Clearer rules, not new ones: what Malta’s FDI bill means for business

Foreign direct investment (FDI) has long been a key contributor to Malta’s economic activity. Since 2020, Malta has operated a formal screening framework under the National Foreign Direct Investment Screening Office Act, designed to assess foreign investments on grounds of security and public order. That framework was introduced in the context of EU Regulation 2019/452, which established a European framework for the screening of FDI and for cooperation between member states and the European Commission.

Bill no. 172 of 2026 proposes amendments to that framework which, if enacted, would refine how it operates in practice, making the rules clearer and more straightforward to apply.

At its core, the proposed amendments do not introduce an entirely new model of supervision but builds on rules that are already in place. Under the current law, investors must already notify the authorities not only when a foreign investment is first made, but also when certain changes occur afterwards. The bill largely preserves these triggers but refines their wording.

The implications are significant, particularly in group structures where ownership and control may shift without an external transaction. Internal reorganisations, share transfers, changes in beneficial ownership, and changes in business activity are part of everyday commercial life. These types of changes are already relevant under the existing regime where a foreign element is present.

The bill, however, seeks to clarify the notification analysis by focusing the trigger on investments affecting the activities listed in the Schedule, rather than referring more broadly to both activities and factors. In practice, FDI considerations may need to be factored in earlier in a transaction’s lifecycle, including at the structuring and term sheet stage, rather than as a later-stage regulatory consideration.

One area where the bill brings welcome clarity is the treatment of portfolio investment. While the current law already excludes such investments from the screening regime, the proposed amendments more clearly define them as investments made without any intention to influence management or control. This is likely to provide greater certainty for financial investors, minority shareholders and fund structures, reducing the risk that purely financial investments are inadvertently caught by the investment screening framework.

The bill also proposes structural changes aimed at improving how the system operates. It proposes to situate the National FDI Screening Office within the Malta Business Registry as a distinct section, aligning investment screening more closely with company registration and company records. This should create a more coherent institutional structure and may also streamline the interface for businesses interacting with the authorities.

One area where the bill brings welcome clarity is the treatment of portfolio investment

The existing FDI board would also be restructured under the bill, with defined composition, appointment criteria, and procedural rules guiding decision-making, which may contribute to greater consistency in how cases are handled.

At the same time, the bill would give the National FDI Screening Office stronger tools. Expanded information-gathering powers will allow it to request details from a wider range of parties involved in an investment, including public and private entities or authorities, particularly in cases where ownership or control is not immediately apparent.

This may place greater emphasis on maintaining clear and up-to-date corporate records, particularly in complex or multi-layered structures where ownership is not always clear-cut. Combined with a clearer notification framework, this points to a system that is not necessarily broader in principle, but more effective in practice.

These developments are not occurring in isolation. The 2019 EU Regulation that underpins Malta’s existing screening framework was itself part of a broader European effort to strengthen oversight of foreign investment on grounds of security and public order. Malta’s proposed amendments are consistent with that direction, reflecting a wider recognition that economic openness and security considerations need to be kept in balance.

Ultimately, the practical impact of the proposed framework will depend on how it is implemented. A balanced and proportionate approach could enhance investor confidence by providing clarity and predictability, while reducing uncertainty and preserving Malta’s competitiveness as an investment destination. At the same time, greater clarity may bring a wider range of situations into focus, with practical implications for how transactions are structured and timed.

Although the bill has not yet been enacted, it offers a clear indication of direction. A note of context is relevant here: with parliament dissolved because of yesterday’s election, the bill has lapsed, along with all other pending legislation. It will be for the incoming administration to decide whether to reintroduce it. If it does, the proposed amendments are best understood as a targeted refinement of the existing regime rather than a fundamental shift towards continuous or intrusive supervision.

For businesses and investors, the message is straightforward: the rules are not new, but they are becoming clearer, more structured, and in some cases, more difficult to overlook.

The contents of the article are intended for general informational purposes and do not constitute legal advice. 

Emma Fenech is an associate with David Zahra & Associates Advocates.