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FDI: Entry and ownership rule
On 24 July 2020, Austrian authorities adopted the new Investment Control Act ("Bundesgesetz über die Kontrolle von ausländischen Direktinvestitionen" or short "Investitionskontrollgesetz"), introducing an updated and tightened FDI screening regime. A lower threshold triggering the notification obligation for acquisitions in sensitive sectors was introduced and indirect acquisitions fall under scrutiny. Additionally, the Act contains now precise definitions of the sectors which fall under the scope of the screening review and provisions to fully implement the new EU FDI Screening Regime Regulation.
In line with previous regulations, the investment review is only applicable to investments by non-EU investors and when the Austrian target company is operating in a sector of particular relevance for national security or public order. For particularly sensitive sectors (defined as water and energy supply, 5G-networks, pharmaceuticals and medical products, and protective equipment) a stricter screening regime was introduced. In the above-mentioned sectors, acquisitions of at least 10% of shares or voting rights trigger the authorisation obligation.
The general threshold triggering the notification obligation for investments in a relevant sector remains at 25% of shares or voting rights. The following sectors are defined as relevant: critical infrastructure (such as energy, ICT, transportation, health, food, data processing and storing, finance, social and distribution systems, chemicals, defense, research institutions, real estate), critical technologies and dual-use goods as well as the security of critical resources supply, media freedom and plurality, and sensitive information, including personal data.
Indirect acquisitions that afford controlling influence or essential assets of the target company are now also subject to approval. The relevant screening factors of the planned acquisition concern the potential danger to security or public order. The new Act also provides criminal and administrative sanctions in case of breaches.
In addition, the Act introduced the cooperation mechanism for the EU-wide screening regime. For further information on the EU FDI Screening Regime (Regulation (EU) 2019/452 establishing a framework for the screening of foreign direct investments into the Union), see the related State Act.
The new Act entered into force on 25 July 2020.
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