The long-awaited Republic of Cyprus’ FDI Screening Law is here

20. November 2025

By Pantelis Christofides and Dr. Thomas Papadopoulos

 

Background Details

Further to the unanimous voting in favour of the FDI Screening Bill by the Plenary of the House of Representatives, the Legislative Body of the Republic of Cyprus, in the Session on the 30th of October 2025[1], the Establishment of Framework for the Foreign Direct Investment Screening Law of 2025 (Law no. 194(I)/2025), hereinafter the Law, was published in the Official Gazette of the Republic of Cyprus on Friday 14th October 2025 .[2]

As per Section 20, the Law will have legal effect as of 2nd April 2026.

Key Interpretative Provisions

A number of key provisions of the Law, which have been included for the purpose of legal certainty to assist existing or prospective investors, include the following:

  1. ‘Undertaking of Strategic Importance’ refers to an undertaking which performs activities that fall within the Particularly Sensitive Sectors, as these have been defined in the Law’s Appendix.
  2. An ‘Undertaking’ is defined as:
  • any entity, whether a legal person or not, which is not a natural person, and includes a company which has been established pursuant to the provisions of the Companies’ Law of the Republic of Cyprus, or any entity which has been established in any other matter, and includes a partnership, a club, a foundation, and a trust; or
  • an entity which has been recognised or established in accordance with the legislation of a country or territory, other than the Republic of Cyprus, and either carries activities in the Republic of Cyprus, or provides goods or services in the Republic of Cyprus.
  1. ‘Special Participation’ means the acquisition, whether directly or indirectly, in isolation or in concert with other persons, of a percentage which corresponds to at least 25% of the share capital and/or the voting rights or corresponding possibility of exercising decisive influence over the undertaking’s activities.
  2. A foreign investor is defined as:
  • a natural person who is not a citizen of a Member State of either the European Union or the European Economic Area or Switzerland, who intends to materialise or has materialised a foreign direct investment; or
  • an undertaking of a third country, that intends to materialise or has materialised a foreign direct investment.
  1. An Ultimate Beneficial Owner is defined by the reference to the corresponding definition provided by the Prevention and Suppression of Money Laundering Law of the Republic of Cyprus.
  2. ‘Control of an undertaking, organisation, foundation or legal entity of other nature’ refers to the possibility of exercising decisive influence on the activities of an undertaking, organisation, foundation or legal entity of other nature, in particular, via:
  • the ownership or right of usage, whether directly or indirectly, of all or at least 25% of the voting rights or the assets of the undertaking or other legal entity; or
  • rights or contracts or other means, which, either in isolation or in combination with other, taking into account also the relevant factual or legal circumstances, provide the possibility of exercising decisive influence over the composition, voting, or decisions of the management bodies of the undertaking or other legal entity; whilst,
  • it is further understood that persons or undertakings that do not possess such rights, as mentioned above, are considered as having acquired control in the event that they have de facto the power to exercise the said rights.

The Competent Authority

The Ministry of Finance of the Republic of Cyprus[3] has been designated as the Competent Authority for the screening of Foreign Direct Investments as well as the National Contact Point for all matters pertaining to the application of Regulation (EU) 2019/452, hereinafter the EU FDI Screening Regulation.

It is worth noting that, pursuant to Sections 9-11, an Advisory Authority is established, comprised by 7 Members, representing competent Ministries of the Republic of Cyprus, assigned with the task of providing the Competent Authority with information and reasoned written advice concerning foreign direct investments which are notified to the Competent Authority pursuant to the Law.

Notification-related Obligations

A foreign investor that intends to proceed with a foreign direct investment, is obliged to notify in advance the intention thereof before the Competent Authority, that being the Ministry of Finance of the Republic of Cyprus, before the materialisation of the investment.

Being furnished with the prior approval of the Competent Authority is required for the implementation of the foreign direct investment.

The Notification:

  • must be made via a written application, in which the intended foreign direct investment in the Republic must be described, also providing the information prescribed by section 4 of the Law, as well as any additional information that may be requested by the Competent Authority, and
  • aims at the screening of the foreign direct investment and securing of the approval of the Competent Authority, as provided in section 5 of the Law.

