Compulsory Screening Across the Twenty-Seven: Regulation (EU) 2026/1386 and the New EU FDI Regime

From January 2028, foreign-investment screening in the European Union stops being a patchwork and becomes an obligation across every member state. Regulation (EU) 2026/1386 on the screening of foreign investments in the Union was adopted by the European Parliament and the Council on 17 June 2026, published in the Official Journal on 26 June, and in force since 16 July; its principal substantive and procedural provisions apply from 17 January 2028. For anyone investing in European defence and dual-use assets, the compliance surface is about to widen from some member states to all of them.

The machinery this will govern is already visible in the system it replaces. In 2024 national authorities handled 3,136 requests for authorisation and ex officio cases, of which 41 per cent were formally screened, and 477 investments were notified to the Union cooperation mechanism by 21 member states, according to the Commission's Fifth Annual Report. That is the baseline; a compulsory regime across all twenty-seven states, with harmonised triggers, raises both the number of reviewable transactions and the number of authorities that can object to any one of them.

The word that matters is compulsory. Under the outgoing framework screening existed where a member state chose to have it, and the fact that 21 states notified means several did not screen at all. A Union regulation that requires screening closes the gaps a deal could once route through, and the cooperation mechanism gives other member states and the Commission a formal say in a transaction that is national on its face. A deal clearable in one capital can now attract objections from several.

For an acquirer this changes deal timetables and deal certainty at once: more transactions become notifiable, more authorities can intervene, and 17 January 2028 is the line before and after which the same transaction is assessed under different rules. For a target — often exactly the EDF-funded SME or dual-use specialist that is most attractive to buy — the regime shapes who can bid and how long approval takes. Screening risk moves from a footnote into the price.

The timing is the practical point. The regulation is in force now but bites in 2028, and that gap is precisely the window in which ownership structures are set and deals are timed. Reading the triggers, the thresholds and the cooperation mechanism before the application date is the difference between pricing screening risk deliberately and being surprised by it after signing.

There is also a jurisdictional subtlety the headline misses. Because the cooperation mechanism operates across borders, the member state where the target sits is no longer the only one whose view counts: a state that hosts a downstream customer, a critical supplier or an affected asset can raise a concern of its own. Compulsory screening therefore multiplies not just the number of filings but the number of governments with standing to shape a single deal — and that is a change in negotiating power, not only in paperwork.

This analysis works through the new regime deliberately, and leaves the reader with the questions that decide the money:

• Which transactions become notifiable under Regulation (EU) 2026/1386 that were not screened at all in the states which previously opted out?
• What does the 2024 baseline — 3,136 cases, 41 per cent screened, 477 cross-border notifications — imply for volumes under a compulsory twenty-seven-state regime?
• How does the Union cooperation mechanism let other member states and the Commission shape a transaction that is national on its face?
• With substantive provisions applying from 17 January 2028, how should acquirers time and structure deals across that line?