June 21, 2023

Investments made by EU investors become subject to FDI screening

Emergency Governmental Ordinance No. 46/2022 (EGO 46/2022) providing the domestic legal framework for the screening of foreign direct investments (FDI) has been recently amended by Law No. 164/2023.

Before the amendment of EGO 46/2022, only foreign (non-EU) investors were subject to FDI screening. Surprisingly, Law No. 164/2023 expands the scope of FDI screening to EU investors, if the following conditions are cumulatively met:

  • the investment is made in a field relevant to national security and public order, as per Decision No. 73/2012 of the Supreme Council of National Defence;
  • the value of the investment exceeds the EUR 2,000,000 threshold;
  • the investment is a notifiable economic concentration, as per Competition Law No. 21/1996.

Although the applicable EU Regulation allows member states discretion as regards the choice of the screening mechanism or the type of foreign investments qualifying for FDI screening, Romania has adopted the most restrictive regime.

We anticipate that the recent amendment of EGO 46/2022 will be perceived as a challenge for EU investors planning to acquire in Romania any business interest subject to FDI screening.

Moreover, in respect of investments implemented in violation of FDI rules under Regulation (EU) 2019/452 and/or EGO 46/2022, and found to affect the security or public order of Romania or be likely to affect projects or programs of interest for the European Union, the Commission for the Examination of Foreign Direct Investments will issue an opinion proposing the cancellation of such investment.

Law 164/2023 authorizes the Competition Council to issue guidelines on how to determine the value of the investment.

Note: Law no.164/2023 approving Emergency Governmental Ordinance no. 46/2022 on measures implementing Regulation (EU) 2019/452 of the European Parliament and of the Council establishing a framework for examining foreign direct investments in the Union, as well as amending and supplementing Competition Law no. 21/1996, was published in the Official Gazette, Part I, no. 495/7.06.2023 and entered into force on June 10, 2023.