An EU framework for screening foreign direct investment (FDI) is to begin operating from Sunday (11 October), according to the European Commission.

The new system is designed to examine investments from outside the EU for any risks they may pose to security or public order in the host member state.

Strategic interests

The commission said the new rules would preserve Europe’s strategic interests while at the same time keeping the EU market open for investment.

The FDI screening regulation, EU Regulation 2019/452, was adopted in March 2019. It set up an EU-wide framework in which the commission and the member states could coordinate their actions on foreign investments.

Since then, work has continued on putting the necessary steps in place to enable the rules to come into effect from Sunday.

Legislation

Each member state had to notify the commission of its existing national investment screening mechanisms. The Government is in the process of drafting legislation on the issue.

Member states have also agreed to cooperate informally on FDI screening where a foreign investment could have an effect on the EU single market.