Briefly
A brand new draft regulation No. 14062 “On Screening of International Direct Investments” (“Draft Regulation”) was registered within the Ukrainian Parliament on 22 September 2025, proposing to introduce a screening mechanism and necessary notification necessities for sure international direct investments (FDIs) in Ukraine in sectors related to nationwide safety pursuits. This initiative represents one more try to introduce FDI regime in Ukraine and displays Ukraine’s ongoing efforts to align its funding laws with the EU’s International Direct Funding Regulation 2019/452, which has been totally relevant since October 2020.
The Draft Regulation is at its earliest stage of approval and stays topic to full parliamentary overview. If adopted, it would come into impact six months following its publication and won’t have an effect on transactions closed previous to its entry into pressure.
Contents
FDI competent authority
The Draft Regulation proposes the institution of FDI Screening Fee (“Fee”), working underneath the Ministry of Financial system, whose actions can be regulated individually by the Cupboard of Ministers of Ukraine. The Fee can be composed of representatives of a number of state our bodies and companies, accountable, inter alia, for nationwide safety and international affairs. The Fee can be accountable for reviewing FDI filings, figuring out whether or not FDIs are topic to screening and deciding whether or not to approve, conditionally approve, or refuse to approve the funding.
Sectoral focus
FDIs can be topic to screening in the event that they contain Ukrainian entities lively within the following sectors (i.e., “Screening Entities”):
- Vital Infrastructure
- Strategic Minerals
- Protection and Twin-Use Merchandise
Notifiable occasions
The Draft Regulation requires notification for approval of FDIs that end in a international investor (straight or not directly):
- Buying greater than 25% of voting rights in a Screening Entity
- Gaining the fitting to nominate the only government physique, or greater than 50% of a collegial government physique, or greater than 25% of a supervisory board or one other collegial administration physique of the Screening Entity
- Gaining the fitting to dam administration choices
- Buying possession or use of fastened property valued at 10% or extra of the Screening Entity’s complete property
- Making different funding transactions right into a Screening Entity leading to international direct funding (i.e., “catch-all” clause)
A Register of International Traders can be established and FDI buyers can be topic to annual reporting and monitoring. Entry to such Register can be restricted and ruled by regulation.
Timing, process and end result of overview
Preliminary overview
Upon receiving an FDI submitting, the Fee should decide whether or not the proposed funding falls throughout the scope of screening. Inside 60 days, it should confirm the sufficiency of the submitted data and paperwork. Its determination concerning screening of notified FDI, or that the funding will not be topic to screening, should be notified to the investor inside 5 working days of such determination being taken.
Screening overview
The screening process should be accomplished inside 90 days from the date the choice to provoke screening is made. Inside the first 30 days, the Committee sends data requests to the state authorities that possess or might acquire data essential for the screening, which should reply inside 30 days. If no grounds for rejection of an FDI submitting are recognized, the Fee adopts a choice to approve the funding or to approve it with situations.
The approval will not be granted in circumstances the place (i) the international investor submits false and/or incomplete data; (ii) the proposed transaction poses a risk to the safety of important infrastructure, important features and/or providers; (iii) the transaction poses a risk to Ukraine’s nationwide safety or nationwide pursuits.
Prohibited transactions
A few of the FDI transactions can’t be authorised if, on the time of the appliance or throughout the previous two years:
- The international buyers had, of their share capital, investments with hyperlinks to aggressor state or different sanctioned states.
- Such buyers (their founders/shareholders or Final Useful Homeowners (UBOs)) had been sanctioned or affiliated with aggressor state.
- Such buyers (their founders/shareholders or UBOs) held citizenship of the occupant-state or aggressor state
- Such buyers had a direct or oblique property curiosity in such states
Merger management
Importantly, the Draft Regulation supplies that merger management process can’t start, and clearance can’t be granted by the Antimonopoly Committee of Ukraine and not using a prior FDI screening determination or affirmation that the investments will not be topic to FDI screening. This, amongst different issues, signifies that if adopted in its present type, the Draft Regulation might considerably prolong the timeline for clearing transactions that require merger management clearance in Ukraine.
