Following the rapid changes in the security environment in recent years, Finland is reassessing its regulations on foreign investments targeting Finnish entities considered critical for the state. The Act on the Screening of Foreign Corporate Acquisitions (the Finnish FDI Act) aims to monitor and, where necessary, restrict foreign influence in Finnish companies that are crucial for national interests. The revision of the Act is largely driven by the updated EU FDI Screening Regulation and focuses on expanding coverage to include emerging critical technologies and industries that may not have direct security implications but are still vital to national security. Currently, many technology sector transactions that would require mandatory monitoring in other countries remain outside the scope of the Finnish FDI Act. 

The Ministry of Economic Affairs and Employment (MEAE) is responsible for overseeing FDI transactions and the ongoing reform process. The revised Act will align with the new CER bill, which strengthens the country’s resilience to crises and critical infrastructure. While the entities covered by the Finnish FDI Act are not identical to those defined as CER critical entities, the CER’s definition of critical entities offers useful support for the practical application of the Finnish FDI Act.

Although still in the early stages, the revision process has gained clarity following the recent publication of the Assessment Memorandum, outlining key areas for reform. The findings of the memorandum will serve as a foundation for the drafting of proposals for legislative changes. The legislative proposal is expected to be submitted to Parliament by autumn 2026, with the revised Finnish FDI Act anticipated to take effect by 2027.

While the review is still in draft form, it offers valuable insight into what to expect in the final legislation. Based on the Assessment Memorandum, the FDI filing procedure is expected to become more straightforward. However, as more transactions are likely to require notification, this could lead to longer processing queues and extended handling times.

Key changes 

The revised Finnish FDI Act is expected to introduce several important changes, including the expansion of the Act’s scope to cover greenfield investments, the standardization of filing requirements, and the extension of filing obligations to EU/EFTA investors involved in acquisitions of critical infrastructure.

No fixed deadlines for application processing times or a specific sector list to automatically trigger filing obligations are expected to be introduced. Therefore, like the current law, the revised version will likely retain some flexibility in the MEAE’s interpretation, allowing it to assess transactions on a case-by-case basis, but in a less flexible manner than currently.

Standardizing triggering conditions and expanding sector coverage 

The Assessment Memorandum proposes a significant overhaul of the Finnish FDI Act’s classification system. Instead of the current three-sector model – “defence”, “security” and “other critical industries” – the revised version will create a unified category with standardized conditions and procedures. This will eliminate sector-specific definitions of a "foreign investor", making all filings mandatory and creating a more consistent review process.

The sectors subject to FDI screening may expand to over ten critical areas, including sensitive industries, critical infrastructure, and technology critical to national security. For instance, non-EU/EFTA investments in critical infrastructure that are currently subject to voluntary filing would undergo a more stringent review process under the new law.

Ultimately, under the new framework, all non-Finnish investors making acquisitions in any of the listed critical sectors may be subject to the strictest level of scrutiny, similar to the current requirements for defence industry filings. 

Proposed sectors for FDI clearance:

• Particularly sensitive industries
• Critical infrastructure and critical service infrastructure (vital functions for society)
• Entities critical for security of supply
• Critical suppliers to the state
• Maintenance of key locations for national defence
• Entities producing or developing technology critical to national security/public order
• Entities essential for state IT security
• Battery storage facilities suitable for electricity storage
• Greenfield investments
• Quantum technology and AI
• Protection of personal data
• Other sensitive information

Clarifying asset deals, intra-group restructurings, and indirect applicability 

The current Finnish FDI Act lacks clarity around asset deals, intra-group restructurings, and indirect applicability. Asset deals, which do not change the ownership structure of a company, are not explicitly covered. The revised law will address this by including asset deals within the scope of the Finnish FDI Act.

Intra-group restructurings, while not clearly defined in the current law, have been interpreted by regulators as falling under the Finnish FDI Act. The revised law will provide a clear definition to formally include these restructurings.

Additionally, the Finnish FDI Act has been applied to indirect arrangements with sensitive authorities. For instance, if a non-defence related company supplies products or services to the Finnish Defence Forces through a subcontractor, it may still be considered a defence sector entity. The revised law will provide clearer provisions for such indirect applicability.

Greenfied Investments and FDI filing

Currently, greenfield investments are not explicitly covered under the Finnish FDI Act, although they can be indirectly captured by the circumvention provision. These investments are considered to have the potential to create conflicts of interest, particularly when state-owned enterprises from other countries invest in Finnish industries. From the state’s perspective, such investments may pose unintended security risks.

The revised law will likely require FDI filings for greenfield investments in specific sectors, including mining, battery industry, wind power, nuclear energy, cloud services, and critical transport infrastructure. The filing requirement will be limited to high-risk sectors to avoid discouraging foreign investment in Finland.

Additional filing thresholds 

Under the current Finnish FDI Act, transactions require FDI clearance if a foreign entity acquires at least 10%, 33.3%, or 50% of a Finnish company or gains equivalent control. The revised law may introduce additional thresholds of 66.7% and 90%, requiring further FDI approval at later stages of ownership acquisition.

Updating sanction policies: Shifting liability from individuals to entities

Currently, individuals responsible for ensuring compliance may face criminal fines for failing to apply for FDI clearance or omitting required information. The revised law is expected to shift liability from individuals to entities, with the MEAE proposing administrative penalties as the primary sanction. A corporate fine under criminal law is also being considered.

If you need more information or further guidance in this area, please contact Maria Karpathakis.

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