Expansion of the Finnish FDI Screening Regime Expected

Authors: Heidi Haanpää, Jenni Heurlin, Katja Heikkinen, Mikko Huimala, Riikka Kuha

The global security environment has changed, and geopolitical tensions have intensified drastically, prompting many countries to update their foreign direct investment (FDI) screening regimes in recent years. In Finland, while the attitude towards foreign investments is expected to remain positive also in the future, it has nevertheless been recognised that the Finnish FDI regime should be reformed to more effectively address risks relating to national security, security of supply, and wide-ranging influence activities.

The current Finnish FDI screening regime, established by the Act on the Monitoring of Foreign Corporate Acquisitions (the Monitoring Act), has been in place since 2012. The most recent updates to the regime were made in 2020. Now, significant amendments to the Finnish FDI screening are anticipated.

To this end, the Finnish FDI authority (the Ministry of Economic Affairs and Employment) published an evaluation report on the current Monitoring Act on 5 February 2025. The report identifies 15 areas for reform in the Monitoring Act both based on national considerations and the forthcoming revision of the EU FDI screening regulation, which will set the minimum level of FDI screening to be applied nationally in EU countries. Below, we discuss what the most significant amendments to the Finnish FDI regime would be if the proposals in the evaluation report were enacted.

1. Broadening the scope of sector coverage. The scope of the Finnish FDI regime is expected to expand in the reform. For instance, to meet the requirements of the proposed EU screening regulation, the scope of the Finnish FDI regime should be broadened especially in relation to new critical technologies (such as quantum technology, AI, semiconductors, and biotechnology). The report, however, proposes to maintain the current approach of the Monitoring Act, which does not exhaustively list the sectors covered by the regime but, in addition to defence and national security sectors, covers enterprises which are considered critical for the vital functions of the society. The preparatory works of the current Monitoring Act refer to government strategies relating to the security of supply as well as national risk assessment documents for determination of critical sectors at any given time, and examples of critical sectors are provided in the preparatory works. This approach allows flexibility for FDI screening as these sectors may evolve over time in line with the objectives of security of supply, however, compared to a regime with a clear listing of covered sectors, it adds uncertainty for foreign acquirers and underlines the need for clear guidance from the FDI authority —especially if the coverage and the scope of the mandatory filing regime (with sanctions for non-compliance) are expanded as proposed (see point 2 below).
   
   
2. Broadening the scope of the mandatory filing regime. The scope of the mandatory advance screening regime in Finland is currently relatively narrow. For EU/EFTA acquirers, only acquisitions in the defence sector fall within the scope of mandatory filing regime, while for non-EU/EFTA acquirers, only defence and security sector acquisitions require mandatory advance filing. In cases of acquisitions of enterprises critical for the vital functions of the society, filing is currently voluntary.
   
   In light of the forthcoming revision of the EU FDI screening regulation, the evaluation report recommends expanding the mandatory filing regime while either abandoning or significantly narrowing the scope of the voluntary filing regime.
   
   The report suggests including acquisitions of enterprises critical for the vital functions of the society in the mandatory advance filing regime. These could encompass sectors such as energy (including nuclear energy facilities, wind power, power grids, and battery storages suitable for electricity storage), water supply, finance, healthcare, transport/logistics (including railways, ports, and operations therein, as well as freight and logistics centres), telecommunications, cloud services, media, and companies dealing with IT security and sensitive information. Based on our experience, this should not however lead to drastic changes in the filing practice, as also to date, approval has typically been sought prior to closing for deal security also in cases of acquisitions of such critical infrastructure.

3. Broadening the definition of foreign acquirers. As noted above, the current Monitoring Act makes a division between EU/EFTA and other foreign acquirers, and for EU/EFTA acquirers, only acquisitions in the defence sector fall within the scope of the current mandatory filing regime. The report now suggests abandoning the current division between EU/EFTA and other foreign acquirers, thereby bringing all non-Finnish acquirers within the scope of the regime, regardless of the sector in which the target enterprise operates.
   
   
4. Greenfield investments to the scope of the FDI screening. Greenfield investments through establishing new enterprises are not currently within the scope of the Monitoring Act. The report acknowledges that newly established enterprises are generally not critical in terms of national security and including greenfield investments within the scope would require significant changes in the entire logic of the Monitoring Act. However, the report recommends enabling targeted monitoring of greenfield investments in the changed security policy environment. This targeted monitoring could cover sectors such as mining and minerals, the battery industry, wind power, nuclear energy facilities, cloud services, and critical transport and service infrastructure, including in port areas. In addition to clearly defining the scope of monitored greenfield investments, the correct timing of such screening should be further considered in the reform. In light of merger control regimes, should the filing occur, for example, before making the required investments or transferring assets, rather than at the point of establishing a new legal entity?
   
   
5. Introduction of two-step review. Currently, the Monitoring Act does not include formal review deadlines for mandatory FDI filings or distinction between initial and in-depth review. According to the latest available statistics, the average processing time for FDI filings in Finland is 65 days.
   
   As required by the proposed EU FDI screening regulation, the updated regime should include a two-step review process. While the Finnish FDI authority does not find it necessary to introduce predefined review timelines (or suggests that if such timelines are introduced, there should be an option for extension), from the perspective of foreign acquirers and deal dynamics, having some time limits would be important.

6. Additional thresholds for FDI screening. Under the current Monitoring Act, acquisitions of at least 10%, 33.3%, and 50% of the aggregate number of votes or equivalent actual decision-making power in a Finnish enterprise may trigger an FDI filing obligation.
   
   Referring to the Finnish Companies Act, the report suggests introducing additional thresholds of 66.7% and 90%. In practice, however, introducing such additional thresholds does not seem particularly necessary. For obtaining control over business operations, the 50% threshold is relevant and the Finnish FDI authority already has the ability to request, in its approval decision, a foreign acquirer to submit a further filing if their influence increases, even if the thresholds are not exceeded.

7. Broadening the possibilities to impose conditions. To date, Finland has not prohibited any foreign acquisitions; however, in certain cases, acquisitions have been approved subject to conditions. Under the current Monitoring Act, imposing conditions is only possible if the foreign acquisition endangers a key national interest. The report suggests that imposing conditions should also be possible in other cases to secure national security and/or public order, based on a case-by-case risk assessment.
   
   In addition, changes are being proposed to sanctions and other consequences for non-compliance with the screening requirements.

In view of the above, we find that a key issue in the reform process will be finding a balance between reasoned national interests and the justified need for legal certainty. Expanding the sector coverage of the regime without a clear list of covered sectors will increase legal uncertainty and risks related to non-compliance, especially if combined with the broadened mandatory filing regime and new sanctions for non-compliance. As the current FDI regime has been in place for quite some time, the current practice and the Finnish FDI authority’s interpretations are rather well-established, and the threshold for informal discussions with the Finnish FDI authority is low. In the future, such informal discussions will become even more important should the proposals in the evaluation report be enacted.

Additionally, expanding the monitoring (for instance to include certain greenfield investments) would lead to an increased number of filings. This, together with the need for guidance through informal discussions, would necessitate additional resources for the Finnish FDI authority and other relevant authorities to ensure that review timelines remain proportionate and to address increased legal uncertainty.

As the next step, a working group will begin drafting a Government Proposal, with the Proposal expected to be presented to the Parliament by autumn 2026 at the latest. We will follow closely the process and are happy to discuss any related questions or issues.