitigated after the completion of the foreign investments. That is particularly true for the foreign investments falling within the common minimum scope, since such foreign investments could lead to provision of irreversible access to sensitive information, critical technologies, essential infrastructure or strategic assets. Ex post intervention would, in such circumstances, be disproportionately burdensome and, in any event, ineffective in properly safeguarding security and public order.

(28)

Greenfield investments occur where a foreign investor or a foreign investor’s subsidiary in the Union sets up new facilities or a new undertaking for the performance of an economic activity in the Union. Greenfield investments should fall within the scope of this Regulation. However, this Regulation should not impose a prior authorisation requirement in respect of those investments. Thus, Member States should remain free to decide whether to include such investments in the scope of their screening mechanisms.

(29)

The cooperation mechanism laid down in Regulation (EU) 2019/452 enables Member States to cooperate and help each other where a foreign direct investment in one Member State is likely to affect the security or public order of other Member States or projects or programmes of Union interest. That cooperation mechanism has proven very useful so far, hence it should be maintained and strengthened by this Regulation to ensure a more aligned approach to foreign investments across the Union.

(30)

For the cooperation mechanism to focus only on those foreign investments where the characteristics of the foreign investor or the Union target are likely to have a negative effect on security or public order, it is appropriate to establish risk-based conditions for the notification of foreign investments undergoing screening in a Member State to the other Member States and the Commission. In particular, where a foreign investor or its subsidiary in the Union is directly or indirectly controlled by a third-country government, it is more likely that it could pursue that third country’s policy objectives. It is therefore appropriate for Member States to notify foreign investments made by such foreign investors where they fall within the common minimum scope of screening mechanisms. Direct or indirect control by a third-country government could be exercised in several ways and could be determined on the basis of, inter alia, ownership structure, government funding, specific governance arrangements such as golden shares, or other features aimed at influencing management decisions. Equally, it is appropriate for Member States to notify foreign investments falling within the common minimum scope where the foreign investor was involved in foreign investments that were prohibited or authorised subject to mitigating measures which were significantly or repeatedly not complied with. Hence, mere procedural or formal cases of non-compliance would, as a general rule, not be a reason for notification. Similarly, Member States should notify foreign investments where they decide to conduct an in-depth investigation and the Union target is linked to projects or programmes of Union interest or to other Member States. Moreover, where a foreign investment does not meet the conditions otherwise laid down for its notification through the cooperation mechanism, the Member State where the foreign investment is undergoing screening should nevertheless notify that foreign investment to the other Member States and the Commission, where that Member State considers that the foreign investment could negatively affect security or public order in at least one other Member State. This ensures that all foreign investments that could negatively affect security or public order are notified through the cooperation mechanism, whilst ensuring that the host Member State retains a margin of discretion in determining whether the conditions for notification are fulfilled. In such a case, the notifying Member State should explain the reasons for notifying that foreign investment.

(31)

In order to ensure the efficiency and effectiveness of the cooperation mechanism, it is necessary to align deadlines and procedures where two or more foreign investments linked to the same broader transaction are screened in two or more Member States. In such multi-country transactions, the applicants should endeavour to make the separate filings in the Member States concerned on the same day. Those Member States should endeavour to notify those filings on the same day through the cooperation mechanism. To ensure an efficient handling of those multi-country transactions, the Member States concerned should coordinate throughout the screening procedure. In particular, they should discuss among themselves and with the Commission, if a Member State so requests, whether the foreign investments should be notified. They should also discuss their screening decisions and endeavour to align the timing of their respective procedures, including the date of adoption of their screening decisions. Where the Member States concerned intend to authorise the foreign investment subject to mitigating measures, they should discuss whether the intended screening decisions are compatible with one another and adequately address the identified risks.

(32)

To adequately identify the likely negative effect of a foreign investment on the security or public order of one or more Member States, Member States should be able to provide comments and the Commission should be able to issue an opinion to a host Member State even if that Member State is not screening that foreign investment or if the foreign investment has been screened but not notified through the cooperation mechanism. Member States should simultaneously transmit their requests for information, replies and comments to the Commission.

