This Regulation (EU) 2026/1386 establishes a comprehensive, harmonized framework for the screening of foreign investments in the European Union on the grounds of security and public order. It replaces the previous Regulation (EU) 2019/452, aiming to address modern geopolitical risks, supply chain vulnerabilities, and the weaponization of economic dependencies. The act mandates that all Member States implement national screening mechanisms and participate in a robust cooperation mechanism to exchange information on sensitive transactions. ****: This regulation has significant implications for Ukraine and Ukrainian entities, as it covers investments in critical sectors—including energy, transport, and dual-use technologies—that are vital to the resilience and reconstruction of the Ukrainian economy and its integration into the EU internal market.
### Structure and Main Provisions
The Regulation is structured into five chapters and four annexes:
* **Chapter 1 (General Provisions):** Defines the scope, including “foreign investments” (which now explicitly includes intra-Union investments controlled by foreign entities) and sets out the objective of protecting security and public order.
* **Chapter 2 (National Screening Mechanisms):** Mandates that all Member States establish screening mechanisms with harmonized minimum requirements, including a “prior authorization” requirement for specific sensitive sectors.
* **Chapter 3 (Cooperation Mechanism):** Details the procedural framework for notifying other Member States and the Commission of sensitive investments, including timelines for comments and opinions.
* **Chapter 4 (Risk Assessment):** Provides a standardized set of criteria for determining whether an investment poses a risk to security or public order.
* **Chapter 5 (Final/Transitional Provisions):** Outlines reporting obligations, evaluation timelines, and the repeal of the 2019 regulation.
**Key changes compared to the 2019 version:**
1. **Mandatory Screening:** Unlike the previous framework, which left the establishment of screening mechanisms to the discretion of Member States, this Regulation mandates that all Member States must have a screening mechanism in place.
2. **Expanded Scope:** It now explicitly covers “intra-Union investments” (investments made by a foreign-controlled subsidiary already established in the EU) to prevent circumvention.
3. **Harmonized Procedures:** It introduces stricter, harmonized timelines (e.g., a 45-day initial review period) and standardized notification forms to reduce compliance costs and legal uncertainty.
### Important Provisions for Practical Use
For legal practitioners and stakeholders, the following provisions are critical:
* **Common Minimum Scope (Article 4(15)):** Member States are now required to screen investments in specific sensitive areas, including dual-use items, semiconductors, quantum technologies, artificial intelligence, critical infrastructure (transport, energy, digital), strategic raw materials, and systemically important financial entities.
* **Prior Authorization Requirement:** For the sectors listed above, Member States must ensure that the investment is screened *before* completion. This is a significant shift toward a “preventative” rather than “reactive” approach.
* **Cooperation Mechanism (Articles 5–13):** The Regulation creates a formal, secure system for Member States and the Commission to share information. If a Member State receives comments from others or an opinion from the Commission, it is legally required to give these “due consideration” and provide a summary of its reasoning if it chooses to disagree.
* **Information Gathering (Article 16):** The Regulation empowers the Commission and host Member States to request assistance from other Member States to gather information from entities within their territory, facilitating a more effective cross-border investigation process.
* **Risk Assessment Criteria (Article 19):** This article provides the definitive list of factors to be considered when assessing risk, including the potential impact on projects of Union interest (listed in Annex II), critical medicines (Annex IV), and the risk of a foreign investor acting as a conduit for a third-country government.
This Regulation enters into force on the twentieth day following its publication, with most provisions applying from **17 January 2028**.
