Finnish FDI screening under reform — Update following the stakeholder consultation

In addition to implementing the new EU FDI Regulation, Finland is considering national aspects of its FDI screening with the aim to make the FDI screening in Finland more predictable. The current FDI Act would be replaced with a new one to reflect the changed geopolitical environment and technological development.

The preparations of the government proposal are still ongoing but we highlight the main changes to the Finnish FDI screening in this post.

Main changes proposed for Finnish FDI screening

All non-Finnish investors, also EU investors, are considered as foreign investors

One of the main changes proposed concerns the definition of a foreign investor. Under the new FDI Act, all non-Finnish investors would be treated as foreign investors, meaning that the current EU/EFTA carve-out would be removed.

In addition to natural persons and companies located outside Finland, foreign investor would include also Finnish companies in which a foreign investor holds at least 10% of voting rights or equivalent actual influence, and any other investment structure in which a foreign investor holds at least 10% of voting rights or equivalent actual influence.

Mandatory FDI screening with new filing thresholds

Following the amendments, Finland would not have a voluntary FDI screening anymore but investments to companies that are within the scope of the new FDI Act would be subject to mandatory screening. A foreign investor would be required to apply for prior approval before completing an investment in a monitored target, whenever ownership or actual influence exceeds any of the following thresholds: 10%, 33.3%, 50%, 66.6% and 90%.

The same thresholds apply to the acquisition of additional ownership stakes, and the authority may, for specific reasons, require an application even where the thresholds are not exceeded but actual influence increases.

New sectors within the scope of the FDI screening

Under the new FDI Act, the companies subject to mandatory FDI screening would be defined more precisely on a sector-by-sector basis. In the future, investment in the following sectors would be subject to mandatory FDI screening in Finland:

• Companies that produce or supply, or intend to produce or supply, defence materiel or other products and services important to military national defence or the Finnish defence industry
• Companies that produce, develop or utilise dual-use goods subject to export controls
• Companies that produce or supply critical products or services to the Finnish authorities for their statutory duties relating to societal security
• Companies whose products or services involve access to confidential, security-classified or otherwise nationally sensitive information
• Companies that produce or supply ICT or information security products or services relevant to national security, overall security or the security of supply
• Companies whose operations, products or services relate to the security of supply, critical infrastructure or other vital functions and services of society
• Other companies that need to be screened based on the EU screening regulation, including those active in critical technologies (such as semiconductors, quantum technologies and certain AI technologies), key functions in transport, energy and digital infrastructure, strategic raw material value chains, companies critical to the financial and payment system, and information systems designed for electoral operations.

Greenfield investment within the scope of the FDI screening

A notable proposed change is that greenfield investment would be brought within the scope of the FDI screening in Finland for the first time. Greenfield investment in the following sectors would be subject to FDI screening in the future:

• Defence sector projects
• Production or development of dual-use goods
• Construction and maintenance of port infrastructure as well as port operation and cargo handling services
• Construction and maintenance of airport infrastructure and ground handling services
• Establishment of logistics terminals serving sectors relevant for the security of supply or the needs of national defence and the defence industry
• Data centres with a potential capacity of at least 100 MW intended to carry out activities that are sensitive from a security, supply security, or critical infrastructure perspective
• Energy infrastructure projects with a production capacity of at least 100 MW, covering baseload and balancing power in the electricity system, renewable energy production, hydrogen projects, and electricity grid operations
• Mining and processing projects related to strategic raw materials of the EU

Introduction of two-phased FDI screening and clear handling time for Phase I

The new FDI Act is expected to introduce a two-phased FDI screening. The first phase would consist of a preliminary examination (Phase I) and, where necessary, the second phase would consist of a detailed assessment based on security considerations (Phase II).

The Finnish National Emergency Supply Agency (NESA, in Finnish Huoltovarmuuskeskus) would be the responsible authority for the Phase I examination within a 45-calendar-day handling time, whilst the Finnish Ministry of Economic Affairs and Employment would carry out the Phase II assessment, in cases where a detailed assessment is necessary. There would be no fixed handling time for the Phase II assessment. Cases of significant effect could be referred to a government plenary session for decision.

Introduction of penalty payment

The new FDI Act would also replace the existing criminal sanctions with an administrative penalty payment, enhancing the effectiveness of enforcement. For legal entities, the maximum penalty would be EUR 10 million or 10% of the total global annual turnover in the previous financial year, whichever is greater. For natural persons, the maximum penalty would be EUR 0,5 million.

Timeline and summary

The government proposal is expected to be submitted to the Finnish Parliament in autumn 2026, following a consultation round commencing in April 2026. The new FDI Act is expected to enter into force in early 2027.

While the proposed changes are not yet final, it can be anticipated that the number of FDI filings in Finland will increase significantly under the new FDI Act as the sector coverage is considerably broadened.

In the future all non-Finnish investors would need to apply for the prior approval when making investment that exceed the filing thresholds in those sectors whether to an existing company or a greenfield investment. The introduction of a two-phased FDI screening with a clear handling time for Phase I is a welcome change that would facilitate the planning of the transaction timeline.