On 17 June 2026 the European Parliament and Council formally adopted Regulation (EU) 2026/1386 on the screening of foreign investments (“FDIs”) in the EU. This new regulation repeals and replaces the current EU FDI regulation (Regulation (EU) 2019/452). It entered into force on 16 July 2026 and, while the provisions of the new regulation will only start to apply from 17 January 2028, it is pertinent to consider how this new regulation will impact FDI screening going forward and invariably lead to changes to the existing Maltese FDI framework over the next 12 months or so.

The need for a new EU regulation was based on two main considerations. Firstly, while the current regulation established an EU framework for national screening of FDIs, Member States remained largely free to decide whether to have a screening mechanism at all and, if so, how that screening mechanism might operate. The new regulation now makes the requirement to have a domestic FDI regime mandatory and introduces a set of sensitive sectors requiring mandatory screening under national regimes, which include defence, dual-use items, semiconductors, AI, quantum technologies, critical raw materials, critical infrastructure, financial services and electoral infrastructure.

Secondly, the current regulation introduced a cooperation mechanism that facilitated information-sharing on FDIs between Member States and the Commission, but while comments and opinions by other Member States and the Commission were possible, their effect in practice was fairly limited. The new regulation substantially strengthens the cooperation mechanism by introducing broader information obligations and more structured review procedures between Member States and the Commission.

With the above context in mind, the new regulation introduces a substantial package of measures that create a more robust and harmonised EU FDI framework, with the aim to “strengthen the efficiency and effectiveness of the screening of foreign direct investments and to ensure a higher degree of harmonisation across the Union”.¹

Malta formally introduced its domestic FDI regime in 2020 through the enactment of the National Foreign Direct Investment Screening Office Act (Chapter 620, Laws of Malta). The Act was largely based on the current EU FDI regulation. In this sense, some of the measures that are being introduced through the new EU regulation (notably, the requirement to have a screening mechanism in the first place) are already in force. Moreover, while not specifically required in the current regulation, the capturing of investments made through EU entities that are directly or indirectly owned or controlled by foreign (non-EU) investors was already included in the Act.

¹ Preamble (16), Regulation (EU) 2026/1386.