The obligation of submitting a Notification arises, as per Section 3(2), in the event that the following criteria are collectively applicable:

  • the foreign direct investment results in the acquisition of Special Participation, as defined in the Law;
  • the value of the foreign direct investment, whether in isolation, or in combination, with other transactions between the same parties within the time period of 12 months as of the date in which the foreign direct investment is scheduled to be materialised, equals or exceeds the sum of Euro 2.000.000; and
  • the foreign direct investment concerns an undertaking of strategic importances, as defined in the Law.

As per Section 3(4), a further increase of Special Participation which would result in the analogy of the share capital and/or the voting rights possessed by the foreign investor to vary from:

  • less than 25% to 25% or more; or
  • less than 50% to 50% or more;

gives rise to an additional obligation to submit a Notification, in accordance with the Section 3(2) provisions, irrespective of the value of the foreign direct investment.

As per Section 3(6), any undertaking, organisation, foundation or legal entity of other nature in which at least 25% of the share capital and/or the voting rights possessed by a foreign investor and/or where the Ultimate Beneficial Owner is a foreign investor and/or in which the foreign investor possesses, directly or indirectly, the control of the relevant undertaking, organisation, foundation or legal entity of other nature, and which intends to proceed with a foreign direct investment in an undertaking of strategic importance is subject to the obligation to submit a Notification, in accordance with the Section 3(2) provisions.

Criteria and Factors to be Taken into Consideration by the Competent Authority

The criteria and factors which must be taken into consideration by the Competent Authority during the foreign direct investment screening are stated in the Law’s Appendix, and include the following:

1.1 in determining whether a foreign direct investment is likely to affect the national security or public order of the Republic of Cyprus, the Competent Authority takes into account, amongst other, the following factors:

  • whether the undertaking in which the foreign direct investment is envisaged to be materialised is active in a particularly sensitive sector which concerns critical infrastructure, whether physical or virtual, including infrastructure in the fields of energy, transport, water, health, education, tourism, communications, media, data processing or storage, aerospace, defence, electoral or financial infrastructure, including systemic credit institutions, sensitive facilities, as well as land and immovable property crucial for the use of the said infrastructure;
  • the likely consequences of the foreign direct investment concerning access to sensitive information, including personal data, or the ability to control such information;
  • the freedom and pluralism of the media;
  • critical technologies and dual use items as defined in point 1 of Article 2 of Council Regulation (EC) No 428/2009, including the technologies in the fields of artificial intelligence, robotics, semiconductors, cybersecurity, aerospace, defence, energy storage, quantum and nuclear technologies as well as nanotechnologies and biotechnologies;
  • the supply of critical inputs, including energy or raw materials, as well as food security.

1.2 in determining whether a foreign direct investment is likely to affect the national security or public order of the Republic of Cyprus, the Competent Authority takes into account, amongst other, the following:

  • whether the foreign investor is directly or indirectly controlled by the government, including state bodies or armed forces, of a third country, including, amongst other, through the ownership structure or the provision of significant funding;
  • whether the foreign investor has already been involved in activities affecting the security or public order in a Member State of the European Union;
  • whether there is a serious risk that the foreign investor engages in illegal or criminal activities;
  • depending on each case, comments submitted by Member States of the European Union and/or the Opinion of the European Commission, as mentioned in Article 6(9) of Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union;
  • the degree in which the foreign direct investment under screening affects or is likely to affect the security or the public order of a Member State of the European Union, other than the Republic of Cyprus, or of the European Union as whole;
  • the possibility as to whether the foreign direct investment is likely to affect projects or programmes of Union interest, as defined in the Annex of Regulation (EU) 2019/452.

It is noted that Foreign Direct Investments which concern ships under construction, or ships that constitute the subject matter of sale or purchase, other than Floating Storage and Regasification Units (FSRUs), are exempted from the obligation to submit a Notification before the Competent Authority, as per Section 3(7).

Possibility of retro-active screening during the period after 2nd April 2026

Under Section 3(8), Competent Authority retains the right to screen any foreign direct investment, irrespective of whether or not it falls within the framework of obligatory notification, in cases where there are valid reasons to consider that the foreign direct investment could affect the security or public order of the Republic of Cyprus. In the event that the foreign direct investment:

  • is not subject to obligatory notification, the Competent Authority could exercise the abovementioned right within 15 months as of the date of materialisation of the investment,
  • is subject to obligatory notification and it had not been notified, the Competent Authority could exercise the abovementioned right within 5 years as of the date of materialisation of the investment.

