The revised FDI screening bill and Cyprus' failure to comply

Cyprus' effort to comply with the EU Foreign Direct Investment (FDI screening) Regulation implemented four years ago, which concerns the establishment of a national mechanism, is proving to be a particularly difficult undertaking as a result of the constant disagreements arising between the parties involved in FDI control.

With Cyprus being the exception to the rule, since almost all of the EU member states have a national mechanism in one way or another, the entire effort on the island has been ongoing for the last few years, but so far the goal has not been achieved. And with the relevant bills prepared from time to time by the Ministry of Finance going backwards and forward like a tennis ball, with a route from the Ministry to the Law Office of the Republic, to the Parliament and back again.

The resulting dystopia was reaffirmed last Monday before the House Finance Committee, where the revised government bill was on the table for discussion, but on which the bodies present expressed strong disagreements and reservations.

As a result, the House Finance Committee decided to send the bill back to the Government, asking the Ministry of Finance to proceed with a new consultation with all those involved, so that there is a conclusion on the matter as soon as possible and which satisfies everyone.

A new consultation to be held

Speaking to InBusinessNews, the Deputy Chairman of the House Finance Committee, DIKO MP, Chrysis Pantelides, said that during last Monday's debate, it became clear that there had not been sufficient consultation prior to the preparation of the revised bill.

"The Ministry of Finance says that the consultation took place, but there is no agreement. On their part, however, the associations concerned claim that no consultation took place. For us, the truth is somewhere in the middle," he said.

"Consequently", continued Pantelides, "we consider that the Ministry of Finance has not exhausted all the dialogue or at least has not managed to convince the stakeholders of the changes that have been made."

"Based on what was reported to the Committee during the discussion of the revised bill, there seems to be too much disagreement on the part of all concerned and therefore we felt that it would be more appropriate to continue the discussion and consultation between the Ministry of Finance and all those involved, in order to reach a conclusion," he emphasised.

"Also," Pantelides added, "we asked the Ministry of Finance to send us some things in writing and to inform us definitively if it insists on its position that this is the framework and cannot be changed," indicating that "if the Government insists that this is the framework and cannot be changed, then we will move the discussion forward."

For now, he pointed out, however, the position of the Finance Committee is that the dialogue between the Ministry of Finance and those involved must continue and be exhausted.

"However, if I repeat, the Government insists that it cannot change the framework any more, then we will proceed to the article-by-article discussion of the bill and we will judge in our wisdom if any changes need to be made," he underlined, stressing that "the objective is for us to pass this framework through the Parliament as soon as possible, but to pass it correctly and not create problems."

Asked to say what problems might arise, the Deputy Chairman of the House Committee on Finance said that "something we believe will create problems is the change that was made regarding the minimum amount of investment that will be controlled and specifically that the control will starts from the first euro of investment, instead of the minimum amount of €2 million foreseen in a previous phase of the consultation".

"This," he said, "we think will create serious problems, mainly due to bureaucracy". "It has issues for which answers must be given, which we are waiting for to see how we will proceed as a Committee," Pantelides concluded.

The revised bill

Regarding the revised bill, as stated in a letter from the Permanent Secretary of the Ministry of Finance, Giorgos Pantelis, dated 22 March, 2024, to the General Secretary of the Parliament, "in September 2022, a bill was submitted to the Parliament for the implementation of a national control mechanism of Foreign Direct Investments."

During the relevant session of the House Financial and Budgetary Affairs Committee, it was decided to hold a consultation with the interested parties regarding specific provisions of the bill.

According to Pantelis, the Ministry of Finance, based on the written comments/observations received from the interested parties, as well as an exchange of views with them, proceeded to revise the provisions of the bill.

The revised bill was submitted to the Law Office in October 2023 for legislative review.

"The revised, legal-technically edited bill, as well as a copy highlighting the changes in relation to the original bill that was submitted to the Parliament, are attached, with the request that you take care of their immediate filing in the Parliament," concludes Pantelis in the letter.

• READ THIS REVISED FOREIGN DIRECT INVESTMENT CONTROL BILL (IN GREEK) HERE

The main changes

It is worth mentioning that according to what the representative of the Ministry of Finance, Michalis Iacovides, stated before the Finance Committee, after the consultation that took place with all the parties involved, most of the recommendations that were proposed were adopted, while those that were not adopted, were evaluated and there is documentation of this.

As he said, the main changes after the consultation include the establishment of an advisory committee, to avoid a concentration of power on the Minister, and in which representatives from other Ministries will participate.

In addition, he said that definitions have been clarified, while individual articles that created confusion and could have given rise to misunderstanding have been deleted.

On her part, the representative of the Law Office, Eleni Symeonidou, emphasised that the bill concerns the implementation of a regulation, which has provisions with immediate application, while the proposed legislation includes only the required provisions to be able to implement the European regulation.

(Source: InBusinessNews)