Romania’s FDI screening regime - from security filter to strategic deal consideration

Oana-Alexandra Ijdelea

Ijdelea & Associates, Bucharest

oijdelea@ijdelea.ro

Siranus Hahamian

Ijdelea & Associates, Bucharest

shahamian@ijdelea.ro

Foreign direct investment (FDI) screening has rapidly evolved from a niche regulatory concern into a central element of transaction planning in Romania. What was initially designed as a targeted mechanism to protect national security and public order has become, in practice, a decisive factor shaping deal timelines, structures and risk allocation across a wide range of sectors.

Romania’s FDI framework is grounded in Emergency Government Ordinance No 46/2022, implementing the European Union FDI Screening Regulation (Regulation (EU) 2019/452. While aligned with the EU framework in principle, the Romanian regime stands out for its breadth, low thresholds and increasingly assertive enforcement, placing it among the most stringent systems in Europe.

A broad and expansive scope

At the core of the Romanian regime lies a dual trigger: the involvement of a foreign, EU or even domestic investor, and the targeting of an activity deemed ‘sensitive’ under the Supreme Council of National Defence (CSAT) Decision No 73/2012. The list of sensitive sectors is notably extensive, covering not only defence, energy and critical infrastructure, but also IT and communications, healthcare, agriculture, transport, financial services, media and even certain real estate and tourism-related activities.

In practice, this has led to a wide and sometimes counterintuitive application of FDI screening. Transactions that would not traditionally be perceived as security relevant, such as business parks, medical laboratories, software platforms or manufacturing activities with no dual-use component, have nonetheless been subject to review. As highlighted by recent practice, the concept of ‘national security’ has expanded well beyond its classical military or strategic connotations.

Equally significant is the financial threshold. Investments exceeding €2m are subject to mandatory notification, a level substantially lower than that applied in most other EU Member States. Moreover, even investments below this threshold may be screened if they are deemed capable of affecting public security or order, further amplifying uncertainty for investors.

Domestic and EU investors are not exempt

One of the most distinctive and controversial features of the Romanian FDI regime is its application to EU and domestic investors. Unlike many other jurisdictions, Romania expressly subjects investments carried out by Romanian entities or individuals to screening, where the relevant criteria are met. As a result, purely domestic transactions, internal reorganisations and greenfield investments may all trigger FDI obligations.

This approach reflects Romania’s cautious stance in the current geopolitical climate, but it also significantly broadens the compliance burden for local entrepreneurs and corporate groups. The practical implication is clear: FDI analysis can no longer be reserved for cross-border M&A: it must become a standard checkpoint in virtually any material transaction.

Procedure, timing and sanctions: why FDI is a deal-critical issue

From a procedural perspective, the Romanian FDI process is straightforward in theory but complex in execution. While statutory timelines suggest an average review period of two to three months for non-problematic cases, the frequent use of information requests and the ‘stop-the-clock’ mechanism often extends the process. In-depth reviews involving CSAT may further prolong timelines, with no clear statutory cap.

The sanctions for non-compliance are severe. Failure to notify, gun-jumping or the provision of inaccurate or incomplete information may result in fines of up to 10 per cent of the investor’s global turnover, as well as the nullity of the underlying transaction documents. These risks transform FDI screening from a procedural formality into a material deal risk that must be addressed contractually and strategically from the outset.

Is Romania ahead of the curve?

Interestingly, developments at EU level appear to validate Romania’s proactive approach. Proposed amendments to the EU FDI Screening Regulation indicate a trend towards broader scope, lower thresholds and enhanced scrutiny – bringing the EU framework closer to the Romanian model. In this sense, Romania may be seen as having anticipated the direction of travel at EU level, albeit at the cost of increased regulatory friction in the short term.

That said, both the existing regulatory framework and recent practice point to areas where the regime could be improved. Greater clarity on sectoral triggers, more transparency regarding decisional practice and clearer guidance on potential conditions attached to approvals would significantly enhance predictability for investors without undermining security objectives.

From compliance to strategy

The key takeaway for investors and dealmakers is that FDI screening in Romania must be approached as a strategic issue, not a box-ticking exercise. Early assessment, careful transaction structuring and realistic timeline planning are now essential. In many cases, the value of experienced legal advice lies not only in managing filings efficiently, but also in determining whether a notification is genuinely required and how risks can be mitigated through transaction design.

As Romania continues to refine its FDI framework and digitalise procedures, there is an opportunity to strike a better balance between security and investment attractiveness. In any case, FDI screening remains a defining feature of the Romanian deal landscape – one that no prudent investor can afford to overlook.