Revision of Malta’s FDI Rules – Key Takeaways

In March 2026, Bill No 172 (National Foreign Direct Investment Screening Office (Amendment) Act, 2026) (the “Bill”) was tabled before Malta’s Parliament. The Bill aims to provide greater clarity on the notification requirements for foreign direct investments which arise from The National Foreign Direct Investment Screening Office Act (the “Act”) as well as implement certain amendments to the institutional framework which sets up and regulates the National Foreign Direct Investment Screening Office (the “FDI Office”).

The FDI Act is undergoing its first major legislative reform since it established Malta’s foreign direct investment regime in 2019, following the enactment of Regulation (EU) 2019/452, which set up a framework for screening foreign direct investments into the Union (the “Regulation”).

Notification Requirements – clarity on notification triggers

Today, the Act currently captures within its scope proposed foreign direct investment being made in Malta which affects any of the activities or factors which form part of the Act’s Schedule. Summarily, the Schedule to the Act contains a list of activities and factors which should be taken into account when assessing whether a foreign direct investment is likely to affect security or public order of Malta. This activities and factors reflect the ones which form part of the Regulation.

The Schedule refers to the following:

• Activities critical infrastructure (physical/virtual) such as energy, transport, water, health, communications, media, data processing/storage, aerospace, defence, electoral or financial infrastructure; sensitive facilities; and land/real estate crucial to such infrastructure; critical technologies and dual-use items; supply of critical inputs including food security; access to sensitive information (including personal data) or the ability to control such information; and freedom and pluralism of the media.
• Factors including whether the foreign investor is directly or indirectly controlled by a third-country government; prior involvement in activities affecting security or public order in an EU Member State; or a serious risk of illegal or criminal activity.

The manner in which the Act is currently drafted requires notification of proposed foreign direct investment, even where such investment only affects the factors and not the activities. This has contributed to uncertainty among investors given that although a proposed investment may not hit one of the activities, it may arguably still need to be notified due to one of the factors being met.

In order to bring the Act in line with the EU FDI Regulation, the Bill proposes to amend the Act such that a foreign direct investment must be notified to the FDI Office only where it affects the activities listed in the Schedule. The factors will therefore only need to be considered subsequently, if the proposed investment will impact the activities.

Whilst the FDI Office has in practice been taking this approach already (i.e. that only foreign direct investment which triggers one of the activities is subject to notification and possibly screening, and not merely where one of the factors is met), the amendment is welcome as it provides investors with  legal certainty and ensures that the Act only captures relevant foreign direct investment within its scope.

Crystallisation of the Portfolio Investments Exclusion

The Act applies to investments which are aimed at establishing or maintaining lasting and direct links in order to carry on an activity in Malta, including investments which enable effective participation in the management or control of a company. It notably, excludes portfolio investments, however, is silent as to what constitutes a portfolio investment, leading to some uncertainty on investors’ side as to whether their proposed investment qualifies for the portfolio investment requirement or otherwise. The only guiding point was the European Commission’s Q&A document on the Regulation which referenced a European Court of Justice judgment of 28 September 2006 in Commission v Kingdom of the Netherlands (Joined Cases C-282/04 and C-283/04). While this was helpful, the referenced judgement referred to “acquisition of shares on the capital market solely with the intention of making a financial investment without any intention to influence the management and control of the undertaking”.  While this provided some guidance as to what may constitute a portfolio investment, it is not entirely clear whether this exemption was intended to apply only to investments made into publicly listed entities in view of the reference to acquisition of shares on the ‘capital market’ which in a broader sense could refer to transactions involving publicly traded entities.

The Bill proposes the following definition of portfolio investment, “means an investment in securities including bonds, shares, and similar instruments, intended for financial investment without any intention to influence the management or control of the company”.

This definition is helpful given that it (i) expands the extent of a portfolio investment to cover different types of instruments and (ii) clarifies that all types of investments may be classified as portfolio investment, regardless as to whether the shares being acquired are publicly traded on a listed market or otherwise and provided that there is no intention to manage or control the company.

The inclusion of a definition fleshing out what constitutes a portfolio investment under the Act is beneficial both for investors who are seeking deal certainty in terms of the notification requirements in Malta as well as for the FDI Office who will not face multiple requests for clarifications from investors who are unsure as to whether their investment may qualify as a portfolio investment.

The key criterion to benefit from the notification exclusion is the lack of intention on the investor’s part to influence the management or control of the company. Thus, while the investor at the point of making the investment may not have the intention or the possibility in any case of influencing the management or control of the company, any changes in this position would trigger a notification requirement under the Act.

Confirmation of the FDI Office’s right to engage with public authorities and private entities

The Bill proposes that during the screening process, the FDI Office will have the power to obtain information from any person involved in the foreign direct investment as well as public authorities and private entities.

The Act currently already affords the power to the FDI Office to consult with public authorities, and it seems that this power is regularly exercised by the FDI Office in its screening whereby it discusses proposed foreign direct investment with regulatory authorities, particularly where the foreign direct investment will concern a target entity or greenfield investment where licensing is involved.

By gaining access to information from private entities, the FDI Office will be better equipped to analyse the market where foreign direct investment is planned. This knowledge will help identify any potential risks associated with the proposed foreign direct investment and determine if there are alternative suppliers available.

Institutional Changes setting up the FDI Office

The Bill will bring the FDI Office directly within remit of the Malta Business Registry (“MBR”), being Malta’s corporate registry. This amendment is being proposed to create a “one coherent structure”.  The objective is to enable the FDI Office to utilize the existing resources of the MBR. Given the size of Malta as a jurisdiction, consolidating regulatory authorities is a logical and efficient approach which will help streamline processes ensuring quicker turnaround. In practice, the FDI Office is already operating from within the MBR. The Bill will legally formalise this practical reality.

This institutional consolidation will also enhance regulatory coherence between the FDI Office and the MBR and facilitate the detection of notifiable transactions. For investors that jump the gun and close their deals without obtaining clearance from the FDI Office the confluence of these two institutions will ensure greater oversight and amplify the FDI Office’s ability to catch non-reported transactions which were otherwise notifiable.

Conclusion

The Bill puts forward a number of welcome proposals which will help ensure that investors planning to carry out transactions in Malta are able to navigate the ever-evolving regulatory framework with much more clarity and certainty.

It is beneficial that these amendments are being proposed at this stage instead of postponing action until further revisions to the Act become necessary to align with the upcoming changes to the EU FDI framework.