Slovenia introduces foreign investments screening rules

On 30 May 2020, the third Anti-COVID-19 legislative package was published in the Official Gazette of the Republic of Slovenia, introducing, among other measures, a screening instrument for foreign investments. This is a novelty in the Slovenian regulatory landscape.

The screening catches not only investments from third countries but, remarkably, also from EU Member States. The regime will remain in force until 30 June 2023.

Scope of the Decree

The Slovenian FDI screening mechanism anticipates that investments by foreign investors acquiring an interest of at least 10 % must be notified to the Ministry of Economy (the "Ministry") within 15 days from

(i) the conclusion of a share purchase agreement or a public takeover bid,
(ii) the establishment of a corporate entity, or
(iii) the acquisition of a right to dispose real estates,

when the investment concerns:

(a) critical infrastructure, whether physical or virtual, including energy, transport, water, health, communications, media, data processing or storage, aerospace, defence, electoral or financial infrastructure, and sensitive facilities, as well as land and real estate crucial for the use of such infrastructure or land and real estate located near such infrastructure;
(b) critical technologies and dual use items as defined in point 1 of Article 2 of Council Regulation (EC) No 428/2009 (15), including artificial intelligence, robotics, semiconductors, cybersecurity, aerospace, defence, energy storage, quantum and nuclear technologies as well as nanotechnologies and biotechnologies as well as healthcare, medical or pharmaceutical technologies;
(c) supply of critical inputs, including energy or raw materials, as well as food security, medical and protective equipment;
(d) access to sensitive information, including personal data, or the ability to control such information;
(e) the freedom and pluralism of the media;
(f) projects and programmes in the interest of the EU as listed with Annex 1 of Regulation 2019/452/EU.

The above-listed factors ((a) through (f)) mirror Article 4 (1) of the EU FDI Screening Regulation 2019/452, while being slightly supplemented as highlighted in italics.

A "foreign investor" is defined as a company or organisation domiciled in, or a citizen of, an EU Member State, the EEA or Switzerland, or a third country.

Also in line with the EU FDI Screening Regulation 2019/452, when determining whether a foreign direct investment is likely to affect security or public order, the Ministry will take into account:

(a) whether the foreign investor is directly or indirectly controlled by the government, including state bodies or armed forces, of a third country, including through ownership structure or significant funding;
(b) whether the foreign investor has already been involved in activities affecting security or public order in a Member State; or
(c) whether there is a serious risk that the foreign investor engages in illegal or criminal activities

Procedural provisions and sanctions

Investments subject to the new regime require approval by the Ministry. The application for such approval must be submitted to the Ministry within 15 days from the date of execution of the agreement. A review period of two months is envisaged for all cases.

The law does not anticipate any extensions or stop-the-clock mechanisms in case of an information request. There is also no standstill obligation envisaged. However, in case the transaction is prohibited, the respective contract is deemed to be null and void by law.

A fine of up to EUR 500,000 may be imposed on corporate entities who were obliged to notify as well as representatives of the corporate entities in the amount of up to EUR 10,000.

authors: Volker Weiss, Eva Škufca and Urša Picelj