New rules for the screening and authorisation of foreign direct investments

On 18 April 2022, new regulations[1] on the screening and authorisation of foreign direct investment ("FDI") in Romania came into force. The new rules have created the national legal framework allowing the application of 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 in the Union ("FDI Regulation"). The FDI Regulation became directly applicable in all Member States on 11 October 2020. It introduced FDI that is likely to affect security or public order, a cooperation mechanism between the Member States and the Member States and the European Commission. The new national regulations establish the mechanism for examining FDI in Romania and the procedure for authorising FDI in Romania. Foreign investments subject to screening and authorisation in Romania FDIs and new investments, defined according to the new regulations, which have as scope the strategic areas of activity provided by the Supreme Council of National Defense (in Romanian: „Consiliului Suprem de Apărare a Țării” - "CSAT") Decision no. 73/2012 and whose value exceeds the threshold of EUR 2,000,000 are subject to screening and authorisation in Romania. As an exception, FDI not exceeding the threshold mentioned above may also be subject to screening and authorisation in Romania if, by its nature or potential effects, concerning the criteria set out in Article 4 of the FDI Regulation, it may have an impact on or present a risk to public security or public order. The FDI will be subject to authorisation under the new regulations, regardless if it constitutes an economic concentration or whether or not it is subject to notification to the Competition Council under specific competition law. Authorities involved in the FDI screening and authorisation procedure Requests for authorization are subject to examination and approval by the Commission for the Examination of Foreign Direct Investment (in Romanian: “Comisia pentru examinarea investițiilor străine directe” - "CEISD"), which is subordinated to the Romanian Government and which will be established within 30 days of the entry into force of the new regulations. Following the examination of the requests for authorisation, the CEISD will issue: (i) a mandatory notice when it proposes the authorisation of FDI in Romania; (ii) an advisory notice, when it proposes (a) conditional authorization of the FDI in Romania based on behavioural or structural measures/commitments of the foreign investor; or (b) rejection of the request for authorisation of FDI, when it considers that the FDI affects the security or public order of Romania or is likely to affect projects or programs of interest to the European Union. Authorization of FDIs that have received a mandatory notice from the CEISD is carried out by the Competition Council by issuing a decision to this effect within 30 days of receipt of the CEISD opinion. The conditional authorization of the FDI or the rejection of the request for authorisation of the FDI which has received an advisory notice from the CEISD shall be carried out by the Romanian Government by issuing a decision. In case the FDI is likely to affect projects or programs of interest to the European Union when issuing the opinion, the CEISD shall consider the statement of the European Commission submitted under the provisions of Article 8 of the FDI Regulation. In the examination procedure, CEISD decides that consultation of CSAT is necessary, or at the request of CSAT to this effect, CEISD shall initiate a detailed investigation of the authorisation request. As part of this thorough investigation, CSAT will issue a notice, which may be mandatory or advisory, depending on whether it considers that authorisation, conditional authorisation or rejection of the request for approval of the FDI is required. Triggering the FDI screening and authorisation procedure The FDI screening and authorisation procedure is initiated by submitting a request for FDI authorisation to CEISD. The foreign investors will present the authorisation request, defined according to the new regulations, wishing to carry out an FDI or a new investment subject to screening and authorisation according to the new rules. In the case of FDI that is carried out as a result of a merger, the authorisation request shall be submitted by each of the parties involved, and in other cases, by the person acquiring control of an undertaking/part of an undertaking or carrying out/creating a new investment. The screening and authorisation procedure for FDI may also be initiated ex officio by CEISD or following a referral from a Romanian authority. Transparency of information on media FDI If the FDI concerns an undertaking that either: (i) holds a national, regional or local audiovisual license; (ii) produces a periodical publication with an average circulation of at least 5,000 copies printed/day in the last year; (iii) has a web portal with at least 10,000 hits/month, CEISD requires transparency of information on the foreign investment before the FDI is carried out and the examination procedure is triggered. This information will be subject to public consultation by CEISD for 30 days. Sanctions According to the new regulations, the following acts are punishable by a fine of up to 10% of the total worldwide turnover in the financial year preceding the sanction: (i) the intentional provision of incorrect, incomplete or misleading information in a request for authorisation of an FDI; (ii) the intentional or negligent implementation of an FDI without it being authorised; (iii) the intentional or negligent implementation of an FDI in breach of or contravention of the commitments made.

 

[1] Government Emergency Ordinance No 46/2022 on measures implementing 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 in the Union and amending and supplementing #_ftnref1Competition Law No 21/1996, published in the Official Gazette of Romania, Part I, No 379 of 18 April 2022.