On 25 January 2023, the Foreign Investment Reliability Assessment Act was adopted by the Estonian Parliament. This new act establishes an investment screening mechanism that would allow Estonian authorities to scrutinise, impose conditions on, and block transactions that pose an undue risk to Estonia's or another EU Member State's security interest. The legislation is expected to enter into force on 1 September 2023.
"§ 1.  Scope and purpose
(1) This Act provides for the conditions and procedure for the foreign investment authorisation obligation, for assessing the reliability of foreign investments and for exercising state supervision of compliance with corresponding requirements.
(2) The purpose of this Act is to ensure the security and public order of Estonia and other Member States of the European Union by assessing the reliability of foreign investments.
(3) The Administrative Procedure Act applies to the authorisation procedure prescribed in this Act, taking into account the specifications provided for in this Act.
§ 2.  Foreign investment
(1) For the purposes of this Act, a foreign investment means a transaction or linked transactions through which a foreign investor:
1) acquires direct or indirect qualifying holding in the target undertaking;
2) achieves direct or indirect control over the target undertaking; or
3) acquires a part of the target undertaking. [...]
§ 3.  Foreign investor
(1) For the purposes of this Act, a foreign investor means:
1) a natural person who holds the citizenship of a third country; a natural person who holds several citizenships, at least one of which is the citizenship of a third country; and a natural person who is a stateless person;
2) an undertaking established on the basis of the law of a third country;
3) an undertaking controlled by the natural person specified in clause 1 or by the undertaking specified in clause 2 of this subsection, regardless of their place of establishment.
(2) For the purposes of this Act, third country means a country other than a Member State of the European Union.
§ 4.  Target undertaking and part of target undertaking
(1) For the purposes of this Act, a target undertaking means:
1) a provider of a vital service;
2) a company in which the state has a qualifying holding;
3) an undertaking which manufactures or, on the basis of a valid contract, supplies goods provided for in the list of military goods or dual-use items specified in the Strategic Goods Act or provides technical assistance related to such goods and/or items to state authorities, except for an undertaking engaged in handling the military weapons, ammunition and munition specified in Subchapter 2 of Chapter 111 of the Weapons Act;
4) a provider of national television or radio service and provider of on-demand audiovisual media service within the meaning of the Media Services Act, as well as a publisher of news, newspapers and magazines in the print media and on the internet whose turnover in Estonia in the previous calendar year in relation to the relevant activity was at least three million euros;
5) an undertaking holding a geological exploration or extraction permit for the exploration or extraction of oil shale or a raw material found in Estonia and included in the List of Critical Raw Materials for the European Union as prepared by the European Commission;
6) an undertaking with whom the state's operation stockpile contract or agreement for delegated stocks has been entered into;
7) an undertaking that owns a permanent national defence object within the meaning of the National Defence Act;
8) an undertaking that owns the infrastructure of masts with a height of at least 200 metres ensuring the operation of national communications or necessary for transmitting broadcasting programmes;
9) a railway infrastructure manager who operates a public railway within the meaning of the Railways Act;
10) a certified aerodrome or heliport operator who operates an aerodrome or heliport which is open for international scheduled air traffic and the air navigation service provider within the meaning of the Aviation Act who ensures servicing air traffic in the Tallinn Flight Information Region;
11) an operator of an Estonian maritime port belonging to the trans-European transport network in accordance with the list of ports specified in Annex II to Regulation (EU) No 1315/2013 of the European Parliament and of the Council on Union guidelines for the development of the trans-European transport network and repealing Decision No 661/2010/EU (OJ L 348, 20.12.2013, p. 1–128).
(2) For the purposes of this Act, a part of a target undertaking means the assets of the target undertaking or an organisationally independent part of the target undertaking, including an enterprise or installation, serving as a basis for the relevant economic activities and necessary for operation for the target undertaking specified in subsection 1 of this section. [...]
§ 5.  Foreign investment authorisation obligation
(1) A foreign investment requires an authorisation from the Consumer Protection and Technical Regulatory Authority (hereinafter foreign investment authorisation), which is granted by assessing the impact of the foreign investment on the security and public order of Estonia or another Member State of the European Union.
(2) The completion of a foreign investment subject to an authorisation obligation on the basis of this Act is prohibited before the foreign investment authorisation is obtained.
(3) The provisions of subsection 2 of this section do not prohibit the conduct of a transaction to offer securities to the public or the conduct of securities transactions as a series, including the conduct of transactions with securities to be converted into other securities listed on the stock exchange, if an application for obtaining a foreign investment authorisation is immediately submitted to the Consumer Protection and Technical Regulatory Authority and, until obtaining the foreign investment authorisation, the foreign investor does not exercise the rights, in particular the voting rights, that the qualifying holding to be acquired or the control to be achieved entails.
