Foreign Direct Investment (FDI) Screening

What Is Foreign Direct Investment (FDI) Screening?

FDI screening is a regulatory procedure whereby governments assess certain foreign direct investments in order to identify and mitigate potential risks to national security or public order. Through this process, competent authorities may approve an investment, impose conditions or, in exceptional cases, prohibit or unwind a transaction where risks cannot be adequately mitigated.
 

What is the current situation of FDIs in Malta?

Following the adoption of Regulation (EU) 2019/452 in March 2019, Malta introduced a national FDI screening mechanism in 2020 through the National Foreign Direct Investment Screening Office Act, which came into force on 11th October 2020. The regime established the National Foreign Direct Investment Screening Office (NFDISO), which is responsible for reviewing certain investments by non EU investors in Maltese undertakings.
 

What is the specific definition of an FDI in Malta?

A foreign investor under Maltese law is defined as a natural person or an undertaking of a third country, meaning any country which is not a Member State of the European Union, intending to make or having made an FDI in Malta.

An FDI is defined as “an investment of any kind made by a foreign investor with the aim of establishing or maintaining lasting and direct links in order to carry on an economic activity in Malta. This includes investments that enable effective participation in the management or control of a company, as well as certain investments carried out pursuant to public procurement processes.” 

In practice, this functional approach means that the Maltese screening regime focuses on who ultimately exercises control over the investment, resulting in an assessment that looks beyond the immediate legal owner, to the ultimate beneficial owner of the company.
 

When must an FDI be submitted for Authorisation in Malta?

In Malta, an FDI must be notified to the NFDISO prior to being carried out where it involves a foreign investor and affects any of the sensitive activities listed in the Schedule to the Act, such as critical infrastructure, supply of critical inputs, technologies or access to sensitive information. 

Notification is also required where, following an investment, there is a change in business activity, a change in ownership resulting in at least 10% being held by a foreign investor or a transfer of direct or indirect control to a foreign investor.
 

What are the required consequences in Malta if an investment is made without the required authorisation?

Foreign investors and other persons involved who fail to comply with the notification or screening obligations may be subject to administrative penalties, including fines of up to €50,000 for failure to notify and up to €100,000 where incorrect or misleading information is provided, in addition to the risk of the investment being conditioned, prohibited, or unwound without compensation.
 

What are the substantive changes proposed in Bill No. 172 of 2026?

Bill No. 172, proposed before the Maltese Parliament in April 2026, is aimed at increasing legal clarity and improving the administrative efficiency of Malta’s FDI screening regime.

A key development is the express confirmation that portfolio investments fall outside the screening regime where there is no intention to influence management or control, providing greater certainty for financial investors, minority shareholders and fund structures.

The Bill also clarifies the notification triggers by systematically refining when an FDI becomes notifiable, particularly in situations that arise after an initial acquisition has already been completed. Under the amended Article 11, notification obligations are no longer framed solely around the moment of entry into Malta but are expressly extended to post completion events that may materially alter the risk profile of an investment.

Coupled with the integration of the FDI Screening Office within the Malta Business Registry, these changes are expected to streamline procedures and reduce issues, while preserving the mandatory and suspensive nature of the regime where notification is required.

How BDO can assist

BDO supports clients by assessing at an early stage whether a proposed transaction triggers FDI notification requirements and by guiding them through the notification and screening process where applicable.