FDI screening was for a long time a blank spot on the regulatory landscape for most countries in Central Eastern Europe (CEE). Unlike Western European Member States, relatively few countries in Central Eastern Europe had instruments to vet foreign investments and those that did exist often were of little practical consequence.
Investment Control Act ("ICA"), OJ, I No 87/2020, 24 July 2020. EU FDI Screening Regulation (Regulation (EU) 2019/452),
OJ L 79I, 21 March 2019.
The ICA has entered into force in July 2020.
The cooperation mechanism set out in the ICA is applicable since 11 October 2020 (Austrian Parliament adopts new FDI screening act).
The notification obligation is triggered if a foreign investor,
i.e. non-EU, non-EEA, non-Swiss individual/entity, intends to carry out an investment (directly/indirectly) in an Austrian undertaking. This includes:
- the acquisition of shares reaching/ exceeding 10 %*), 25 % and 50 % (voting rights);
- the acquisition of control;
- the acquisition of essential/all assets of an undertaking (asset deals);
- the undertaking is active in a sector listed in an Annex to the ICA; and
- the undertaking is Austrian, i.e. has its seat or its central administration in Austria (local nexus).
No approval is required for an investment in an undertaking with i) fewer than 10 employees and ii) an annual turnover or balance sheet total of less than EUR 2m (start-up exception).
- The 10 % threshold applies for investments in particular highly-sensitive sectors (see below). For investments in other sensitive sectors the triggering threshold is at 25 % and 50 % (voting rights).
The ICA applies to an investment in an undertaking which is active in a sector listed in the Annex. Part I of the Annex lists the following particularly sensitive areas for which the 10 % threshold applies. The list is exhaustive:
- defence equipment/defence technology;
- critical energy infrastructure;
- critical digital infrastructure (in particular 5G infrastructure);
- systems that enable data sovereignty of the Republic of Austria; and
- research and development in the fields of pharmaceuticals, vaccines, medical devices and personal protective equipment (until 31 December 2022).
Part II of the Annex lists other areas which are critical for public security and/or order and for which the 25 % threshold applies. Besides the above-mentioned, these include investments in the following non-exhaustive areas:
- critical infrastructure such as the energy, information technology, transport, health, food, and telecommunications sectors, etc.;
- critical technologies and dual-use items as defined
in Regulation (EC) No 428/2009, in particular artificial intelligence, robotics, cyber security, quantum and nuclear technology, nano and biotechnology, etc.;
- supply of critical resources, including energy or raw materials, as well as food security, medicines, vaccines, medical devices and personal protective equipment, etc.;
- access to sensitive information, including personal data, or the ability to control such information; and
- the freedom and pluralism of the
Note: The sectoral scope criteria are given a wide reach in practice. For instance, undertakings active in one of the above-mentioned sub-infrastructure areas (e.g. in telecom) are presumed by law to be critical infrastructure.
Process and timetable
Competent authority: Federal Ministry for Digital and Economic Affairs
Mandatory filing requirement: Yes
Filing deadline: A relevant agreement needs to be reported immediately after the signing of the contract / announcement of the intention of a public offer.
Responsibility for filing: While the notification obligation rests primarily with the foreign investor and its management (i.e. the acquirer), the ICA foresees a subsidiary reporting obligation for the target company. In addition, the relevant Authority can assume jurisdiction ex officio if it becomes aware of a transaction subject to approval that has not been notified.
Sanctions: Implementation ahead of local regulatory clearance is subject to criminal sanctions and/or administrative fines.
Length of the proceedings:
Phase 1: One month after a 35-day period (extendable) within which the EU Commission and/or Member States can comment on the transaction (under the EU FDI Screening Regulation).
Phase 2: Two months.
By Volker Weiss, Office Managing Partner, Schoenherr