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Fdi Screening Regime In Finland.

What is Finland’s FDI Screening Regime?

FDI screening in Finland is a national security and public order review mechanism that allows authorities to examine and potentially block or condition foreign investments that could endanger key national interests.

The regime is established under the Act on the Screening of Foreign Corporate Acquisitions (No. 172/2012, as amended). The Ministry of Economic Affairs and Employment (MEAE) administers the screening process. Finland also cooperates with the EU framework on FDI screening under EU Regulation 2019/452.

1.1 Purpose of FDI Screening

The screening regime aims to protect:

National defence and security

Security of supply

Public order and key societal functions

Foreign and security policy interests
These are broadly defined to include vital services and infrastructure sectors.

2. What Transactions Are Covered?

2.1 Corporate Acquisitions Subject to Screening

A foreign investor must submit a notification or application when they:

Acquire 10%, 33%, or 50% of voting rights or significant control in a Finnish target; and

The target is a “monitored entity” such as:

Defence industry enterprises

Companies supplying critical services or products essential to state functions

Other firms considered vital to societal security

For defence and security sectors, pre‑closing notification and approval are mandatory. For other sectors with strategic importance, notifications are often voluntary but can be called in by authorities.

2.2 Definition of Foreign Investor

Depending on the sector:

Defence acquisitions: any entity not Finnish‑domiciled.

Security and other critical sectors: entities outside the EU/EFTA (European Free Trade Association) may be treated as foreign investors.

2.3 Standstill and Obligations

In mandatory cases, the transaction cannot close before clearance.

Failure to notify or submission of false data may lead to fines.

3. Interaction With EU Rules

Under EU Regulation 2019/452, Finland coordinates with other EU Member States on FDI notifications and information exchange. The national screening authority acts as the EU contact point for these procedures.

4. Judicial Review and Legal Challenges

The Screening Act and related administrative decisions can, in principle, be challenged under the Administrative Judicial Procedure Act before regional administrative courts. However, for certain referral or further examination decisions, judicial review may be excluded by express statutory wording.

5. Case Law and Practical Precedents

NOTE: Finland’s FDI screening regime is largely administrative and recent. Unlike older merger‑control or competition decisions, few reported judicial cases on FDI screening itself have been published publicly in court reports. Where case law exists, it is mainly via administrative decisions or judicial oversight.

Here are six key precedents or examples illustrating how Finland interacts with FDI screening and administrative review:

Case 1 — Defence Sector Mandatory Filing Cases

In multiple defence sector acquisition reviews, the MEAE has required pre‑closing applications because the target fell within the defence or security sector. These include defence technology firms and producers of dual‑use goods. The authority often engages in consultation with other ministries before confirming a transaction. As of 2025, Finland has not publicly rejected a defence sector acquisition outright, but approvals have included conditions in some cases.

Principle: Defence and security acquisitions trigger mandatory pre‑clearance, and approval is normally granted unless key national interest is endangered.

Case 2 — Security and Critical Sectors Monitoring

For firms providing essential public services (e.g., communications infrastructure or emergency supply chains), investors have voluntarily filed notifications. In practice, the MEAE has:

Asked for supplementary information

Engaged other authorities in consultation

Assessed risk to national security

These decisions remain largely administrative due to the voluntary nature of filing in these sectors.

Principle: Even non‑defence transactions may be reviewed if they impact functions vital to society.

Case 3 — Failure to Notify: Administrative Enforcement

In an administrative investigation, a foreign investor acquired control (crossing a 10% threshold) without filing, triggering enforcement scrutiny under section 10 of the Screening Act. The MEAE has authority to impose fines for failure to notify or withholding material information.

Principle: Administrative sanctions apply for non‑compliance with notification obligations.

Case 4 — Voluntary Notification Call‑in and Judicial Oversight Potential

In several transactions where investors initially believed their acquisitions were outside scope, the MEAE has called in the deal for review under voluntary screening provisions. Under the law, such a call‑in may be followed by an administrative review, and potentially a judicial appeal in an administrative court if the investor contests the scope.

Principle: Voluntary filings and call‑in decisions can lead to dispute before administrative courts.

Case 5 — Standstill Violation Allegations

A handful of administrative inquiries have occurred where investors allegedly closed a deal before mandatory clearance. While most have resulted in corrective notifications rather than outright penalties, it highlights the importance of adhering to the screening standstill.

Principle: Standstill violations can be subject to administrative penalties or corrective action.

Case 6 — Real Estate and National Security Decisions

Separate from corporate screening, acquisitions of real estate by non‑EU/non‑EEA entities are controlled under the Act on Transfers of Real Estate Requiring Special Permission. The Ministry of Defense reviews such cases when properties are near defence assets or otherwise sensitive. Judicial review of permit denials is available via administrative courts.

Principle: Real estate acquisitions by foreign persons can be screened and challenged judicially when national security is implicated.

6. Key Legal and Policy Themes

6.1 National Security

The regime puts national defence and security of supply first, especially in the defence industry and critical infrastructure sectors.

6.2 Thresholds Without Monetary Limits

Unlike other jurisdictions, Finnish FDI screening is based on control/ownership thresholds (10%, 33%, 50%), not monetary deal value.

6.3 Mandatory vs. Voluntary

Mandatory screening applies to defence and security sectors, while voluntary mechanisms extend to other strategic areas. Authorities can mandate review even after an investment has closed.

6.4 Judicial Review

Administrative and judicial processes exist but are limited in scope, and there is no broad catalogue of published court decisions specifically interpreting the FDI screening statute as of 2025.

7. Summary of Practical Takeaways

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