(33)

Where the likely negative effect on security or public order emanates from a foreign investment into a Union target that is part of or participates in one of the projects or programmes of Union interest, which are critical for the Union as a whole, the Commission should be able to issue an opinion. A Commission opinion identifying the likely negative effect on projects or programmes of Union interest on the grounds of security or public order should be notified to all Member States.

(34)

The Commission should be able to issue an opinion addressed to all Member States where it identifies two or more foreign investments that, taken together, are likely to negatively affect security or public order. That could in particular be the case where two or more foreign investments present comparable characteristics, for example, where the foreign investments are made by the same foreign investor, where two or more foreign investors present similar risks, or where two or more foreign investments concern the same target or the same infrastructure, such as trans-European infrastructure for transport, energy or communication. Member States and the Commission should discuss the Commission’s analysis of the risks identified in its opinion and the possible ways to address those risks.

(35)

The Member States should not adopt a screening decision before the deadlines for comments and opinions have expired unless security or public order interests, such as avoiding bankruptcy of the Union target, require an earlier decision. Such exceptional circumstances should be notified to the other Member States and the Commission, which should provide their comments or issue its opinion expeditiously.

(36)

To adequately address the likely negative effect of a foreign investment on the security or public order of one or more Member States, a Member State that receives duly justified comments from other Member States or an opinion from the Commission should give such comments or opinion due consideration, including where it considers that its own security or public order is not affected. That Member State should, where necessary, coordinate with the Commission and the Member States concerned and provide them with the operative part and the summary of the main reasons for its decision. That summary should include the extent to which the host Member State gave the Member States’ comments or the Commission opinion due consideration as well as, where applicable, the reasons for its disagreement with the Member States’ comments or the Commission opinion. The provision of that information ensures that Member States are accountable for how they give due consideration to the concerns raised by other Member States or the Commission, whilst respecting the sensitive nature of screening decisions and confidential information contained therein.

(37)

It is important to take into account that foreign investments that were not notified through the cooperation mechanism might pose a risk to security or public order. Therefore, Member States and the Commission should be able, no later than 15 months from the completion of a foreign investment, to provide duly justified comments or issue an opinion, respectively, to the host Member State on a foreign investment which has not been notified through the cooperation mechanism. To avoid overburdening the cooperation mechanism, Member States and the Commission should, before providing comments or issuing an opinion, respectively, verify whether the host Member State has already started or completed the screening of the foreign investment and whether it intends to notify the foreign investment through the cooperation mechanism. The host Member State should give due consideration to the comments of the other Member States and to the opinion of the Commission and, on this basis, inform the Member States that have provided comments and the Commission if it does not intend to screen the foreign investment. This can for example be the case if the host Member State disagrees with the risks identified in the comments or the opinion. Similarly, the host Member State could indicate that it does not intend to screen the foreign investment because the foreign investment does not fall within the scope of its screening mechanism or has already been screened, although those situations should ideally have been clarified before any comments were provided or any opinion was issued. Where the host Member State indicates that it does not intend to screen the foreign investment, a meeting should be organised at the request of either a Member State that provided comments or at the request of the Commission, where the Commission issued an opinion. The Commission should be invited to the meeting even if it did not issue an opinion. The Member States having provided comments or the Commission might, in particular, request such a meeting to further present or discuss the risks identified. Where, following the meeting and despite the additional explanations received from the Member States having provided comments or the Commission, the host Member State decides not to screen the foreign investment, it should inform the Member States that provided comments and the Commission thereof and provide them with a written explanation. That written explanation might have overlaps with previously indicated reasons stated, for example at the requested meeting.

(38)

To ensure the efficiency of the cooperation mechanism, the contact points put in place by Member States and the Commission for the application of this Regulation should be suitably placed in their respective administrative structures. Those contact points should have the qualified staff and powers needed to carry out their work under the cooperation mechanism and ensure the proper handling of confidential information.

(39)

To ensure the effective functioning of the cooperation mechanism, Member State notifying the foreign investment through the cooperation mechanism should be required to provide a minimum level of information in a standardised format. Where a foreign investment is not notified through the cooperation mechanism, the host Member State should be able to provide at least the same minimum level of information. The Commission and Member States should be able to request additional information from the host Member State. A request for additional information should be duly justified, limited to the information necessary for the Member States to provide comments or for the Commission to issue an opinion, proportionate to the purpose of the request and not unduly burdensome for the host Member State.

