Pantelis Christofides, partner at the L. Papaphilippou & Co LLC law firm, presents the new status quo concerning the Republic of Cyprus’ FDIS legal framework
Pertaining to Foreign Direct Investment (FDI) Screening legal field, our Law Firm is, after the conclusion of the relevant Due Diligence Process (KYC), at the disposal of either foreign investors or legal persons in which foreign investors participate, concerning the application of the provisions 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 into the Union, also known as the EU FDIS Regulation, which has been in force as at 11/10/2020, as well as the Establishment of Framework for the Foreign Direct Investment Screening Law of 2025 (Law no. 194(I)/2025), also referred to as the RoC FDIS Law, which has been published in the Official Gazette of the Republic of Cyprus on 14/11/2025, and it will, subsequently, enter into legal effect on 02/04/2026.
To that effect, it would indeed be prudent, from a business perspective, for investors to be in a position to respond to any queries and submit and requested documents in the event that, utilising the already existing Co – Operation Mechanism under the EU FDIS Regulation, any other European Union Member State, or the European Union itself, pose specific enquiries to the Republic of Cyprus with the aim of preparing Comments or an Opinion, respectively, concerning an FDI which as already been materialised as at 10/04/2019, within 15 months from the date of the FDI materialisation, and it had not been notified by the Republic of Cyprus via the Co – Operation Mechanism due to absence of the relevant FDIS National legislation.
Further, investors, within the ambit of upholding the Principle of Legal Certainty, and in order to avoid the invalidity from the outset of the intended FDI, should also evaluate the presence of a duty to submit a Notification before the Republic of Cyprus’ FDIS Competent Authority, that being the Ministry of Interior, as at 02/04/2026, on the basis of RoC FDIS Law which had been unanimously voted for by the Plenary of the House of Representatives, and relates to the application of the EU FDIS Regulation provisions.
As part of the specific FDI screening process, the Competent Authority must evaluate whether there is a possibility of affecting the security or public order and take into consideration the said FDI potential consequences, which, amongst other, relate to:
- Whether the undertaking in which the foreign direct investment is envisaged to be materialised is active in a particularly sensitive sector which concerns critical infrastructure, whether physical or virtual, including infrastructure in the fields of energy, transport, water, health, education, tourism, communications, media, data processing
The writing on the wall is clear: We stand before dynamic changes in the investment sector. And as always, the L. Papaphilippou & Co LLC law firm stands firmly by the legitimate investors, strengthening the economy of Cyprus. Or storage, aerospace, defence, electoral or financial infrastructure, including systemic credit institutions, sensitive facilities, as well as land and immovable property crucial for the use of the said infrastructure;
- critical technologies and dual use items;
- the supply of critical inputs, including energy or raw materials, as well as food security;
- the access to sensitive information, including personal data, or the ability to control such information; or
- the freedom and pluralism of the media.
Further, and in order for the contractual parties, that place themselves in a potential investment procedure, to know how their contractual rights could be affected as a result of the FDIS process, our Law Firm could examine together with the said potential investors the possibility of including contractual terms such as the condition precedent of acquiring the Competent Authority’s approval prior to closing and implementing the projected FDI, a monetary consideration re – allocation mechanism and/or changes of other structural aspects of the projected FDI on the basis of any materialisation conditions which could be placed by the Competent Authority, as well as an FDIS Process Monitoring and Appraisal Mechanism, taking also stock of the effect of the final outcome of the said process on the initially projected FDI.