FDI in Ukraine: New Mandatory Screening Rules Ahead

Background

On 22 September 2025, the Ukrainian Parliament registered Draft Law No. 14062, “On Screening of Foreign Direct Investments.” The draft establishes a government mechanism to monitor the flow of foreign capital into Ukraine and block transactions that could pose a threat to national interests or security.

International Context

The EU has operated a framework for FDI screening since Regulation (EU) 2019/452 (2019), with most Member States adopting national rules in line with this framework. In the United States, CFIUS reviews transactions that may result in foreign control of U.S. businesses. Ukraine follows this global trend, driven by risks of hostile or politically motivated capital, particularly from the aggressor state.

Competent Authority

The Ministry of Economy will approve, approve with conditions (remedies), or reject foreign direct investments. Applications will be reviewed with input from a Collegial Advisory Commission, which will include representatives from the MFA, the Security Service, the Foreign Intelligence Service, and other relevant agencies as needed.

Scope of Screening

Screening will apply exclusively to investments in three groups of business entities:

1.        Critical Infrastructure: investments in objects listed in the official Register of Critical Infrastructure Assets;

2.        Strategic Natural Resources: investments in entities engaged in the extraction of metallic ores and non-metallic minerals of strategic importance;

3.        Defense & Dual-Use Goods: investments in companies involved in development, production, modernization, repair, transportation, disposal, or trade of military and dual-use items.

Transactions Triggering Screening

Screening is required for transactions where a foreign investor:

• Makes direct investments in a screening entity;

• Acquires more than 25% of voting rights;

• Gains the right to appoint the sole executive body, >50% of the collegial executive body, or >25% of a supervisory board / to block management decisions;

• Acquires ownership or use of fixed assets worth 10% or more of the entity’s total assets.

Screening Outcomes

Investments may proceed only after approval (with or without conditions).

Prohibited Transactions

Certain FDI transactions cannot be approved if, at the time of application or within the preceding two years, any of the following circumstances exist with respect to the foreign investor (legal entity or natural person), its participants, founders, or ultimate beneficial owners (UBOs):

1.      Investment Linked to аggressor or sanctioned states;

2.      Affiliation with аggressor or sanctioned states;

3.      Citizenship of the occupant/aggressor state;

4.      Property or Financial Interest in an aggressor or terrorist state.

Timeframes

• Screening procedure: up to 90 calendar days from initiation;

• Requests for additional information must be issued within 30 days, and responses are required within 30 days.

• If no grounds for refusal exist, the Ministry of Economy approves the investment (with or without conditions).

Grounds for Refusal

Approval must be denied where the transaction:

·         Involves submission of false or incomplete information;

·         Threatens the security of critical infrastructure, essential functions, or services;

·         Poses a threat to Ukraine’s national security or national interests.

Legal Consequences of Violations

If violations of the FDI screening regime occur:

• Prohibition of Transaction: if misrepresentation is discovered after approval but before execution.

• Sanctions: deprivation of voting rights and dividend rights; transaction declared invalid if approval was based on misrepresentation;

• Compensation: damages to national security or national interests recovered through court proceedings.

Link with Merger Control

An essential innovation of the draft law is its integration with the existing merger control framework. The draft proposes amendments to competition law, establishing that the Antimonopoly Committee of Ukraine (AMCU) will not be able to authorize a concentration unless:

·       There is prior approval for the foreign investment, or

·       The Ministry of Economy confirms there are no grounds for screening.

In other words, the screening procedure becomes a mandatory prerequisite for clearance of specific concentrations involving foreign investors.

Moreover, the draft law clarifies that this requirement will apply not only to new filings but also to pending concentration filings and cases before the AMCU at the time the FDI screening law enters into force. This alignment is designed to avoid regulatory gaps and ensure that potentially sensitive transactions cannot bypass national security review under the guise of merger control.

This linkage brings Ukraine closer to EU practice, where FDI screening increasingly operates in parallel with antitrust and merger regimes, ensuring that both competition and security considerations are addressed in cross-border transactions.

Entry into Force

If adopted, the Law will enter into force six months after the day following its official publication. Its provisions will not apply to FDI transactions executed before entry into force.

Outlook

Public consultations and input from business associations are expected. The adoption of an FDI screening regime is both timely and crucial for Ukraine’s economic security and resilience.