Cyprus has introduced its first formal screening regime for foreign direct investments. Law 194(I)/2025 entered into force on 2 April 2026 and applies to any qualifying foreign investment in a strategically important Cypriot undertaking made on or after that date. The regime is not designed to close Cyprus to foreign capital — Cyprus remains firmly open for business. What it does is establish a structured, proportionate process through which certain investments are assessed for their potential impact on national security and public order. This guide explains who is affected, what triggers a notification obligation, how the process works, and what sanctions apply for non-compliance.
1. Background and legal framework
Cyprus was one of the last EU Member States to implement a national FDI screening mechanism. The EU has operated a cooperation framework under Regulation (EU) 2019/452 since October 2020, which encourages Member States to assess inbound investments in sensitive sectors. Law 194(I)/2025 gives Cyprus its own domestic screening tool, consistent with that EU framework.
The competent authority is the Ministry of Finance, which also serves as Cyprus's national contact point under the EU cooperation mechanism. An Advisory Committee — comprising senior representatives of the Ministries of Defence, Energy, Foreign Affairs, Interior, Justice and Transport — provides reasoned written advice at each key stage of the assessment.
2. Does the law apply to your investment?
The notification obligation is triggered only when all three of the following conditions are satisfied cumulatively:
2.1 The holding threshold trigger
A separate notification obligation arises — regardless of investment value — where an existing holding is increased across either of the following thresholds:
- from below 25% to 25% or more; or
- from below 50% to 50% or more.
This means that even small incremental acquisitions can trigger the obligation if they push a shareholding across these watermarks.
2.2 Who counts as a "foreign investor"?
The Law applies to:
- natural persons who are not nationals of an EU Member State, EEA Member State, or Switzerland; and
- undertakings constituted under the laws of any country outside the EU, EEA, or Switzerland.
Importantly, the obligation also applies to EU/EEA/Swiss-incorporated entities that are owned or controlled, directly or indirectly, by a foreign investor. A Cypriot holding company that is ultimately foreign-owned is not exempt simply by virtue of its Cypriot registration.
2.3 Persons acting in concert / consortium transactions
The qualifying holding threshold captures acquisitions made not only by a single investor acting alone, but also by persons "acting in concert" — a term defined by reference to the Takeover Bids Law (Law 41(I)/2007). In practice, this means that where two or more investors coordinate their acquisition of shares in a Cypriot target, their combined stake is assessed against the 25% threshold, even if each investor individually acquires less than 25%.
This is particularly relevant for consortium acquisitions and club deals. Where multiple investors participate in a coordinated transaction, the notification obligation applies if their aggregate holding meets the threshold. As a general rule, one notification should be submitted per investment. Co-investors who share the same ultimate beneficial owner (UBO) or belong to the same corporate group may file a single joint notification. Where investors are unrelated, separate notifications are required for each.
3. Undertakings of strategic importance
The Law does not screen all investments — only those in undertakings carrying out activities in particularly sensitive sectors. The following categories are identified in the Annex to the Law:
| Category | Examples |
|---|---|
| Critical infrastructure | Energy, transport, water, health, education, tourism, communications, media, data processing/storage, aerospace, defence, electoral infrastructure, financial services (including systemic credit institutions), sensitive facilities, and real estate crucial for such infrastructure |
| Critical technologies & dual-use items | AI, robotics, semiconductors, cybersecurity, aerospace, defence, energy storage, quantum and nuclear technologies, nanotechnologies, biotechnologies |
| Critical inputs | Energy, raw materials, food security |
| Sensitive information | Personal data, and the ability to access or control such information |
| Media freedom | Freedom and pluralism of the media |
The assessment is fact-specific and focuses on what the Cypriot target actually does, not how it is labelled or what sector the wider group operates in. By way of example, Cyprus-registered companies that serve purely as holding vehicles or perform only limited intra-group functions — such as share ownership, invoicing, or administration — without any genuine operational connection to a sensitive sector will generally fall outside the mandatory notification framework. Where there is genuine doubt, we recommend submitting a notification.
The following transaction types fall outside the scope of the Law:
- Greenfield investments (the establishment of a new undertaking from scratch).