(40)

To ensure that cooperation is based on complete and accurate information, the host Member State should be able to request a foreign investor or 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 to provide information. To ensure the quality of information, the host Member States should, where they have reasonable doubts about the completeness and accuracy of the information, take reasonable steps to verify the information provided to them by that foreign investor or other natural or legal person. For example, the host Member State should identify obvious contradictions and obviously false, misleading or missing information. In exceptional circumstances, where, despite its best efforts, the host Member State is unable to obtain information requested by another Member State or the Commission, it should notify them without delay. In such a case, the other Member States and the Commission should be able to base their comments and their opinion, respectively, on the information available to them.

(41)

The host Member State and the Commission could face obstacles in gathering relevant information from natural or legal persons in other Member States. Therefore, where a certain piece of information is strictly necessary for determination of whether the foreign investment is likely to negatively affect security or public order, the host Member State and the Commission should be able to request another Member State to gather information from a natural or legal person residing or established in its territory. Furthermore, a host Member State could face a situation where it is necessary to ask two or more other Member States to assist in gathering that information, which can constitute a significant burden, especially for Member States with more limited resources. To enhance the effectiveness of the information gathering assistance, a host Member State should be able to request the Commission to assist in this process and gather the information for it. At the same time, the Member State, in whose territory the natural or legal person from whom the information is sought resides or is established, should be able to, within a reasonable timeframe, object to this process or offer to provide that information itself. The possibility for that Member State to object ensures that Member States retain control over the collection of information on their territory. Therefore, the Commission should sufficiently inform that Member State, including as regards what information is requested by the host Member State. A host Member State should be able to choose to request another Member State to gather the necessary information or to request the assistance of the Commission, depending on what it deems more efficient or more appropriate in a given situation. As part of a request for information, the natural or legal person from whom information is sought could, even indirectly, receive confidential information, such as information about the planned foreign investment. Hence, it is necessary to specify that such a natural or legal person should not use any confidential information it received for any purpose other than to reply to the request for information and that it should not disclose it.

(42)

Member States and the Commission should ensure the confidentiality of the information they provide or receive in the application of this Regulation, in accordance with Union and national law. Information received as a result of the application of this Regulation should be used only for the purpose for which it was provided, which includes the use of such information in the judicial review of screening decisions. Where the unauthorised disclosure of information might cause prejudice to the interests of the Union, or of one or more of the Member States, the originator of the information should classify the information in accordance with Union and national law. When responding to requests for access to documents handled in the application of this Regulation, Member States and the Commission are to coordinate and provide at least the level of protection of the protected interests available under Article 4 of Regulation (EC) No 1049/2001 of the European Parliament and of the Council (14), with a view to protecting the purpose of investigations. The Commission should take all necessary measures to ensure the protection of confidential information in compliance with, in particular, Commission Decisions (EU, Euratom) 2015/443 (15) and (EU, Euratom) 2015/444 (16). Furthermore, Member States and the Commission should take all necessary measures to ensure compliance with the Agreement between the Member States of the European Union, meeting within the Council, regarding the protection of classified information exchanged in the interests of the European Union (17). That includes, in particular, the obligation not to downgrade or declassify classified information without the prior written consent of the originator. Any non-classified sensitive information or information which is provided on a confidential basis should be handled as such by the authorities. The screening authority should give the entity providing the information the opportunity to indicate which information it considers to be confidential. This can for example be done by means of the form to be submitted to request a prior authorisation of the foreign investment.

(43)

To safeguard the confidentiality and integrity of communications, the Commission should establish and maintain a secure and encrypted system that complies with the highest standards of data protection and security and includes monitoring and auditing capabilities to ensure compliance with security standards. All substantive communications between Member States, as well as between Member States and the Commission under this Regulation, should be transmitted through that system, unless the nature of the information to be transmitted requires the use of other means, such as physical documents. Substantive communication between the Member States and the Commission should include, in particular, notifications through the cooperation mechanism, information about the intention to provide a comment or issue an opinion, requests for information from the host Member State, answers to those requests, comments and opinions, and substantial new information following the notification of the foreign investment. The establishment and use of the secure and encrypted system should not affect the overall communication between screening authorities and the Commission, which should remain possible by all appropriate means.

