EU adopts Regulation 2026/1386 mandating national screening of foreign investments, repealing 2019/452
EU Member States must run prior-authorisation screening of sensitive foreign investments under a binding Union framework from 17 January 2028.
Change
On 17 June 2026 the EU adopted Regulation (EU) 2026/1386 establishing a binding Union framework requiring every Member State to screen foreign investments in a common minimum scope under a prior-authorisation requirement, repealing Regulation (EU) 2019/452; it enters into force on 16 July 2026 and applies from 17 January 2028.
Why it matters
Every Member State must establish a screening mechanism imposing prior authorisation for foreign investments in the common minimum scope — dual-use and military goods, semiconductor, quantum and certain AI technologies, critical transport, energy and digital infrastructure, strategic raw materials, defined financial market infrastructure and systemically important financial entities, and electoral systems. Screening authorities must complete an initial review within 45 calendar days of a complete filing and may open an in-depth investigation, impose mitigating measures, prohibit or unwind an investment, and impose penalties for failure to file. Scope reaches intra-Union investments made through a foreign investor's EU subsidiary. A Commission-run secure system and database underpin a cooperation mechanism through which other Member States comment and the Commission issues opinions.
Implications
- — Foreign investors and their EU subsidiaries acquiring effective participation in a Union target within the Article 4(15) prior-authorisation scope must file for authorisation before completion — completing without filing exposes the transaction to screening and a screening decision for at least 24 months after completion, plus penalties.
- — Member State governments must establish a screening mechanism conforming to the Regulation and notify the Commission of the adopted measures by 17 January 2028 — absence of a conforming mechanism is non-compliance with Article 3.
- — Member State screening authorities must complete an initial review of a complete filing within 45 calendar days and be resourced to run in-depth investigations, impose mitigating measures and penalties, and operate the cooperation-mechanism notifications — under-resourcing breaches the Regulation's procedural requirements.
- — The European Commission must establish and maintain the secure encrypted system and secure database by 17 July 2027, through which substantive cooperation-mechanism communications must be transmitted.
Who is affected
- — Foreign investors and foreign investors' EU subsidiaries filing transactions in the prior-authorisation scope
- — Member State governments responsible for investment-screening legislation
- — Member State screening authorities designated to conduct foreign investment screening
- — European Commission as operator of the cooperation-mechanism secure system and database
What to watch
- — Effective 16 July 2026 — Articles 3(2), 15(2), parts of Article 18, and Articles 27–29 begin to apply, including the delegated-act powers and the start of the Commission's system-build obligations.
- — By 17 July 2027 — the Commission must have the secure encrypted system and secure database operational for the cooperation mechanism.
- — From 17 January 2028 — the Regulation applies in full, Member States must have notified conforming screening mechanisms, and Regulation (EU) 2019/452 is repealed.