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On 16 September 2025, the European Commission (the “Commission”) published updated Q&As on the Foreign Subsidies Regulation (the “FSR”). This document provides an important steer on the Commission’s interpretation of the FSR regime and notification requirements – a regime for which there is currently limited guidance and even less precedent.
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The revised Q&As include a new Question 26 (“Q26”), which states that most passive limited partner (“LP”) contributions are no longer required to be reported as foreign financial contributions (“FFCs”) directly facilitating concentrations. Essentially, passive LP contributions no longer need to be disclosed individually, but can be anonymised and aggregated.
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This is a significant and positive development that departs from the more burdensome approach previously applied, where private equity sponsors were required to provide a detailed list of all LP investments, the nature of the investors and investment terms.
PE Reporting Obligations at a Glance
- Passive LP contributions can now be reported together with regular FFCs received by portfolio companies in Table 1 of the Form FS-CO (separately for acquiring and non-acquiring funds), if all FFCs exceed EUR 45 million in aggregate for each third country– i.e., countries outside the European Union.
- Table 1 requires a brief description of the purpose of the financial contribution and the granting entity, as well as the aggregate amount granted by each third country.
- The disclosure of LPs can now be anonymised and aggregated, grouped by third country of origin. LP commitments no longer need to be individually reported in detail as FFCs “directly facilitating” a concentration.
- The Commission’s FSR case teams retain discretion to ask follow-up questions or request further information.
- Co-investors participating in the transaction remain reportable in full as FFCs directly facilitating the concentration under Article 5(1)(d). The identities of co-investors will likely have to be disclosed. We expect sovereign wealth fund co-investors to continue to be scrutinised more heavily, although we do not expect any material impact on transaction approval.
- Previous co-investors that are not part of the notified transaction can be reported in Table 1 (in anonymised and aggregated form).
- FFCs into the investment company group and FFCs into portfolio companies remain reportable under Table 1 (if they are individually more than EUR 1 million and all FFCs together more than EUR 45 million by third country), unless falling within the categories of the FFCs deemed most likely to distort competition under Article 5 FSR.
- The fund exemption continues to apply: full reporting of LPs and other FFCs can be limited to the acquiring fund only if the conditions of the fund exemption are met:
- non-acquiring funds have a majority of different investors measured according to their entitlement to profit;
- the acquiring entity is subject to the EU AIFM Directive or equivalent third-country legislation; and
- there are no, or only limited, economic or commercial transactions between the fund that controls the acquirer and other funds managed by the same investment firm, within the last three years.
Outlook
- While investment companies remain subject to far-reaching disclosure obligations under the FSR, the new guidance in Q26 of the FSR Q&As indicates a pragmatic shift toward simplification and burden reduction.
- The new Q26 clarification should simplify notification preparation by removing the need to compile full LP lists and associated information. However, PE sponsors should still map and regularly collect FFCs received across their portfolio companies and at the fund level – “FSR readiness” can be a differentiator in a contested bid situation.
- Further potential changes to the FSR and its enforcement may be on the horizon as part of a broader review of the FSR framework. Possibilities for wider exemptions for private equity under the FSR are being explored in a targeted Commission consultation.
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