This article provides an up-to-date overview of the currently existing FDI regimes in Moldova.
Law on the examination mechanism of investments of importance for state security (the "FDI Law") No 174/2021 dated 11 November 2021.
The notification obligation is triggered:
- if any natural or legal person intends to carry out an investment by any means, directly or indirectly, individually or jointly, including as ultimate beneficial owner(s) in a Moldovan area of significance for state security. This includes:
- by the acquisition of control, the acquisition or increase of a "qualified participation", in a company active in (including in a company which invests in companies active in) areas of significance for state security;
- by the entry into certain types of concession agreements, i.e. (i) works concession contract or a service concession contract, and (ii) concessions in the field of defence and state security;
- by the entry into a public-private partnership agreement relating to "assets of national security significance" or falling within areas of significance for state security;
- by the entry into investment agreements with the Moldovan Government relating to "assets of national security significance" or falling within areas of significance for state security;
- by the entry into a sale and purchase agreement in relation to assets representing at least 25 % of the value of the assets of companies already investing in areas of significance for state security; or
- by the entry into financial transactions (loans/credits or subsidies) between a company already investing in areas of significance for state security and persons from other states that are directly or indirectly controlled by the governments of other states.
The FDI Law does not provide for a financial threshold from which the transactions in question would fall within its scope.
No approval is required for an investment carried out by an undertaking from the financial sector as well as those involving international financial institutions.
The FDI Law defines the relevant sectors through the following exhaustive list:
- hydrometeorological and geophysical field;
- radioactive waste management; operation of energy (including electric energy, natural gas and petroleum products), transport, water and sewerage, aerospace, defence, election infrastructure;
- exploitation of artificial intelligence technologies, robotics, semiconductors, cybersecurity, aerospace, defence technologies, quantum and nuclear technologies, nanotechnologies and biotechnologies;
- production of means of cryptographic protection for information;
- production and acquisition for the purpose of resale of means of protection of information classified as a state secret;
- production of explosive materials for industrial use and their distribution activities;
- aviation security activities;
- design, production, maintenance and operation of aircrafts, including unmanned aircrafts, and of its components;
- design, production, maintenance and operation of systems and components used in air traffic management and provision of air navigation services;
- design, maintenance and operation of airports and heliports, including the safety-relevant equipment used on them;
- management of airports, bus stations, rail traffic, inland waterways, ports and quays for waterway traffic;
- television broadcasts/audio-visual services;
- provision of fixed or mobile electronic communications networks and/or services;
- supply of services in national ports;
- geological exploration and/or exploitation of mineral deposits;
- production, export, re-export, import of weapons, ammunition and military equipment; products, technologies and services that can be used in the manufacture and use of nuclear, chemical, biological and missile weapons; and
- administration of public registers of the state, information security.
Also, the FDI Law provides a filing requirement in relation to assets of national security significance. The list of assets of national security significance is exhaustive and approved by the Government decree.
Process and timetable
Competent authority: Council for the promotion of investment projects of national importance
Mandatory filing requirement: Yes
Filing deadline: Prior to carrying out investment activities in areas of significance for state security.
Responsibility for filing: The responsibility for filing remains with the potential investor or foreign acquirer.
Sanctions: Entering into or carrying out transactions without the prior approval of the Council may lead to the Council's decision to (i) request the termination of the agreement/ transaction and the reparation of the damage caused, regardless of the law applicable to the contract/transaction,
(ii) suspend the investor's voting right, right to summon a general meeting of shareholders, right to include questions on the agenda of the general meeting of shareholders, right to propose members to management bodies, right to receive dividends / net income, etc., and (iii) order the management to annul the target’s issued shares and order the issuance of new shares, which will become Moldovan company treasury shares, which would need to be transacted (sold) in line with the applicable legislation (including while observing the FDI Law).
Length of the proceedings: The Council will examine the request within 45 days of the date of its receipt. The term can be suspended within up to 20 days in case the potential investor has to complete the filing with some missing documents.
By Vladimir Iurkovski, Office Managing Partner at Schoenherr, Moldova