Albania's new FDI screening regime now in full effect

Namely, the Albanian Council of Ministers adopted Decision No. 226, approving the Regulation on Procedures for the Evaluation and Review of Foreign Direct Investments (the "Regulation"). The Regulation gives effect to the mandatory FDI screening regime introduced by last year's amendments to Law No. 7764/1993 on Foreign Investments, establishing a comprehensive procedural framework for the review of foreign investments in key sectors of the Albanian economy. The government will soon publish its official guidelines for the application of the Regulation, which should provide more clarity on numerous open points.

Therefore, Albania now operates a mandatory pre-closing notification regime for foreign direct investments in designated sectors.

Scope of application

• The Regulation covers foreign direct investments in Albania relating to critical public infrastructure, critical technologies and dual-use items, the supply of critical data, access to sensitive information and media freedom.

Key definitions and screening criteria

• A "foreign investor" is a natural person or undertaking of a third country intending to make or having made a foreign direct investment.
• Notification thresholds differ by sector: in "sensitive sectors", such as energy, transport, health, telecommunications, banking, media, AI and cybersecurity, notification is required at 25 % participation, with further triggers at 30 %, 40 %, 50 % and 75 %. In "particularly sensitive sectors", which include the defence industry, critical energy and digital infrastructure, 5G networks, data centres, water supply and FinTech, the threshold is 10 %.
• Screening primarily applies where: (i) a third-country investor targets a sensitive sector; (ii) an EU investor is controlled by a third country; or (iii) an EU investor with 10 %+ third-country participation targets particularly sensitive sectors. Some of the risk factors included are opaque ownership structures, military purposes, terrorism risks and threats to media pluralism.

Institutional framework

• Reviews are conducted by the Interministerial Committee for the Review of Foreign Direct Investments (KNIHD), chaired by the Minister responsible for the economy. The KNIHD is supported by a Secretariat, which provides technical and administrative assistance.

Review procedure

• Before closing a notifiable transaction, the investor must submit an authorisation request to the Secretariat. Interestingly, there is also an obligation for the target to notify the Secretariat within 10 days of becoming aware of an unreported transaction – with joint and several liability for non-compliance. The KNIHD must decide within 30 days (extendable to 90 days) whether to decline investigation or initiate a detailed review.
• Following a detailed investigation, the KNIHD may grant authorisation (with or without conditions), refuse authorisation or suspend pending additional information.
• The KNIHD may also conduct ex officio reviews of unreported investments and order corrective measures or unwinding.
  Sanctions
• Where a foreign direct investment is prohibited or conditionally authorised, the relevant investment agreements are void or produce effects only in accordance with imposed conditions. The KNIHD has the power to declare the invalidity of share purchase agreements or other related investment agreements, set timeframes for the fulfilment of conditions or mitigating measures, and prescribe measures necessary to rectify or eliminate the consequences of a prohibited or void investment.

Entry into force

• The Regulation entered into force in April 2026. A transitional period applied until July 2026, during which mandatory screening was limited to the media and defence sectors, while voluntary notifications were available across all other designated sectors. Following the expiry of the transitional period, the mandatory screening regime now applies to all designated sectors.
• Notably, investments made prior to the entry into force of the Regulation may still be subject to review where they pose genuine risks to security or public order, undergo material changes or show indications of third-country influence.
• The Regulation will be repealed once Albania joins the European Union.