1.1 Cyprus has enacted its statutory framework for the screening of foreign direct investments (“FDI”) through the Law on the Establishment of a Framework for the Screening of Foreign Direct Investments of 2025, Law 194(I)/2025 (the “Law”).
1.2 The Law was published in the Official Gazette on 14 November 2025 and enters into force on 2 April 2026.
1.3 The Law was adopted for the purposes of implementation of Council Regulation (EU) 2019/452 (as amended) (the “Regulation”) into national legislation, which formulated the EU legal framework for FDI screening and relevant cooperation mechanism on grounds of safeguarding security and public order.
1.4 The new FDI screening regime is important not only to non-EU investors, but also to Cypriot targets, sellers, lenders, advisers and corporate groups. In particular, transactions that previously proceeded as ordinary M&As or structuring exercises, may now be subject to standalone FDI screening analysis at an early stage and associated, mandatory FDI screening clearance under the new legal framework as per the provisions of the Law.
1.5 In addition, the new FDI screening framework, empowers the competent authority a call-in power to review transactions even where they fall outside the mandatory, FDI screening notification perimeter, where there are reasonable grounds that security or public order may be affected.
1.6 As from 2 April 2026, any inbound investment into a Cyprus business that operates in a strategic or sensitive area should be screened from an FDI perspective. Investors and relevant parties to transactions should incorporate FDI screening analysis into legal due diligence, structuring and planning from the outset of transactions.
2 Competent Authority
2.1 The Ministry of Finance is designated as the competent authority for FDI screening (including with respect to the establishment of a seven-member advisory committee).
2.2 The Law also designates the Ministry of Finance as Cyprus’ national contact point for the cooperation mechanism under the Regulation (including the assessment of notifications and the issuance of decisions pursuant to the Law).
2.3 At EU level, that cooperation mechanism allows the European Commission and other EU Member States to exchange information, raise concerns and issue comments and/or opinions in relevant cases, although the final decision on a given case remains with the host EU Member State.
3 Investors
3.1 The Law defines a foreign investor as either:
3.1.1 a natural person who is not a national of an EU Member State, EEA Member State or Switzerland, that intends to make or having made a FDI; or
3.1.2 a third-country undertaking that intends to make, or has made, a FDI.
3.2 Importantly, under Article 3(6) of the Law, the notification obligation is extended to any legal entity in which at least 25% of the share capital and/or voting rights is held by a foreign investor, and/or whose ultimate beneficial owner is a foreign investor, and/or which is directly or indirectly controlled by a foreign investor, where that entity proposes to invest in a Cyprus enterprise of strategic significance.
4 Notification
4.1 The Law provides that prior notification is mandatory by a foreign investor intending to carry out an FDI (which necessitates the submission of the extensive, required documentation/information) where the following conditions are met cumulatively:
4.1.1 the investment results in the acquisition of a special participation;
4.1.2 the value of the investment, whether on its own or combined with other transactions between the same parties within 12 months from the date the transaction is expected to take place, is at least €2.000.000; and
4.1.3 the investment concerns an enterprise of strategic significance.
4.2 A “special participation” is defined as the direct or indirect acquisition, individually or acting in concert, of at least 25% of the share capital and/or voting rights, or an equivalent ability to exercise decisive influence over the enterprise’s activities.
4.3 Under Article 2 of the Law, an “enterprise of strategic importance” means an enterprise carrying out activities falling within particularly sensitive sectors, as specified in the Annex to the Law. For this purpose, the concept of “enterprise” is covering any non-natural-person entity, whether or not it has separate legal personality, including companies (incorporated under the provisions of the Cyprus Companies Law Cap. 113), partnerships, associations, foundations and trusts, as well as entities formed under foreign law that carry on activities in Cyprus or provide goods or services in Cyprus.
4.4 The Law also provides that a further increase of a special participation, crossing the thresholds from below 25% to 25% or more, or from below 50% to 50% or more, triggers a notification obligation (irrespective of value of investment).
5 Entreprises of Strategic Significance
5.1 The Annex to the Law sets out the relevant risk factors and sensitive areas. These include, among others, critical infrastructure and strategically sensitive activities relating to energy, transport, water, health, education, tourism, communications, media, data processing or storage, aerospace, defence, electoral infrastructure and financial services, including systemic credit institutions. The Annex also refers to sensitive facilities and land or real estate of critical importance for the use of such infrastructure.
