ARTICLE
21 May 2026

Foreign Direct Investment: Cyprus’s new guardrails between opportunity and security

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Elias Neocleous & Co LLC

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Elias Neocleous & Co LLC is the largest law firm in Cyprus and a leading firm in the South-East Mediterranean region, with a network of offices across Cyprus (Limassol, Nicosia, Paphos), Belgium (Brussels), Czech Republic (Prague), Romania (Budapest) and Ukraine (Kiev). A dynamic team of lawyers and legal experts deliver strategic legal solutions to clients operating in key industries across Europe, Asia, the Middle East, India, USA, South America, and China. The firm is renowned for its expertise and jurisdictional knowledge across a broad spectrum of practice areas, spanning all major transactional and market disciplines, while also managing the largest and most challenging cross-border assignments. It is a premier practice of choice for leading Cypriot banks and financial institutions, preeminent foreign commercial and development banks, multinational corporations, global technology firms, international law firms, private equity funds, credit agencies, and asset managers.
Cyprus has enacted its first foreign direct investment screening regime, establishing mandatory notification and approval requirements for certain foreign investments that may impact national security or public order. The new law introduces a comprehensive framework covering sensitive sectors and sets out clear timelines, conditions, and penalties for compliance.
Cyprus Government, Public Sector
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Cyprus has introduced its first foreign direct investment (FDI) screening regime through Law 194(I)/2025 (the “Law”), which enters into force on 02 April 2026.

The Law establishes a mandatory notification and approval process for certain foreign investments that may affect national security or public order, bringing Cyprus in line with the EU FDI screening framework. It defines the specific conditions that would give rise to a notification requirement, capturing the concepts of new and existing FDIs, investment value, and direct and indirect ownership and control. It focuses on sensitive and strategic sectors, including critical infrastructure, energy, telecommunications and financial services.

A designated competent authority will review covered transactions within defined statutory timelines and may may grant unconditional approval, approval subject to conditions, or prohibit the transaction. The Law also provides for administrative sanctions and penalties for non-compliance, underscoring the importance of early regulatory due diligence and careful structuring and timing of investments and transactions involving foreign participation in Cyprus.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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