These FAQs are the second part of a two-part series regarding the National Foreign Direct Investment Screening Office Act (Chapter 620 of the Laws of Malta) (the “Act”) which aim to provide the reader with the practical implications concerning the notification procedure and the screening process in terms of the Act.
You may access Part 1 of the FAQs here.
Once the notification requirement is triggered, what information is to be submitted to the Screening Office?
In terms of the notification form, the information to be submitted to the Screening Office shall include:
- the ownership structure of foreign investor and of undertaking in which the FDI is planned to be made or has been made including information on the ultimate investor and/or beneficial owner and participation of the capital;
- the approximate value of the FDI;
- the products, services and business operations of the foreign invetsor and of the undertaking in which the FDI is planned or completed;
- the jurisdictions including the Member States in which the foreign investor and undertaking in which FDI is planned or completed, conduct relevant business operations;
- the funding of the FDI and its source;
- the date when FDI is planned to be completed or has been completed; and
- any other information the Screening Office may reasonably require in the performance of its functions.
How is the notification form submitted?
What are the timing considerations concerning FDI notification and the screening process?
Within 5 working days from the receipt of the relevant notification, the Screening Office shall determine whether the FDI shall be subject to screening.
The Screening Office shall then notify the foreign investor of its decision to screen the FDI or otherwise, within an additional 5 working days from that decision.
Where the Screening Office concludes that the FDI shall be subject to screening, the cooperation mechanism is triggered and the Screening Office shall within 60 calendar days from the date of its decision, determine whether the FDI may affect security or Maltese public order. It should be noted that this time period can be extended by the Screening Office where necessary.
Where the Screening Office concludes that the FDI does not affect the security or public order of Malta, it shall inform the foreign investor within 5 working days from the date of its decision.
What are the consequences in terms of the Act in the event that the FDI is found to affect the security or public order of Malta?
Where the Screening Office concludes that the FDI affects the security or public order of Malta, it may condition, prohibit or unwind such an investment, and shall inform the foreign investor in writing of its decision, which shall include a reasoned justification.
If the FDI is conditioned, prohibited or unwound pursuant to a decision of the Screening Office, the foreign investor and any other person, undertaking, organisation, foundation or other entity having an interest in the said investment shall not be entitled to any form of compensation or reimbursement, for whatsoever reason.
What are the consequences in terms of the Act in the event of failure to notify an FDI to the Screening Office?
In principle and in terms of Article 11 of the Act, foreign investors and all persons involved in the FDI shall be obliged, prior to carrying out the investment or effecting any changes mentioned in that article, to notify the Screening Office with the investment.
In the event that an investment is carried out prior to notification, Article 16 of the Act states that the investment shall automatically be considered to be in violation of the Act, and the Screening Office may at its own discretion, take all the necessary measures to unwind such investment.
Moreover, the Screening Office may, by notice served on the offender, impose administrative penalties in a number of instances including for failure to notify an FDI in terms of Article 11 of the Act.
©Fenech & Fenech Advocates 2021
Disclaimer │ The information provided on this Update does not, and is not intended to, constitute legal advice. All information, content, and materials available are for general informational purposes only. This Update may not constitute the most up-to-date legal or other information and you are advised to seek updated advice.