(44)

To ensure the secure and efficient submission and processing of filings related to foreign investment screening, and to alleviate the administrative burden on both natural or legal persons making a filing and screening authorities, the Commission should, at the request of at least nine Member States, establish an online EU portal (the ‘online EU portal’). The online EU portal should provide a unified mechanism for natural or legal persons making a filing to electronically file transactions with screening authorities. The Commission should design the system to be user-friendly and ensure that it complies with applicable data protection requirements and security standards. The online EU portal should, if established, only be used in respect of foreign investments in Member States which have so requested. If a Member State requests to opt out of that online EU portal, the online EU portal should no longer be used in respect of foreign investments in that Member State, without affecting the continued use of the online EU portal by the other relevant Member States.

(45)

To ensure the effectiveness of the cooperation mechanism, the Commission should set up a secure database with information on the foreign investments notified through the cooperation mechanism and the outcome of the assessments under screening mechanisms since 12 October 2020. Member States should, after the completion of the national procedure, upload to the secure database certain information about the foreign investment, and they could also provide additional information, including where applicable, relevant business intelligence procured and verified from commercial vendors, such as providers of risk analysis or sanctions and compliance screening services. It is appropriate for such information to be shared through the cooperation mechanism only to the extent permitted by the contractual arrangements governing its use and disclosure. Furthermore, Member States should also be able to upload to the secure database relevant information on cases where mitigating measures were significantly or repeatedly not complied with, since such information could be relevant for determining whether other foreign investments should be notified through the cooperation mechanism or are likely to negatively affect security or public order.

(46)

In order to enhance the ability of Member States and the Commission to identify, assess and mitigate potential risks to security or public order stemming from foreign investments, it is important that they have high quality business intelligence capability at their disposal. That capability should allow for the collection and analysis of relevant information and thus facilitate coordinated risk assessments. In the framework of the crisis-preparedness architecture established under Regulation (EU) 2024/2747 of the European Parliament and the Council (18), the Commission will develop elements for such a capability. It could complement the cooperation mechanism under this Regulation to the extent that the information gathered, processed or analysed under Regulation (EU) 2024/2747 concerns potential risks to security or public order.

(47)

To ensure a consistent approach to the screening of foreign investments across the Union, it is essential for some of the standards and criteria used to assess likely risks to security or public order to be set at Union level. Those standards and criteria should take into account risks pertaining to the foreign investment and risks pertaining to the foreign investor.

(48)

Foreign investments are more likely to pose risks to security or public order where they are liable to produce effects on certain sectors, assets or activities that are crucial to security or vital societal functions. It is therefore appropriate for Member States and the Commission to focus on these potential effects when determining whether an investment could negatively affect security or public order. In particular, they should assess the likely negative effect of an investment on the security, integrity, resilience and functioning of a critical entity as defined in Directive (EU) 2022/2557, in view of the core functions performed by such entities and the consequences that their disruption would entail. The same applies to foreign investments that could affect the availability of critical technologies, or the protection and availability of intellectual property or other intangible assets such as trade secrets, databases, algorithms or processes, since the leakage or inaccessibility of such technologies or assets could undermine security. It is equally important for Member States and the Commission to assess the extent to which a foreign investment could affect food security, public health, including the provision and availability of critical medicines, or the continued supply of critical inputs as well as the security of military facilities and other sensitive public facilities, given the essential role these sectors and assets play in safeguarding societal resilience and the continuity of vital services. Member States and the Commission should also consider the potential effects of foreign investments on sensitive information, including personal data, in particular where large-scale data sets are concerned, due to the risk of misuse or strategic exploitation of such data. Moreover, particular attention should be given to foreign investments that could affect projects or programmes of Union interest, where disruptions or undue influence could have cross-border implications for the Union as a whole. Finally, in order to protect from potential foreign interference, Member States and the Commission should consider the potential effects of foreign investments on the freedom and pluralism of the media, including online and social media platforms or their ancillary features, or other digital and interactive environments for education or recreation purposes. For the purposes of clarity, the list of projects or programmes of Union interest should be set out in an annex. Those should include the trans-European networks for transport, energy or communication, as well as programmes providing funding for research and development for activities that are relevant for the security or public order. A list of technology areas that are relevant for risk assessments under this Regulation and a list of critical medicines should be set out in separate annexes.

