The proposed amendments to the Act include new provisions on, inter alia, circumvention of the Act, disclosure of confidential information to authorities and cooperation between the Member States. Furthermore, the proposed amendments aim to address the national concerns and practical needs arisen in relation to the protection of vital national interests, such as national defense, critical infrastructure and technologies as well as supply
and functions fundamental to society. According to the draft government proposal, the scope of the Act will not be extended.

According to the provisions of the Act in force, a confirmation of Finnish Ministry of Economic Affairs and Employment (the “MEE”) must be applied for as regards all foreign companies’ proposed acquisitions of Finnish companies that produce defense industry products or services or dual use
items or services. Additionally, the monitoring extends to transactions carried out by non-EU or non-EFTA companies’ that may have an effect on
vital national interests, such as critical infrastructure, security of supply and other functions fundamental to society.

According to the Act, a foreign person or entity is any person or entity not domiciled in the EEA as well as any entity domiciled in the EEA where a foreign person or entity has one tenth of the total votes or a corresponding influence. With respect to acquisitions concerning the defense sector, including also companies producing dual use items or services, a foreign person or entity is any person or entity not domiciled in Finland as well as any entity domiciled in Finland where a person or entity not domiciled in Finland has one tenth of the total votes or a corresponding influence.

According to the Act, acquisitions of at least one tenth, one third or half of the total votes or a corresponding influence in a Finnish company
trigger the threshold of applying for confirmation from the MEE.

Factors that Member States and Commission may take into account

According to the Regulation, Member States and the Commission may take into account several factors when assessing whether a foreign direct investment would likely affect security or public order. These factors include the investment’s impact on, among others:

• Critical infrastructure whether physical or virtual, including energy, transport, water, health, communications, media, data processing or
  storage, aerospace, defense, electoral or financial infrastructure and sensitive facilities, as well as land and real estate crucial for the use
  of such infrastructure.
• Critical technologies and dual use items including artificial intelligence, robotics, semiconductors, cybersecurity, aerospace, defense, energy
  storage, quantum and nuclear technologies as well as nanotechnologies and biotechnologies.
• Supply of critical inputs, including energy or raw materials, as well as food security.
• Access to sensitive information, including personal data, or the ability to control such information.
• The freedom and pluralism of the media.

Cooperation and exchange of information between the Member States

The national confirmation processes concerning foreign corporate acquisitions which fall under the scope of the Act will likely be prolonged with at least two weeks as a result of the implementation of the Regulation. The national monitoring mechanisms will be supplemented with requirements concerning cooperation and exchange of information between the Member States. The MEE will in the future serve as the national contact point between the Member States and the Commission in order to ensure the effective exchange of information on monitored foreign investments in a Member State and to make it possible for Member States and the Commission to raise concerns related to a specific foreign investment. Furthermore, a provision concerning the disclosure of confidential information to authorities is proposed to be included to the Act.

The implementation of the EU-wide framework, however, does not restrict Finland’s national sole responsibility for safeguarding its national security
and the final say whether a particular foreign investment will be allowed or not or whether particular foreign investments will be monitored or
not will remain at national level. Applicants will be obliged to submit more information when applying for a confirmation. The application
would in the future include, inter alia, the following information:

• the ownership structure of the foreign investor and the target company, including information on the ultimate investor and participation in the capital;
• the approximate value of the investment;
• the products, services and business operations of the foreign investor and the target company;
• the Member States in which the foreign investor and the target company conduct relevant business operations;
• the funding of the investment and its source;
• the planned completion date of the investment; and
• the effects on projects or programmes of EU interest.

Circumvention of the Act

A new provision considering the circumvention of the Act is proposed to be included in the Act. According to the proposed provision, if it is evident
that an acquisition or measures, arrangements or other actions with comparable effects have as an objective to circumvent the requirement to apply for confirmation from the MEE, it must be submitted for the MEE’s review at its request. The proposed provision would apply broadly, for example it would also apply in cases where the MEE has previously approved another foreign company’s acquisition in a Finnish company subject to monitoring under the Act.

Security sector corporate acquisitions

According to the draft government proposal corporate acquisitions in the security sector would also become subject to the prior confirmation of the
MEE. This would apply to acquisitions concerning companies providing products or services to authorities which are deemed vital for the security of
the society. No exhaustive definition would be given, but the preparatory works list as examples the Defence Forces, police, customs, National Center for Security of Supply, National Security Authority and the Transport and Communications Agency Traficom. As a guiding principle for determining a
security authority, the authority would have statutory responsibility for safeguarding national safety and public order.

Conditional confirmations

Furthermore, the draft proposal contains a new provision that would enable the MEE to impose conditions for the confirmation of a foreign corporate
acquisition and, if necessary enforce the compliance of the conditions with a penalty payment. The possibility for the MEE to impose conditions would be a beneficial alternative to no confirmation for the acquisition.

Request for comments

The MEE is currently requesting comments to the draft Finnish government proposal implementing the Act. Comments can be submitted at
www.lausuntopalvelu.fi until 3 April 2020. The draft government proposal on the amendment of the Act is currently available at the website of the MEE in Finnish and Swedish. The objective is that the proposal would be submitted to the Parliament in June 2020 and that the proposed amendments would enter into force on 11 October 2020.