Robertas Čiočys and Aušra Abraitytė-Gedminė (Ellex Legal) authored this publication

Under the Law on the Protection of Objects of Importance to Ensuring National Security of the Republic of Lithuania, only specific FDIs into entities, infrastructure or sectors deemed of importance to national security are subject to the FDI screening process.

The supervision of FDI review is assigned to the Commission for the Coordination of Protection of Objects of Importance to Ensuring National Security formed by the Government of Lithuania.

Summary of major changes in 2024

• There were no major changes in 2024, although the list of economic activities considered a part of strategically important sectors for ensuring national security was updated slightly to include the issuance of electronic money, including electronic money tokens, asset-referenced tokens and the provision of crypto-asset services as defined in the EU’s Markets in Crypto-Assets Regulation of 2023.
• In addition, there have been slight changes related to certain public procurement matters and the lease of electronic communications infrastructure designed for national defense or security purposes.

Who files?

A natural person or legal entity seeking to invest in an entity, infrastructure or sector deemed of importance to national security must disclose and obtain the clearance to proceed with the investment. FDI regulation applies equally to both foreign and national investors if their investment falls under the scope of review.

However, a distinction is made depending on whether the investor is from an EU, NATO, EFTA or OECD country, or other countries.

For investors from EU, NATO, EFTA or OECD countries, the screening process is typically less burdensome, as they are presumed to align with national security interests. In contrast, investors from other countries undergo a more rigorous screening process, and certain types of FDI from these countries may be prohibited by the law.

Types of deals reviewed

In Lithuania, the FDI screening procedure applies to several sectors regarded as pillars of national security.

Screening is required for investment into specific companies explicitly recognized as strategically important to Lithuania’s national security due to their intended purpose or the nature of their activities. Such companies are listed in the law and fall into one of three categories: enterprises solely controlled by the state; enterprises with at least two-thirds of shares owned by the state; and entities that are not owned by the state.

Additionally, investments into assets or areas critical to national security, such as airports, railways, secured national data transmission networks, LNG terminals, and others, require screening. Land and territory of national importance are also included in the review.

Screening applies to five economic sectors critical to national security: energy; transport; information technology (including telecoms and high-tech); finance and credit; and military equipment. The government identifies specific activities within these sectors. In total, 54 activities are listed, requiring individual assessment on a case-by-case basis.

Scope of the review

The objective of the review is to ensure the investor complies with and does not negatively impact Lithuania’s national security interests.

The Commission evaluates the investor’s identity and ownership structure, including ultimate owners—natural persons or legal entities. The source of funds for the investment is also scrutinized. The scope of the review and the required information depend on the nature of the investment, with stricter reviews for enterprises deemed important to national security and lighter reviews for economic sectors.
Findings about the investor are gathered from the State Security Department, Ministry of Foreign Affairs, Ministry of Interior, the Police Department and the General Prosecutor’s Office. Other institutions may also be involved at the Commission’s discretion.

Review process timeline

The review process takes approximately ten to 40 working days from the day the Commission receives the FDI notice and required information.

In certain cases, the review process involves an initial stage during which it is established if screening should be carried out. This stage takes approximately ten working days.

If during this initial stage the institutions counter with information suggesting that screening must be carried out, the investor must provide the requested information and documents within ten business days of receipt of the request. Upon provision of this information and documents, the screening procedures will be initiated. If institutions do not counter with the required information, screening procedures should not be initiated. Usually, written confirmation that screening procedures will not be carried out is issued.

Upon the start of screening procedures, institutions must provide their findings within 15 working days, extendable by up to five additional working days. If no findings are provided, the investor is presumed not to conflict with national security.

The Commission has 20 working days from the start of the screening process, extendable by up to three additional working days, to conclude whether the investment aligns with national security interests. In case of a negative conclusion, the government must adopt a final decision within 15 working days from the adoption of the negative commission conclusion. If no decision is made, the investor is presumed to align with national security interests.

How foreign investors can protect themselves

Investors should carefully assess whether their intended FDI falls under the screening requirements, particularly when investing in one of the five economic sectors critical to national security. When in doubt, it is prudent to initiate the FDI screening process.

FDI filing and screening should be completed before the closing of the transaction, usually a condition precedent in transaction documents. If post-investment screening is initiated and the investor fails to meet national security requirements, the Commission has the authority to declare the transaction null and void. 

In case of the acquisition of shares or voting rights in an enterprise important for ensuring national security in violation of the law, the investor shall not have the right to participate and vote in the general meeting of shareholders nor exercise other non-property rights. It is noted that a change of ultimate owners and similar changes may also trigger screening procedures.

Proactively engaging with relevant Lithuanian authorities early in the investment planning phase is important to clarify any uncertainties regarding the applicability of FDI screening requirements. Foreign investors should also perform a comprehensive due diligence review of the targeted entity or assets. This should include an evaluation of their inclusion in national security-related activities, as well as an understanding of their role within the economic sectors critical to national security.

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