(49)

Member States and the Commission should also take into account the context and circumstances of the foreign investment. This should include, in particular, whether the foreign investor, a natural person or entity controlling the foreign investor, the beneficial owner of the foreign investor, any of the subsidiaries of the foreign investor, or any other party owned or controlled by, or acting on behalf or at the direction of the foreign investor is likely to pursue a third country’s policy objectives or to facilitate the development of a third country’s military capabilities, as well as whether it could use the foreign investment to support the commission of serious violations of human rights or international humanitarian law. Such serious violations are liable to cause a serious disturbance to foreign relations or to peaceful coexistence of nations, thereby affecting the security of Member States. Furthermore, circumstances such as previous rejections of requests for authorisation or non-compliance with mitigating measures, prior involvement in activities negatively affecting security or public order, illegal or criminal activities, including circumvention of Union restrictive measures adopted pursuant to Article 29 TEU and Article 215 TFEU, establishment in a third country identified as having significant strategic deficiencies in its national regime on anti-money laundering and on countering the financing of terrorism, a legal requirement to share information for intelligence purposes or an opaque ownership structure can constitute risk factors and should therefore also be assessed. In addition, Member States and the Commission should examine whether the foreign investor could be a conduit for a third-country government or a non-state actor to acquire and exert influence on the Union target indirectly. Such influence could go beyond influence conveyed through corporate structures or other means of corporate law and could be conveyed by natural persons such as the investor’s shareholders or board directors in any manner of ways. That extends to informal means including leveraging personal relationships, applying personal or political pressure, and employing threats and other manipulative or deceptive practices.

(50)

Where the host Member State considers that a foreign investment is likely to negatively affect security or public order, it is appropriate to require that Member State to take appropriate measures to mitigate that risk, where adequate measures are available, taking into due consideration any comments provided by other Member States and an opinion issued by the Commission. Foreign investments should only be prohibited or unwound on an exceptional basis, where mitigating measures or measures available under Union or national law other than those within the screening mechanism are not sufficient to mitigate the negative effect on security or public order.

(51)

To support the implementation of the cooperation mechanism and to foster the exchange of best practices among Member States, the group of experts on the screening of foreign direct investments referred to in Regulation (EU) 2019/452 should be maintained and its tasks updated in accordance with this Regulation.

(52)

Member States and the Commission should be encouraged to cooperate with the responsible authorities of like-minded third countries on issues related to the screening of foreign investments on grounds of security or public order. Such administrative cooperation should aim at strengthening the effectiveness of the framework for screening foreign investments by Member States and the cooperation between the Member States and the Commission pursuant to this Regulation. It should be possible for that cooperation to involve the exchange of information and best practices, as well as technical and capacity-building support. In the context of that cooperation, the Commission should encourage the establishment of investment screening mechanisms by third countries, particularly those countries that are candidates for accession to the Union and countries in the Union’s neighbourhood. The Commission should also monitor the developments with regards to screening mechanisms in third countries. The Commission should be kept informed of contacts with third countries to the extent that they relate to systemic issues related to investment screening.

(53)

In order to enhance transparency for foreign investors, the Commission should maintain a publicly available list of all screening mechanisms. Furthermore, to the extent that that is not already laid down in national law, Member States should publish and regularly update detailed guidance on the scope of their screening mechanism, the thresholds and triggers for notification obligations, and the applicable timelines and procedural rules.

(54)

Member States should notify to the Commission their screening mechanisms and any amendment thereto. The Member States should publish an annual report on the application of their screening mechanisms, relevant legislative developments and the activities of the screening authority, including aggregate and anonymised data on the transactions screened.

