Navigating the foreign direct investment landscape: key changes and implications of the new Slovenian regime

Scope of applicability and notifiable investments

The new law introduces changes to the scope of applicability, primarily focusing on investments involving 10 % or more shares or voting rights. Notably, subsequent acquisitions also require notification. While the law no longer applies to investors based in the European Union, it is essential to note that indirect investments are still covered. As the law does not provide explicit criteria for determining indirect holdings, businesses with third-country shareholders in their ownership structure should carefully assess their notification obligations.

Sectoral application and increased scrutiny

The new law closely aligns with the EU FDI Regulation in terms of sectoral application. However, the interpretation of the authority responsible for enforcement has raised concerns due to its notorious lack of clarity, even under the existing regime, which already shared similarities with the EU Regulation. Expect heightened scrutiny in specific cases, such as when an investor reaches mandatory takeover thresholds, certain qualified thresholds, or when the investor or the target company attains at least a 20 % market share in the relevant market within Slovenia.

Procedural changes and notification requirements

While the deadlines for notification remain the same as under the existing regime (15 days from signing the agreement, publication of a takeover bid, or registration into the business register for greenfield investments), there are procedural novelties to consider. Notifications now require more detailed information, leading to more elaborate submissions. Additionally, a formalised preliminary review is introduced, providing the authority's opinion on whether an investment qualifies as an FDI and whether it poses any (in)significant effects on public order and security. Unlike the existing regime, the opinion will be followed by a formal decision, allowing investors to have legal remedies available at an earlier stage.

Screening process and decision-making

If investment screening is initiated (a so-called Phase II), a two-step procedure will follow, potentially extending the proceedings to over two years, which has already garnered criticism from the legislator's legal service. For preliminary proceedings (Phase I), a general administrative deadline of two months for the authority to deliver its decision should apply. The screening process will ultimately result in the authority's decision on the investment, either approving, denying or imposing conditions and/or remedies. However, any conditions or remedies imposed will be limited to a maximum duration of 10 years.

Penalties for non-compliance

Failure to comply with the notification requirements carries fines that remain unchanged. Legal persons may face fines of up to EUR 500,000, responsible persons of legal persons up to EUR 10,000 and individuals up to EUR 5,000.

Conclusion

With the new foreign direct investment law set to take effect, investors should familiarise themselves with the changes to the scope of applicability, notification requirements and the potential implications for their operations.