The Department of Contracts (“DOC”) Circular 07/2026 dated 8th May 2026 and subsequent guidance issued on 9 June 2026 have brought Malta’s Foreign Direct Investment (“FDI”) screening regime firmly into the public procurement sphere. While Chapter 620 of the Laws of Malta has been in force since 2020, the latest developments clarify how the regime applies to public contracts and concessions involving activities that may affect security or public order.
For contracting authorities and economic operators alike, the message is clear: FDI screening is no longer merely a corporate or investment law consideration. In certain circumstances, it has become an integral part of the procurement lifecycle.
- When Might a Public Contract Fall within Malta’s FDI Regime?
Under Chapter 620, a FDI includes investments made pursuant to a public procurement process. This means that the award of a public contract may constitute a regulated investment where the successful bidder qualifies as a third-country investor and the contract concerns a critical activity.
The sectors potentially affected are broad and include critical infrastructure, critical technologies and dual use items, critical inputs, access to sensitive information and personal data, and activities capable of affecting media freedom and pluralism. Importantly, the assessment is not limited to contracts directly concerning these sectors. A procurement procedure may also fall within scope where it supports, enables or interfaces with a critical activity through ancillary services or subcontracted elements.
- Responsibilities of Contracting Authorities and Economic Operators
Circular 07/2026 clarifies that responsibility for compliance rests on both contracting authorities and economic operators. Contracting authorities are expected to assess whether a procurement relates to a critical activity and, where appropriate, include references to the FDI screening framework in the procurement documentation.
Economic operators, on the other hand, must determine whether they qualify as third-country investors for the purposes of Chapter 620. The definition extends beyond entities established outside the European Union. It also captures undertakings in which non-EU persons or entities directly or indirectly hold at least ten per cent of the shareholding, voting rights or other ownership interests. Whether a natural person is considered to be non-EU is determined by their nationality, as opposed to residency.
Moreover, the analysis does not stop at the bidder itself. The DOC has clarified that consideration should also be given to ultimate beneficial owners, subcontractors and entities upon whose capacities a bidder relies in order to satisfy selection criteria. Consequently, a Maltese or EU-based economic operator may still fall within the notification regime where a relevant third-country element exists within its ownership structure or supply chain.
- Integrating FDI compliance into the Public Procurement Process
Perhaps the most important practical consequence of the Circular is the clarification of a necessary compliance step between contract award and contract signature. Where the relevant conditions are met, a mandatory notification must be submitted to the National Foreign Direct Investment Screening Office (“NFDIS”). Following its review, the NFDIS Office may issue the necessary clearance for the investment to proceed.
The Circular also serves as a reminder that the obligations under Chapter 620 arise by operation of law. Although the procurement-specific measures apply to procedures involving critical activities published from June 2026 onwards, the underlying legislation has been in force since October 2020. Ongoing procurement procedures and previously awarded contracts may therefore still require consideration of the applicable FDI screening obligations.
- Planning Ahead
From a procurement perspective, the Circular effectively clarifies that there is an additional regulatory checkpoint before a public contract can be concluded. Economic operators should therefore factor potential notification and review periods into their procurement planning and contract mobilisation timelines.
The integration of FDI screening into Malta’s procurement framework reflects a wider European trend towards protecting strategic sectors while maintaining open and competitive markets. For economic operators active in public procurement, early assessment of ownership structures, subcontracting arrangements and potential notification requirements is likely to become an increasingly important aspect of procurement compliance and risk management.
