Draft Act on Screening Foreign Investments
As the Slovak Republic does not currently have a comprehensive legal regulation in the field of foreign investment screening due to the protection of security and public order in the Slovak Republic and security and public order in the EU, the National Council of the Slovak Republic approved on 29th November 2022 a draft Act on Screening Foreign Investment. Its primary purpose is to regulate the screening of foreign investments from third countries coming to Slovakia.
Slovakia sees the benefits of foreign investments in its economic development. Therefore, the aim of the new legislation is not to reduce the inflow of foreign investments to Slovakia, but to introduce a mechanism that has proven worldwide to be an effective means of protection against potential security risks associated with foreign investments.
Foreign investment is mainly understood as acquisition, merger, a certain range of “asset” investments, but also greenfield or joint venture investments. A critical foreign investment is one where a heightened security risk is anticipated in advance (e.g. investments in the military technology sector, digital services) and has been determined to be worth at least 10% of the target entity’s share capital or voting rights.
The Ministry of Economy of the Slovak Republic (ME SR) will be the screener of foreign investments and the screening will be based on a request from the foreign investor or ex officio (e.g. for a critical investment). A screening by the ME SR may result in either an approval or a prohibition of the investment.
The Act on Foreign Investments Screening will take effect from 1st March 2023.
