Key Takeaways From Year One Of The Slovak FDI Regime

Schoenherr Attorneys at Law


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The first comprehensive Slovak foreign direct investment (FDI) screening regime entered into force on 1 March 2023. Now that the first year of this new FDI regime is behind us, below we summarise...
Slovakia Government, Public Sector
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The first comprehensive Slovak foreign direct investment (FDI) screening regime entered into force on 1 March 2023. Now that the first year of this new FDI regime is behind us, below we summarise the key takeaways based on our practical experience with this law.

Statistics of FDI proceedings in Slovakia

Based on publicly available unofficial statistics, it seems that 14 FDI proceedings were initiated during the first year of the Slovak FDI regime, with Schoenherr advising on five of them. Seven of these proceedings were mandatory screenings, with no prohibition, no approval with remedies and no call-in by the authority. Official statistics should be published in summer 2024.

Approach of the FDI authority and timing of screening

There has been uncertainty regarding how the FDI authority, i.e. the Ministry of Economy (the "Ministry"), will exercise its powers under the new FDI regime. This uncertainty pertains especially to the interpretation of some unclear definitions, formalities, timing, voluntary filings or potential call-ins. In practice, however, FDI screenings are running smoothly, with the Ministry taking an open and forthright approach. The Ministry is very open to discussions on any point regarding the potential need to file a notification or during actual screening, while case handlers are available and responsive. We have also seen the Ministry be prepared to change its position – on formalities, for example – upon submission of a reasoned statement. Even though screening timeframes are regulated by law (45 days in the case of voluntary filings and 130 days in the case of mandatory filings), actual FDI screening periods can be hard to anticipate. The Ministry frequently uses its powers to request additional information, both from a foreign investor and a target group, which suspends the review period. In general, however, after submitting a complete notification, the Ministry issues approval decisions within three to four months.

Voluntary filing guidelines

In addition to mandatory filing (related to investment into critical targets), the Slovak FDI Act introduced a voluntary filing applicable to investments into non-critical targets, while leaving unclear what investments are covered by this possibility. Voluntary filing serves mainly as a tool to avoid a potential call-in of the transaction by the Ministry after closing, which otherwise would be possible within two years. In the first year of the FDI Act, the Ministry published guidelines specifying circumstances in which voluntary filing is highly recommended, given the increased risk of a potential call-in of a transaction. Risk criteria include:

  • the target supplies goods and/or services to the state, operators of critical infrastructure or essential providers with increased cybersecurity risk, especially if the supplies have a unique feature or are difficult to replace by alternative goods and/or services;
  • the target is involved with R&D or innovation, financially, in personnel, or in any other way, based on a contract concluded with Slovak universities or academic institutions, particularly in the fields of energy (including renewable energy), semiconductors, artificial intelligence (biometrics and data mining) and biotechnology;
  • the target participates in projects of EU interest listed in the EU FDI Regulation.

Even if the transaction falls outside these risk criteria, the Ministry encourages foreign investors to proactively apply for voluntary filing to eliminate the potential risk of a call-in.

Frequent requests for further information

In general, the Ministry tends to frequently use its powers to request additional information for both mandatory and voluntary filings, even though the Slovak application form requires comprehensive information. These requests are targeted both at a foreign investor and at a target group and usually involve multiple rounds of requests. Requests for information differ from one case to another, but in our experience, the Ministry often focuses on the following topics:

  • personal data processing (especially access of a foreign investor to the data of a Slovak target) and cybersecurity;
  • supply continuity of the offered products/services and introduction of new products/services;
  • impact of the investment on existing contracts (especially in relation to public entities or other critical entities);
  • rationale and general aim of a transaction.

Importance of the EU Cooperation Mechanism (EUCM)

The EUCM allows the European Commission (EC) and other EU Member States to provide their view on the investment. Information provided to the Ministry from other Member States or the EC is presumably a significant source of information about investments that could potentially threaten public security in the Slovak Republic. The Ministry also uses the EUCM to identify potential transactions that are subject to Slovak FDI screening (and were not filed). It is proactively contacting foreign investors to remind them of their obligation to file. As the Ministry becomes increasingly familiar with the EUCM, we also expect call-ins to play a larger role in the Ministry's activities.

Conclusion and outlook

FDI filings in Slovakia have become a common feature of M&A transactions over the past year. The authority's practical and open approach certainly helps to achieve smooth screenings, but some areas have yet to be clarified, such as the scope of transactions for voluntary screening or the applicability of FDI to certain transactions (such as pledges). It is therefore important to analyse the potential FDI implications of transactions with targets that have a presence in Slovakia. In the upcoming years, we expect an increase in enforcement activities by the Ministry, including call-ins, especially based on information from the EUCM. Additionally, we anticipate that the Ministry may expand the list of circumstances in which voluntary filings are advisable, and that the government might expand the list of transactions subject to mandatory screening, even before the implementation of the planned revamped EU FDI regime.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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