[...]
§ 10.  Assessment of foreign investment
(1) Upon assessing the impact of a foreign investment on the security and public order of Estonia or another Member State of the European Union, the Consumer Protection and Technical Regulatory Authority and the Committee consider in particular the circumstances relating to the foreign investor as well as to the economic activities and the relevant economic sector of the target undertaking or a part of the target undertaking.
(2) In relation to a foreign investor, particular account is taken of:
1) in which countries and economic sectors the foreign investor operates;
2) what the ownership structure of the foreign investor is, including whether it is transparent and understandable;
3) from which source the foreign investment is financed and whether the origin of the funds is clearly identifiable;
4) whether the foreign investor is directly or indirectly controlled by the government, including a state authority or armed forces, of a third country;
5) whether the foreign investor or its beneficial owner is or has been involved in activities that endanger the security or public order of Estonia or another Member State of the European Union;
6) whether the foreign investor or its beneficial owner is or has been engaged in, or there is a reasonable doubt that it will engage in, illegal activities;
7) whether the foreign investor or its beneficial owner is or has been a subject of an international sanction.
(3) In relation to the economic activities of a target undertaking or a part of a target undertaking, particular account is taken of:
1) the economic sector in which the target undertaking or the part of the target undertaking operates and their importance in that sector;
2) the extent to which the target undertaking is financed by the European Union funds or other public funds;
3) whether the foreign investor intends to make a change in the economic activities of the target undertaking or the part of the target undertaking or in the management of the target undertaking;
4) whether the target undertaking is engaged in research and development activities and which intellectual property rights it owns;
5) whether the part of the target undertaking comprises intellectual property rights.
(4) In relation to the relevant economic sector of a target undertaking or a part of a target undertaking, particular account is taken of:
1) what the overall competitive situation is and who the competitors of the target undertaking are;
2) availability of substitute products or services;
3) what the impact of the foreign investment on the activities of the target undertaking or the part of the target undertaking in the economic sector, including on their relations with suppliers, providers and customers, is.
§ 11.  Approving grant of foreign investment authorisation, grant of authorisation, grant of authorisation with secondary condition and refusal to grant authorisation
(1) The Committee approves the grant of a foreign investment authorisation and the Consumer Protection and Technical Regulatory Authority grants a foreign investment authorisation if the foreign investment does not endanger the security and public order of Estonia or another Member State of the European Union.
(2) The Committee does not approve the grant of a foreign investment authorisation and the Consumer Protection and Technical Regulatory Authority refuses to grant a foreign investment authorisation if the foreign investment may endanger the security or public order of Estonia or another Member State of the European Union.
(3) A foreign investment authorisation may contain a secondary condition which obliges a foreign investor or a target undertaking to take measures to avoid endangering the security or public order of Estonia or another Member State of the European Union, including to transfer holding of a certain size in the target undertaking or continue effective contracts for the supply of products or provision of services. [...] 
(5) The Consumer Protection and Technical Regulatory Authority may refuse to grant a foreign investment authorisation if:
1) there is good reason to doubt the authenticity of the data and documents submitted or the accuracy of the content thereof;
2) the applicant has not submitted additional data requested on the basis of subsection 1 of § 8 of this Act, which may have an impact on the grant of a foreign investment authorisation or refusal to grant the same;
3) the foreign investment may have an impact on projects or programmes of interest to the European Union within the meaning of Article 8 of Regulation (EU) 2019/452 of the European Parliament and of the Council.
(6) The reasons serving as a basis for the administrative act issued pursuant to subsections 2 and 5 of this section as well as the information and evidence collected in the procedure are not disclosed, including to the applicant, to the extent in which it may endanger the security or the protection of public order of Estonia or another Member State of the European Union or in which it is subject to the restriction on access provided for in law.
[...]
§ 15.  Competence
(1) The Committee performs the following functions:
1) assesses the impact of a foreign investment on the security and public order of Estonia or another Member State of the European Union and approves the grant of a foreign investment authorisation or refuses to approve the same;
2) makes a proposal for imposing a secondary condition of a foreign investment authorisation and gives an assessment of the secondary condition;
3) decides on the provision of comments on the basis of Regulation (EU) 2019/452 of the European Parliament and of the Council and prepares the comments." (Foreign Investment Reliability Assessment Act, adopted 25.01.2023, in force since 01.09.2023, Sections 1, 2, 3, 4, 5, 10, 11, and 15 [unofficial translation])
Act: Foreign Investment Reliability Assessment Act, adopted 25.01.2023, in force since 01.09.2023
[<a href="https://www.riigiteataja.ee/akt/110022023003">Act</a>],[<a href="https://www.riigiteataja.ee/en/eli/504042023002/consolide">Act_Eng</a>]