- Purely passive portfolio investments that confer no management influence.
- Internal restructurings within the same corporate group where ultimate control does not change.
- Investments in ships under construction or ships being bought/sold (except FSRUs, which remain in scope).
- Investments completed before 2 April 2026 (the Law is not retroactive).
3.2 Joint ventures
Joint ventures require particular care. The establishment of a joint venture does not, in itself, automatically trigger a notification obligation. Where a JV is formed to establish an entirely new business — rather than to acquire an existing undertaking — it is more akin to a greenfield investment and generally falls outside the Law's scope.
However, a notification obligation may arise where a foreign investor acquires, through a JV vehicle, a qualifying holding or decisive influence over an existing Cypriot undertaking of strategic importance. This can occur, for example, where one party to the JV contributes a shareholding in an existing undertaking, or where the JV agreement itself confers governance rights — such as veto rights or board representation — that amount to decisive influence over an existing entity.
The assessment is substance-driven: the key question is whether, in practice, the JV results in a foreign investor acquiring or increasing a qualifying holding or control over an existing undertaking in Cyprus.
4. The notification and screening process
4.1 Pre-completion obligation
A notifiable investment cannot be completed before the Ministry of Finance has issued its decision. Approval is effective only once the investor receives written confirmation. Contracts or agreements relating to transactions requiring prior approval are treated as subject to a condition precedent of obtaining that approval — this has important implications for transaction structuring and the drafting of conditions precedent in M&A documentation.
4.2 Who must notify?
The obligation rests with the foreign investor. Where a representative submits the application, a Power of Attorney or equivalent authorisation document is required. The investor remains responsible for the accuracy and completeness of all information provided, even where it originates from the target undertaking or other parties.
4.3 How to submit
Applications are submitted exclusively through the Ministry of Finance e-services portal (www.gov.cy/mof/en/services/). Submission is free of charge and the electronic service is available in English only. The application comprises three elements:
- Completion of summary fields in the online portal.
- Upload of the official Notification Form (in PDF, downloaded from the Ministry's website).
- Upload of supporting documents — including ownership charts pre- and post-investment, plus optional documents such as investment agreements, financial statements, and shareholder registers.
Only the official editable PDF downloaded from the Ministry's website will be accepted. Scanned, printed, or modified templates are rejected. The Notification Form and all supporting documents must be in English.
4.4 What information is required?
The Notification Form and supporting documentation must cover, among other things:
- Identity and ownership structure of all parties, including the ultimate beneficial owner.
- Approximate value of the investment and source of funding.
- Products, services, and business activities of both the investor and the target.
- Economic activities conducted in Cyprus by all relevant parties.
- NACE classification, registration details, and annual turnover/employee numbers.
- Sanctions and criminal record information in relation to relevant persons connected to the investor.
- Countries in which the investor and target conduct business.
Investors submitting commercially sensitive information may formally designate specific documents, statements or other material as confidential — including material containing trade secrets. In doing so, the investor must provide reasons for the designation and submit a separate non-confidential version.
The Ministry of Finance, the Advisory Committee, and any person acting on their behalf are bound by a statutory obligation of secrecy with respect to such information, and may not disclose or publish it except to the extent required for implementing the Law or establishing a breach. Classified information exchanged with the European Commission or other Member States is afforded equivalent protection and cannot be downgraded or declassified without prior written consent.
4.5 The screening timeline
Maximum total duration: up to 85 working days (excluding suspension periods).
Suspension: Both the 20-day and 65-day periods are suspended whenever the Ministry requests additional information, restarting only when the investor responds in full.
EU cooperation: Where an investment undergoes screening, the Ministry notifies the European Commission and other Member States, which may submit comments or opinions. These are not binding, but the Ministry must give them due consideration. The final decision always rests with the Ministry of Finance.
4.6 Possible outcomes
Following its assessment, the Ministry may:
- Approve the investment (effective only upon written confirmation).
- Approve the investment subject to specific conditions or undertakings.
- Prohibit, terminate, or reverse the investment where it is found to affect national security or public order.
