FDI Screening in Austria: The Investment Control Act

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The Investment Control Act (Investitionskontrollgesetz, Federal Gazette I 87/2020; "ICA") partly came into force on 24 July 2020. The remaining sections took effect on 11 October 2020. Foreign direct investment control in Austria, which has so far lived a shadowy existence in Section 25a of the Austrian Foreign Trade and Payments Act (Außenwirtschaftsgesetz; "AußWG"), is now subject to an entirely new regime. The ICA aims to strengthen the clout of Austrian FDI control. As in the past, investments by persons and entities from foreign countries (outside the EU, EEA and Switzerland) that could pose a threat to security or public order can be prevented by means of an approval procedure. In particular, the new act provides for the following tightenings and new regulations:

  • Lower Threshold: Under Section 25a AußWG, a share in voting rights of at least 25% triggered an obligation to apply for approval. Under the ICA, for certain conclusively defined, particularly sensitive areas, the obligation to apply for approval is already triggered by the acquisition of a share in voting rights of only 10% (regardless of whether this share conveys control). Areas such as defence equipment, water and the operation of energy or digital infrastructure are regarded as particularly sensitive. Research and development in the areas of pharmaceuticals, vaccines, medical devices and personal protective equipment is also subject to the lowered threshold until 31 December 2022.
  • Obligation to obtain approval for indirect acquisitions: According to Section 25a AußWG, indirect acquisitions by foreign persons through a non-foreign acquiring entity were only subject to FDI screening approval if such acquisition structure was chosen to circumvent FDI screening regulations. Under the ICA, indirect acquisitions by foreign persons are now generally covered by approval requirements. Thus, it has to be analysed who actually gains influence in the target company through the planned acquisition. According to the explanatory notes to the government bill, this is to be assessed on the basis of the true economic substance of the transaction. 
  • Timing of the application: Section 25a AußWG obliged the acquirer to submit the application for approval prior to signing. The new ICA defers the date by which the application must be submitted to the leading competent member of the Federal Government (currently the Federal Minister for Digital and Economic Affairs) to immediately after signing. Also, in the case of public offers, applications have to be filed after the decision to submit a public offer is published. Closing may not be carried out before an approval is granted or the relevant deadlines have expired.
  • Subsidiary obligation of the target company to notify: The ICA  provides for a subsidiary obligation of the target company to notify. The target company must immediately notify the acquisition in writing if it becomes aware of an intended acquisition requiring approval and has not received any information about an application for approval. 
  • Initiation of approval proceedings ex officio: Under Section 8 ICA  an approval proceeding may be initiated ex officio if no application has been made for a transaction requiring approval. If the relevant transaction has already been closed, it is possible to impose subsequent obligations or even order the unwinding of the transaction.
  • Certificate of non-objection: If potential applicants are not certain whether an approval is required for a particular transaction, they can apply for a certificate of non-objection. An application for such certificate must include all the information contained in a standard FDI screening notification. If a certificate of non-objection cannot be issued by the Minister for Digital and Economic Affairs because the transaction is subject to approval, no subsequent application for approval is required and the applicant is informed of the initiation of an approval procedure.
  • Criminal liability: Completion of foreign direct investments requiring authorisation without approval, breaching the obligations laid down in an approval decision, and obtaining an approval by providing incorrect or incomplete information is punishable by criminal law. The maximum prison sentence for such violations amounts to up to one year, a qualified breach might be punished with a prison sentence of up to three years.
  • Coordination within the EU: Since 11 October 2020, Regulation (EU) 2019/452 establishing a framework for the screening of foreign direct investment into the Union (FDI Screening Regulation; OJ L 79I) is applicable in all Member States. The regulation establishes mechanisms for cooperation and information exchange between the individual Member States and the Commission. Chapter 3 of the ICA creates the necessary preconditions for this cooperation in Austria.


Contact: Isabella Hartung, E: hartung@beira.at