New Investment Control Act widens the scope of FDI screening
25 Jul 2020
On 25 July 2020, the newly adopted Investment Control Act entered into force in Austria. It has two main purposes: 1) implementation of the EU Regulation on FDI screening, and 2) expansion of the foreign investment review in comparison to the previous regime under the Foreign Trade Act.
The definition of "foreign investment" in the new legislation encompasses the direct or indirect acquisition of a company, of voting rights (10%, 25%, 50%), a controlling influence, or essential assets of a company. The "controlling influence" does not only refer to voting rights, but covers any "possibility of influencing the activities of the target company through rights, contracts or other means individually or together", in particular through rights of ownership or use of all or substantial assets.
Foreign investment are assessed whether they pose threat to security or public order, including crisis preparedness and the provision of public services. It applies only to sectors and activities enumerated in the annex and include two main groups. Particularly sensitive areas encompass: manufacturing of defense equipment and technologies; operation of critical energy and digital (5G) infrastructure; water supply; operation of systems that guarantee the data sovereignty and R&D relating to drugs, vaccines, medical devices and personal protective equipment. Other areas covered by the Act are: critical infrastructure (energy, ICT, transportation, health, food, data processing and storing, finance, social and distribution systems, chemicals, defense, research institutions, real estate necessary for critical infrastructure), critical technologies and dual-use goods (AI, robotics, semiconductors, cybersecurity, defense technologies, quantum and nuclear technologies, nanotechnologies, biotechnologies), security of critical resources supply (power, raw materials, food, medical supplies and drugs), media freedom and plurality, and sensitive information, including personal data.
The new law provides for criminal and administrative penalties in case of a breach. Additionally, a transaction is null and void without prior approval.
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Type:
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Entry and establishment (Approval and admission)
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Industry:
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Primary (Agriculture, forestry and fishing)
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Manufacturing (Manufacture of food products, beverages and tobacco products, Printing and reproduction of recorded media, Manufacture of coke and refined petroleum products, Manufacture of chemicals and chemical products, Manufacture of basic pharmaceutical products and pharmaceutical preparations, Manufacture of basic metals, Manufacture of computer, electronic and optical products, and electrical equipment)
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Services (Electricity, gas, steam and air conditioning supply, Water supply, sewerage, waste management and remediation activities, Transportation and storage, Accommodation and food service activities, Publishing, audiovisual and broadcasting activities, Telecommunications, Computer programming, consultancy and related activities, Financial and insurance activities, Real estate activities, Scientific research and development, Other professional, scientific and technical activities, Public administration and defence; compulsory social security, Human health activities, Arts, entertainment and recreation)
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