5.2 The Annex to the Law further identifies critical technologies and dual-use items, including technologies relating to artificial intelligence, robotics, semiconductors, cybersecurity, aerospace, defence, energy storage, quantum and nuclear technologies, nanotechnology and biotechnology. It also covers issues such as access to sensitive information or personal data, media freedom and pluralism, and security of supply of critical inputs such as energy, raw materials and food.
6 Transactions
6.1 The Law defines “transaction” broadly as any acquisition, agreement or other economic activity leading to the acquisition of all, part, or any interest in an enterprise in Cyprus. The Law also defines “completion of the investment” by reference to the point at which the last condition precedent relating to the investment decision is satisfied, resulting for the Law having, in practice, retrospective effect.
6.2 In addition, the Law states that agreements, contracts and/or legal acts concerning transactions that require prior FDI screening approval are deemed to be subject to a suspensive condition that such approval is obtained.
7 Notification Timing
7.1 The Ministry of Finance must first decide within 20 working days from receipt of a duly completed filing whether the notified investment will be subject to screening. That period may be suspended if additional information or clarifications are requested.
7.2 In case the Ministry of Finance concludes that the case should proceed to full screening, it must notify the investor within 5 working days, and then decide within 65 working days (unless period is suspended for further requests) whether the investment may affect the security or public order of Cyprus. We also note, that approval is not deemed as granted from the Ministry of Finance until receipt of written decision by the investor.
8 Regulatory Outcomes
8.1 Where the Ministry of Finance, concludes that an investment does not threaten security or public order, it notifies the investor accordingly within 5 working days from its decision.
8.2 Where concerns exist, the authority may approve subject to conditions, or prohibit, terminate or reverse the investment.
8.3 The Law also provides that, where an investment is prohibited, terminated or reversed, or where the investor has not complied with imposed conditions, the investor and persons acting in concert may be prevented from exercising rights arising from the investment, including voting, management or control rights.
8.4 It is notable that the Ministry of Finance, as part of its examination, may take into account not only Cyprus-specific factors, but also, amongst others, comments from other EU Member States and opinions of the European Commission, as well as the possible effect of the investment on EU projects or programmes of European Union interest.
8.5 In addition, the European Commission and the EU Members States reserve their right under Article 7 of the Regulation to issue opinions and/or submit comments to the Ministry of Finance with respect to any FDI.
9 Call-In Powers
9.1 Even where a transaction does not fall within mandatory notification, the Ministry of Finance may still examine it where there are reasonable grounds that it may affect security or public order. For non-notifiable cases, that power may be exercised within 15 months from completion, and for transactions that were notifiable but were not notified, the Ministry of Finance may exercise its powers within 5 years from completion.
10 Penalties and Recourse to Administrative Court under Article 146 of the Cyprus Constitution
10.1 The law provides for administrative fines to a foreign investor, including:
10.1.1 a fine of €5,000 to €50,000 for failure to notify a FDI;10.1.2 up to €100,000 for false or misleading information;
10.1.3 up to €50,000 for failure to provide required information; and
10.1.4 up to €100,000, plus up to €8,000 per day for continuing non-compliance with measures ordered by the Ministry if Finance within the set deadline.
10.2 The Ministry of Finance, in its capacity as the FDI related competent authority, where it identifies an actual or imminent breach of the Law, has the right under Article 17 of the Law, to take measures to seek from the courts a prohibitory and/or mandatory injunction, including on an interim basis. In such proceedings, the Court may order the immediate cessation and/or non-repetition of the breach, the adoption within a specified period of corrective measures to remedy the unlawful situation, and any other action or measure it considers necessary or reasonable in the circumstances.
10.3 In addition, failure to notify (where a FDI is notifiable) triggers the authority to treat the FDI automatically as being in breach of the Law and to take available measures to prohibit, terminate or reverse it.
10.4 Under Article 18 of the Law, FDI decisions of the Ministry of Finance are administrative acts and are subject to recourse before the Administrative Court under Article 146 of the Constitution.
11 Proposed Reform of Regulation
11.1 At EU level, we note a proposed revision and replacement of the Regulation. In particular, legislative file 2024/0017(COD), originally proposed by the European Commission on 24 January 2024 and confirmed as a nearly final compromise text dated 10 February 2026, provides for a new regulation on the screening of foreign investments within the European Union and the repeal of the Regulation.
11.2 The proposed revision, is expected to be enacted by summer 2026 and enter into force 18 months following its enactment.
11.3 The proposed revision, following its enactment, it shall require the amendment of the Law, for the purpose of national alignment.
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