Finland is in the process of enacting a new foreign direct investment (“FDI”) regime. On 3 June 2026, the Ministry of Economic Affairs and Employment (“MEAE”) published the draft government proposal for an Act on the Screening and Authorisation of Foreign Investments (“Proposed FDI Act”), proposing a significant expansion of and other major changes to the current regime. A new FDI Act is expected to enter into force in spring 2027. Once adopted, the number of cases subject to Finnish FDI review is expected to roughly triple, with an estimated 60–70 additional cases per year. In the following, our experts analyse the proposed key changes that investors and businesses should consider in transaction planning.
The reform’s background and timeline
The Proposed FDI Act (sijoituslupalaki, in Finnish) would replace the existing Act on the Screening of Foreign Corporate Acquisitions (yritysostolaki, in Finnish), which provides the legal framework for the current Finnish FDI regime. The Finnish Government intends to revise the regime so that risks to national security, security of supply, and foreign influence activities are addressed more efficiently.
A further objective of the reform is to implement the changes to national legislation required by the ongoing EU-level reform of FDI screening. The EU’s forthcoming new Regulation on the Screening of Foreign Direct Investments (“EU FDI Regulation”) is intended to replace the current EU-wide framework for FDI screening, which has applied since October 2020. The EU FDI Regulation – expected to be published in July 2026 – will introduce a common level of harmonisation across the EU while permitting more extensive national requirements. The new EU rules will begin to apply 18 months after the EU FDI Regulation has entered into force, which would mean the beginning of 2028.
The draft government proposal for the Proposed FDI Act, published on 3 June 2026, is currently at the consultation stage. Comments on the draft proposal may be submitted to the MEAE until 16 July 2026. As things stand, the subsequent government proposal would be submitted to the Parliament in late September 2026, allowing a new FDI Act to enter into force in spring 2027.
Key changes of the proposed FDI act
1. Widening of sectoral coverage
The number of Finnish entities subject to mandatory FDI screening would be increased by widening the sectoral coverage. The new scope would include targets already subject to screening under the current FDI regime (see the first four bullets below, which would remain largely unchanged but be refined in certain respects) as well as entities in the new sectors (see the remaining bullets).
The entities active in the following sectors would be subject to screening:
- Producing or supplying, or intending to produce or supply, defence materiel or other products or services important to military national defence or the Finnish defence industry.
- Exporting, producing, developing, or handling dual-use goods subject to export authorisation.
- Producing or supplying critical products or services related to the statutory duties of Finnish authorities essential to the security of society.
- Activities, products, or services relating to safeguarding security of supply, critical infrastructure, or other vital functions or services of society.
- Activities, products, or services involving access to confidential, classified, or otherwise nationally security-relevant information and data collections.
- Producing or supplying information and communications technology or cybersecurity products or services relevant to national security, comprehensive security or security of supply.
- Critical sectors mandated by the EU FDI Regulation, including defence and dual-use goods, semiconductors, quantum and AI technologies, critical raw materials, energy and digital infrastructure, key financial and payment system actors, and information systems for electoral functions.
Under the Proposed FDI Act, acquisitions of entities active in the above sectors would require mandatory prior FDI approval. The voluntary notification regime available in certain situations under the existing FDI regime would be abolished.
2. Extension of screening to certain greenfield investments
Under the Proposed FDI Act, FDI screening would, for the first time, extend to cover greenfield investments in certain critical sectors. A greenfield investment means establishing a new company or business for the purpose of carrying out economic activities in Finland.
Targeted sectors subject to FDI screening in greenfield investments would include:
- Defence sector projects and the manufacturing or development of dual-use items.
- Construction and maintenance of airport and port infrastructure and related services such as port operations, cargo-handling, and ground-handling service (excluding vessel bunkering and waste reception).
- Establishment of logistics terminals serving food, healthcare, or fuel industry, or the needs of national defence and the defence industry.
- Data centres with a potential capacity of at least 100 MW that are intended to carry out activities in certain monitored sectors or that intend to involve AI or quantum technologies pursuant to the EU FDI Regulation.
