FDI: screening on the grounds of security or public order in Slovenia
In relation to foreign direct investments, the Regulation (EU) 2019/452 of the European Parliament and of the Council establishing a framework for the screening of foreign direct investments into the Union (hereinafter: “the FDI Screening Regulation”) has already been in force since the 10 April 2019 but will be applied from the 11 October 2020. The FDI Screening Regulation establishes a framework for the screening by Member States of foreign direct investments into the Union on the grounds of security or public order and for a mechanism for cooperation between Member States, and between Member States and the Commission, with regard to foreign direct investments likely to affect security or public order. It includes the possibility for the Commission to issue opinions on such investments. Furthermore, nothing in the FDI Screening Regulation will limit the right of each Member State to decide whether or not to screen a particular foreign direct investment within the framework of this regulation.
In the light of the FDI Screening Regulation, the Slovenian National Assembly recently enacted the Act Determining the Intervention Measures to Mitigate and Remedy the Consequences of the COVID-19 Epidemic (hereinafter: “the ZIUOOPE”), which laid down some rules on foreign direct investments in Slovenia. The ZIUOOPE entered into force on the 31 May 2020. The provisions on the screening of foreign direct investment currently apply until the 30 June 2023.
“Foreign investor” means a natural person or an undertaking of a Member State, European Economic Area (EEA), Swiss Confederation or third country, intending to make or having made a foreign direct investment in the Republic of Slovenia.
Foreign direct investment
“Foreign direct investment” means an investment made by a foreign investor and the purpose of which is to establish or maintain permanent and direct links between a foreign investor and an economic entity established in the Republic of Slovenia, by acquiring at least 10 % participation in capital or voting rights.
Notification of the foreign direct investments
A foreign investor or target company or an acquired company must notify a foreign direct investment to the Ministry of Economic Development and Technology (hereinafter: the Ministry) no later than 15 days after the conclusion of the merger agreement or from the publication of the takeover bid, or 15 days from the establishment of the company in Slovenia, or 15 days from the conclusion of the contract by which the foreign investor or his subsidiary in Slovenia acquired the right to dispose of land and real estate.
According to the ZIUOOPE, fine for breach of the notification obligation can reach 250,000 EUR for small companies or even 500,000 EUR for medium and large companies. The fine for sole proprietors or individuals who independently perform an activity is set at a maximum of 150,000 EUR, and for individuals at 5,000 EUR. The responsible person of the legal entity shall be fined a maximum of 10,000 EUR.
Subject of screening
The ZIUOOPE imposes the obligation to notify foreign direct investment in the field of the following activities:
(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;
(b) 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, defence, energy storage, quantum and nuclear technologies as well as nanotechnologies and biotechnologies and health, medicine and pharmaceutical technology;
(c) supply of critical inputs, including energy or raw materials, as well as food security and medical and protection equipment;
(d) access to sensitive information, including personal data, or the ability to control such information; or
(e) the freedom and pluralism of the media;
(f) projects or programs in the interest of the European Union as defined in Annex I to the FDI Screening Regulation.
The screening of foreign direct investment will be performed by commission appointed by the minister responsible for the economy.
The commission will have a minimum of 3 and a maximum of 10 members. The chairman and two members are appointed to screen individual foreign direct investment from among the employees of the Ministry, while other members are appointed from among employees of other state bodies, bodies of self-governing local communities and holders of public authority and other legal entities under public and private law.
State bodies, bodies of self-governing local communities and holders of public authority and other legal persons of public and private law must give an opinion to the commission at its request (hereinafter: opinion-givers). The opinion-givers will give an opinion within 15 days of receiving the request for its issuance.
In conducting the procedure of screening of foreign direct investment, the commission may invite a foreign investor to provide an explanation or additional explanation in writing or orally and submit appropriate evidence.
Before the start of an individual screening of foreign direct investment, the chairman and members of the commission must submit a written statement of non-affiliation with the foreign investor and the target company or acquiring company, and a statement that they will protect all information, facts and circumstances that they become aware of in the performance of the commission's tasks.
The commission must complete its work by preparing an opinion on whether foreign direct investment will be approved, determine the conditions for its implementation, prohibit or cancel if it endangers security or public order of the Republic of Slovenia. The commission must submit its opinion to the Minister.
Based on the opinion of the commission, the Ministry will issue a decision on whether foreign direct investment will be approved, determine the conditions for its implementation, prohibit or cancel. If the Ministry prohibits or cancels a foreign direct investment in the screening, this decision results in the annulment of the merger agreement or the contract by which the foreign investor acquired the right to dispose of land and real estate, or the decision on entry in the court register or takeover bid. The decision on the screening is limited to whether the foreign direct investment poses a threat to security or public order of the Republic of Slovenia. In determining whether foreign direct investment influences on the security or public order, the Ministry will take into account especially:
whether the foreign investor is directly or indirectly under the control of the government, including state authorities or the armed forces of a third country, including through an ownership structure or significant funding;
whether the foreign investor has already been involved in activities that affect security or public order in a Member State;
whether there is a serious risk that the foreign investor is engaged in illegal or criminal activities.
The Ministry will issue a decision no later than 2 months from the notification of the foreign direct investment. The Government of the Republic of Slovenia will decide on an appeal against a decision of the Ministry. The provisions of the law governing the general administrative procedure will apply mutatis mutandis to the notification and screening procedure.
 See also European Commission's document: 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), available at: https://trade.ec.europa.eu/doclib/docs/2020/march/tradoc_158676.pdf