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Financial Inclusion and Compliance in Slovenia Set for Major Overhaul

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Slovenia’s government has introduced a new framework for foreign direct investment (FDI) screening, which will come into effect on July 1, 2023. The regulations aim to improve the country’s financial inclusion and compliance with EU laws, while also safeguarding its public order and security.

Key Changes in FDI Screening

The new rules introduce significant changes to the existing FDI framework, including:

Narrower Definition of Foreign Investors

  • Only citizens of third countries or legal entities with their seat outside the European Union will be subject to the notification obligation.
  • This change aims to reduce the administrative burden on investors and improve the efficiency of the screening process.

Expanded Definition of FDI

  • The definition of FDI has been expanded to include indirect investments and subsequent acquisitions of at least 10% of share capital or voting rights.
  • This change recognizes that modern investment strategies often involve complex structures and multiple stakeholders.

Critical Sectors and Exemptions

The list of critical sectors that trigger the FDI regime remains largely unchanged, except for:

New Exemptions

  • Health, medicinal, and pharmaceutical technologies are now exempt from the list.
  • This change reflects the government’s commitment to supporting innovation and research in these areas.

Determining Impact on Public Order or Security

The Slovenian Ministry of Economy, Tourism and Sport will determine whether an FDI affects public order or security in the country. The ministry has introduced a two-stage review process:

Phase 1: Preliminary Review by the Notification Commission

  • The commission will conduct a preliminary review to assess the potential impact of the investment on public order or security.

Phase 2: In-Depth Screening by the Expert Group

  • If the commission identifies any concerns, the expert group will conduct a more in-depth screening to determine whether the investment affects public order or security.

Conditions for Implementation

The new framework stipulates a list of conditions that can be imposed on FDI if it is deemed to affect public order or security. These conditions may include:

Restrictions on Business Cooperation with Third-Country Nationals

  • Investors may be required to limit their business cooperation with third-country nationals.

Requirements for Preserving Certain Assets in Slovenia

  • Investors may be required to preserve certain assets in Slovenia, such as intellectual property rights or real estate.

Commitments to Maintain Original Activities in the Country

  • Investors may be required to commit to maintaining original activities in the country.

Sanctions for Non-Compliance

The new regulations introduce significant sanctions for non-compliance, including:

  • These fines may be imposed if an investor fails to notify the FDI within the required timeframe or submits incomplete information.

Fines Ranging from EUR 2,000 to EUR 10,000 for Responsible Persons

  • These fines may also be imposed on responsible persons who fail to comply with the regulations.

The introduction of these new regulations aims to improve Slovenia’s financial inclusion and compliance with EU laws while safeguarding its public order and security. Investors are advised to familiarize themselves with the new framework to avoid non-compliance and potential sanctions.