Consequences of Failure to File a Notification Before the Competent Authority

In accordance with Section 7, in the event that any person related to a foreign direct investment which falls within the provisions of the Law, omits to proceed with the submission of a notification in accordance with the Section 3 provisions, the said foreign direct investment is automatically considered as being in violation of the provisions of the Law, and the Competent Authority can, if it considers that the circumstances so dictate, take all and/or any measures in its disposal in order to prohibit or terminate or reverse the said foreign direct investment.

Under Section 8, any contracts and/or agreements and/or transaction which concerns actions for which the prior approval of the Competent Authority is required pursuant to the Law are considered as being subject to the condition precedent of receiving such approval.

Further, the Competent Authority has been empowered under the Law, inter alia, to impose administrative sanctions on the foreign investor or any other person, legal or natural, that exercises direct or indirect control over the foreign direct investment which falls within the ambit of the Law’s provisions, in the event of infringement of the Law or failure to comply with the Law, including:

  • an administrative fine not less that Euro 5.000 and not exceeding Euro 50.000 to a foreign investor, in the event of failure to submit a notification of concentration in contravention to the Section 3 provisions,
  • an administrative fine not exceeding Euro 100.000, in the event of provision of false or misleading information in the context of complying with an obligation provided in the Law,
  • an administrative fine not exceeding Euro 50.000, in the event of failure to provide information in the context of complying with an obligation provided in the Law,
  • an administrative fine not exceeding Euro 100.000, in the event of failure to comply within the prescribed by Section 6(2) of the Law with any measure issued by the Competent Authority, and an additional administrative fine not exceeding Euro 8.000 for any day that the violation continues.

Right to Judicial Redress 

As per Section 18, the Decisions of the Competent Authority constitute Administrative Acts, and are subject to Administrative Recourse before the Administrative Court, pursuant to the provisions of Article 146 of the Constitution of the Republic of Cyprus.

Relationships with Concentration Control Law

It is noted that no provision has been made in the Law as to the prioritisation or consecutive submission of Notifications between the Competent Authority under the Law and the Commission for the Protection of Competition (CPC) of the Republic of Cyprus[4] under the Control of Concentrations between Undertakings Law of 2014 (Law no. 83(I)/2014), hereinafter the Concentration Control Law[5].

Having said that, it could arguably be the case that the foreign investor may decide to proceed firstly with a Notification before the Competent Authority under the Law, and, after receiving the Decision of the Competent Authority, to proceed with the submission of Notification before the CPC, in the event that the Concentration Control Law section 3 jurisdictional thresholds are met.

The reason for adopting such an approach is the possibility that the Competent Authority may consider appropriate to impose structural remedies which could have an impact upon the element of control over the relevant undertaking which would necessitate per se the submission of Notification pursuant to the Concentration Control Law section 6 criteria.

What’s Next?

The Council of Ministers of the Republic of Cyprus is entrusted with issuing Regulations (Secondary Legislation), concerning, inter alia, the ascertainment of procedural matters which concern the notification filing process pursuant to the Law, and setting the Forms concerning the said notification filing process, as per Section 19 of the Law. Accordingly, the publication of these documents by the Competent Authority is to be considered as forthcoming.

 

 

[1] See to that effect the relevant Agenda of the House of Representatives which presents the outcome of the relevant voting process publicly accessible at https://www.parliament.cy/images/media/redirectfile/06-30102025%20%CE%A4%CE%9F%CE%A0%CE%9F%CE%98%CE%95%CE%A4%CE%97%CE%A3%CE%95%CE%99%CE%A3.pdf

[2] Publicly accessible at https://www.mof.gov.cy/mof/gpo/gazette.nsf/D30D352C98409E5FC2258D420022BC6D/$file/5061%2014%2011%202025%20PARART%CE%97MA%201o%20MEROS%20I.pdf(kindly refer to pages 2 – 16 of the PDF).

[3] As to the website of the Ministry of Finance, kindly refer to https://www.gov.cy/mof/

[4] For the CPC website, kindly refer to https://www.competition.gov.cy/competition/competition.nsf/index_gr/index_gr?OpenDocument

[5] For the English translation of the Concentration Control Law, kindly refer to https://www.competition.gov.cy/competition/competition.nsf/All/5937AB49B8B38080C2257FB2003A442B?OpenDocument

 

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