On Tuesday, 19 May, the European Parliament ratified new regulations to screen foreign investments and mitigate security risks. The legislation received strong support, with 508 votes in favour, 64 opposed, and 90 abstentions. Members of the European Parliament (MEPs) reached an agreement with EU member states on mandatory screening of foreign investments in critical sectors, including defence, semiconductors, artificial intelligence, critical raw materials, and financial services. This initiative seeks to identify and address potential security and public order risks while maintaining an open environment for foreign capital inflows.
The revised framework will simplify procedures for national screening mechanisms, thereby reducing complexity and enhancing the EU’s attractiveness as an investment destination. Additionally, collaboration among national screening authorities and with the European Commission will be strengthened to facilitate coordinated responses to cross-border security risks.
Furthermore, the new regulations will apply to transactions within the EU involving investors ultimately owned by individuals or entities from non-EU countries. It has been acknowledged that further action at the Union level is needed to address economic security risks related to foreign investments. In line with this commitment, the European Commission has undertaken to establish conditions for foreign investment in specific strategic sectors. It has submitted a legislative proposal for an Industrial Accelerator Act, presented on 4 March, 2026.
“With this text, we are closing a chapter of European naivety. Certain foreign states are seeking to weaken us. We are turning the page on the wilful blindness of Member States that allowed foreign actors to seize control of sensitive sectors of our economy. But our work on foreign investment is not finished – the fight for Europe’s independence and sovereignty continues, now with the proposed Industrial Accelerator Act,” said Parliament’s rapporteur Raphaël Glucksmann (S&D, FR).
The foreign direct investment screening regulation became effective on 11 October, 2020. Following its evaluation, the Commission proposed a revision in January 2024 to address key deficiencies. The COVID-19 pandemic, Russia’s aggression against Ukraine, and other geopolitical tensions have emphasised the need to protect critical EU assets from certain investments better.