Where conditions are imposed and the investor fails to comply within the specified period, the Ministry may prohibit or reverse the investment. During any such period, the investor is suspended from exercising any rights derived from the investment, including voting rights and management or control rights.
5. What does the Ministry assess?
The assessment is case-specific and draws on indicative factors falling into two categories:
Factors relating to the target
- Whether the undertaking operates in a particularly sensitive sector (infrastructure, technology, critical inputs, etc.).
- The nature and strategic importance of its activities in Cyprus.
- Whether the investment could affect access to or control of sensitive information, including personal data.
- Impact on the freedom and pluralism of the media.
Factors relating to the investor
- Whether the investor is directly or indirectly controlled by a government of a third country, state bodies, or armed forces.
- Whether the investor has previously been involved in activities affecting security or public order in an EU Member State.
- Whether there is a serious risk that the investor is engaged in illegal or criminal activities.
The Ministry also considers the extent to which the investment may affect security or public order in another EU Member State or in the EU as a whole, and whether it may affect projects or programmes of Union interest such as Horizon Europe, Galileo, or Trans-European Networks.
6. Consequences of non-compliance
The Law provides for material administrative sanctions, which may be imposed regardless of whether the underlying investment is also prohibited or reversed:
Even where no notification is submitted, the Ministry retains the power to initiate an ex officio review of a foreign direct investment.
Mandatory notification not made (breach): The Ministry may initiate a review up to five years from the date of completion of the investment.
No mandatory notification required (investment completed): The Ministry may still review within fifteen months of completion if it has reasonable grounds to consider that the investment may affect national security or public order. Investors who complete a transaction that falls outside mandatory notification should be aware that this 15-month window means the investment is not entirely beyond scrutiny.
In both cases, the Ministry retains all powers available under the Law, including the power to prohibit, terminate or reverse the investment.
Decisions of the Ministry of Finance constitute administrative acts and are subject to recourse before the Administrative Court under Article 146 of the Constitution. The Ministry may also seek injunctive relief, including interim orders, in cases of breach or imminent breach.
7. Practical checklist for investors
When considering or structuring a transaction involving a Cypriot target, work through the following questions at an early stage:
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01
Foreign investor status
Are you a "foreign investor" under the Law? Consider whether ultimate ownership or control of the acquiring entity may bring it within scope even if it is EU-incorporated.
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02
Sector check
Does the target operate in a sensitive sector (see Section 3)? Focus on the actual activities of the Cypriot entity, not the group's broader business.
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03
Holding threshold
Does the transaction result in acquiring at least 25% of shares/voting rights or decisive influence? If you already hold shares, does this transaction cross the 25% or 50% watermark?
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04
Value threshold
Does the transaction value (alone or aggregated with related transactions in the past 12 months) reach €2 million?
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05
Restructuring carve-out
Is this an internal restructuring where ultimate control does not change? If so, mandatory notification may not apply.
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06
Timeline planning
If notification is required, allow sufficient lead time — up to 85 working days plus any suspension periods. Build this into your transaction timeline and condition your signing/closing mechanics accordingly.
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07
Documentation readiness
Prepare ownership charts (pre- and post-investment), source of funds documentation, and organisational/beneficial ownership information well in advance.
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08
Sensitivity assessment
Consider whether the investment may affect sensitive data, critical infrastructure, or state-linked investors, as these factors increase the likelihood of full screening.
8. How Yiasemis LLC can assist
We advise foreign investors, corporate groups, and their legal teams on all aspects of the Cyprus FDI screening process, including:
Our team's dual qualification in Cyprus and England & Wales, and our background advising on cross-border M&A and corporate transactions, means we understand both the legal framework and the commercial pressures that investors face. We work efficiently and practically, keeping the process proportionate to the deal.
For further information or to discuss whether this regime applies to your investment, please contact us at info@yiasemis.law.
This article is intended for general informational purposes only and does not constitute legal advice. It reflects the Law as published and the guidance issued by the Ministry of Finance as at 2 April 2026. The Law is in its early stages of application and guidance may evolve. Specific advice should be sought in relation to any particular transaction.