(55)

The Commission should draw up an annual report on the implementation of this Regulation and submit it to the European Parliament and to the Council. In the interest of transparency, that report should also be made public. The annual report should be based on, inter alia, reports submitted by all Member States to the Commission on a confidential basis with due respect to the need to ensure the protection of the confidentiality of certain information, in particular where the publication of data could affect the security or public order of the Union or jeopardise the anonymity of specific transactions. The annual report should include information on trends and figures relating to foreign investment into the Union, updates on relevant legislative developments in the Member States, as well as information on international cooperation efforts.

(56)

Any processing of personal data pursuant to this Regulation should comply with the applicable rules on the protection of personal data. Processing of personal data by the contact points and other entities within Member States should be carried out in accordance with Regulation (EU) 2016/679 of the European Parliament and of the Council (19). Processing of personal data by the Commission should be carried out in accordance with Regulation (EU) 2018/1725 of the European Parliament and of the Council (20). Personal data might be contained in documents and other sources of information which are processed for the purpose of investment screening. Those data might include names of natural persons who are investors in target companies, names and contact data of natural persons who are involved in the management of the investor or target company, or names and positions of persons involved in operating contact points. Each competent national authority of a Member State and the Commission should be individually responsible for the processing of personal data when using the cooperation mechanism.

(57)

The European Data Protection Supervisor was consulted in accordance with Article 42(1) of Regulation (EU) 2018/1725 and delivered an opinion on 15 March 2024. The Commission and Member States should be considered joint controllers, within the meaning of Regulation (EU) 2018/1725 and Regulation (EU) 2016/679, for the processing of personal data. On 28 April 2022, the Commission and the Member States’ representatives or authorities participating in the cooperation mechanism under Regulation (EU) 2019/452 signed a Joint Controllership Agreement, which is compatible with this Regulation. Therefore, the Commission and the Member States’ representatives or authorities participating in the mechanism should maintain that Joint Controllership Arrangement, which should continue to apply also in respect of this Regulation, and references in the Joint Controllership Arrangement to provisions of Regulation (EU) 2019/452 should, for that purpose, be read as references to the corresponding provisions of this Regulation. While taking into account Opinion 13/2024 of the European Data Protection Supervisor, it was considered that defining common retention periods would not be appropriate, since this Regulation lays down only the minimum requirements of the screening mechanisms and since some of the Member States only started developing their screening mechanisms.

(58)

The Commission should evaluate the functioning and effectiveness of this Regulation by four years and six months from the date of entry into force of this Regulation and every five years thereafter and should present a report to the European Parliament and to the Council. That report should analyse the evolution of foreign investments into the Union and assess the contribution of this Regulation to the economic security of the Union. It should also assess whether a modification of the common minimum scope of screening mechanisms is warranted, including as regards foreign investments into Union targets that manufacture or hold a marketing authorisation for critical medicines. In addition, that report should evaluate the risks linked to foreign investments in media services and how best to address them. It should also include an assessment of whether this Regulation should be amended. Where the report contains a proposal to amend this Regulation, the Commission should be able to append a legislative proposal thereto.

(59)

The implementation of this Regulation by the Union and the Member States should comply with the relevant requirements for imposing restrictive measures on the grounds of security or public order laid down in the Agreements of the World Trade Organization (21), including, in particular, Article XIV(a) and Article XIV bis of the General Agreement on Trade in Services (22). The implementation of this Regulation should also be consistent with commitments made under other trade and investment agreements to which the Union or Member States are parties as well as trade and investment arrangements to which the Union or Member States are adherents.

(60)

Where a foreign investment constitutes a concentration falling within the scope of Council Regulation (EC) No 139/2004 (23), the application of this Regulation should be without prejudice to the application of Article 21(4) of Regulation (EC) No 139/2004. This Regulation and Article 21(4) of Regulation (EC) No 139/2004 should be applied in a coherent manner. To the extent that the respective scopes of application of both Regulations overlap, the grounds for screening set out in this Regulation and the notion of legitimate interests within the meaning of Article 21(4) of Regulation (EC) No 139/2004 should be interpreted coherently, without prejudice to the assessment of the compatibility of the national measures aimed at protecting those interests with the general principles and other provisions of Union law.

