FDI And The EU Regulation 2019/425

Author:STA Law Firm
Profession:STA Law Firm

New European Foreign Investment Screening Regulation


The European Union (EU) spans with twenty-eight (28) member states which have a combined population of approximately 500 million people. It is a massive draw for foreign investors in part due to its scale. With 28 member states spread across a large proportion of the continent of Europe, there is a vast selection of nations one can choose to invest in. With significant populations and large markets found all around, even those that are niche can find great significance.

The EU is a highly developed jurisdiction with the help of some of the large global economies contributing towards it. Within these last few years, there has arisen some commotion in the EU with the UK voting to leave. The UK is the second-largest economy in the Union, and so the impact of them going will undoubtedly be felt.

Another critical draw relates to the regulatory structure of the EU. It is an incredible achievement when looked at in detail as the legislative fabric covers the entire area of the EU and is accessible on the most comprehensive scales. While each of the member states is sovereign and thus cannot truly be controlled by the EU or its regulations.

Their member states benefit from laws throughout the EU, some of which are as follows:

Treaties are discussed and agreed upon by the member states of the EU, and once the Treaty is formed, it must be ratified by each member state into their legislations. Regulations are created by the EU, though they must be introduced within each state individually utilising their respective processes. The EU provides directives and gives the states specific goals, though they can be achieved through any means the members see fit. Decisions by the ECJ(European Court of Justice) are also binding for future related cases as court decisions generally are treated in common law jurisdictions. Such a structure allows for harmony between the different countries of the EU concerning their laws. With a regulatory body governing multiple nations, the standards of services and goods produced in the Union are among the best in the world.

All of these combined make the region one which receives much international investment from various locations and with many interests. As such, a recent new framework for screening foreign investments has come into the fold, which allows for a more significant amount of selectiveness in who can and cannot invest.

What the Changes Entail


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