Financial Crime World

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Slovenia Introduces New FDI Screening Rules

Effective July 1, 2023

Ljubljana, Slovenia - As part of its ongoing efforts to regulate foreign direct investment (FDI), Slovenia will implement new screening rules effective July 1, 2023. The amended Investment Promotion Act (ZSInv) replaces the temporary law introduced in 2020 during the COVID-19 pandemic.

Key Changes

The new regulation introduces significant changes to the existing framework, including:

  • Narrowing down the definition of a foreign investor to those from third countries, including citizens and legal entities with their seat outside the European Union
  • Expanding the scope of foreign direct investments to include any subsequent investment of at least 10% in a Slovenian entity
  • Clarifying information and evidence required for FDI notifications, procedures, conditions, and sanctions

Critical Sectors

While the list of critical sectors remains largely unchanged, there are some notable exclusions:

  • Health, medicinal, and pharmaceutical technologies are no longer considered critical sectors
  • Medical and protective equipment are also excluded from the list of critical resources

Criteria for Determining Impact on Public Order or Security

The Slovenian Ministry of Economy, Tourism, and Sport (Ministry) will assess whether an FDI affects the public order or security of the Republic of Slovenia based on the following criteria:

  • The size and nature of the investment
  • The potential impact on national security
  • The level of control exercised by foreign entities

Two-Phase Screening Process

The new regulation introduces a two-phase screening process to ensure thorough evaluation of FDI transactions:

  1. Phase 1: Preliminary Review
    • A Notification Commission at the Ministry performs an initial review and issues an opinion assessing the potential impact of the transaction
  2. Phase 2: In-Depth Review
    • An Expert Group at the Ministry conducts a comprehensive review and submits an opinion to the Ministry, which then issues a decision on whether to approve the FDI or impose conditions

Sanctions

The regulation includes penalties for non-compliance:

  • Fines of up to EUR 500,000 may be imposed on legal entities that fail to notify the foreign direct investment within 15 days or do not disclose required information
  • Responsible persons may face fines of up to EUR 10,000