EU Implements Mandatory Foreign Investment Screening Overhaul

On June 17, 2026, the EU Council and Parliament adopted a regulation revising the foreign investment screening framework. This reform mandates all member states to maintain screening regimes for sensitive sectors, including defense and AI. The new rules aim to enhance cooperation among national authorities and the European Commission while retaining national decision-making power. The regulation will be published in the Official Journal of the EU and will take effect 20 days post-publication, with full application starting 18 months later. The changes are designed to protect EU security amid geopolitical tensions, particularly following the COVID-19 pandemic and Russia's actions in Ukraine. The European Commission also proposed the Industrial Accelerator Act to set conditions for foreign investments in strategic sectors. Investors are advised to conduct early risk assessments and prepare for a more structured investment screening process.

Key Points: • EU adopts a revised foreign investment screening framework effective in 18 months. • Mandatory screening will cover sensitive sectors like defense, semiconductors, and AI. • Enhanced cooperation between national authorities and the European Commission is expected.