CELIS Update on Investment Screening and Economic Security – March 2026
By Helene Schramm with the assistance of interns Reet Sodhi and Aditi Singh
INVESTMENT SCREENING MECHANISMS
European Union – Revised EU FDI Screening Regulation Moves Toward Final Approval
On 10 February 2026, the draft of the new EU FDI Screening Regulation (“Proposal”), emerging from trialogue negotiations, was published following approval by the Permanent Representatives Committee. The Presidency has sent the letter in the Annex to the Chair of the European Parliament’s INTA Committee, marking the proposal’s transmission for first reading agreement. This draft is intended to replace Regulation (EU) 2019/452 and provides a preview of the likely final version.
While keeping screening decisions in the hands of national authorities, the Proposal meaningfully advances the EU’s FDI oversight goals through much greater harmonisation. Every Member State will need to put in place mandatory screening for a set list of sectors, from dual-use items and military goods to semiconductors, quantum and certain AI technologies, critical infrastructure, strategic raw materials, financial market infrastructure, and electoral systems. The draft also mandates call-in powers for non-notified transactions completed between 15 months and five years post-closing, alongside a requirement for prior authorisation, and a broader definition of foreign investment covering EU-based entities under non-EU control and closing loopholes such as those revealed by the ECJ’s Xella ruling.
From the provisional political agreement of 11 December 2025, the Proposal now heads toward formal approval by Parliament and Council in spring 2026.
Ukraine – Ukraine Establishes Inter-Agency Commission on FDI Screening as Permanent Investment Review Law Remains Pending
Ukraine’s Cabinet of Ministers adopted Resolution No. 97 on 28 January 2026, formally establishing an Interdepartmental Commission on the Screening of Foreign Direct Investments (“FDI”) Related to National Security. The Commission functions as a temporary advisory body to the Government and was specifically activated under martial law to assess FDI in strategic sectors, including defence, energy, critical infrastructure, and the extraction of strategic raw materials. Draft Law No. 14062 (“On the Screening of Foreign Direct Investments”) registered in Parliament on 22 September 2025, remains under consideration and has not yet been adopted. The draft law proposes a permanent screening mechanism under the Ministry of Economy, requiring notification of FDI that confer more than 10% ownership in critical sectors such as energy and defence.
The Commission is co-chaired by the Minister of Economy, Environment and Agriculture and the First Deputy Secretary of the National Security and Defence Council of Ukraine. Its membership includes one representative each from the Ministries of Economy, Finance, Digital Transformation, Foreign Affairs, and Reintegration of the Temporarily Occupied Territories, as well as representatives of the Security Service of Ukraine, the Foreign Intelligence Service, and the State Service for Special Communications and Information Protection.
According to available sources, the temporary Interdepartmental Commission appears to follow a process similar to that envisaged in Draft Law No. 14062, which provides for a 90-day review period. This includes an initial 60-day phase to verify the completeness of the notification (with five working days’ notice to the investor), followed by a 30-day period during which state authorities may request additional information (to be provided within 30 days). The process culminates in a decision to approve, conditionally approve, or prohibit the investment if threats to national security or critical infrastructure are identified, or if the submitted information is false or incomplete.
Romania – Draft Emergency Ordinance Signals Changes to Romania’s FDI Screening Rules
Romania’s government has released a draft Emergency Ordinance to change its investment screening rules under OUG 46/2022.
It is proposed that more sectors be considered sensitive. These include critical technologies such as AI, semiconductors, cybersecurity, quantum technology, and nuclear technology. It also includes critical infrastructure like energy, transport, health, communications, finance, and data. Other sectors covered are defence, pharmaceuticals, and agro-food. The filing threshold would increase from €2 million to €5 million. However, authorities could still examine deals below €5 million if they think there is a national security risk. Additionally, anti-circumvention rules have been proposed: if the same parties carry out multiple connected transactions within one year, the value will be combined. This is to stop parties from splitting deals just to stay below the threshold. Certain intra-group reorganisations by EU or OECD investors would not require filing, as long as there is no change of control and no non-qualifying financing involved. The screening fee would be reduced from €10,000 equivalent to €5,000. This lowers the administrative burden on investors. A 45-day review period is proposed for the completion of filings, with the possibility of an extension in more complex cases. For more efficiency, a new IT platform will be introduced to allow digital filing and communication. The Commission for the Examination of Direct Investments is proposed to be reorganised into a simpler structure. It would include representatives from various ministries and security authorities and would operate under the authority of the Government. Under the proposal, straightforward approvals would be issued by order of the Prime Minister’s Chancellery, without requiring prior approval from the Competition Council.
Overall, the proposed amendments aim to place greater emphasis on a risk-based assessment. Although the filing threshold would be increased, strategic and sensitive transactions would still be subject to close scrutiny.
Germany – Germany Emphasises Supply Chain Security and Technology Retention in Defence FDI Reviews
On 29 January 2026, the German Federal Ministry of Defence (Bundesministerium der Verteidigung) (“BMVg”) published a guidance on investment screening for foreign investments in the German security and defence industry (Sicherheits- und Verteidigungsindustrie). In this guidance, the BMVg explains that it evaluates foreign investments from two principal perspectives: whether the investment could affect supply security for the German Armed Forces (Bundeswehr) and whether it could negatively impact Germany’s overall defence capability, particularly where know-how could flow to a non‑allied state and accelerate that state’s military development.
