New obligations for the foreign investors on Screening of their Investments

On 29 November 2020, the Slovak Republic has adopted the Act No. 497/2022 Coll. on Screening of Foreign Investments (hereinafter as “SFI”). The SFI basically follows the framework set up by REGULATION (EU) 2019/452 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 19 March 2019 establishing a framework for the screening of foreign direct investments into the European Union (hereinafter as “Regulation). The SFI came into force on 1 March 2023.  The SFI set conditions for screening of foreign investments in the area of foreign investors investing in the territory of the Slovak Republic. The purpose of the SFI is to protect the Slovak republic and EU from an investment that can harm the security or public order along with setting up a mechanism for cooperation between Slovak republic and another member states of the EU. 

In accordance with Sec. 69 of the SFI, screening of the (foreign) investments only applies on the investment that are realized after 1 March 2023 and does not apply on the (foreign) investments before this date. 

I. Foreign investors 

A foreign investor is, in general, considered as:

a) a person that is not a citizen of the Slovak Republic and/or the EU; or
b) an entity, whose registered seat or place of business is outside the Slovak republic and/or the EU. 

Provided that the entity has registered seat or place of business inside the Slovak Republic or the EU, but:

a) is controlled by a person from outside the Slovak Republic or the EU;
b) ultimate beneficial owner is from outside the Slovak Republic or the EU;  
c) financing of this investment is secured by the non-member state or by an entity, in which non-member state holds a share; and
d) act in mutual consent with a person or entity stated above;

shall be considered as foreign entity as well.

II. Foreign investments

In accordance with the Art. 2, Sec (1) of the EU Regulation, the foreign investment is an investment of any kind by a foreign investor aiming to establish or to maintain lasting and direct links between the foreign investor and the entrepreneur to whom or the undertaking to which the capital is made available in order to carry on an economic activity in a Member State, including investments which enable effective participation in the management or control of a company carrying out an economic activity. 

In accordance with the Sec. 2 of the SFI The foreign investment is an investment intended or realized by a foreign investor, regardless of applicable laws, provided that the foreign investor will:

a) acquire a target company or its part;
b) execute effective participation in a target company; 
(i.e. at least 25%: participation on the registered capital; or of the voting rights);
c) increase effective participation in a target company;
(i.e. increase of the participation on the registered capital or voting rights in the amount of at least 50%, provided that critical investment shall be considered – 20%, otherwise  33% or 50%)
d) execute control of a target company; or
e) acquire ownership or any other right to substantial assets of a target company and this is a critical foreign investment. 

The foreign investment shall not be considered:

a) investments between related parties;
b) establishment of pledge; and
c) transactions in the ordinary course of business for the purposes of selling or buying goods, products or services. 

The SFI distinguishes the foreign investments into two categories:

  1. Critical investment – with type of this investment there is an increased risk of a negative impact on the security or public order of the Slovak Republic,
  2. Non-critical investment – other than critical investments, 

Whether an investment is critical or not is specified by the government´s regulation no. 61/2023 Coll. on specification of critical foreign investments. It is set that the critical investments are such as investments in the field of defence, digital services, or other elements of critical infrastructure, press agency and others specified in the regulation.

III. Screening the investments 

The screening of the investment is made on the basis of filing the request for screening the investment. Respective formulars are set up by the regulation of the Ministry of Economy of the Slovak Republic no. 64/2023 Coll. 

Obligation to file a request for the investment screening is mandatory only regarding the critical investment. It is not possible to make this type of an investment without authorization provided for the Investor by the Ministry of Economy of the Slovak Republic. 

For non-critical investment, the foreign investor has the option to file a request to screen their investment. In this case, if the Ministry of Economy of the Slovak Republic does not find a reason for the investment to be marked as a critical investment, the Ministry of Economy of the Slovak Republic will only send a confirmation and the process itself will be terminated and closed.

Except for the request for the screening of an investment by an investor, the Ministry of Economy of the Slovak Republic may also act upon its own discretion and initiate the screening of an investment by themselves, however not later than in the period of two years after the investment was made. 

IV. Result of the Screening 

The result of the screening is that the investment is approved, conditionally approved, or rejected. Ministry of Economy also makes inspection in order to determine compliance with legal obligations.

