Banking & Finance
NFDI Provides Update Regarding Notification Forms
The National Foreign Direct Investment Screening Office (“NFDI Office”) was set up in Malta, in order to implement the provisions of EU Regulation 2019/452. On the 14th of October 2020, the NFDI Office published a Circular on its website whereby it notified Corporate Service Providers that Notification Forms must only be submitted to the NFDI Office when all of the 3 below-mentioned conditions are met:
- Where the Ultimate Beneficial Owner, whether existing or new, is a ‘foreign investor’ (natural person of a third country or an undertaking of a third country, intending to make or having made a Foreign Direct Investment) and is an individual who has a direct or indirect economic ownership and/or voting rights of 10% or more, or control by other means in the Maltese investment;
- The activity is one as described in Article 4 of Regulation 2019/452, meaning that it is likely to affect security or public order in terms of its potential effects on:
- critical infrastructure, whether physical or virtual – including energy, transport, water, health, communications, media, data processing or storage, aerospace, defence, electoral or financial infrastructure, and sensitive facilities, as well as land and real estate crucial for the use of such infrastructure;
- critical technologies and dual use items (defined as items, including software and technology, which can be used for both civil and military purposes, and shall include all goods which can be used for both non-explosive uses and assisting in any way in the manufacture of nuclear weapons or other nuclear explosive devices) – including artificial intelligence, robotics, semiconductors, cybersecurity, aerospace, defense, energy storage, quantum and nuclear technologies as well as nanotechnologies and biotechnologies;
- supply of critical inputs, including energy or raw materials, as well as food security;
- access to sensitive information (“confidential information, including commercially-sensitive information”), including personal data, or the ability to control such information; and
- the freedom and pluralism of the media.
When determining whether a foreign direct investment is likely to affect security or public order, the following factors may also be taken into account:
- whether the foreign investor is directly or indirectly controlled by the government, including state bodies or armed forces, of a third country, including through ownership structure or significant funding;
- whether the foreign investor has already been involved in activities affecting security or public order in a Member State; or
- whether there is a serious risk that the foreign investor engages in illegal or criminal activities.
- Where there is a direct, tangible and long-lasting nature within the territory of Malta.
Where all of the conditions specified in (1) to (3) above subsist, the Notification Form is to be completed and submitted to the NFDI Office BEFORE the relevant corporate documents are submitted to the Malta Business Registry for registration.
Furthermore, it is to be noted that the following Guidelines to the Notification Form have also been published on the website of the NFDI Office.
- European Country means any country within the European Union. For the purpose of this assessment, the European Economic Area countries are considered as third countries.
- In the Notification Form, the applicant must provide sufficient proof of the sources of funding of the investment. The NFDI Office can seek to carry out independent due diligence on each or some of the UBOs.
- As from 11th October 2020, investors from third countries who make Maltese investments which relate to activities mentioned in Article 4 of the EC Regulation 2019/452 mentioned above shall be obliged to notify the NFDI Office before submitting the Memorandum and Articles or other relevant forms to the Malta Business Registry for the registration.
- In the event that the applicant is not sure as to whether the investment falls under any of the activities listed in Article 4 of the Regulation cited above, the applicant should communicate by e-mail on email@example.com in order to request clarifications prior to submitting this Notification Form to the NFDI Office.
- In the case of companies having ownership of intellectual property, such as patents and any other incorporeal rights, resulting from activities listed in Article 4, the Notification Form is to be submitted to the NFDI Office.