The new Act on Screening Foreign Investments due to come into force from 1 March 2023


At the end of last year, the National Council of the Slovak Republic adopted Act No. 497/2022 Coll. on Screening Foreign Investments (the “FDI Act”) which we publicised in this article: ( The FDI Act comes into force on 1 March 2023. Foreign investors will have to consider the implications of this law on their foreign direct and indirect investments (“FDI”), and how to address them. Here is a brief overview of the new rules.

FDIs to be screened

The FDI Act applies to FDIs from:

  1. citizens and entities seated in non-EU countries; and
  2. EU citizens and EU-seated vehicles operating
  • under control,
  • with funds,
  • having an UBO or
  • in concert with
    a foreign investor, being a citizen/entity under lit. (a), a non-EU public authority or an entity that has an equity participation from a non-EU public authority.

Such FDI must be aimed at a target entity that is an entity seated in Slovakia, existing or being created due to such foreign investment, regardless of the transaction form (share, asset or business deal, merger, joint venture, incorporation of Slovak seated vehicle, providing financing) and governing law if certain criteria for critical/non-critical FDI are met.

The following FDIs are excluded from screening even if they could otherwise meet the criteria:

  1. intragroup investments;
  2. security creation in the form of a pledge, provided that the pledgee (foreign investor) is not entitled to give business instructions to the target company;
  3. transactions within the ordinary scope of business.

Critical FDI

Critical FDI applies where there is an increased risk of a negative impact on security or public order in the Slovak Republic considering the target entity’s activity, or the sector in which the target entity operates.

Such target entities are designated by the Government’s Decree to enable more flexible update if necessary in the future; they include:

  • firearms and weapons manufacturers;
  • producers of dual-use items (software and technology that can be used for civilian and military purposes);
  • entities designated as entities of economic mobilisation;
  • providers of content sharing platforms;
  • digital service providers (online marketplaces, web browsers, cloud computing);
  • press agencies, publishers of a periodicals, operators of news web portals;
  • entities in the information security encryption sector.

Forms of screening

The FDI Act distinguishes between:

  1. screening based on an application:
    1. mandatory, in the case of a critical FDI, whereby a standstill obligation applies and no implementation can happen before the clearance decision;
    2. voluntary, in the case of non-critical FDI; the application must be filed before implementation but the transaction can be implemented irrespective of the clearance decision already issued, with the risk of later prohibition or conditions;
  2. ex officio screening on the authority’s initiative or a motion of other authorised bodies.

Screening can consist of two phases:

  1. risk assessment: an analysis of the negative impact of the FDI on security and public order in the case of non-critical FDI, whereby in the absence of risks, the transaction can be cleared in this phase,
  2. actual screening: a more complex analysis and assessment in cooperation with other authorities and bodies.

Ministry of the Economy

The main decision-making authority is the Slovak Ministry of the Economy, which works in close cooperation with other authorities.

The powers, forms of decision (clearance, conditional clearance or prohibition) and sanction mechanisms resemble those of the competition authorities.

For example, a breach of the standstill obligation may result in a fine equal to the higher of (a) the total value of the investment; or (b) 2% of the turnover of the foreign investor, or its group, based on the preceding financial year.

Final notes

Following Russia’s unprovoked invasion of Ukraine and the restrictive measures set out in the recent Council Sanctions Regulations, the European Commission has issued guidelines for Member States on foreign direct investment from Russia and Belarus.

The FDI Act also reflects some aspects of the cooperation under EU Regulation 2019/452, whereby the FDI Act goes beyond the scope of this EU Regulation in many areas, e.g. extending the application to indirect investments. For more information on EU Regulation 2019/452, please see the EU FDI Control Guide prepared by CMS in cooperation with LexisNexis on the implementation of EU Regulation 2019/452 (19 March 2019).

Please, see the link to the EU FDI Control Guide here: EU FDI Control.

If you would like more information on this or have any questions regarding Slovak law, please contact your regular CMS advisor or local CMS experts.