(61)

This Regulation should not affect Union rules on the prudential assessment of acquisitions of qualifying holdings in the financial sector, laid down by Directives 2009/138/EC (24), 2013/36/EU (25) and 2014/65/EU (26) of the European Parliament and of the Council, which is a distinct procedure with a specific objective.

(62)

The application of this Regulation should be consistent with, and without prejudice to, other notification and authorisation procedures set out in Union law. The Commission should be allowed to use the information notified by the Member States within the framework of the cooperation mechanism to exercise its role of overseeing the application of Union law in accordance with Article 17 TEU.

(63)

In order to take into account the adoption or amendment of Union legal acts establishing projects or programmes, to adapt the list of technology areas that are relevant for risk assessments and to take into account the adoption of legal acts providing for the establishment of the Union List of Critical Medicinal Products, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission in respect of amendments to the relevant provisions of this Regulation and the Annexes thereto. The list of projects and programmes of Union interest set out in the relevant Annex to this Regulation should cover projects or programmes established by Union law that provide for the development, maintenance or acquisition of critical infrastructure, critical technologies or critical inputs which are of particular importance for security or public order. The list of technology areas that are relevant for risk assessments set out in the relevant Annex to this Regulation should include areas where a foreign investment could affect security or public order in more than one Member State through a Union target, which does not participate in or receive funds from a project or programme of Union interest. As regards critical medicines, it is important that, when the Commission has established the Union List of Critical Medicinal Products by means of an implementing act adopted pursuant to a Regulation laying down Union procedures for the authorisation and supervision of medicinal products for human use and establishing rules governing the European Medicines Agency, amending Regulations (EC) No 1394/2007 (27) and (EU) No 536/2014 (28) and repealing Regulations (EC) No 141/2000 (29), (EC) No 726/2004 (30) and (EC) No 1901/2006 (31), the reference to the critical medicines to be taken into account by Member States and the Commission when determining whether a foreign investment is likely to negatively affect security or public order should be updated and replaced with a reference to the Union List of Critical Medicinal Products and subsequent amendments thereto and that the relevant annex should be deleted. It is of particular importance that the Commission carries out appropriate consultations during its preparatory work, including at expert level and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making (32). In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States’ experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(64)

In order to ensure uniform conditions for the implementation of this Regulation, in particular as regards the form to be used to provide information about foreign investments, the arrangements for the functioning of the secure and encrypted system and the online EU portal, the technical guidance to Member States concerning the secure database on the outcome of assessments under national screening mechanisms, and the form to be used by Member States for their annual reporting to the Commission, implementing powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council (33).

(65)

In accordance with the principle of proportionality, it is necessary and appropriate for the achievement of the basic objective of ensuring that foreign investments into the Union do not have a negative effect on security or public order to lay down rules on a Union framework for the screening, by Member States, of foreign investments in their territory, on the grounds of security or public order and on a cooperation mechanism to enable Member States and the Commission to exchange relevant information on foreign investments, assess their potential effect on security or public order, and identify potential concerns. This Regulation does not go beyond what is necessary in order to achieve the objective pursued, in accordance with Article 5(4) TEU.

(66)

Regulation (EU) 2019/452 should be repealed. In order to allow for sufficient time for Member States and entities to prepare for its implementation, this Regulation should start to apply 18 months from its date of entry into force. To ensure legal certainty and smooth cooperation between Member States and the Commission in the screening of foreign investments, and taking into account the legitimate expectations of foreign investors, it is appropriate for Regulation (EU) 2019/452 to continue to apply to foreign direct investments which are undergoing screening on, or are completed by, the date of application of this Regulation. This includes the possibility for Member States to provide comments or for the Commission to issue an opinion pursuant to Article 7(8) of Regulation (EU) 2019/452. This Regulation should not apply to foreign direct investments to which Regulation (EU) 2019/452 continues to apply. It should also not apply to other foreign investments which are undergoing screening on the date of application of this Regulation, such as intra-Union investments which are already subject to screening pursuant to national law. It is equally appropriate to clarify that this Regulation does not apply to foreign investments which are completed by the date of application of this Regulation,