Who Files – and Who Gets Fined?

The new Foreign Investment Screening Regulation (FISR) harmonises key elements of national screening procedures, but leaves an unexpectedly basic question unresolved: who exactly must make the filing – and who faces penalties if no filing is made?

Article 4 uses several different formulations. Article 4(9) requires Member States to ensure that foreign investments subject to the prior authorisation requirement in Article 4(15) are filed by the “applicant requesting an authorisation”; Article 4(10) refers to the “person who made the filing”; and Article 4(11) requires screening authorities to be empowered to impose penalties on “foreign investors”, including for failure to file. Those formulations do not necessarily identify the same legal entity.

The FISR expressly covers investments carried out not only by a foreign investor itself, but also through a foreign investor’s subsidiary in the Union. Article 2(5) defines the foreign investor as a natural person who does not hold the nationality of a Member State or an undertaking or entity established or otherwise organised under the laws of a third country, while Article 2(7) separately defines a “foreign investor’s subsidiary in the Union” as an undertaking established under the laws of a Member State and directly or indirectly controlled by a foreign investor (hereafter, “EU subsidiary”). The Regulation therefore treats them as distinct legal categories. The entity expected to submit the filing may therefore differ from the foreign investor potentially exposed to penalties under Article 4(11).

An undefined applicant

Article 4(9) requires a foreign investment subject to the prior authorisation requirement in Article 4(15) to be filed before completion by the “applicant requesting an authorisation”. Yet the final FISR does not define that expression. The Commission’s January 2024 proposal did: Article 2(10) defined the applicant as the party or parties to the foreign investment transaction applying for authorisation with the relevant screening authority. The proposal also defined the “request for authorisation”. That applicant definition did not itself allocate the filing duty, but it at least confined the applicant role to a party or parties to the transaction.

The final text keeps the definition of “request for authorisation” in Article 2(4), but removes the definition of the applicant. At the same time, it introduces a definition of “filing” in Article 2(10) and elsewhere uses the more neutral language of the “person making the filing”. Article 7(a), for example, provides that in multi-country transactions “the person making the filing” shall endeavour to file in all Member States concerned on the same day. Recital 31 still refers to “the applicants”, while Article 18(2) refers more broadly to “natural or legal persons making a filing”. Article 11(4) speaks of the “foreign investor that made the filing”, and Article 11(6) again uses “applicant requesting the authorisation” without defining that term. None of these provisions identifies which transaction party must occupy the applicant role in every case.

The available legislative history preserves the operative formula but does not explain why the applicant definition was ultimately removed. Amendment 77 in Parliament’s amendments adopted on 8 May 2025 retained the operative rule that the investment “shall be filed by the applicant requesting authorisation”. The final Regulation kept that formula in Article 4(9), but adopted the new “filing” terminology for other provisions.

Consider an investment made through an EU subsidiary. Suppose a US parent controls a German subsidiary and the German subsidiary acquires an Austrian company that develops semiconductor technology covered by Annex I. The transaction can constitute a foreign investment under Article 2(1), even though the immediate purchaser is established in the Union. Who should Austria require to file? Article 4(9) does not determine at Union level whether the applicant must be the foreign parent, the German purchaser, another party, or more than one of them.

Penalties under Article 4(11)

Article 4(11) is more specific about penalties. It sets a minimum EU requirement: Member States must empower screening authorities to impose effective, proportionate and dissuasive penalties on foreign investors that fail to comply with the requirements of the screening mechanism, expressly including failure to file where required. On its wording, Article 4(11) conditions the required penalty power on non-compliance by the foreign investor. It neither expressly requires nor expressly precludes penalties under national law for other persons.

If national screening rules designate only the EU subsidiary as the party required to file, what obligation of the foreign investor itself has been breached when no filing is made? The Regulation does impose other obligations that may fall directly on foreign investors in specific circumstances: under Article 15(3), for example, a host Member State may request the foreign investor to provide specified information, which must then be provided within 15 calendar days. Those duties are distinct from the filing obligation in Article 4(9).

National rules might address this either by imposing the filing duty on the foreign investor, alone or together with the direct acquirer, or by allowing the subsidiary to file while imposing a separate duty on the foreign investor to ensure that the investment is duly filed. The FISR does not expressly choose between these approaches.

Comparison with EU merger control

Article 4(2) EUMR expressly allocates the notification duty: mergers must be notified jointly by the parties to the merger and acquisitions of joint control by those acquiring joint control, while in all other cases notification is made by the person or undertaking acquiring control. The Commission Implementing Regulation (EU) 2023/914, Article 2(1), follows that allocation and provides that notifications are to be submitted by the persons or undertakings referred to in Article 4(2).

The EUMR also connects that allocation to enforcement more explicitly. Article 14(2)(a) allows fines on the persons referred to in Article 3(1)(b) or the undertakings concerned where they fail to notify a concentration in accordance with Article 4 or Article 22(3) before implementation, subject to Article 7(2) and (3). The addressee language is not identical to Article 4(2), but the EUMR expressly allocates the notification duty and separately identifies the persons or undertakings exposed to fines for non-notification.

The FISR takes a different route. It harmonises the existence of pre-closing filing and authorisation for the common minimum scope but does not itself identify which transaction party must be the “applicant requesting an authorisation”. National rules will therefore have to specify who must file and how that obligation relates to liability for non-compliance.

What national implementation should clarify

Article 3 provides some room for national specification. It allows national provisions that are complementary to or more specific than the FISR, provided that they do not undermine and are consistent with its objective. Article 3 does not, however, identify which transaction party is the applicant under Article 4(9).

Subject to the Regulation and Union law, national rules could, for example, place the filing duty on the foreign investor, the direct acquirer, or both. Whatever model is chosen, national rules should specify how it interacts with Article 4(11). If the EU subsidiary alone is required to file, they should clarify whether the foreign parent has a separate compliance duty capable of supporting penalties under Article 4(11), and whether the subsidiary itself may also face penalties under national law. If the foreign investor bears the filing duty, the rules should explain how that obligation operates where the immediate purchaser is an EU subsidiary several corporate levels below it.

This matters now because Article 3(2), already applicable, requires Member States to notify the Commission by 17 January 2028 of the measures adopted under Article 3(1), while Article 4 applies from 17 January 2028. Article 23(2) also requires Member States, to the extent this is not laid down in national law, to publish detailed guidance on the “thresholds and triggers for filing obligations”. The identity of the filer should likewise be made explicit in national rules or guidance rather than left to case-by-case inference by investors and their advisers.

Conclusion

The FISR requires pre-closing filing for the common minimum scope but does not itself expressly determine which transaction party bears that obligation in transactions involving an EU subsidiary. Article 4(11) makes that allocation consequential because the Regulation requires penalty powers specifically in respect of foreign investors that fail to comply with the screening mechanism.

EU merger control provides that clarity. Member States implementing the FISR should do the same.