The Austrian jurisdiction on Foreign Direct Investments ("FDI") is based on the EU FDI Screening Regulation (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 Union). The respective national law, the Investment Control Act ("Investitionskontrollgesetz") ("InvKG") has been in force since July 23, 2020. It provides for national control of foreign investments of a certain scope made by companies located in third countries that threaten national security or public order. Direct or indirect acquisition of more than 10% (or 25%) of shares, relevant assets or any other form of controlling influence of an Austrian company active in a critical industry requires approval by the Austrian Ministry for Digital and Economic Affairs. In case of a FDI exceeding the relevant thresholds, approval is necessary. Responsible for filing such a request is the acquirer, subsidiarily the seller, shortly after the binding contract has been signed. The authority then has to evaluate if the respective investment could be a threat to national security or public order. Additionally, the national authority has to notify the European Commission, starting the European Cooperation Mechanism (“EU-Kooperationsmechanismus”) where the Commission and Member States can comment on the transaction within 35 days. After this time period, the national authority has up to another month to reach a decision and notify the applicant. The one-month period only starts with the notification of the authority. Further prolongation can occur in case of missing information in the request for approval. The authority will thus demand correction and the time limit only starts upon filing of the complete request. During the one-month period the authority can decide to approve or disapprove the transaction or to start an in-depth approval process (“vertieftes Prüfverfahren”), which extends the time limit up to two months. If no decision is taken within one month, this shall be deemed to be an approval. If the restrictions of the InvKG are not complied with, the transaction is deemed void and penalties of up to one year of prison sentence or payment of EUR 40,000 are possible.

In line with EU regulations, the Austrian regime on FDI restrictions is focused on national security threats as laid out in Art. 52 and 65 .b. Economic protectionism as such is frowned upon by the ECJ and is thus not regarded as a valid justification for national restrictions. In Austria, therefore, the focus of regulations lies on protecting national security and public order.

A "foreign investor" as defined in the InvKG is any natural person without EU citizenship or citizenship of an EEA state or Switzerland or a legal entity that has its registered office or head office outside the EU, the EEA and Switzerland.

The InvKG distinguishes between highly critical ("sensitive") and critical sectors that could impose a threat to national security or public order. The exhaustive list of highly critical sectors includes military equipment and technologies, energy and infrastructure, water supply, data sovereignty as well as research and development in the areas of medicine, pharmaceuticals, vaccination and personal protective equipment. Other critical sectors, listed exemplarily, are foods, chemicals, telecommunication, robotics, finance, data processing, media, and research institutions. Exceptions exist for small companies and start-ups with less than 10 employees and a EUR 2 million annual turnover or annual balance sheet total.

Thresholds depend on the "type" of critical sector in which the investment takes place. In the case of a highly critical sector, acquisitions of more than 10% need authority approval. In other critical sectors, the threshold is 25%. Subsequent increases in shares up to 25% or 50%, respectively, require another request for authority approval.

If the investment does not exceed the relevant thresholds, no notification is necessary. If, however, the InvKG applies, a request for authority approval has to be filed. In case the acquirer does not comply with this obligation, the seller has to notify the authority and they will start the process for approval.

No, the request for approval can only be submitted after the signing of the binding contract or at least a binding declaration of intent. In case of doubt or if the requirement of authority approval is unclear, the foreign investor has the option to apply for pre-approval (“Unbedenklichkeitsbescheinigung”).

Since 2011, Austria has adopted restrictions for FDI. The current regime is largely based on the EU regulation issued in March 2019, hence before COVID-19. However, when Austria drafted its national regulations, the pandemic was already in progress. The experiences made in the early months of the pandemic in Austria certainly influenced the legislation of investment restrictions, especially the definition of highly critical sectors such as the medical sector, production of personal protective equipment or research for pharmaceuticals and vaccines.

Due to the COVID-19 pandemic, foreign direct investment decreased significantly in 2020, with a 35% decrease. As can be seen in the first annual report.

The competent ministry has to issue an annual report indicating the exact number of approval processes completed and the decisions made.

The Ministry has submitted a report for the period from 25.07.2020 to 24.07.2021. Before the enactment of the InvKG, 25 proceedings were conducted in about 8 years. In the first year of the InvKG's applicability, a total of 50 proceedings were conducted and completed. Of the 50 procedures, 37 were regarding requests for approval and 13 were regarding of an application for a pre-approval ("Unbedenklichkeitsbescheinigung"). During the reporting period, the Authority reviewed 28 transactions. In 4 cases, an approval requirement was identified.

The authority has to evaluate if the respective investment could be a threat to national security or public order. In line with Art. 52 and 65 AEUV as well as interpretation by the ECJ, two criteria have to be met in order to deny approval of the foreign investment: i.) the protected industry affects core public interests and ii.) the feared threat has to be subsistent and sufficiently severe. Hence, the criteria for restrictions are rather strict. Authorities also check if the foreign investor is a state-owned company (or close to) or if there is a risk of illegal activities. In general, however, the legal criteria for approval are rather vague. The activity of the last 6 months will be visible in the annual activity report, which is yet to be published.

No, nothing is known about this. There is also no mention of changes in the latest annual report.