Screening of foreign direct investment: the temporary interdepartmental commission was established

Although the draft law on foreign direct investment (the “FDI”) screening is currently under consideration by the Verkhovna Rada of Ukraine, the Government has already begun to establish the relevant institutional mechanism.

Why was the Commission created, and what is its composition?

The Interdepartmental Commission is designed to ensure:

• interaction and coordination of the activities of executive authorities on issues related to assessing the potential impact of the FDI on national security;
• identification of ways, mechanisms, and means of resolving problematic issues related to the impact of the FDI on national security; and
• analysis and assessment of the impact of the FDI on national security.

The co-chairs of the Commission are:

• Minister of Economy, Environment, and Agriculture of Ukraine;
• First Deputy Secretary of the National Security and Defence Council of Ukraine.

The Commission also includes representatives of ministries, national security authorities, financial regulators, and the Antimonopoly Committee of Ukraine.

What tools will the Commission use?

To carry out its tasks, the Commission has the right to:

• request necessary information and materials from public authorities, businesses, critical infrastructure operators, and foreign investors;
• engage Ukrainian and international experts, as well as representatives of international organisations, to provide professional advice, proposals, and expert opinions;
• create working groups to address specific issues; and
• organise conferences, seminars, and other events within its competence.

What does this mean for businesses and investors?

At this stage, the FDI screening mechanism has not yet been implemented, and therefore, there is no obligation to undergo the relevant procedures and no liability for failure to do so.

However, investors should begin considering potential screening requirements when structuring future transactions, particularly in strategic sectors. Greater scrutiny is expected regarding the origin of capital, ownership structure, and ultimate beneficial owners.

The introduction of a screening mechanism for FDI is an important step towards creating a secure, transparent, and predictable investment environment that is consistent with EU standards and the expectations of international investors.