Background
Greece and the EU are considered among the most attractive destinations for foreign investment in the world, attracting billions in investments from non-EU countries each year.1 While such investments are key to maintaining a strong economy and job market, some investments may pose a risk to the security or public order of EU member states or the EU as a whole. Therefore, most EU member states have adopted national rules to screen foreign direct investments in sensitive areas. Until now, Greece has been an exception, being one of only four EU member states without an operational national Foreign Direct Investment (FDI) screening regime.2
Since 11 October 2020, foreign investments into the EU have also been subject to the EU’s Foreign Direct Investment Screening Regulation (EU FDI Screening Regulation). The EU FDI Screening Regulation introduced the first EU-wide foreign investment screening cooperation mechanism between the European Commission (EC) and member states, and it increased scrutiny of foreign investments into the EU in strategic industry sectors, infrastructure and key future technologies.
As part of the EU’s Economic Security Package, published in January 2024 and aimed at minimising risks to the EU’s economic security, the EC proposed to revise and strengthen the EU FDI Screening Regulation. This included, among others, requiring that all member states adopt a screening mechanism and setting the minimum scope for compulsory screening of transactions. The European Parliament is currently assessing the revised EU FDI Screening Regulation and will vote on this in an upcoming plenary session, after which negotiations with EU member states to finalise the proposal can begin. Following the EC’s renewed push for all member states to set up their own FDI screening regimes, and amid the wider geopolitical context, the Greek government published its proposal for a national FDI screening regime at the start of April 2025.
Greek FDI screening framework
The draft law published by the Greek government for consultation on 2 April 2025 seeks to establish a framework for the screening and authorisation of FDI in Greece on grounds of security or public order. Accordingly, investments by foreign investors in sectors identified as sensitive or highly sensitive will need to be notified to the relevant Greek authority prior to their implementation.
The current Greek FDI proposal does not include any thresholds regarding the turnover or assets of the investment target, or thresholds regarding the investment value, thereby requiring that any investment in the relevant sectors, regardless of its size, must be notified to the authority. The only exceptions to this are:
(i) Portfolio investments: The acquisition of corporate securities intended exclusively for financial investments, without the intention of influencing the management or control of the business.
(ii) Internal restructurings: Restructuring transactions within a group of companies, or the merger of multiple legal entities into a single legal entity, provided that the shares held by foreign investors do not increase or the transaction does not entail an increase in the participation of a foreign investor in the management or control of the target company.
(iii) Investments in start-ups: Investments in start-ups that employ fewer than 10 employees and have an annual turnover of less than €2 million.
Foreign investors
The definition of a foreign investor in the draft law is intended to align with the revised EU FDI Screening Regulation. Therefore, the scope of the draft law covers investments from both third-country investors, and EU member state investors if they are controlled, directly or indirectly, by a natural or legal person from a third country or by the government of a third country. The draft law notes that an investor could be controlled by the government of a third country through both its ownership structure and through the provision of significant funding. It is currently not clear what level of funding would be required for the Greek authority to determine that an investor is controlled by a foreign government.
In addition to the aforementioned, the draft law also provides that, in case of investments in highly sensitive sectors (see below), entities with at least 10% foreign ownership will qualify as foreign investors, even if such entities are not controlled by a natural or legal person from a third country, or by the government of a third country. This significantly expands the potential pool of entities that could qualify as foreign investors, making legal advice essential prior to any investment in sectors identified as highly sensitive.
Sectoral scope
The draft law currently identifies two separate categories of sensitive sectors where the Greek FDI screening regime will apply:
(i) Sensitive sectors: Includes investments in targets active in the energy, transport or digital infrastructure sectors. A foreign investor is required to notify if its investment leads to the acquisition of at least 25% of the shares of a target active in sensitive sectors. A foreign investment in sensitive sectors will also be assessed when it increases to 30%, 40%, 50% or 75%.
(ii) Highly sensitive sectors: Includes investments in targets active in the defence and national security sectors (including dual-use items subject to export control, and military technology and equipment), cybersecurity, AI, port infrastructure, critical sub-sea infrastructure and tourism infrastructure in border areas. A foreign investor is required to notify if its investment leads to the acquisition of at least 10% of the shares of a target active in highly sensitive sectors. A foreign investment in highly sensitive sectors will also be assessed when it increases to 25%, 30%, 40%, 50%, 60%, 70% or 75%.
The comments submitted during the public consultation have noted that the sectoral scope of the draft Greek FDI screening regime is rather limited when compared to those of other EU member states. Crucially, the scope of the draft Greek FDI screening regime is not aligned with the EC’s proposal for a revised EU FDI Screening Regulation, which sets out a minimum sectoral scope for investments that should be subject to mandatory screening by member states. For example, the draft Greek FDI screening regime does not apply to foreign investments where the target is part of or participates in a project of Union interest, such as the EU’s Horizon programme or the Trans-European Network for Energy. It also does not encompass investments in targets active in several of the EC’s proposed list of sectors of particular importance for the security or public order of the EU, such as the advanced semiconductor sector or the critical medicine sector. It is likely, therefore, that Greece will have to amend the scope of its national FDI regime if the revised EU FDI Screening Regulation is approved.
Procedure
The draft law clarifies that FDI investments must be notified to the relevant Greek authority prior to their implementation. If a foreign investor fails to notify a notifiable investment to the authority, they may face fines of up to €50,000 and their investment could be unwound.
Upon submission of a notification to the authority, the authority has five days to confirm whether the investment is within the scope of Greece’s FDI screening regime and assess the completeness of the filing. The proposed FDI screening regime will comprise two phases. The first phase will last 30 days, during which the authority will examine the file and either approve the investment or initiate in-depth proceedings.
The second phase of in-depth proceedings will require significantly more time, generally between 60 and 140 additional days from the date in-depth proceedings are initiated. Furthermore, when the Greek authority initiates in-depth proceedings, it will notify the investment to the EC and the other EU member states, who may provide their comments in accordance with the EU FDI Screening Regulation. This could further delay the process, since the Greek authority must wait for comments from the EC or any other member state that has indicated an intention to submit them. Following the submission of the authority’s recommendation to the Minister of Foreign Affairs, the Minister may decide to approve, prohibit or unwind the transaction, or impose specific commitments or mitigation measures on it.
The draft law also provides the relevant authority with ex officio investigation powers, allowing it to call in transactions that come within the scope of the FDI screening regime, but which were not notified by the foreign investor.
Impact
While the sectoral scope of the proposed Greek FDI screening regime is narrower than in other EU member states, its enactment into law will nonetheless significantly impact investments in the affected sectors in Greece. The lack of turnover, asset value or transaction value thresholds in the draft law and the expansive definition of foreign investor when considering investments in highly sensitive sectors mean that any entity contemplating a transaction in the relevant sectors must seek legal advice to ascertain the potential impact of this law on their envisaged investment. At the same time, the draft law will likely be amended to incorporate feedback received during the public consultation and ensure closer alignment with the proposed revised EU FDI Screening Regulation. Reed Smith will continue to monitor the development of this draft law closely.
- According to the UN’s 2024 World Investment Report, FDI flows in Greece amounted to US$ 8.4 billion in 2022 and US$ 5.4 billion in 2023.
- The others being Bulgaria, Croatia and Cyprus, all of which are also preparing their own FDI screening regimes.
In-depth 2025-116
