Broad consensus among stakeholders appears to be forming around the revised bill to establish a National Mechanism for the Screening of Foreign Direct Investments, which was tabled before the Parliamentary Committee on Finance on Monday.

The bill aligns Cyprus with European practices by introducing stricter controls on investments of strategic importance, while ensuring the country remains an attractive and competitive destination for reliable investors.

Key Amendments in the Bill

A Ministry of Finance representative outlined the most important changes:

• Definition of strategic enterprises now includes companies incorporated under the laws of another country but operating in Cyprus.

• Exemption of investors from EU, EEA, and Switzerland.

• Obligation of timely notification by foreign investors to prevent delays.

• Minimum investment notification threshold set at €2,000,000.

• Exemption for ships, due to the special regime of Cyprus’s shipping industry, to protect competitiveness—excluding floating LNG units.

• Consultation process with an advisory committee.

• Ex officio screening, even without prior notification of the investment.

The Ministry emphasized that the goal is to create a transparent, predictable, and clear mechanism that will not undermine Cyprus’s competitiveness compared to other countries.

Stakeholder Support

Stakeholders such as the Cyprus Chamber of Commerce and Industry (CCCI), the Employers and Industrialists Federation (OEB), the Cyprus Bar Association, the Association of Cyprus Banks, ICPAC, CIFA, and the Cyprus Shipping Chamber have expressed support for the proposed legislation.

However, the technology business association TechIsland noted that they expected an exemption for the tech sector, similar to what was introduced in Belgium.

Committee Reactions

After the committee session, the Chair of the Parliamentary Committee on Finance, DIKO MP Christiana Erotokritou, described the bill as very important, stressing that it strengthens development and shields Cyprus with a modern and robust legislative framework. She noted that the law promotes the attraction of trustworthy investments while excluding those that do not meet the criteria in strategic sectors such as telecommunications, energy, and tourism.

Ms. Erotokritou explained that the revised bill was submitted in August by the Ministry of Finance and that discussions have now begun in the Finance Committee, aiming to conclude within September. She highlighted that the bill enjoys majority support from all involved stakeholders, including professional and business associations.

She added that the framework foresees the establishment of an advisory committee and a competent authority involving various ministries to assess each investor’s background. The mechanism also allows retroactive screening of investments made within the past 15 months, to ensure that critical infrastructure remains accessible only to reliable investors. She clarified that this is not a new initiative but rather the transposition of the 2019 EU Regulation into national law, with screening carried out by Cypriot authorities.

According to her, the framework is “supportive of good-faith, transparent, and growth-oriented investments” while deterring “bad-faith” investments or those failing to meet the required criteria.

Opposition’s Concerns

AKEL MP Andreas Kavkalias stated that the committee now has before it the government’s bill for creating a screening mechanism for foreign direct investments, which stems from the EU regulation in force since 2020 concerning investment screening within member states.

Mr. Kavkalias stressed that AKEL is particularly concerned about the fact that, in recent years, major investments and acquisitions have taken place in key sectors such as banking, healthcare, and real estate.

“The aim must be the protection of the public interest and the vital interests of the Republic,” he said, clarifying that the party will examine all provisions of the bill—improved compared to the previous draft—before announcing its final position in the coming weeks.

Asked about AKEL’s concerns regarding potential monopolistic trends in hospitals, he explained that this forms part of the party’s broader reservations about safeguarding society’s and the Republic’s interests through this legislation. He also pointed to certain provisions that raise questions, such as designating the Ministry of Finance as the competent authority, assuring that all aspects will be thoroughly reviewed before the party finalizes its stance.