On 7 May 2020, a bill to establish an investment screening procedure to safeguard Luxembourg’s essential security interests was introduced to the Chamber of Deputies. If passed into law, it will establish a notification requirement for any transaction leading to “significant influence” (10%) over a Luxembourg company. The bill allows the government to prohibit, condition, or unwind such transactions if they would jeopardize “security and public order or essential national or European interests”. 
On 1 September 2023, Luxembourg implemented a national screening process for foreign direct investment (FDI), aligning with EU Regulation 2019/452. Targeting FDI impacting security or public order, it excludes portfolio investments. Critical activities, encompass various sectors including energy, health, and AI. Non-EEA investors must notify the Minister of Economy upon reaching a 25% voting rights threshold. The Minister assesses factors like technology sustainability and media freedom, potentially initiating a 60-day investigation. Results can lead to authorization, conditional approval, or prohibition of the FDI, with non-compliance inviting penalties such as voting rights suspension and fines.
"Article 1. Definitions
or the purposes of this law, we mean:
(1) "control":
1st The fact, directly or indirectly:
a) to have the majority of the voting rights of the shareholders or associates of an entity governed by Luxembourg law; Or
b) to have the right to appoint or dismiss the majority of the members of the administrative, management or supervisory body of an entity governed by Luxembourg law and to be at the same time a shareholder or partner of this entity; Or
c)  to be a shareholder or partner of an entity governed by Luxembourg law and to control, under an agreement concluded with other shareholders or partners of this entity, the majority of the voting rights of the shareholders or partners thereof;
2nd or also, the fact of crossing, directly or indirectly, the threshold of 25 percent of holding the voting rights of an entity governed by Luxembourg law;
(2) “screening decision”: the fact of authorizing, subjecting to conditions or prohibiting a foreign direct investment following the screening procedure.
(3) “Member State”: a Member State of the European Union;
(4) “screening factors”: the criteria for determining whether a foreign direct investment undermines security or public order;
(5) “foreign investor”: a natural person or entity governed by foreign law who is not a national of either a Member State or a State party to the Agreement on the European Economic Area other than a Member State of the European Economic Area. European Union and who intends to make or has made a foreign direct investment;
(6) “foreign direct investment”: an investment of any nature made by a foreign investor and which aims to establish or maintain lasting and direct relations between the foreign investor and an entity under Luxembourg law for which these funds are intended, thus allowing the foreign investor to participate alone, in concert or by interposition in the control of this entity carrying out in the Grand Duchy of Luxembourg an activity listed in Article 2;
(7) “portfolio investment”: an acquisition of securities of an entity governed by Luxembourg law carried out with the intention of making a financial investment and which does not allow the foreign investor to exercise, directly or indirectly, control of the entity under Luxembourg law;
(8) “screening procedure” means the act of evaluating and examining a foreign direct investment under the screening factors.
Art. 2 Scope of Application
(1) The national screening mechanism applies to foreign direct investments, except portfolio investments, likely to undermine security or public order, in an entity governed by Luxembourg law carrying out critical activities in Luxembourg.
(2) The following activities are considered critical activities within the meaning of this law:
1st the development, exploitation and trade of dual-use goods within the meaning of Article 2(1) of Council Regulation (EC) No 428/2009 of 5 May 2009 establishing a Community export control regime , transfers, brokerage and transit of dual-use goods, as amended;
2nd in the energy sector: the production and distribution of electricity, the packaging and distribution of gas and the storage and trading of oil; quantum and nuclear technologies;
3rd in the transport sector: land transport, water transport and air transport;
4th in the water sector: the collection, treatment and distribution of water, the collection and treatment of wastewater, as well as the collection, treatment and elimination of waste;
5th in the health sector: activities related to health care and medical analysis laboratories; nanotechnologies and biotechnologies;
6th in the communications sector: wireline telecommunications, wireless telecommunications, satellite telecommunications and postal and courier services;
7th in the data processing or storage sector: computer installations for data processing, hosting of information services and internet portals; technologies relating to artificial intelligence, semiconductors, cybersecurity;
8th in the aerospace sector: space operations and the exploitation of space resources;
9th in the defense sector: activities linked to national defense; the production and trade of arms, ammunition, powders and explosive substances intended for military purposes or war materials;
10th in the finance sector: the activities of the central bank as well as the infrastructures and systems for exchange, payment and settlement of financial instruments;
11th in the media sector: publishing, audiovisual and broadcasting activities;
12th in the agri-food sector: activities linked to food safety.
(3) The following are also considered critical activities within the meaning of this law:
1st research activities directly related to the activities listed in paragraph 2;
2nd production activities directly related to the activities listed in paragraph 2;
3rd related activities that may allow access to sensitive information, including personal data, directly linked to the activities listed in paragraph 2;
4th related activities likely to allow access to the premises in which the activities listed in paragraph 2 are carried out.
[...]
Art. 7 Filtering Factors
(1) To determine whether a foreign direct investment is likely to harm security or public order, its potential effects on:
1st the integrity, security and continuity of supply of critical infrastructures, whether physical or virtual, linked to the activities referred to in Article 2;
2nd the sustainability of activities linked to critical technologies and dual-use goods within the meaning of Article 2, point 1, of Council Regulation (EC) No 428/2009 of 5 May 2009 establishing a Community regime for the control of exports, transfers, brokerage and transit of dual-use goods, as amended;
3rd the supply of essential inputs including raw materials as well as food security;
4th access to or the ability to control sensitive information, including personal data;
5th media freedom and pluralism.
(2) May also be taken into account, in particular:
1st whether the foreign investor is controlled directly or indirectly by the government of a third country, including public bodies or the armed forces;
2nd the fact that the foreign investor has already participated in activities detrimental to security or public order in a Member State;
3rd the fact that there is a serious risk that the foreign investor will carry out illegal or criminal activities.
Art. 8 Filtering Decision
(1) The filtering decision is made by the minister.
(2) The screening decision shall be notified in writing to the foreign investor before the expiry of the period referred to in Article 6(1).
(3) Authorization of foreign direct investment may be subject to conditions.
(4) The conditions which may be attached to the authorization of a foreign direct investment are determined with regard to the screening factors and aim to ensure that the foreign direct investment envisaged does not undermine security or public order.
(5) Any authorization referred to in paragraph 3 of this article is accompanied by an obligation for the foreign investor to report on the implementation of the conditions, in accordance with the terms set by the Minister in the screening decision." (Law of July 14, 2023 establishing a national screening mechanism for foreign direct investments likely to undermine security or public order for the purposes of implementing Regulation (EU) 2019/452, Articles 1, 2, 7, and 8 [google translation])
Law of July 14, 2023 establishing a national screening mechanism for foreign direct investments likely to undermine security or public order for the purposes of implementing Regulation (EU) 2019/452, Articles 1, 2, 7, and 8
[<a href="https://legilux.public.lu/eli/etat/leg/loi/2023/07/14/a411/jo">Law</a>],[<a href="https://investmentpolicy.unctad.org/investment-policy-monitor/measures/4381/luxembourg-introduces-new-fdi-screening-regime">Other</a>]