Cyprus has introduced a new legal framework for Foreign Direct Investment (FDI) with the Establishment of a Framework for the Screening of Foreign Direct Investments-Law of 2025 (Law 194(I)/2025), which will apply from April 2026.
This is an important development for investors and businesses, as it introduces a formal review process for certain foreign investments. At the same time, the framework is clear and manageable—especially when considered early in the transaction process.
What Does the New Law Do?
The law requires prior approval for specific investments made by foreign investors into Cyprus companies operating in sectors considered strategically important.
In simple terms, some transactions will now need to be reviewed and approved before completion.
This does not change the attractiveness of Cyprus as an investment destination. It simply means that this additional step should be built into transaction planning from the beginning.
When Is a Filing Required?
A notification is required where all of the following apply:
- The investor is a foreign investor
- The investor acquires at least 25% of shares or voting rights, or otherwise gains similar control
- The investment value is €2 million or more
- The target company operates in a strategically important sector
Which Sectors Are Covered?
The law takes a broad approach to what is considered “strategic.”
In addition to traditional areas like energy and defense, it also includes:
- Healthcare and education
- Transport
- Tourism
- Media and communications
- Financial services
- Data processing and storage
- Technology and innovation sectors such as artificial intelligence, cybersecurity, semiconductors, and biotechnology
As a result, many businesses may fall within scope—even if they do not initially consider themselves sensitive.
How the Review Process Works
The review is carried out in two stages:
- An initial assessment (up to 20 working days) to decide whether a full review is needed regarding the notified investment
- A full review (up to 65 working days) where the transaction is assessed in more detail
If additional information is requested, the timeline may be extended. Approval becomes effective only once it is formally issued in writing.
What Powers Do the Authorities Have?
The competent authority has flexibility in how it handles transactions. It may:
- Approve a transaction (with or without conditions)
- In limited situations, prohibit, terminate or reverse a transaction
- If the investor fails to comply restrictions on the exercise of rights including voting, management and control rights might be imposed
In practice, transactions that are properly prepared are expected to proceed without difficulty.
Post-Completion Review
The law also allows the authority to review transactions after completion in certain cases:
- Within 15 months if there are concerns about security or public order
- Up to 5 years where a mandatory filing was not made
This highlights the importance of checking early whether a transaction falls within the regime.
Practical Takeaways
The introduction of FDI screening in Cyprus is a procedural change rather than a barrier.
For investors and businesses, the key is to:
- Consider FDI at an early stage
- Factor approval timelines into deal planning
- Address the issue during due diligence and structuring
- Reflect it clearly in transaction documentation
With the right preparation, the process can be handled efficiently and without disruption.
How KSA Can Support You
At KSA, we work with clients to ensure that FDI requirements are identified early and managed smoothly as part of the overall transaction process.
We can assist with:
- Initial FDI assessments
- Transaction structuring
- Preparation and submission of filings
- Communication with the authorities
Our focus is to help you move forward with clarity, certainty, and confidence.
Get in Touch
If you are planning a transaction that may sign or complete on or after April 2026, now is a good time to consider how the new framework may apply.
Our team is available to discuss your specific transaction and guide you through the process.