Legal responsibility and sanctions
Failure to adjust to the FDI notification requirement might end in:
- Revocation of voting rights acquired by a transaction involving international funding
- Invalidation of the related transaction
- Lack of the fitting to obtain a share of income/dividends from the date the related transaction was executed
- Fines of as much as 50% of the worth of the FDI
Influence on M&A transactions
The Draft Regulation registration marks a major step in the direction of the institution of a proper FDI screening regime in Ukraine. If authorised, M&A transactions in strategic sectors involving international buyers would require a extra cautious and thorough planning to account for timing wanted to finish FDI screening and merger management processes and, as soon as accomplished, be prepared for annual monitoring and reporting.
Events to M&A transactions might want to perform personal in-depth pre-transaction due diligence and “know-your-counterparty” procedures to proactively handle dangers of unsuccessful regulatory FDI screening, in addition to agree within the transaction documentation on enough danger allocation mechanisms.
The Draft Regulation is presently underneath parliamentary overview and is anticipated to be a scorching subject of MPs’ debate. Moreover, an alternate, extra complete, draft regulation has already been submitted to the Ukrainian Parliament on 8 October 2025. The Draft Regulation can be adopted following consultations with private and non-private sectors’ stakeholders and has already stirred lively debate amongst enterprise and authorized communities.
For sure that the overview interval for FDIs is considerably increased than that set by EU’s International Direct Funding Regulation 2019/452 and the “catch-all” clause for notifiable FDIs must be additional clarified.
Whereas no quick motion is required, it is strongly recommended to watch legislative developments and already entry potential impression on deliberate funding transactions in specified sectors. If in case you have any questions or wish to talk about how this proposal might have an effect on your funding planning, please contact us.
* * * * *
Bohdan Malyk, Trainee, has contributed to this authorized replace.
Briefly
A brand new draft regulation No. 14062 “On Screening of International Direct Investments” (“Draft Regulation”) was registered within the Ukrainian Parliament on 22 September 2025, proposing to introduce a screening mechanism and necessary notification necessities for sure international direct investments (FDIs) in Ukraine in sectors related to nationwide safety pursuits. This initiative represents one more try to introduce FDI regime in Ukraine and displays Ukraine’s ongoing efforts to align its funding laws with the EU’s International Direct Funding Regulation 2019/452, which has been totally relevant since October 2020.
The Draft Regulation is at its earliest stage of approval and stays topic to full parliamentary overview. If adopted, it would come into impact six months following its publication and won’t have an effect on transactions closed previous to its entry into pressure.
Contents
FDI competent authority
The Draft Regulation proposes the institution of FDI Screening Fee (“Fee”), working underneath the Ministry of Financial system, whose actions can be regulated individually by the Cupboard of Ministers of Ukraine. The Fee can be composed of representatives of a number of state our bodies and companies, accountable, inter alia, for nationwide safety and international affairs. The Fee can be accountable for reviewing FDI filings, figuring out whether or not FDIs are topic to screening and deciding whether or not to approve, conditionally approve, or refuse to approve the funding.
Sectoral focus
FDIs can be topic to screening in the event that they contain Ukrainian entities lively within the following sectors (i.e., “Screening Entities”):
- Vital Infrastructure
- Strategic Minerals
- Protection and Twin-Use Merchandise
Notifiable occasions
The Draft Regulation requires notification for approval of FDIs that end in a international investor (straight or not directly):
- Buying greater than 25% of voting rights in a Screening Entity
- Gaining the fitting to nominate the only government physique, or greater than 50% of a collegial government physique, or greater than 25% of a supervisory board or one other collegial administration physique of the Screening Entity
- Gaining the fitting to dam administration choices
- Buying possession or use of fastened property valued at 10% or extra of the Screening Entity’s complete property
- Making different funding transactions right into a Screening Entity leading to international direct funding (i.e., “catch-all” clause)
A Register of International Traders can be established and FDI buyers can be topic to annual reporting and monitoring. Entry to such Register can be restricted and ruled by regulation.
