Authors: Robert Neruda, Lenka Štiková Gachová, Dušan Valent, Tomáš Varšo

Foreign Direct Investment (“FDI”) screening has been in full swing in Slovakia since March 2023. ¹ Slovakia has had a functional FDI regime consistent with the EU framework for a year now. ² Below, we share our practical insights and experiences after the first year of its operation.

Key points

• Slovakia has an FDI system based on standard principles (a combination of mandatory and voluntary regime).
• Experience with the Slovak FDI screening process so far has been positive.
• HAVEL & PARTNERS will ensure that you comply with all obligations in relation to Slovak FDI.

1. Our Practical Experience

Our experience with the Slovak FDI screening process so far has been rather positive. The Slovak Ministry of Economy (“MoE”) seems to be keen to make the process smooth and encourages transparent communication, which is always welcome. However, there are some legal requirements in the Slovak FDI Act that unnecessarily delay the review process.

Before issuing a final decision, the MoE is required to provide a draft opinion to both the foreign investors and the target. The MoE should send the draft opinion only when it has concerns in relation to the investment. Currently, it also sends the draft to the investor when it has no concerns at all and intends to approve the investment without remedies. In this case, the requirement is an administrative hurdle that causes unnecessary delays without any value.

There is a similar issue with the appeal period. Foreign investors have a right to appeal the first instance MoE’s decision – on which the Minister of Economy decides. The deadline for the appeal is 15 days from the day the foreign investor receives the decision. The decision does not become effective until this period expires. The timeframe for appeal is of standard duration. However, the FDI Act does not provide for the possibility of a waiver. Therefore, in a situation where the MoE approves an investment, the foreign investor still has to wait for the expiration of the appeal period before it may implement its investment. This delay does not bring any value to the process.

2. When Should Foreign Investors Consider a Voluntary Notification?

The MoE also provided guidance ³ to foreign investors who do not fall under the obligatory notification regime but may consider making a voluntary notification. If voluntary notification is not submitted, the MoE may initiate an ex officio review within two years after the completion of the investment (typically the closing). The MoE recommends foreign investors to make a voluntary notification in the following scenarios:

1. If the target supplies goods, products or services to the (i) state, (ii) entities of economic mobilisation, (iii) operators of critical infrastructure, or (iv) providers of essential services, especially if the items supplied are unique, have limited alternatives, or there are limited number of alternative suppliers within the EU.
2. Where the target provides financial, human or other support to research, development or innovation through contracts with universities or the Slovak Academy of Sciences.
3. If the target participates in projects or programmes of EU interest.⁴
4. Foreign investments are subject to review by other countries, with a special focus on European Union (EU) Member States, and the Slovak target (fulfilling the conditions under 1. to 3. above) is also part of the investment.
5. A foreign investor may voluntarily notify a foreign investment also out of an interest in confirming its credibility and the credibility of its investment plans.

The MoE’s guidance is a welcome and useful. On the other hand, the list is not exhaustive. Foreign investors should thus remain alert, and carefully assess the impact of their investment on security and public order in Slovakia and the EU.

3. The MoE’s FAQ Document: Pre-notifications, greenfield investments and other

The MoE helpfully published an FAQ document ⁵ shortly after the Slovak FDI Act came into force and updated it throughout the year. The document provides guidance to foreign investors on a number of technical and substantive issues.

In our view, it is important that the MoE welcomed informal consultations with foreign investors. While not required by law (they do not represent pre-notification customary for competition merger filings), the consultations allow investors to seek guidance on specific issues.

The MoE also confirmed that the Slovak FDI Act covers greenfield investments. In case foreign investors must notify the investment, they must do so prior to the establishment of the Slovak target.

4. The Path Forward

Slovakia's FDI screening regime demonstrates the government's commitment to protecting national security interests and public order while maintaining a welcoming environment for foreign investors. The availability of guidelines and the FAQ document from the MoE supports this endeavour by ensuring clarity and transparency in the review process.

Our practical experience has revealed some procedural shortcomings in the current regime. These should be improved. However, there's hope on the horizon – an amendment to the Slovak FDI Act is expected to be introduced this year. This legislative update provides an opportunity to address these issues, streamline the processes, and create a more investor-friendly framework.

FDI screening has become an integral part of Slovakia’s regulatory framework, requiring serious consideration from foreign investors. HAVEL & PARTNERS stands ready to assist in navigating this process safely. Feel free to reach out to any of the authors of this article for guidance.