Montenegro adopts a blueprint for FDI screening

The Government of Montenegro has adopted the Proposal for the Establishment of an Efficient Foreign Investment Screening Mechanism ("Proposal"), a policy blueprint for the drafting of Montenegro’s first dedicated screening legislation, the Foreign Investment Screening Act (Zakon o provjeri stranih investicija) ("Law"), and the implementing regulations.

Published in the context of Montenegro's targeted 2028 accession, the Proposal closely relies on the Slovenian and Croatian models and in several respects goes beyond the EU minimum standard.

Competent authorities

The Proposal sets out a three-tier institutional structure:

(i) The Ministry of Economic Development is designated central authority and the national contact point for cooperation with the European Commission and EU Member States. Its dedicated unit will be in charge of reviewing the filings and preparing draft decisions.

(ii) Foreign Investment Screening Council, consisting of the representatives of ministries and authorities responsible for economy, interior, defence, foreign affairs, finance, competition, electronic communications, transport, energy and national security, will be giving its opinion on whether to approve the notified transaction.

(iii) The Government of Montenegro will decide on the notifications.

Transactions and sectors subject to FDI screening

Once enacted, the new FDI screening legislation will apply to the investments involving acquisition of direct or indirect control, significant influence, or at least 10% of the share capital or voting rights in a Montenegrin company active in one of the strategically sensitive sectors listed below, when the acquisition is by investors from non-EU countries, and those incorporated in the EU or in Montenegro, if they are directly or indirectly controlled by a third-country investor. The 10% trigger makes the Proposal stricter than the EU Regulation 2026/1386 of the European Parliament and of the Council of 17 June 2026 on the screening of foreign investments in the Union and repealing Regulation (EU) 2019/452 ("EU FDI Screening Regulation"). The Proposal does not define "significant influence".

The following sectors are proposed to be designated as strategically sensitive: energy; transport and logistics infrastructure including ports, airports and rail; electronic communications, digital infrastructure and cybersecurity; water management; healthcare, biotechnology and medical equipment manufacturing; financial infrastructure and payment systems; media; defence industry, dual-use goods and space technologies; electoral infrastructure and voting systems; AI, semiconductors, quantum and other critical technologies; access to sensitive personal, corporate or state data; critical raw materials; land and real estate whose location, purpose or proximity to critical infrastructure creates risk; agricultural land and food production.

In this respect, the Proposal goes beyond the EU FDI Screening Regulation which does not include media, healthcare, water, agricultural land, and real estate sectors within the scope of mandatory filing. Under Article 19(1) of the EU FDI Screening Regulation, these sectors are assessed only within the scope of potential effects of the investment, not as the sector in which the target operates. A transaction in any other sector may therefore be assessed against these criteria, provided it is otherwise subject to screening and is capable of affecting, for example, media pluralism or the availability of critical medicines. In contrast, Montenegro proposes to review any eligible transaction involving a target from one of these sectors.

Furthermore, any qualifying transaction in transport, energy and digital infrastructure sectors will require prior authorisation, and not only transaction which involves a target assessed as critical.

Finally, transactions involving land near ports, energy assets or military facilities will need clearance even where the target has no operating business.

The Proposal is silent on whether and to what extent internal restructuring may require prior authorization under the future screening legislation.

It is equally silent on whether the establishment of companies for the purpose of greenfield projects sponsored by third-country investors in the designated sectors will require prior FDI authorization other than in cases in which greenfield project involves assets the acquisition of which requires clearance, such as critical real estate or agricultural land.

Screening procedure

Standstill

Transaction may not be implemented before a clearance is obtained.

Deadline for the assessment

Upon receipt of the relevant documents, the Ministry of Economic Development confirms the completeness of the filing and then conducts an initial review within 45 calendar days from the certificate of completion to determine whether the proposed investment should be cleared or it potentially represents a risk for security or public order so that a further in-depth investigation is required. The sanctions status of the investor and its connected persons must be verified before the Council issues its recommendation.

The wording of the Proposal is unfortunate in that it suggests the clearance decision is within the competence of the Government and required prior opinion of the Foreign Investment Screening Council even when the Ministry's assessment is that the investment should be cleared without further investigation but leaves the Council's opinion and the Government's decision outside the 45-day deadline.

The deadline for completion of the in-depth review, when one is required, is not designated in the Proposal.

Types of decisions

The Government will be able to issue either an unconditional clearance, a conditional clearance with mitigation measures, or a prohibition. Conditional clearance may impose restrictions on access to certain data, retention of key infrastructure in Montenegro and the appointment of security-vetted persons to designated positions, alongside any other measure necessary to protect the public interest and proportionate.

EU cooperation mechanism

Since Montenegro cannot participate in the EU cooperation mechanism until it becomes Member State, it will not be able to either receive or send comments to the EC related to the FDI screening process. Accordingly, if the FDI screening legislation is adopted before Montenegro joins EU, the parties to a transaction which requires filings in Montenegro and in several Member States will have to sequence the parallel processes. In this scenario, Article 22 of the Regulation may be of help. It permits Member States and the Commission to engage bilaterally with third-country authorities on investment screening. Recital 52 of the Regulation directs the Commission to encourage the establishment of screening mechanisms in candidate countries including through technical and capacity-building support.

Enforcement

The Ministry will be authorised to open a review on its own initiative where a notifiable transaction was not filed. The limitation period with which the competent authority will be permitted to exercise the call-in power is not designated in the Proposal but is to be set in the law. Such period should not be shorter than 24 months from the completion of the transaction, which is the floor set by the EU FDI Screening Regulation.

Fines would apply in case of a failure to notify, providing inaccurate information in the filing, failure to comply with imposed measures and gun-jumping. The law should prescribe the possibility to impose corrective measures in the form of retrospective filing, interim suspension of voting and management rights, or divestiture. The Proposal includes anti-circumvention measures, by targeting intermediate vehicles, nominee shareholders and other structures that conceal the actual investor. The authorities will be empowered to assess transactions based on their economic substance rather than legal form.

Conclusion

The Proposal is a framework, not a draft law. Several points that materially affect deal planning remain outstanding and will be hopefully picked up at the stage of drafting the relevant FDI screening legislation, including:

• Intra-group reorganisations. The law should make an explicit carve-out for restructurings that leave beneficial ownership unchanged.
• Investments screened without a prior filing requirement. Beyond the sectors Member States must subject to mandatory prior authorisation, the EU FDI Screening Regulation provides that they may extend screening to other investments without requiring a filing before closing. For such, the Regulation requires that the authority be able to open a review on its own initiative for at least 15 months and up to five years after completion. The Proposal contains no such category since everything within scope requires prior authorisation.
• Greenfield investment. The law should clarify whether greenfield investment requires clearance. In any event, since the acquisitions of critical real estate and of agricultural land are within scope of the future screening legislation, the site acquisition will be subject to review even if the project itself is not.
• Pre-notification and voluntary filing. The Proposal does not foresee any mechanism for informal jurisdictional guidance or a voluntary filing to obtain comfort.
• Competence and deadlines. The future legislation will hopefully clarify the competence and deadline for the clearance in no-issue filings, as well as the deadline for the completion of the in-depth review.
• Transitional rules and interaction with merger control. The Proposal is silent on transactions signed but not closed before the law takes effect. It would be also useful if the future legislation were to include provisions on the coordination between FDI review and merger clearance of the same transaction (whether reviews proceed in parallel or an FDI screening should only be conducted after the merger clearance has been obtained, whether one clock suspends the other, and what prevails if remedies imposed under the two regimes conflict).