AUSTRIA Law and Practice

Contributed by: Markus Fellner, Florian Kranebitter and Mario Burger, Fellner Wratzfeld & Partners

are classified either as “portfolio investment” or “other investment”.

In Austria, the new legislation on the screening of foreign direct investment is based on the Federal Act on the Control of Foreign Direct Investments (Bundesgesetz über die Kontrolle von ausländischen Direktinvestitionen). This has been in force since 2020.

The investment screening, based on that legislation, requires that the acquisition of an Austrian company, a part of a company, a shareholding or a majority shareholding in a company by natural or legal persons of third state origin (outside of the EU, the EEA or Switzerland) – under certain conditions – has to be approved.

This FDI screening concerns acquisitions of companies in critical infrastructure sectors explicitly defined by law. These include:

• energy;

• telecommunications;

• information technology;

• transportation;

• defence;

• finance;

• chemicals;

• foods;

• robotics;

• media; and

• research and development in the medical sector.

Every non-EEA/non-Swiss investor must report:

• the acquisition of the whole undertaking;

• the acquisition of a specific share of voting rights (10% for critical infrastructure or 25%);

• the acquisition of a controlling interest; or

• the acquisition of material assets, whereby a determining influence on part of an undertaking is acquired.

Such kind of an acquisition in Austrian companies must be reported to the Ministry of Digital and Economic Affairs and may only be closed after the Ministry has cleared it. A de minimis exception applies to small companies, including start-ups, companies with fewer than ten employees and companies with an annual turnover or net assets of less than EUR2 million. Noncompliance with the above-stated requirements can lead to both criminal and administrative sanctions, within and outside of Austria.

These sanctions can apply with extraterritorial effect – ie, not just for actions within Austria, but also for actions which take place outside of Austria.

Credit Institutions

The decision to acquire or increase a direct/indirect qualifying holding in an Austrian credit institution must be reported to the FMA. A qualifying holding is one that represents 10 % or more of the capital and/or voting rights in the credit institution or which reaches other relevant thresholds (20 %, 30 % or 50 %). These reporting requirements also apply to persons which are acting jointly. In addition, obtaining rights to appoint the (majority of the) management board or other means of providing significant influence over the management of the credit institution are considered as a qualifying holding. The European Central Bank evaluates the acquisition of qualifying holdings in credit institutions to make sure that the proposed acquirer meets certain criteria (reliability, financial soundness, etc). If the requirements are not fulfilled, the acquisition might be prohibited or subjected to certain conditions.