European Parliament approves mandatory screening of foreign investments in defence financial services semiconductors and other sensitive sectors

The European Parliament has approved revised EU rules that would make foreign investment screening mandatory in all Member States for sensitive sectors including defence, semiconductors, artificial intelligence, critical raw materials and financial services. The measure is intended to identify and address security or public order risks while keeping the EU open to foreign capital, and it also extends to transactions within the EU where the investor is ultimately owned by non-EU individuals or entities. The agreed framework streamlines national screening procedures and strengthens cooperation between national screening authorities and the European Commission on cross-border security risks. Parliament approved the agreement with Member States by 508 votes to 64 with 90 abstentions. The package also recognises the need for further Union-level action on economic security risks from foreign investments, and the Commission has committed to set conditions for foreign investment in specific strategic sectors. Parliament noted that the Commission has already submitted a legislative proposal for an Industrial Accelerator Act. The regulation still requires formal approval by the Council before it can enter into force. It would then apply 18 months later.