In a long-anticipated move aligning Cyprus with European Foreign Investment Control standards, the Law on the Establishment of a Framework for Screening Foreign Direct Investments of 2025 [Law 194(I)/2025] has been published in the Official Gazette and will enter into force on 2 April 2026.

The new regime introduces a structured screening process for foreign direct investments (FDI), in line with Regulation (EU) 2019/452, targeting transactions that may raise concerns for national security or public order in strategic and sensitive sectors.

Under the new framework, non-EU/EEA/Swiss investors and third-country undertakings must notify and obtain prior approval from the Ministry of Finance before completing certain investments in strategic undertakings.

The obligation to notify applies where an investment crosses defined legal thresholds, which include both transaction value and the level of control or influence acquired over the target enterprise, whether directly or indirectly.

The competent authority may impose conditions, prohibit, unwind, or otherwise restrict transactions deemed to pose a risk to security or public order.  Failure to comply with the notification and approval requirements may lead to financial or other sanctions.

For investors, financial institutions and corporates, FDI screening will become a key consideration in transactional planning, particularly in cross-border deals and joint ventures involving sensitive sectors, often in parallel with Merger Control compliance.

Early legal assessment will be essential to determine whether a transaction falls within the scope of the framework and to ensure timely compliance with regulatory requirements.

For further information or tailored guidance, please contact Polyvios Panayides (polyvios.panayides@demetriades.com) at Chrysses Demetriades & Co LLC.