- Energy infrastructure projects, covering baseload and regulating power, renewable energy production, and hydrogen projects with a production capacity of at least 100 MW (also collectively through multiple sub-threshold projects by an investor), and licensed electricity network operations under the Electricity Market Act.
- Exploration, extraction, processing, recycling, recovery, or storage activities of EU strategic raw materials.
3. Expansion of definition of “foreign investor”
Going forward, all investors not residing in Finland would be regarded as “foreign investors” and would, accordingly, need an approval when acquiring Finnish entities subject to FDI screening. Currently, except for defence sector companies, only non-EU/EFTA investors are subject to the approval procedure.
4. Introduction of new notification triggers
New notification triggers at 66.6% and 90% would be introduced, supplementing the existing thresholds of 10%, 33.3%, and 50% of shares, or other equivalent factual control, in a company subject to screening.
As under the current regime, a prior FDI approval could be required for a “specific reason” even where the foreign investor’s influence increases without meeting any of the above thresholds.
5. Changes to procedure, new FDI authority
The new FDI review procedure would introduce a preliminary review (Phase I) and a possible detailed review (Phase II) based on security considerations. The National Emergency Supply Agency (“NESA”; Huoltovarmuuskeskus, in Finnish) would be the competent authority empowered to grant an FDI approval in a Phase I review. Unlike in the current regime where there are no set deadlines for the review, the NESA would have to take its decisions within 45 calendar days.
If in Phase I it cannot be ruled out that the foreign investment could negatively affect comprehensive security or public order, Phase II will be initiated. The MEAE, which acts as the competent authority under the current FDI regime, would carry out a possible Phase II review. The MEAE could also take a matter from NESA into its own consideration already in Phase I where the significance of the matter so requires. No review deadline is proposed for Phase II.
As under the current regime, the decision not to grant the approval would be taken in the government plenary session based on the proposal of the MEAE. So far, Finland has never refused to grant an FDI approval.
6. Move from criminal to administrative penalties
A new administrative penalty system imposing fines for non-compliance with the Proposed FDI Act would be introduced, replacing the current criminal sanctions. For companies, the maximum fine would be EUR 10 million or 10% of the undertaking’s worldwide annual total turnover for the preceding financial year, whichever is greater. For individuals, the maximum fine would be EUR 500,000.
The NESA would act as the sanctioning authority for fines of up to EUR 100,000. Larger amounts would be decided by a sanctions board within the NESA based on the proposal of the NESA.
In addition, where a foreign investor fails to request a prior approval for an investment when required, it may be ordered to submit the approval application or restore the situation to a lawful state. Ultimately, the MEAE could declare the investment null and void.
Key takeaways
Although the current proposal for a new mandatory FDI regime is only a draft government proposal, at the moment there is nothing to indicate that the final proposal would be substantially different. The consultation period of the proposal is open to anyone until 16 July 2026. It is expected that the final government proposal would be submitted to the Parliament in late September 2026 and that a new FDI Act would be in force in spring 2027.
The proposed new national FDI regime – which takes into account also the changes required by the forthcoming EU FDI Regulation – would have a significantly wider scope than the current one. This is mainly due to widening the sectoral coverage, considering all investors not residing in Finland as “foreign investors”, and introducing additional notification triggers. Consequently, the Proposed FDI Act is expected to roughly triple the annual number of cases subject to an FDI approval.
As a main rule, Phase I cases would be dealt with by the NESA, an existing authority the jurisdiction of which would be extended to FDI reviews. While Phase I cases would have to be decided within a reasonable sounding 45 calendar days, unfortunately Phase II cases – decided by the MEAE – would not have a set review deadline.
The change from a criminal penalty system to an administrative one would probably be welcomed by most. However, it is worth noting that the proposed administrative fines for non-compliance would be significant.
Given the significant changes included in the proposal, foreign investors and businesses should take the FDI considerations into transaction planning from day one.
As indicated above, the final contents of the new FDI regime remain subject to change. Our FDI experts will continue to follow the reform carefully and would be pleased to discuss the draft government proposal, any subsequent step of the reform, or any other FDI-related question with you.
Thank you to Legal Tech Trainee Sonja Kojo for her assistance in writing this Alert.
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