The new Investment Control Act

Investment Control Act ("ICA")

The Austrian Federal Ministry for Digital and Economic Affairs has released the draft of the new Investment Control Act ("Investitionskontrollgesetz") ("ICA") for evaluation. The draft will likely undergo changes throughout the legislative process.

Extension of sectors under scrutiny

The ICA substantially expands the list of examples critical sectors that can pose a threat to public security or order. The list in the ICA’s Annex 1 includes inter alia critical infrastructures, energy, information technology, traffic and transport, health, food, telecommunication, data processing and storage, defence, constitutionally protected institutions, finances, R&D facilities, cyber security, quantum and nuclear technologies, nanotechnology, biotechnology, security of supply of critical resources, supply of medicine, vaccines, medical devices and personal protective equipment including related R&D, access to sensitive information including personal data and freedom and plurality of media ("Annex 1 sectors"). The ICA’s Annex 2 contains a second list of highly critical sectors which includes defence goods and technologies, administration of critical energy and digital infrastructure (especially 5G), water, administration of systems that assure the data sovereignty of the Republic of Austria and R&D related to pharmaceuticals, vaccines, medical products and personal protective gear ("Annex 2 sectors").

Lower minimum thresholds

The ICA lowers the thresholds for FDI screening. Acquisitions of shareholdings of more than 10% in Annex 2 sector companies and acquisitions of shareholdings of more than 25% in Annex 1 sector companies may qualify for scrutiny.

"Foreign" investments

FDI screening is limited to foreign investments. An investment is "foreign" if the investor has its seat or headquarter outside of the EU, EEA or Switzerland or, in the case of a natural person, is not an EU, EEA or Swiss citizen. The assessment relies on the nationality of the ultimately controlling shareholder.

Notification obligation for Austrian target

The ICA obliges the acquirer to notify the intended transaction to the Austrian government ("Government") immediately after the signing of the agreement or, in the case of a public bid, prior to the publication of the decision to submit a binding offer. The Government will inform the target about the notification. If the target becomes aware that it is subject to a notifiable transaction and has not been informed in the way described above that the transaction has been notified, the target is obliged to notify the transaction immediately after having received knowledge of the transaction.

Review periods

Upon receipt of the notification, the Government has to immediately inform the EU Commission about the transaction. The EU Commission and EU Member States then have 35 calendar days to on comment on the transaction. If additional information is submitted, EU Commission and Member States have to submit their comments within 20 calendar days following the submission of the additional information. EU Commission statements submitted within five calendar days after the expiry of the above-mentioned deadlines will be considered to have arrived prior to the expiry of the deadline. Within a month following the expiry of the period of comments from EU Member States and EU Commission, the Government has to either clear the transaction or start an in-depth investigation. The opening of an in-depth investigation triggers a further two-month (Phase 2) review period.

From this result the following review periods:

Phase 1: up to approx. 2 months.

Phase 2: another 2 months.

Stand-still obligation

The ICA provides for a prohibition to implement the transaction prior to clearance or expiry of the review periods due to inactivity.

Application to ongoing transactions

The ICA’s wording is unclear on which ongoing transactions will be covered by the new regulation. It provides that any transaction signed after the ICA’s entry into force will be subject to the new rules, whereas transactions that have been “realised” prior to the ICA’s entry into force will be covered by the previous regulation. This seems to indicate that transactions that have been signed prior to the entry into force of the new regulation but have not been closed are subject to the new regime. However, this will have to be clarified.

Threat to public security and order

Transactions will be assessed under the ICA for their ability to result in a threat to public security and order including crisis prevention and services to the public within the meaning of Art. 52 and 65 TFEU. The assessment will especially consider (i) whether the acquirer is (indirectly) controlled by the government, administrative bodies or armed forces of a "foreign" country, (ii) whether the acquirer or a natural person in a leading position at the acquirer is or has been involved in activities that negatively affect public security or order in another EU Member State, and (iii) whether a significant risk exists that the acquirer or a natural person in a leading position at the acquirer is or has been involved in illegal or criminal activities.


The ICA provides for imprisonment of up to one year for the implementation of a notifiable transaction without government approval, violation of conditions and obligations imposed in the approval decision as well as for the provision of false or incomplete information. The draft provides for imprisonment of up to three years for especially serious violations. Negligent violations may lead to imprisonment of up to six months or monetary fines.


Recent months have seen a tightening of FDI screening rules across the globe. The Austrian draft foresees severe sanctions for breach of the new rules. While the draft will likely undergo some changes prior to entering into force, companies and individuals are advised to carefully assess FDI screening requirements in the context of M&A transactions and to carefully monitor the legal landscape during the ongoing Covid-19 situation and beyond.