Foreign Investment Control in the EU 2026: What Changes for Companies and M&A

Key data

If your company operates in strategic sectors and has or seeks investors outside the EU, this regulation changes the rules of the game. The Regulation (EU) 2026/1386, published on 26 June 2026, repeals Regulation (EU) 2019/452 and introduces a more robust system for controlling foreign direct investment (FDI), with greater coordination between Member States and the European Commission. The question is not whether this affects the market: it is whether it affects your specific operation.

What does this regulation establish?

Regulation 2026/1386 builds a renewed framework on three pillars that significantly expand the scope of previous control:

The critical sectors subject to the new notification obligations are:

• Technology
• Infrastructure
• Energy
• Defence
• Media

Any non-EU company that intends to acquire significant stakes in European strategic assets must go through strengthened prior reviews before closing the transaction.

Economic and operational impact

The impact is not just regulatory: it translates into direct consequences on the timeline and cost of corporate transactions.

• Longer timelines in M&A: Merger or acquisition transactions with non-EU capital must complete more exhaustive prior reviews, which extends closing times and may condition negotiations with the investor.
• Additional administrative burdens: Affected companies must prepare specific documentation for authorization procedures, with the cost of internal resources and external advice that this entails.
• Greater long-term legal certainty: The regulation provides a more predictable framework for transactions that pass the filter, reducing uncertainty after closing.
• SMEs in sensitive sectors: Are directly included in the new authorization procedures, which represents a significant novelty compared to the previous framework.
• Risk of transaction blocking: The European Commission acquires greater intervention capacity, which may result in the suspension or conditioning of investments that previously only passed through the national filter.

Who does it affect?

• European companies in critical sectors (technology, infrastructure, energy, defence, media) that have or seek investors outside the EU.
• SMEs in sensitive sectors that receive foreign investment: are directly subject to the new authorization procedures.
• Non-EU investment funds that intend to acquire significant stakes in European strategic assets.
• M&A teams and CFOs managing transactions with non-EU capital: must incorporate the new timelines and requirements into their planning.
• Legal and financial advisors accompanying foreign direct investment transactions in Europe.
• National control authorities of the Member States, which must coordinate their mechanisms with the European Commission.

Practical example

Imagine a Spanish cybersecurity company (technology sector, considered critical under the new regulation) that is negotiating an investment round with a venture capital fund based in Asia.

Under Regulation 2019/452, the transaction could have been managed primarily at the national level, with the Spanish control authority as the main contact and a relatively limited review process.

Under Regulation 2026/1386, the same transaction must undergo a broader notification procedure, with coordination between the Spanish authority and the European Commission. The investment fund will have to provide additional documentation on its structure, source of funds and links with third countries. The transaction closing timeline is extended, and there is the possibility that the Commission will intervene directly if it considers that the investment affects strategic assets. The Spanish company, even if it is an SME, is not exempt from these authorization procedures.

The result: more time, more documentation and more uncertainty about closing, but also greater legal certainty once the transaction is approved.

What should companies do now?

1. Identify if your sector is on the critical list: Check if your main activity falls into technology, infrastructure, energy, defence or media. If so, any non-EU investment you receive falls under the new framework.
2. Audit your current capital structure: Check if you already have investors outside the EU with significant stakes and assess whether those structures require review or notification under the new regulation.
3. Incorporate the new timelines into ongoing M&A transactions: If you are negotiating non-EU capital entry, alert all parties that closing times will be extended due to strengthened authorization procedures.
4. Prepare the required documentation in advance: Work with your legal advisor to anticipate what information the prior review procedure will require and have it ready before initiating notification.
5. Monitor the entry into force date: The regulation does not yet specify the exact date of application. Set an alert to act as soon as it is published, as ongoing transactions may be affected.
6. Consult with your national control authority: National mechanisms must coordinate with the European Commission. Contact the competent body in your country to learn about the updated procedure.

Official source

Consult the complete regulation at official source

Disclaimer: This article is for informational purposes only and does not constitute legal advice. For specific decisions, consult a qualified professional. Source: https://eur-lex.europa.eu/./legal-content/AUTO/?uri=OJ:L_202601386