Provided that the investment is rejected (not approved), then an investor is not entitled to proceed with the investment. In the case that the investment is already made, then the Ministry of Economy of the Slovak Republic may order the investor to revert transaction. 

Further, the Ministry of Economy of the Slovak republic may order that a foreign investor:

a) is not entitled to exercise any rights; or
b) is restricted to exercise any rights;  

acquired based on foreign investment that (i) is in contrary to the decision of the Ministry of Economy of the Slovak republic or (ii) lacks required approval.  

Insolvency law trends in Slovakia


1.1 What reorganisation and bankruptcy processes are available for financially troubled debtors? (How is the process commenced? Is insolvency necessary? Who controls the process and/or administers the estate (e.g. the debtor/existing management, the creditors, the court, a specially appointed mediator or supervisor)? What is its purpose?)

The Slovak law provides for 2 particular processes available for the debtors in financial difficulties: bankruptcy and restructuring. Both proceedings are initiated solely upon the petition (proposal) and are dived into 2 phases. Bankruptcy is commenced upon declaration of bankruptcy by the court and is being preceded by so called bankruptcy proceeding (initial phase) where property of debtor ascertainment is carried out by trustee (in Slovak Republic: the administrator). On the other hand, restructuring is commenced upon its permit by the court and is being preceded by so called restructuring proceeding (initial phase) where evaluation of all prerequisites is executed by court.

Should the debtor file a petition to bankruptcy declaration, its insolvency is presumed. A creditor is entitled to initiate a bankruptcy proceeding only should the debtor is insolvent, i.e. the debtor is unable to fulfil at least two monetary obligations to more than one creditor 30 days after their due date.

Unlike in the bankruptcy where insolvency of the debtor is prerequisite, the process of restructuring may be carried out even if insolvency of the debtor is impending provided the process is recommended in a restructuring opinion and the maintenance of at least a substantial part of the operation of the debtor’s enterprise and higher degree of creditors satisfaction rather than in the bankruptcy may be reasonably expected. However, a creditor is authorized to initiate the restructuring only after debtor’s endorsement.

The bankruptcy process is generally supervised by the bodies of creditors and the competent court while the estate of the debtor is administered by the trustee appointed by the court. On the other hand, within the restructuring, the administration of the debtor’s property is entrusted to existing management and control of the process is executed by the trustee through endorsement process subjected to supervision of the court.

Conversion of all residual property of the debtor and its liquidation in order to ensure the highest possible satisfaction of the creditors is the main feature of bankruptcy. That is to say, bankruptcy is general collective execution (liquidation) of a debtor’s property. In contrast to bankruptcy, the maintenance of at least a considerable part of the operation of the debtor’s enterprise, the enforcement protection of the debtor, the prolongation of maturity of respective parts of debtor’s obligations and chiefly, the larger extent of the creditor satisfaction rather than in bankruptcy, are main aims of restructuring process.

1.2 Is a stay on creditor enforcement action available? (Are additional filings necessary? What does the stay prevent? Are there carve-outs, e.g. for financial collateral? How is the stay lifted? When does it expire?)

Each and every already initiated enforcement proceeding towards property of the debtor is ex lege (by operation of law) terminated upon declaration of bankruptcy; therefore no additional filings are needed. There are no exceptions regarding aforesaid ban of enforcement.

However, within initial phase of bankruptcy, i.e. within bankruptcy proceeding, are enforcement actions only suspended as opposed to bankruptcy where enforcement proceeding are terminated. This will equally apply to restructuring, where enforcement proceedings are only suspended and after permit of restructuring terminated. Should the bankruptcy is not declared or the restructuring is not permitted, already initiated enforcement proceedings are being resumed.

A stay on creditor enforcement cannot be lifted and it expires upon termination of bankruptcy or restructuring.

1.3 What are the key features of a reorganisation plan and how is it approved? (Who proposes the plan? Is there a period of exclusivity? What are the voting requirements? Are creditors put into classes?)

In general, a reorganization plan (in Slovak Republic: the restructuring plan) includes 2 main sections: the descriptive part and the binding part.

It can be concluded that binding part of the restructuring plan is crucial, as it contains specification of all rights and obligations to be constituted, altered or expired with respect to participants of the restructuring plan (such as prolongation of maturity, partial expiration of the obligations, installments schedule). However, right of the creditor to contest legal acts curtailing creditor’s ascertained receivable is not affected.

