The Accountant - Issue 1/21

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NFDISO

THE ACCOUNTANT INTERVIEW: NATIONAL FOREIGN DIRECT INVESTMENT SCREENING OFFICE The National Foreign Direct Investment Screening Office established in April 2020 evaluates and screens project proposals to ensure that direct investments from outside the EU do not create issues of security and good order to Malta and to the EU in general. The Accountant met with Screening Office Chairperson Mr Mario Galea (MG) and Chief Operations Officer Ms Bethany Magro (BM) to get a closer look at the new mechanism and what it means for CSPs.

What is the main function of the NFDISO? MG: The purpose of the Screening Office is to facilitate investment and yet protect the interests of Malta and the EU. The Act LX 2020 came into force in October last year and stems from European Regulation 2019/452, establishing a framework for the screening of foreign direct investments in member states. So our role is to assess projects for any potential risks. We take a wide approach to security and our priority is to safeguard public order in its broader sense. The NFDI Office’s interest in not only to protect strategic assets such as data or technology, but we are careful to examine the impacts of proposed investments on the wider social wellbeing of citizens.

How do you set out to achieve this in practice? BM: The Screening Office evaluates proposed economic projects by non-EU investors, including takeovers and transfer of shares , to establish whether they expose national and EU interests to any form of risk. If they do not, the investment is cleared for progression.

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If we identify risk potential, the screening process is triggered: The Office requests detailed information and conducts due diligence before sharing the file with the other EU partners for cross-checking. This also means that the Office is simultaneously screening investments made in other member states and raises concerns if a project in another country poses risks to Malta. The final decision on projects undergoing screening in Malta lies with the National Office. Once the investment is reviewed by the Commission and other Member States the Office may either give final approval or set out mitigating measures on the project.

Does the screening process extend to CSPs too? MG: Technically, it is the company directors that are responsible for the investment projects, but screening depends on the particular case and it may involve other persons associated with the project, including CSPs. Certain mitigation measures, for example, could affect CSPs directly. >>