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1. The Commission shall apply the eligibility and participation conditions set out in paragraph 2 to the procurement, grants or prizes under this Title if it deems that this is necessary and appropriate to preserve the security, integrity and resilience of the operational Union systems, taking into account the objective to promote the Union's strategic autonomy, in particular in terms of technology across key technologies and value chains, while preserving an open economy. Before applying the eligibility and participation conditions in accordance with the first subparagraph of this paragraph the Commission shall inform the Programme committee referred to in point (e) of Article 107(1) and shall take utmost account of the Member States’ views on the scope of application of and the justification for those eligibility and participation conditions.

2. The eligibility and participation conditions shall be as follows:

(a) the eligible legal entity is established in a Member State and its executive management structures are established in that Member State;

(b) the eligible legal entity commits to carry out all relevant activities in one or more Member States; and (c) the eligible legal entity is not to be subject to control by a third country or by a third country entity. For the purpose of this Article, ‘control’ means the ability to exercise a decisive influence over a legal entity directly, or indirectly through one or more intermediate legal entities. For the purpose of this Article, ‘executive management structure’ means the body of a legal entity appointed in accordance with national law, and which, where applicable, reports to the chief executive officer or any other person having comparable decisional power, and which is empowered to establish the legal entity’s strategy, objectives and overall direction, and oversees and monitors management decision-making.

3. The Commission may waive the conditions under points (a) or (b) of the first subparagraph of paragraph 2 for a particular legal entity upon evaluation based on the following cumulative criteria:

(a) for specific technologies, goods or services needed for the activities referred to in paragraph 1 no substitutes are readily available in the Member States;

(b) the legal entity is established in a country which is a member of the EEA or EFTA and which has concluded an international agreement with the Union as referred to in Article 7, its executive management structures are established in that country and the activities linked to the procurement, grant or prize are carried out in that country or in one or more such countries; and (c) sufficient measures are implemented to ensure the protection of EUCI under Article 43 and the integrity, security and resilience of the Programme’s components, their operation and their services. By way of derogation from point (b) of the first subparagraph of this paragraph, the Commission may waive the conditions under points (a) or (b) of the first subparagraph of paragraph 2 for a legal entity established in a third country which is not a member of the EEA or EFTA if no substitutes are readily available in countries which are members of the EEA or EFTA and the criteria set out in points (a) and (c) of the first subparagraph are met.

4. The Commission may waive the condition under point (c) of the first subparagraph of paragraph 2 if the legal entity established in a Member State provides the following guarantees:

(a) control over the legal entity is not exercised in a manner that restrains or restricts its ability to:

(i) carry out the procurement, grant or prize; and (ii) deliver results, in particular through reporting obligations;

(b) the controlling third country or third country entity commits to refrain from exercising any controlling rights over or imposing reporting obligations on the legal entity in relation to the procurement, grant or prize; and (c) the legal entity complies with Article 34(7).

5. The competent authorities of the Member State in which the legal entity is established shall assess whether the legal entity complies with the criteria set out in point (c) of paragraph 3 and guarantees referred to in paragraph 4. The Commission shall comply with that assessment.

6. The Commission shall provide the following to the Programme committee referred to in point (e) of Article 107(1):

(a) the scope of application of eligibility and participation conditions referred to in paragraph 1 of this Article;

(b) details and justifications on the waivers granted in accordance with this Article; and (c) the evaluation that formed the basis for a waiver, subject to paragraphs 3 and 4 of this Article, without divulging commercially sensitive information.

7. The conditions set out in paragraph 2, the criteria set out in paragraph 3 and the guarantees set out in paragraph 4 shall be included in the documents relating to the procurement, grant or prize, as applicable, and, in the case of procurement, they shall apply to the full life cycle of the resulting contract.

8. This Article is without prejudice to Decision No 1104/2011/EU and Commission Delegated Decision of 15.9.2015 , Regulation (EU) 2019/452, Decision 2013/488/EU and Decision (EU, Euratom) 2015/444 and to the security vetting carried out by Member States with regard to legal entities involved in activities requiring access to EUCI subject to the applicable national laws and regulations. If contracts resulting from the application of this Article are classified, eligibility and participation conditions applied by the Commission in accordance with paragraph 1 shall be without prejudice to the competence of national security authorities. This Article shall not interfere with, amend or contradict any existing Facility Security Clearance and Personnel Security Clearance procedure within a Member State.