New FDI Law

The long-awaited foreign direct investment (“FDI”) screening legislation has now come into force through Law 164/2023 (the “FDI Law”), which was published in the Official Gazette of Romania on 7 June and came into effect on 10 June.

The FDI Law amended Government Emergency Ordinance no. 46/2023 (“GEO 46”) – which implemented Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union.  [LM1] 

The main changes that FDI Law made to GEO 46 are very important as they not only modified GEO 16 but also expended its scope, as follows:

  1. the term investor now refers, in addition to non-EU investors, to natural persons who are citizens of an EU member state, and to legal person whose registered office is in an EU member state, which have carried out or intend to carry out an investment in Romania.  Also classified as an investor are legal entities, whose registered office is in an EU member state, which have made or intend to make an investment in Romania, in which control is directly or indirectly exercised by a natural person who is a citizen of an EU member state, or a legal person whose registered office is in an EU member state, or another legal entity, without legal personality, organized under the laws of an EU member state.
  • the obligation of examination and approval is extended not only to non-EU investments but also to investments of any nature establishing or maintaining commercial relationships with a Romanian company.
  • the structure of the Commission for the Examination of Foreign Direct Investments has changed, a representative of the Ministry of Energy having been added to the Commission in view of the great interest in this sector.
  • a very awaited matter is the method of establishing the value of the investment, and the law provides that this will be provided by instructions of the Competition Council.

There are still many practical aspects that FDI Law has not clarified, such as those regarding the continuous investments started before GEO 46, or what happens to the examination taxes paid if in fact the business did not have to notify the FDI screening commission but did so, taking into account the breadth of the targeted fields, but probably practice and / or delegated legislation will in due course clarify these matters.