On January 31, 2025, the Regulations for the Organization and Activities of the Inter-ministerial Council for Screening of Foreign Direct Investments (the Regulations) were promulgated. This represents another step in the process of implementing the screening procedure for Foreign Direct Investments (FDI) in the country.
Background
In 2024, the National Assembly incorporated the screening procedure for FDI into the Investment Promotion Act. These requirements stem from Regulation (EU) 2019/452, making Bulgaria one of the last EU member states to adopt this mechanism While the amended law contains all the requirements and conditions that determine which investments are subject to screening, as well as who the members of the Inter-ministerial Screening Council (ISC) shall be, prior to the commencement of the screening mechanism, the law provided that the Council of Ministers was required to adopt the Regulations as well as amend Regulations for the implementation of the Investment Promotion Act by September 12, 2024.
Main aspects of the Regulation
The newly adopted Regulations expand the provisions of the Investment Promotion Act by not only addressing the structure of the ISC but also emphasizing on the handling of sensitive information. Specific measures are introduced for storing confidential information in separate folders, and access to such information will be restricted to a limited group of individuals. Another key focus of the Regulations is the framework for cooperation between the European Commission, the ISC, and equivalent FDI screening bodies in other EU member states.
Permit procedure
The Regulations include several new provisions relating to the FDI permit procedure. For the purpose of issuing a permit, the ISC may request additional information from the applicant, and a refusal to provide such information will be taken into account when deciding. When providing additional information, the applicant will have the right to request a hearing before the ISC.
The Regulations also regulate how and when the sessions of the ISC will take place. Regular sessions will be called according to the time limits for granting or denying a permit, and the presiding officer or one-third of the members will be able to call special sessions, and all meetings of the ISC will be closed sessions. There are also provisions for quorums and majorities as well as how members can be substituted when necessary.
Administrative structure of the ISC
Among all else, the Regulations establish that the administrative, technical, expert and organizational support for the activities of the ISC shall be provided by the Secretariat of the Security Council to the Council of Ministers. The Secretariat will also play a key role in facilitating cooperation between the ISC and the European Commission.
The regulations also allow experts from various fields to assist the ISC in highly specialized decision-making areas.
The Future of FDI Screening
While the new Regulations mark significant progress, the process of establishing an effective FDI screening system in Bulgaria is not yet complete. The Council of Ministers still needs to approve the Regulations for Implementing the Investment Promotion Act, after which members of the Inter-ministerial Council must be appointed. Only after these steps are complete will the body be able to function, providing a structured procedure for monitoring and controlling investments. The mechanism’s impact on foreign investment attraction and management in Bulgaria remains to be seen as it seeks to balance national security with economic interests. This development positions Bulgaria alongside other EU member states in implementing a comprehensive FDI screening framework, aligning with broader European efforts to safeguard strategic sectors while maintaining an open investment environment.
But while Bulgaria is still preparing to launch the screening mechanism, the European Commission is already discussing the drafting of a new regulation to introduce a unified screening procedure in all EU member states. If you want to follow closely the development of FDI screening in the country and in Europe you can follow us in LinkedIn here.
This article is for informational purposes only and does not constitute legal advice or counsel.
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