New foreign investment control mechanism in Estonia

The new system sets out that foreign investors, who wish to participate in an economic field that is important to Estonia’s security or public order, are subject to the obligation of obtaining a permit from the Consumer Protection and Technical Regulatory Authority (in Estonian „Tarbijakaitse ja Tehnilise Järelevalve Amet“). 

A foreign investor is a natural person or a company with a link to a third country, i.e. a country that is not a member state of the European Union. A foreign investment is a transaction or a series of related transactions through which a foreign investor starts a new activity or acquires an asset in the host country. 

Before the authorisation is granted, an assessment of the impact of the foreign investment is carried out based on the Foreign Investment Reliability Assessment Act. Assessment of reliability of foreign investments is one of the non-military preventative methods that helps ensure the security of Estonia as well as other European Union member states. During the assessment, the reliability or unreliability of the foreign investment is detected, and potential risks are identified and eliminated. 

Authorisation for foreign investment will not be granted if it threatens Estonia or another member state of the European Union.

Authorisation is required:

1. if the foreign investor wishes to invest in a company that is active in areas that are important for security or public order, such as

2. if the foreign investor wishes to invest in a company in which the state has a qualifying holding

3. if the foreign investor wishes to acquire a significant shareholding (of at least 10%) in a company that is active in areas that are important for security or public order, as such a significant share might enable the shareholder to exercise a negative influence on the management of such company

Overall, the assessment of a foreign investment, therefore, helps to protect Estonia’s sovereignty. In order to maintain a safe business environment, it is necessary to ensure the independence, openness and transparency of companies. The reliability of foreign investments, the impact on security and public order, and potential risks are assessed in each case individually.

Safer investments for all!