Slovenia legislates for government screening of foreign investment


As of 11 October 2020, the European Union (EU) Foreign Investment Screening Regulation (Regulation 2019/452) establishes a framework for screening foreign direct investments (“FDI”) in the EU (the “FDI Screening Regulation"), which will apply to FDI coming from third countries into the EU. However, as the Covid-19 pandemic shook global capital flows and companies saw the value of their assets tumble, in March 2020 the European Commission issued guidelines[1] calling on EU Member States to install or to make full use of their existing FDI screening mechanisms with the aim of protecting business operating in strategical or critical sectors.

Slovenia has followed that call by adopting the Act Determining the Intervention Measures to Mitigate and Remedy the Consequences of the COVID-19 Epidemic (the ‘Act’) on 29 May 2020. It obliges foreign investors to notify the Ministry of Economic Development and Technology (the ‘Ministry’) of any significant investment in Slovenia in strategic sectors.

However, while the FDI Regulation addresses third-country investment in the EU, the Act also addresses investors originating in the EU, the EEA and Switzerland.

The summary of the measures adopted below aims to give you a brief overview of the steps investors should take in relation to the new obligations under the Act, which will be in place until 2023.

Obligation to notify

Foreign investors originating from the EU, the EEA, Switzerland or third countries, who have acquired or intend to acquire at least a 10% share in the capital or voting rights in a Slovenian company must notify the Ministry of:

  • the conclusion of a share purchase agreement or a public takeover bid, or
  • the establishment, expansion or diversification of a corporate entity, or
  • the acquisition of a right to dispose of real estate,

when the investment is made in one (or more) of the following areas:

  • critical infrastructure, whether physical or virtual, including infrastructure in the fields of energy, transport, water, health, communications, media, data processing or storage, the aerospace sector, and defence, electoral or financial infrastructure and sensitive facilities, as well as land and real estate, which are essential for the use of such infrastructure or land and real estate located in the vicinity of such infrastructure;
  • critical technologies and dual-use items as defined in point 1 of Article 2 of Council Regulation (EC) No. 428/2009, including artificial intelligence, robotics, semiconductors, cybersecurity, aerospace and defence technology, energy storage technology, quantum and nuclear technology, nano- and biotechnology, as well as health, medical and pharmaceutical technology;
  • the supply of critical resources, including energy or raw materials, food security, medical and protective equipment;
  • access to or control of sensitive information, including personal data;
  •  the freedom and pluralism of the media; and
  • projects or programmes in the interest of the European Union as defined in Annex I to Regulation 2019/452 / EU.

It is important to note that the Ministry has the right to retrospectively screen individual transactions for a period of five years from the conclusion of a share purchase agreement or a public takeover bid, from the establishment of a corporate entity or from the conclusion a contract on acquisition of real estate.

Procedure provisions and Sanctions

The notification needs to be made within 15 days from any of the above events.

Failure to notify leads to fines of up to EUR 500,000 for the company and EUR 10,000 for the responsible person.

The details that must be reported to the Ministry include the presentation of the concluded contracts.

In screening an investment, the Ministry assesses whether the foreign investment represents a threat to Slovenian security or public order, considering mainly the following criteria:

  • 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;
  • Whether the foreign investor has already been involved in activities affecting security or public order in a Member State; and
  • Whether there is a serious risk that the foreign investor engages in illegal or criminal activities.

The Ministry will have 2 months to render its decision – without being able to extend the deadline – to decide whether the notified FDI is to be approved, is subject to additional conditions or is designated as prohibited (i.e. as causing threat to security or public order in the Republic of Slovenia).

The notification process does not envisage a standstill, so the transaction can generally follow its (so far) normal course, of course with a notion of severely undermined legal certainty.

If the Ministry declares an investment inadmissible in relation to the above criteria, the underlying contract will be deemed void, and invalidate the entry in the court registry and other registries.

A potential appeal by the notifying party will be reviewed by the government, without the possibility of a judicial review.


The Act awards the Ministry wide investigatory and control powers with little clarity on how exactly they will be used.  Therefore, the inconsistencies, vagueness, and ambiguity of some parts of the Act raise even more eyebrows. Further, in our view it has unnecessarily gone beyond the scope of the EU FDI Screening Regulation by extending FDI to EEA investments.

Certainly, the open issues will need further regulation or at least additional guidelines from the Ministry of Economic Development and Technology, but it is already perfectly clear that the newly introduced rules will heavily impact on M&A and investments in real estate in Slovenia without making investment in Slovenia any more attractive.

CMS Slovenia will be glad to assist you on any further queries regarding this matter. 

[1] Communication from the Commission Guidance to the Member States concerning foreign direct investment and free movement of capital from third countries, and the protection of Europe’s strategic assets, ahead of the application of Regulation (EU) 2019/452 (FDI Screening Regulation) 2020/C 99 I/01.