CMS Expert Guide to Foreign Investment Screening Laws in Slovenia

Control of FDI in Slovenia is regulated by the Investment Promotion Act (“ZSInv”).

Slovenian legislation implements the requirements of the Regulation (EU) 2019/452 establishing a framework for the screening of foreign direct investments into the Union and an EU-wide cooperation mechanism between the European Commission and EU Member States on FDI screenings (“EU FDI Screening Regulation”). 

The ZSInv covers certain “investments”, which can be asset deals or share deals/acquisition of voting rights (see below 2.1) in a Slovenian undertaking active in certain areas (see below 2.3) by a “foreign investor” (see below 2.2).

Asset deals must be notified if a foreign investor wishes to make an investment in tangible and intangible assets relating to the formation of a new establishment, by which the foreign investor acquires, directly or indirectly, at least 10% of the capital or voting rights in a newly established company with its registered office in the Republic of Slovenia.

Share deals must be notified if the foreign investor acquires, directly or indirectly, at least 10% of the capital or voting rights in a company established in the Republic of Slovenia. Due to the broad definition and the inclusion of indirect ownership changes, intra-group restructurings are, in principle, within the scope of ZSInv.

The ZSInv sets out a broad definition of a foreign investor. It includes someone who is a national of a non-EU third country or a legal person established in a non-EU third country who intends to make a direct foreign investment in the Republic of Slovenia or has already made such an investment. Furthermore a foreign investor is also a national of a third country or a legal person established in a third country who holds, directly or indirectly, at least 10% of the capital or of the voting rights in a legal person established in an EU Member State and who intends to make a direct foreign investment in the Republic of Slovenia or has already made such an investment.

The sectors/areas in which foreign investment is subject to approval requirements are those considered as “critical” and which could represent a threat to security and public order. These are:

1. critical infrastructure, physical or virtual, including infrastructure in fields of energy, traffic, water, health, communications, media, data processing and storage, plane and space sector and defence, voting or financial infrastructure, sensitive objects and land and real estate essential for the use of such infrastructure, or land and real estate nearby such infrastructure;
2. critical technologies and dual-use items as defined in Article 2(1)(1) of the EU Dual Use Regulation, including artificial intelligence, robotics, semiconductors, cybersecurity, plane, space and defence technology, technology for energy storage, quantum and nuclear technology, nanotechnology, biotechnology and health, medical and pharmaceutical technology;
3. the supply of critical resources, including energy or raw materials, food security, medical and protective equipment;
4. access to sensitive information, including personal data, or the ability to control such information;
5. freedom and pluralism of the media; and
6. projects and programmes of European Union interest, as defined in Annex I of the EU FDI Screening Regulation.

If a foreign investor meets the thresholds mentioned (see 2.1) and the target engages in activities which are categorized as critical, the filing is mandatory. However, there is no “standstill” obligation.

The substantive test assesses if the the investment will affect the public order or security of Slovenia. In determining whether a foreign direct investment may have an impact on security or public policy, the Slovenian Ministry of the Economy, Tourism and Sport (“Ministry”) will take into account, in particular, whether:

• the foreign investor is directly or indirectly controlled by a government, including the state authorities or armed forces of a third country, including through an ownership structure or substantial financing;
• the foreign investor has previously been involved in activities affecting the security or public order of any EU Member State;
• there is a serious risk that the foreign investor is engaged in illegal or criminal activities;
• the foreign investor has reached the acquisition threshold in the target company  through the notified transaction, or has acquired a 10 % share of the voting rights in the target company following a successful takeover bid, or has acquired at least 75 % of the total voting shares of the target company through a successful takeover bid;
• the foreign investor has a market share of at least 20 % in critical activities in the territory of the Republic of Slovenia through the target company or the target company or a newly established company;
• the foreign investor has achieved a 25 % or 50 % participation in the capital or voting rights in the target or acquired company through the transaction which is the subject of the notification.

The Ministry sets up an expert group, consisting of 3 to 10 members, that screens the FDI and delivers an opinion. The Ministry then issues, based on the expert group’s opinion, a decision authorizing (potentially subject to conditions), prohibiting or unwinding the FDI. 

For direct acquisitions, the obligation to submit an application for approval rests with the directly acquiring person/persons. If a target undertaking is only acquired indirectly, the indirect acquirer(s) are obliged to submit an application. 

The application must be submitted no later than 15 days from:

• the conclusion of the merger contract or the publication of the acquisition offer (by which the foreign investor acquires at least 10 % of participation in capital or voting rights); or
• the formation of the company in Slovenia.

The information required for an application for approval includes:

• name and residence or company name and registered office of the foreign investor and of the target or acquired company;
• annual turnover of the foreign investor and of the target or acquired company;
• total number of employees at the foreign investor and at the target or acquired company;
• foreign investor’s and target or acquired company’s securities trading code;
• ownership structure of the foreign investor and of the target or acquired company, including information on the ultimate investor and the participation in the capital;
• value and source of financing of the foreign direct investment;
• products, services and business activities of the foreign investor and the target or acquired company (NACE classification of economic activities);
• countries in which the foreign investor and the target or acquired company carry out the relevant business activities;
• date on which the foreign direct investment is to be completed or has been completed;
• the contract governed by the law on contractual relations by which the foreign investor acquires title to the immovable property.

All information must be provided in Slovenian language.

The ZSInv is silent when it comes to confidentiality. However, in accordance with the Public Information Access Act and the Trade Secret Act, the Ministry has to keep the provided information confidential and may not disclose information that is classified as business secrets.

If an application for the authorization of the FDI is not submitted in aforementioned deadlines, the responsible person may be fined. The level of the fine depends on the subject responsible for the violation:

• legal person: from 100.000 to 250.000 EUR;
• legal person, categorized as a medium-sized or large company according to the Companies Act: from 200.000 to 500.000 EUR;
• sole trader: from 50.000 to 150.000 EUR;
• responsible person at the legal person: from 2.000 to 10.000 EUR; or
• individual: from 1.000 to 5.000 EUR.