Timing, process and end result of overview
Preliminary overview
Upon receiving an FDI submitting, the Fee should decide whether or not the proposed funding falls throughout the scope of screening. Inside 60 days, it should confirm the sufficiency of the submitted data and paperwork. Its determination concerning screening of notified FDI, or that the funding will not be topic to screening, should be notified to the investor inside 5 working days of such determination being taken.
Screening overview
The screening process should be accomplished inside 90 days from the date the choice to provoke screening is made. Inside the first 30 days, the Committee sends data requests to the state authorities that possess or might acquire data essential for the screening, which should reply inside 30 days. If no grounds for rejection of an FDI submitting are recognized, the Fee adopts a choice to approve the funding or to approve it with situations.
The approval will not be granted in circumstances the place (i) the international investor submits false and/or incomplete data; (ii) the proposed transaction poses a risk to the safety of important infrastructure, important features and/or providers; (iii) the transaction poses a risk to Ukraine’s nationwide safety or nationwide pursuits.
Prohibited transactions
A few of the FDI transactions can’t be authorised if, on the time of the appliance or throughout the previous two years:
- The international buyers had, of their share capital, investments with hyperlinks to aggressor state or different sanctioned states.
- Such buyers (their founders/shareholders or Final Useful Homeowners (UBOs)) had been sanctioned or affiliated with aggressor state.
- Such buyers (their founders/shareholders or UBOs) held citizenship of the occupant-state or aggressor state
- Such buyers had a direct or oblique property curiosity in such states
Merger management
Importantly, the Draft Regulation supplies that merger management process can’t start, and clearance can’t be granted by the Antimonopoly Committee of Ukraine and not using a prior FDI screening determination or affirmation that the investments will not be topic to FDI screening. This, amongst different issues, signifies that if adopted in its present type, the Draft Regulation might considerably prolong the timeline for clearing transactions that require merger management clearance in Ukraine.
Legal responsibility and sanctions
Failure to adjust to the FDI notification requirement might end in:
- Revocation of voting rights acquired by a transaction involving international funding
- Invalidation of the related transaction
- Lack of the fitting to obtain a share of income/dividends from the date the related transaction was executed
- Fines of as much as 50% of the worth of the FDI
Influence on M&A transactions
The Draft Regulation registration marks a major step in the direction of the institution of a proper FDI screening regime in Ukraine. If authorised, M&A transactions in strategic sectors involving international buyers would require a extra cautious and thorough planning to account for timing wanted to finish FDI screening and merger management processes and, as soon as accomplished, be prepared for annual monitoring and reporting.
Events to M&A transactions might want to perform personal in-depth pre-transaction due diligence and “know-your-counterparty” procedures to proactively handle dangers of unsuccessful regulatory FDI screening, in addition to agree within the transaction documentation on enough danger allocation mechanisms.
The Draft Regulation is presently underneath parliamentary overview and is anticipated to be a scorching subject of MPs’ debate. Moreover, an alternate, extra complete, draft regulation has already been submitted to the Ukrainian Parliament on 8 October 2025. The Draft Regulation can be adopted following consultations with private and non-private sectors’ stakeholders and has already stirred lively debate amongst enterprise and authorized communities.
For sure that the overview interval for FDIs is considerably increased than that set by EU’s International Direct Funding Regulation 2019/452 and the “catch-all” clause for notifiable FDIs must be additional clarified.
Whereas no quick motion is required, it is strongly recommended to watch legislative developments and already entry potential impression on deliberate funding transactions in specified sectors. If in case you have any questions or wish to talk about how this proposal might have an effect on your funding planning, please contact us.
* * * * *
Bohdan Malyk, Trainee, has contributed to this authorized replace.