The ministry stresses that outflows of know-how not only harm supply chains but may also allow foreign investors to strengthen their own defence industries, and that German production and R&D facilities often lose their long‑term viability once such knowledge has left the country. It sets out a checklist for screening a planned sale of a German security and defence company (or at least 10% of its voting rights) to a foreign investor, including security‑related risks posed by the investor, the location and structure of its decision‑making bodies, direct or indirect supply to the Bundeswehr, unique selling points of the products, their current military relevance and potential future relevance. The checklist also covers know‑how protection mechanisms, referring to safeguards against uncontrolled outflows of proprietary technology, intellectual property, retention of data servers exclusively within the EU and robust data security measures. The BMVg further states that formal investment screening cannot address all avenues of know‑how outflow and points to risks arising from greenfield investments, recruitment of German specialists, R&D partnerships and financial sponsorships where contractual safeguards are insufficient.
Finally, it situates its approach within Germany’s National Security and Defence Industry Strategy adopted in late 2024. That strategy identifies key technologies — including military IT and communications, artificial intelligence, naval shipbuilding, armoured vehicles, sensors, electromagnetic warfare, quantum technologies, missiles and missile defence, space technologies, ammunition and unmanned systems — that are to be retained at the national level or within a European or allied framework. It also makes clear that preventing know-how outflows through investment screening forms an integral part of this broader strategic objective.
China – China Releases 2025 Catalogue of Encouraged Industries to Strengthen Foreign Investment
On 24 December 2025, China’s National Development and Reform Commission (“NDRC”) and the Ministry of Commerce unveiled the 2025 version of the Catalogue of Encouraged Industries for Foreign Investment, outlining key measures to attract and use foreign capital with greater efforts. The catalogue, approved by the State Council, is effective since 1 February 2026 and represents an important policy for promoting foreign investment in China.
The new catalogue aims to channel more foreign investment into advanced manufacturing, modern services, high-tech industries, energy conservation and environmental protection, and further encouraging foreign investment in the central and western regions, Northeast China and South China’s Hainan Province. Compared to the 2022 version, it features a net increase of 205 items and includes 303 modifications, adding and expanding relevant items such as terminal products, components and raw materials to enhance the development level of the industrial chain and supply chain in advanced manufacturing. The NDRC and the Ministry of Commerce said they will work with relevant departments to enhance guidance and coordination to ensure the effective implementation of relevant measures in the catalogue and that the policy delivers tangible results.
ECONOMIC SECURITY STRATEGIES
European Union – European Commission Proposes Industrial Accelerator Act to Boost Clean Industry and Strategic Manufacturing
On 4 March 2026, the European Commission presented the proposal for an Industrial Accelerator Act (“Proposal”), a Regulation establishing a framework of measures to speed up industrial capacity and decarbonisation in strategic sectors. The initiative aims to ensure that industry accounts for around 20% of EU GDP by 2035, while preserving and creating an estimated 150,000 jobs in key sectors. It focuses on selected strategic sectors, notably steel, cement, aluminium, cars, and net‑zero technologies like batteries, solar, wind, heat pumps and nuclear.
According to the Proposal, the Act would use the Single Market to increase demand for low‑carbon and “Made in EU” products by inserting origin and low‑carbon conditions into certain public procurement procedures and public support schemes. These provisions are designed to create lead markets for European‑made clean technologies and products in the sectors covered, while keeping the possibility to extend the framework to other energy‑intensive industries where appropriate. The proposal also introduces a specific regime for major FDIs above 100 million euro in emerging strategic sectors such as batteries, electric vehicles, solar PV and critical raw materials, in cases where a single third country holds more than 40% of global manufacturing capacity, so that such investments generate added value in the EU through high‑quality employment, innovation, technology and knowledge transfer, and a minimum share of Union workers.
In addition, the proposal provides for a single digital permitting system and a “one project – one submission” approach to simplify and shorten procedures for manufacturing and decarbonisation projects. It further envisages “Industrial Acceleration Areas” designated by Member States, where area‑wide permits, streamlined environmental and planning assessments and, in some cases, tacit approval would apply, with the intention of clustering clean industrial projects and giving investors greater certainty. The Act will now be examined and negotiated by the European Parliament and the Council under the ordinary legislative procedure before it can be adopted and enter into force.
United Kingdom – Publication of the Report on ‘Toward a new doctrine for economic security: Government Response’
On 4 February 2025, the House of Commons Business and Trade Committee published its Fourteenth Report of Session 2024–26, “Toward a new doctrine for economic security: Government Response” (“Report”). The Report reviews the government’s response on the report ‘Toward a new doctrine for economic security’ (HC 835) of 24 November 2025 and finds that only four of its twenty‑five recommendations have been fully accepted. The Committee maintains that, despite this response, the UK’s economic security regime is still not fit for the future and leaves significant risks unaddressed. It notes the government’s adoption of the “Protect, Promote, Partner” framework but concludes that economic security policy lacks a clear, structured doctrine, prioritization of risks and articulation of unacceptable dependencies. The committee emphasizes that economic security is the foundation of national security.
The Report criticizes the decision not to appoint a cross‑government Minister for Economic Security, not to establish an Office of Economic Security and not to reinstate an Economic Security sub‑committee of the National Security Council, warning that coordination remains fragmented. It also regrets the government’s refusal to introduce an Economic Security Bill, arguing that reliance on separate legislation such as the National Security and Investment Act 2021 and other statutes does not amount to a coherent statutory framework for economic security. The Committee warns that the UK risks falling behind allies that are already adopting dedicated economic security strategies and legislation.
