Security Alert
On 23rd May 2025, the Greek Parliament enacted pivotal -and long awaited- law 5202/2025 on measures for the implementation of Regulation (EU) 2019/452 (the “Law”), establishing a comprehensive framework for screening foreign direct investments (the “FDI”) within the Union on the grounds of security or public order.
Zepos & Yannopoulos participated actively in the public consultation of the draft law and the majority of our recommendations were adopted and incorporated into the final legislation.
In a nutshell:
Scope and objective: The Law aims to establish a robust national screening mechanism for foreign direct investments intending to take place in Greece and/or in other member states and subject to specific screening criteria, in sectors considered sensitive to national security or public order. It seeks to mitigate potential risks associated with certain foreign direct investments in infrastructure, assets, goods or services necessary in a) strategic (sensitive) sectors such as energy, transport, health, information and communication technologies, or digital infrastructure, and b) particularly sensitive sectors including defence and national security, cybersecurity, artificial intelligence, port infrastructure, crucial underwater infrastructure and tourism infrastructure in border areas.
FDI screening criteria: A foreign direct investment falls under the screening mechanism of the Law if:
1. Is made in Greece and meets any of the following conditions:
(a) the investment is made by a third country foreign investor and the target undertaking is economically active in one of the aforementioned sectors; or
(b) the investment is made by an EU member state foreign investor provided that such foreign investor is: (i) controlled, within the meaning of paragraphs 2 to 5 of Article 32 of Law 4308/2014, by a natural person or a third country undertaking, or (ii) directly or indirectly controlled by the government of a third country, including state entities and armed forces, through ownership structure or significant funding, and the target undertaking is economically active in one of the aforementioned sectors; or
(c) the investment is made by an EU member state foreign investor, into whom a natural person or an undertaking from a third country, or the government of a third country, including state entities and armed forces, through ownership structure or significant funding participates with at least 10%, and the target undertaking is economically active in one of the particularly sensitive aforementioned sectors;
and/or
2. Is made in other EU member states and is subject to evaluation in Greece for security or public order reasons as per Article 11 of the Law.
The Law specifically stipulates the participation percentages in the target undertaking that (and the increase of which) would trigger the screening mechanism of the pertinent FDI and the conditions taken into account for the calculation of such participation stake. Briefly, FDI in sensitive sectors are scrutinised when participation exceeds 25%; while FDI in particularly sensitive sectors are scrutinised when participation in the target undertaking exceeds 10%.
Exemptions: The Law exempts from its screening process the following: (a) acquisitions of corporate securities made exclusively for financial investments (portfolio investments); (b) intragroup restructuring transactions or merger, provided that foreign investors do not increase their shares or their stake of control or influence, or the transaction does not entail additional rights resulting in a change in the actual participation of one or more foreign investors in the management or control of the target undertaking; and (c) pending tender procedures for which a binding offer has been received and contracts for assets’ development which have not yet been completed by the entry into force of the Law.
Competent authority and screening kick-off: The Law mandates the establishment of the Interministerial Committee for the Screening of Foreign Direct Investments (the “FDISIC”), on the grounds of national security or public order, supported by a specific division (B1 Division) of the Ministry of Foreign Affairs. Prior to concluding an investment that meets the screening criteria described above, foreign investors must submit an application and supporting documentation before the B1 Division for review. B1 Division shall notify the FDISIC by providing the latter all the required documents of the foreign investors and within thirty (30) days of the aforementioned notification, the FDISIC will either exempt the investment from screening or initiate the investigation process under Article 8 of the Law. Following the investigation, the Ministry of Foreign Affairs either approves the FDI or resolves its prohibition, reversal or the imposition of specific conditions or mitigating measures for the implementation of the FDI. The legislator also provides for an ex-officio investigation by the FDISIC, in case of failure to submit the aforementioned application.
Consequences, penalties and administrative sanctions: Any prohibition, reversal or imposition of specific conditions or mitigating measures by the Ministry of Foreign Affairs for the implementation of the FDI, entails the automatic nullity of the transaction. Failure to submit an application may lead to the reversal of the FDI or other measures. Administrative sanctions may range from Euro 5,000 to 100,000, while in specific cases of non-compliance may amount to double the value of the investment made.
The Law represents a significant milestone enhancing Greece’s strategic oversight of foreign direct investment in sectors vital to national security and public order. Introducing meticulously defined criteria and transparent screening processes in line with EU standards, the Law is expected to foster an environment where strategic national interests are preserved while still maintaining Greece’s position as an attractive investment destination.
For further information please contact us at fdi@zeya.com