In the event that restructuring is initiated by a creditor, the trustee draws up and proposes the restructuring plan. If process initiated by the debtor, it is responsible for the restructuring plan submission.

No period of exclusivity shall apply in Slovak law environment.

In order to adopt the restructuring plan, certain voting requirements have to be met. A participant in the plan possess one vote for each euro of the ascertained receivable and the voting requirements stipulates whether votes per capita or votes counted according to the ascertained receivable are needed. The adoption of the restructuring plan requires that (1) each group for secured receivables votes for the plan adoption, (2) in each group for unsecured receivables, an absolute majority of voting creditors supported the plan (per capita) and concurrently their votes exceed a majority of votes of the voting creditors (per ascertained receivable), (3) in each group for proprietary rights of shareholders votes of an absolute majority (per ascertained receivable) vote for the plan approval, (4) an absolute majority of votes of present creditors (per ascertained receivable) votes for the plan adoption. The consent of debtor is required only if the debtor is natural person and restructuring plan is proposed by the trustee.

The restructuring plan adopted by creditors on the approval meeting is furthermore subject to the court’s confirmation having possibility to either reject the plan on the grounds stipulated by law or confirm the plan and complete a formal process of the restructuring.

The unregistered receivables subjected to restructuring or denied claims become unenforceable upon the court’s confirmation of plan.

1.4 Can a creditor or a class of creditor be “crammed-down”? (Are there any creditor protections?)


If the voting requirements for the plan adoption are not met, the submitter of the plan may demand substitution of approval within respective groups (classes) through decision of the court. However, there are few conditions to be fulfilled in order to demand aforesaid substitution of approval prescribed by law. The substitution of approval of an unsecured receivables group may not be awarded if creditors of the group obtain fulfillment in a period exceeding five years; this will not apply to so-called subordinated claims. All in all, even if a group (class) of creditor is “crammed-down” or outvoted, the plan may be confirmed by the court through substitution of its consent.

Further, 50% of the ascertained claims will not cease to exist and the remaining part converts to other proprietary right. The debtor may not distribute profit between its members until receivables of unsecured creditors are not satisfied to the extent of 50% of their ascertained amount; this will not apply in relation to subordinated claims. Infringement of the debtor’s duty under previous sentence establishes inefficacy of the plan towards affected unsecured groups (classes).


Unsecured receivables of related person, unsecured claim consisting of contractual penalty and receivables connected with the obligation of subordination are deemed as subordinated claims and are being satisfied from proceeds remaining after the full settlement of other unsecured receivables.

1.5 Is there a process for facilitating the sale of a distressed debtor’s assets or business? (Are credit-bidding or stalking horse bids allowed?)

Within bankruptcy, the trustee usually draws up a sales plan of the debtor’s property. Moreover, any sale is subjected to authorization of the creditor body or the court; real estate may be realized only by auction and after expert opinion on its value is submitted.

Credit-bidding or stalking horse bids are not allowed.

Within framework of bankruptcy, a forfeiture of pledged property and blocking of other offers to buy property of the debtor are not allowed and the trustee is not bound by any contractual pre-emption rights.

1.6 What are the duties of directors of a company in financial difficulty? (Is special regard to be had to the creditors?)

First of all, the debtor is obliged to prevent its insolvency and systematically monitor its financial situation as well as the status of its assets and obligations. If the insolvency is impending, the debtor is obliged to take appropriate measures to avert it without undue delay.

The insolvent debtor is obliged to file petition on a bankruptcy declaration within 30 days of the day of ascertainment of its heavy indebtedness; otherwise statutory representatives of the debtor are obliged to pay in favour of a bankruptcy mass a sum in the amount of the debtor’s registered capital, but not exceeding double the minimum amount of a company’s registered capital stipulated by law.

When assessing heavy indebtedness, so-called going concern value is taken into account and obligations are reduced by subordinated claims.

1.7 What priority claims are there and is protection available for post-petition credit?

Receivables against assets (such as costs of property realisation, remuneration of the trustee, wages of employees, and expenses connected with proceeding) are priority claims within bankruptcy.
Claims arisen during restructuring proceeding, labour receivables to which entitlement arose in month in which restructuring process was initiated, remuneration of the trustee and non-monetary receivables are priority claims within restructuring, not being affected by effects of restructuring proceeding. Aforesaid claims are claimable in full extent and not included in the restructuring plan, unless creditors grant consent thereto.

