The Republic of Cyprus’ 2025 FDIS Bill is out and … it is robust!

18. July 2025

By Pantelis Christofides and Dr. Thomas Papadopoulos, CELIS Fellows and Country Reporters for the Republic of Cyprus

The Republic of Cyprus’ Ministry of Finance has submitted on 10th July 2025 before the Plenary of the House of Representatives[1] the long awaited new FDIS Bill[2], with the title of ‘the Establishment of Framework for the Foreign Direct Investment Screening Law of 2025’. Further to the previous CELIS Interim Updates[3], certain key provisions of the new FDIS Bill are mentioned below:

  1. ‘Undertaking of Strategic Importance’ means an undertaking which performs activities that fall within the Particularly Sensitive Sectors, as these have been defined in the Bill’s Appendix.
  2. An ‘Undertaking’ has been 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, institution and trust;
  • an entity which has been recognised or established in accordance with the legislation or 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. A foreign investor that intends to proceed with a direct foreign 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, at least 10 days before the materialisation of the investment. The Notification must be made via a written request, in which the intended foreign direct investment in the Republic must be described, also providing the information prescribed by section 4 of the Bill, as well as any additional information that will be requested by the Competent Authority. The Notification 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 Bill. The prior approval of the Competent Authority is required for the implementation of the foreign direct investment.
  2. The obligation of filing a Notification arises 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 Bill;
  • 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 Bill.
  1. ‘Special Participation’ means the acquisition, whether directly or indirectly, in isolation or with common understanding 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. Further increase of Special Participation, as defined above, 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 obligation to file a Notification irrespective of the value of the foreign direct investment.

  1. The criteria and factors which must be taken into consideration by the Competent Authority during the foreign direct investment screening are stated in the Bill’s Appendix.
  2. Any undertaking, organisation, institution or legal entity of other species 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, institution or legal entity of other species, and which intends to proceed with a foreign direct investment in an undertaking of strategic importance is subject to the obligation to file a Notification.
  3. ‘Control of an undertaking, organisation, institution or legal entity of other species’ refers to the possibility of exercising decisive influence of the activities of the undertaking, organisation, institution or legal entity of other species, and in particular, via:
  • the ownership or right of usage, whether directly or indirectly, of all or at lease 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.
  1. An ‘Ultimate Beneficial Owner’ is defined by the reference to the corresponding definition of the Prevention and Suppression of Money Laundering Law of the Republic of Cyprus.
  2. 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 file a Notification before the Competent Authority.
  3. The 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 occasions 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 above – mentioned jurisdiction within 15 months as of the date of materialisation of the investment.
  4. The Decisions of the Competent Authority could be considered as Administrative Acts and be subject of Administrative Recourse before the Administrative Court, pursuant to the provisions of Article 146 of the Constitution of the Republic of Cyprus.
  5. As per the Bill’s Appendix:
  • 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 considers the following factors:
  • whether the undertaking in which the foreign direct investment is envisaged to be materialised is active in particularly sensitive sector which concerns critical infrastructure, whether physical or virtual, including energy, transport, water, health, education, tourism, communications, media, data processing or storage, defence, electoral or financial infrastructure, including systemic credit institutions, sensitive facilities, as well as land and real estate crucial for the use of such 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 (15), including 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;

and

  • 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.
  • 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.
  1. The Bill, after the conclusion of the relevant debate before the Parliamentary Committee on Finance and Budget and, thereafter, approval, via voting, by the Plenary of the House of Representatives of the Republic of Cyprus, is envisaged, as per the Bill’s text, to enter into force 4 months after the publication thereof into Law in the Official Gazette of the Republic of Cyprus.
  2. It is expected that the Parliamentary Committee on Finance and Budget will be debating the 2025 FDIS Bill, after the summer recess, i.e. as of September 2025, with a view to submitting the said Bill for voting before the Plenary of the House of Representatives before the end of 2025[4].

 

[1] See to that effect the relevant Explanatory List of the Bills submitted before the House of Representatives on 10th July 2025, publicly accessible at https://www.parliament.cy/images/media/redirectfile/%CE%A3%CE%9A%CE%9F%CE%A0%CE%9F%CE%99%2034-katathesi%2010.07.2025%20.pdf [in Greek].

[2] The text of the new FDIS Bill is publicly accessible via the House of Representatives’ website with electronic address https://www.parliament.cy/images/media/redirectfile/23.01.066.167-2025-%CE%B8%CE%B5%CF%83%CF%80%CE%B9%CF%83%CE%B7%CF%82%20%CF%80%CE%BB%CE%B1%CE%B9%CF%83%CE%AF%CE%BF%CF%85%20%CE%BE%CE%B5%CE%BD%CF%89%CE%BD%20%CE%B5%CF%80%CE%B5%CE%BD%CE%B4%CF%8D%CF%83%CE%B5%CF%89%CE%BD.pdf [in Greek].

[3] See to that effect CELIS Interim Update dated 2nd July 2025 entitled ‘A New Cyprus Foreign Direct Investment Screening Legislative Bill Incoming’, publicly accessible at https://www.celis.institute/celis-blog/a-new-cyprus-fdi-screenng-legislative-bill-incoming/, and the follow – up CELIS Interim Update dated 3rd July 2025 entitled ‘Republic of Cyprus’ New FDIS Bill unveiled: further details’, publicly accessible at https://www.celis.institute/celis-blog/cyprus-new-fdi-bill-unveiled/ [both in English].

[4] See to that effect the interview of the Chairwoman of the Parliamentary Committee on Finance and Budget Honorable Mrs. Christiana Erotokritou with the Economy Today magazine Editor in Chief Mr. Xenios Mesaritis entitled ‘FDI Screening: The delay in adoption threatens the Country’s institutional credibility’ publicly accessible, as of 10th July 2025, at https://economytoday.sigmalive.com/oikonomia/kypros/107154_fdi-screening-i-kathysterisi-yiothetisis-apeilei-ti-thesmiki-axiopistia-tis [in Greek].

 

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