Filenews 3 July 2025
A bill for the implementation of a National Foreign Direct Investment Control Mechanism, in accordance with the EU regulation on the protection of national security and public order, was adopted by the Council of Ministers on Wednesday.
"The government continues with stability to implement planned decisions, which it had announced," said the Minister of Finance, Makis Keravnos, in statements after the Council of Ministers, noting that the House has adopted legislation for the implementation of a National Foreign Direct Investment Control Mechanism, in accordance with the relevant European Union regulation for the protection of national security and public order.
"It is a very important decision because it is directly related to the safeguarding of national interests," the Minister said, recalling that this proposal had been submitted at some point in Parliament where there were some discussions. Today, after consultations and a revision of this proposal, it has been approved by the Council of Ministers, he said.
He noted that the main relevant provisions of this bill are that the competent authority for this matter is the Ministry of Finance. "The powers of this competent authority are to approve, prohibit or reverse investments for reasons of public, order or security," he said.
He noted that a foreign investor is "defined as any natural or legal person from a country of the European Union, the European Economic Area or Switzerland". He added that foreign direct investment "is considered to be any investment by a foreign investor with the aim of stable participation and substantial influence in the management of a business of strategic importance in the Republic of Cyprus".
He clarified that the term strategic enterprise refers to enterprises that fall into particularly sensitive sectors as defined in the annex of the relevant bill and mentioned indicatively the sectors of energy, tourism, transport, health, communications, defense, financial services and dual-use technologies.
He noted that there is a notification obligation for these foreign investors and it is required from investors whose foreign direct investment value is more than 25% or if there is a diversification from 25% to 50% or more. "The notification obligation applies when the foreign direct investment carries out exactly this activity, according to which it owns at least 25% of the share capital," the Minister said. He added that exceptions to this proposal concern foreign direct investments involving ships, under construction or ships that are being sold, except for floating gas storage and regasification units.
The Advisory Committee, which is established by this decision, will be composed of representatives of the Ministries of Finance, Defence, Trade and Energy, Foreign Affairs, Interior, Justice and Public Order and the Ministry of Transport and Communications, according to the Minister.
He noted that for the preparation of the revised bill, in addition to the consultation, best practices applied by all other member states of the European Union were also taken into account.
Responding to a question, Mr. Keravnos said that what is being done today is the strong encouragement by the European Commission for Cyprus to introduce this institution, which exists in all member states of the European Union, "precisely to safeguard national interests".
Asked about which countries it concerns, the Minister said that it concerns mainly countries outside the European Union, but also that a European Union company in which a foreign investor from a third country with 25% or more participates, falls under this procedure.
Asked about the control of investments to date, the Minister said that there are institutions that have carried out the audit, such as the Ministry of Finance, the Hellenic Capital Market Commission, the Central Bank, etc. "With this proposal, this process is now concretized with specific responsibilities and specific bodies, which will be able to impose and monitor this process," he added.
CNA