The post-petition credit is not affected by the restructuring plan, if provided to the debtor after commencement of the restructuring proceeding.

1.8 Is there a different regime for banks and other financial institutions?

No different regime is being applied for banks and other financial institution, if they are in position of unsecured creditor.


2.1 Can bankruptcy or reorganisation proceedings be opened in respect of a foreign debtor? (Is there a particular test to determine jurisdiction?)

EU perspective:

Insolvency proceeding, i.e. bankruptcy or restructuring, may be opened in territory of Slovak Republic under the Council Regulation (EC) No. 1346/2000 on insolvency proceedings (“Regulation”).
If a center of main interests (“COMI”) of the debtor is situated in Slovak Republic, the main insolvency proceeding may be opened in Slovak Republic and is governed by Slovak law (lex fori concursus). Aforesaid main insolvency proceedings has extraterritorial effects and affects entire property of the debtor across the European Union (“EU”).

The secondary insolvency proceeding may be opened in parallel with main insolvency proceeding provided such proceeding is initiated after commencement of the main proceeding and establishment of the debtor is situated in Slovak Republic. The secondary insolvency proceeding is governed by laws of Slovak Republic and its effects are limited only to the assets located in Slovak Republic. This shall not apply to restructuring which cannot be opened as the secondary insolvency proceeding.

International perspective:

With respect to recognition of insolvency proceeding with foreign element (out of EU) is applied reciprocity principle, unless international treaty stipulates otherwise. The competence of the Slovak court is given if the debtor has property in the territory of Slovak Republic regardless its amount.

Bankruptcy declared by the Slovak court affects property of the debtor situated abroad, if legal regulations of respective State permit it.

2.2 Can recognition and assistance be given to foreign bankruptcy or reorganisation proceedings? (Is there particular legislation governing cross-border insolvency? What key conditions need to be satisfied?)

EU perspective:

According to the Regulation, all decisions of the Member States court in relation to insolvency proceedings are recognized in other Member States without any further formal requirements; therefore the trustee is entitled to exercise all powers and competencies stemming from the law of the State of the opening of insolvency proceeding in other Member State.

International perspective:

Foreign bankruptcy shall be recognized by the Slovak court upon petition of a foreign trustee provided (1) there is given reciprocity principle, (2) the foreign trustee proves its appointment, initiation of foreign bankruptcy and legal interest of such recognition; unless international treaty stipulates otherwise.


3.1 What other major stakeholders (e.g. governmental or regulatory institutions) could have a material impact on the outcome of the reorganisation? (Are there special protections for employees? How are pension liabilities treated?

Tax Office and Social Insurance Company have a specific status within the framework of restructuring as providers of state aid. For this reason, they are considered creditors not consenting with the plan having possibility to substitute their approval (see 1.4).

Protection of employees is ensured through guarantee insurance, which is mandatory for any employer operating in Slovak Republic. If an employer is unable to settle claims of employees due to its insolvency, such claims are satisfied through guarantee insurance benefits. Pension liabilities are covered by guarantee insurance benefits, which can be disbursed for three months provided the employment lasted for the 18 months preceding the employer’s insolvency.

Moreover, labour claims of employees arisen after bankruptcy declaration are receivables against assets and have the priority claim status being satisfied prior to unsecured receivables.


4.1 In no more than 200 words, outline any current bankruptcy and reorganisation trends specific to your jurisdiction.

A significant amendment of insolvency law became effective on 29 April 2015 through Act n. 87/2015 Coll. Aforesaid act strengthens a legal position and increases possibilities of satisfaction of unsecured creditors in restructuring as well as establishes a register of disqualified statutory bodies due to breach of their statutory duties. The amendment prevents a merger, an amalgamation and a split-up of a company during bankruptcy or restructuring, which are ways the debtor and its statutory bodies may avoid their liabilities. Moreover, it tightens up obligations of statutory members of insolvent companies or companies facing impending insolvency as to diversion of insolvency and ban on drawback of fulfillment substituting company’s own resources.