Further Changes Introduced To Romania's FDI Regime

• Published date: 13 June 2023
• Subject Matter: Government, Public Sector, Inward/ Foreign Investment
• Law Firm: Kinstellar
• Author: Mr Iustinian Captariu and Catalin Graure

June 2023 - Romania has just introduced additional amendments to its foreign direct investment ("FDI") screening regime, further broadening the scope of what was already one of the more far-reaching FDI regimes in the European Union.

The changes were enacted under Law no. 164/2023, published in the Official Gazette of Romania on 7 June 2023 (the "FDI Amendment Law") and applicable as of 10 June 2023, on approving Government Emergency Ordinance no. 46/2022 on measures for applying EU Regulation 2019/452 establishing a framework for the examination of foreign direct investment in the Union (the "EU FDI Regulation") and amending Competition Law no. 21/1996 ("GEO 46/2022"). GEO 46/2022 introduced the new FDI framework in Romania in April 2022 and was followed by the enactment of secondary FDI rules on the organisation and functioning of the FDI Screening Commission ("CEISD") in November 2022.

For additional background on GEO 46/2022 and the general traits of the new Romanian FDI regime, please see our previous update on the matter here.

Main changes brought by the FDI Amendment Law

We summarise below the most significant changes introduced by the FDI Amendment Law:

• The introduction of the concept of "EU investors" and increase of the scenarios where a local FDI filing is required, in what is generally perceived in the market as an overall debatable extension of the scope of the FDI regime to also capture EU investments (whereas only non-EU investments were previously subject to mandatory filing obligations).
• Clarification of the authorities' powers and the process to unwind a closed transaction - in this respect, the law provides that if a foreign investment was carried out in breach of the FDI rules and affected national security, public order, or projects or programmes of Union interest, the CEISD would issue an opinion proposing that the foreign investment be unwound. The CEISD opinion would also need to include the conditions, criteria timeline and procedure for unwinding the respective foreign investment. The final say would then vest with the Government which would issue a decision to unwind the transaction/investment As can be expected, this will of course raise particular difficulties in practice, and it remains to be seen how the authorities would handle such cases;
• The Romanian Competition Council ("RCC"), which performs secretarial duties for the CEISD and also formally issues the clearance decisions based on the screening...