Austria passed a new Investment Control Act ("ICA") expanding the screening of foreign investments ("FDI"), effective July 25, 2020.
The Austrian rules on European FDI-cooperation will enter into force on October 11, 2020. The ICA affects a wide array of "sensitive sectors," including, among others:
- information technology;
- media; and
- research and development ("R&D") in the medical sector.
FDI in Austrian companies covered by the ICA must be notified to the Minister of Digital and Economic Affairs and may close only after the Ministry has cleared them, which will usually take up to 66 days.
Any non-European Economic Area/non-Swiss investors must notify the following:
- direct or indirect acquisitions of 25% or more or of 50% or more of the share capital of an Austrian company; an additional lower threshold of 10% applies for companies active in "highly sensitive sectors," i.e., defense, critical energy, digital and 5G infrastructure, operators of systems which are relevant to Austria's data sovereignty, water and R&D companies in the medical sector; and
- direct or indirect acquisitions of control (as defined by the ICA) of an Austrian company active in sectors covered by the ICA, including the acquisition of significant assets of any such company.
A de minimis exception applies to small companies, including start-ups, companies with less than 10 employees and companies with an annual turnover or net assets of less than € 2 million.
Non-compliance with the notification requirement or the closing prohibition under the ICA can trigger both criminal and administrative sanctions both within and outside of Austria. Such sanctions can be applied with extraterritorial effect, i.e., not only for actions within Austria, but also for actions which take place entirely outside of Austria.