Moldova's Law 174/2021, enacted on November 11, 2021, and effective since November 19, 2021, establishes regulations for controlling investments in sectors vital for state security, applying equally to local and foreign investors. These sectors encompass various areas, such as energy, defense, telecommunications, and more. To engage in investment activities within these sectors, approval from the Council for Promotion of Investment Projects of National Importance is required, with a detailed application process and document submission. Failure to obtain this approval can result in legal consequences, including suspension of voting rights and transactions.
Prior to that, there was no regulation providing for screening of foreign investment in sector vital for state security.
"Article 1. Regulatory scope and purpose of the law
(1) This law establishes the conditions for investors to carry out investment activities in the fields of importance for state security, the powers and mechanisms of state supervision of those investment activities.
(2) The purpose of this law is to protect investments made in areas of importance for state security and to increase the transparency of investments of importance for state security.
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Article 3. Scope
(1) This law applies to legal relationships related to the performance of investment activities by natural and legal persons who, by any means, directly or indirectly, individually or together with persons acting in concert, including as the effective beneficiary, intend to achieve or carries out the following types of investment activity and/or transaction in the fields of importance for state security (hereinafter – investments/investment activities):
a) holding control, procuring/acquiring or increasing a qualified participation in the form of shares or shares in the social capital of a legal entity, including a legal entity that already makes investments in areas of importance for state security, or holding control over this legal persons;
b) conclusion of a works concession contract or a service concession contract in accordance with Law no. 121/2018 regarding works concessions and service concessions, as well as concessions in the field of defense and state security if the procedure for awarding and executing the concession contains information classified as state secret under Law no. 245/2008 regarding the state secret, the object of which is goods of importance for the security of the state or is part of the areas of importance for the security of the state, established by this law;
c) conclusion of a public-private partnership contract in accordance with Law no. 179/2008 regarding the public-private partnership, the object of which is goods of importance for the security of the state or is part of the areas of importance for the security of the state, established by this law;
d) conclusion of an investment agreement in areas of importance for state security in accordance with the provisions of Law no. 81/2004 regarding investments in entrepreneurial activity, the object of which are goods of importance for the security of the state or are part of areas of importance for the security of the state, established by this law. If the object of the investment agreement regulated in art. 121 of Law no. 81/2004 regarding investments in entrepreneurial activity fall into one of the areas of importance for state security established by this law, the respective agreement is qualified as an investment agreement in areas of importance for state security;
e) concluding a sale-purchase transaction of assets that are part of or belong to legal entities that already make investments in areas of importance for state security, the value of which represents at least 25% of the value of the assets of these legal entities, according to the latest situation financial;
f) the conclusion, on behalf and/or on behalf of a legal entity that already makes investments in the areas of importance for state security, of financial transactions, through one or more operations linked to each other, in the form of credit/loan or subsidy , with persons from other states who are directly or indirectly controlled by the governments of other states.
(2) The provisions of this law do not apply to investment activities and transactions provided for in paragraph (1):
a) carried out by entities from the financial sector, nor those carried out with the participation of international financial institutions;
b) regarding the purchase of goods, equipment and services from local or foreign suppliers that do not affect the control over the operator in the field of importance for the security of the state.
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Article 4. Areas of importance for state security
The areas of importance for state security are the following:
a) activity in the hydrometeorological and geophysical field;
b) radioactive waste management;
c) exploitation of the infrastructure in the fields of energy, transport, water and sewage, from aerospace, defense, electoral;
d) exploiting the technologies of artificial intelligence, robotics, semiconductors, security cyber, aerospace technologies, defense technologies, technologies quantum and nuclear, nanotechnologies and biotechnologies;
e) production of means of cryptographic protection of information;
f) the production and purchase for the purpose of commercialization of means of protection a information classified as a state secret;
g) production of explosive materials for industrial use and distribution activities to them;
h) activities intended for aeronautical security;
i) design, production, maintenance and operation of aircraft, including unmanned aircraft on board, as well as the components for them;
j) design, production, maintenance and operation of systems and components used in
air traffic management and provision of air navigation services;
k) design, maintenance and operation of aerodromes and heliports, including a safety impact equipment used on them;
l) management of airports, bus stations, railway traffic, inland waterways, a ports and quays for navigable traffic;
m) television broadcasts/audiovisual services;
n) provision of mobile or fixed electronic communications networks and/or services;
o) provision of services in national ports;
p) geological study of underground resources and/or exploration of substance deposits useful natural;
q) production, export, re-export, import of armaments, ammunition and equipment military; products, technologies and services that can be used in the manufacture and use of weapons nuclear, chemical, biological and missile;
r) administration of public state registers, information security.
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Article 7. Request for prior approval of investments of importance for state security
(1) Any potential investor, prior to carrying out investment activities in the fields of importance for state security provided for in art. 4 or activities whose object is goods of importance for the security of the state provided for in art. 5, is obliged to obtain a prior approval from the Council.
(2) To request prior approval, the potential investor presents documents and information that refer to:
a) the structure of the social capital (of the shareholders/associates), including the effective beneficiary;
b) the maximum value of the investment, expressed in monetary units;
c) the basic activity, commercial products and services;
d) the country or countries in which they operate and the main business partners in the country or abroad with whom they collaborate;
e) financial statements for the last 3 years;
f) the source of financial means for financing the investment;
g) the date on which the investment is planned to be made or on which it was made;
h) the criminal record, in the case of natural persons shareholders/associates or beneficial owners;
i) the statement regarding the intention to make the investment individually or jointly, as well as the supporting documents confirming the concerted action. The concerted action of the potential investor can also be ascertained by the Council based on its own assessments. [...]
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Article 11. The legal consequences arising in the event of lack of prior approval
(1) If the investor carries out investment activities in the fields of importance for the security of the state provided for in art. 4 or whose object is goods of importance for the security of the state provided for in art. 5 in violation of the provisions of art. 7, without the prior approval of the Council, the following legal consequences apply:
a) The Council orders the suspension of the exercise of the right to vote, the right to convene and hold the general meeting of shareholders/associates, the right to introduce issues on the agenda, the right to propose candidates for the members of the management body, the right to to receive dividends/income from the distribution of net profit, in the case of investments provided for in art. 3 paragraph (1) lit. a). The shares/social parties with suspended voting rights are not excluded from the calculation when convening the general meeting of shareholders/associates and establishing the quorum. [...]
b) The Council orders the suspension of contracts/transactions, in the case of investments provided for in art. 3 paragraph (1) lit. b)–f), until approval is obtained." (LAW No. LP174/2021, of 11 November 2021, regarding the mechanism for examining investments of importance for state security, Articles 1, 3, 4, 7, and 11 [google translation])
LAW No. LP174/2021, of 11 November 2021, regarding the mechanism for examining investments of importance for state security, Articles 1, 3, 4, 7, and 11 [google translation]
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