All the details of the bill on the control of foreign direct investments

Details regarding the approval of a bill by the Cabinet, through its 2 July decision, which provides for the establishment of a framework for the control of foreign direct investments and which will be submitted to the House of Representatives for voting, have been announced by the Ministry of Finance.

As stated in the 4 July announcement, the purpose of the proposed bill is to implement 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 European Union (EU) for reasons of national security or public order.

It is added that the aim is for the control framework that will be created to operate effectively and transparently to safeguard security and public order, providing a stable institutional environment, that will encourage and not constitute an obstacle to investment activity.

According to the Ministry, and based on the main provisions of the bill, the competent authority is the Ministry of Finance, which will have the power to approve, impose conditions, prohibit, or reverse investments that may affect security or public order.

It is also clarified that a foreign investor is considered any natural or legal person from a country outside the EU, the European Economic Area or Switzerland, while a strategic enterprise means an enterprise that carries out activities that fall within particularly sensitive sectors specified in the Annex to the bill, such as energy, transport, health, defense, communications, tourism, financial services, dual-use technologies, etc.

It is added that the notification obligation is triggered when the acquisition of a participation percentage of at least 25% in the share capital and/or voting rights or a corresponding possibility of decisive influence on the activities of the enterprise, the value of the direct foreign investment, either individually or in combination with other transactions between the same parties within a period of twelve months from the date on which the direct foreign investment is planned to be made, equals or exceeds the amount of two million euros (€2,000,000) and the investment concerns an enterprise of strategic importance.

Furthermore, the notification obligation is required, regardless of the value of the investment, for a further increase in the participation percentage from less than 25% to 25% or more and from less than 50% to 50% or more.

It is also stated that the notification obligation also applies when the foreign direct investment is made by an enterprise in which a foreign investor holds at least 25% of the share capital, regardless of the country of origin of the enterprise in question, provided that the investment concerns an enterprise of strategic importance in the Republic of Cyprus.

It is noted that the competent Authority reserves the right to examine any foreign direct investment, regardless of whether or not it falls within the scope of mandatory notification, in cases where there are reasonable grounds to believe that the foreign direct investment may affect the security or public order of the Republic of Cyprus, while the draft law also specifies the investment control schedules and the evaluation criteria.

To support the work of the competent Authority, a seven-member Advisory Committee is being established with the participation of competent Ministries, which will provide reasoned written recommendations to the competent Authority, while administrative fines are provided for in case of violation or failure to comply with the provisions of the Law. Furthermore, the decisions of the competent Authority are subject to appeal before the Administrative Court, the Ministry concludes.

(Source: InBusinessNews)