Montenegro has commenced the drafting of a law aimed at screening foreign investments based on national security and public order considerations. This initiative introduces a new regulatory framework that may impact mergers and acquisitions, as well as significant investment transactions within the country.
The Ministry of Economic Development initiated a 15-day public consultation period regarding the proposed Law on Screening of Foreign Investments on September 11, with feedback due by September 26. This move follows government endorsement and marks the beginning of legislative efforts to establish Montenegro’s first comprehensive foreign investment screening system.
The proposed regime aims to safeguard national security and public order while aligning Montenegro’s investment review processes with European standards. Under the current proposal, the ministry would serve as the central authority for screening, supported by an inter-institutional body, while final decisions on sensitive transactions would rest with the government.
This shift indicates a transition from an almost entirely open foreign direct investment (FDI) framework to one where certain transactions may require additional scrutiny before completion. The specifics concerning which transactions will necessitate mandatory reviews, the thresholds for such reviews, and the categories of investors involved will be determined in the final legislation.
Montenegro’s economy has historically depended significantly on foreign capital for development. In the first half of 2026, gross foreign direct investment amounted to approximately €457 million, with real estate investments contributing around €238 million, and investments into local companies and banks accounting for about €72 million.
This reliance necessitates careful design of the new screening system. A mechanism that is overly broad or unpredictable could extend transaction timelines and create legal uncertainties, whereas a too-restrictive approach might not adequately address the risks intended by this legislation.
The anticipated focus is likely to be on targeted reviews rather than imposing general restrictions on foreign investment. Comparable regimes generally assess issues related to critical infrastructure control, sensitive technology, energy supply, personal data management, and other ownership areas with implications beyond mere commercial value.
This development represents a notable change in Montenegro’s investment policy. For much of the last two decades, efforts have centered on attracting capital. The forthcoming framework will require authorities to scrutinize investor identities, ownership structures, and transaction implications more closely.
The timing is particularly relevant as Montenegro is poised to enter a significant investment cycle involving energy, transportation, tourism infrastructure, and logistics, with expectations that foreign entities will contribute a considerable portion of this capital.
While these new regulations are not expected to outright prevent foreign investments, they may impose additional conditions or extend approval processes for certain deals. The regime could also influence mergers and acquisitions involving existing Montenegrin companies.
Investors conducting due diligence may find it necessary to evaluate not only competitive aspects and sectoral approvals but also whether a transaction triggers the need for foreign-investment review. This requirement could subsequently affect transaction documentation.
Share purchase agreements might need to include extra regulatory conditions, longer closing deadlines, and clearer risk allocation in cases where approval is delayed or conditional. For lenders, the new regime may hold significance when financing structures afford substantial control rights or when enforcement could lead to ownership of assets governed by this law.
The legislation is projected to be prepared within an 18-month timeframe, indicating that full operational capacity may not be immediate. This timeline provides businesses and advisors an opportunity to prepare adequately.
Key uncertainties remain regarding which transactions will require notification, applicable thresholds, and the speed at which authorities must respond. These factors will ultimately determine whether the new regime becomes merely an additional compliance step or a more significant consideration in transactions focused on Montenegro.
As Montenegro continues to rely heavily on foreign capital, balancing increased scrutiny with maintaining investment certainty presents a critical challenge. The effectiveness of this new framework will hinge less on the volume of reviewed deals and more on ensuring that rules are clear, predictable, and enforced within commercially viable timelines.
