Foreign Investment Screening Act

Purpose of the Act:

• To establish a transparent and efficient system for screening foreign investments in order to protect the security and/or public order of the Republic of Croatia, the European Union, and the Member States.

Who is subject to the Act?

• The obligations apply to any trader or a company, regardless of their legal form, which has their registered office or permanent establishment in the Republic of Croatia and operates or shall be incorporated in connection with a foreign investment that affects or may affect security or public order.
• The list of entities subject to the Act shall be determined by the competent authorities within six months after the Government of the Republic of Croatia adopts a regulation defining a list of sectors and subsectors together with the criteria for identifying obligated entities under the Act. This list shall be regularly updated.
• Competent authorities shall notify all companies that have been identified as obligated entities under the Act.

What are the obligations?

• The obligated entity or the foreign investor shall be required to submit an application for screening of every foreign investment resulting in acquiring 10% or more of stocks and shares, or voting rights, in the obligated entity under the Act.
• The Act applies to all types of concessions, public-private partnership contracts (where the foreign investor acts as the concessionaire), companies, free zones, and concentrations regulated under competition law.
• Agricultural land, forests, and forest land owned by the Republic of Croatia are excluded from the scope of application.

What is the procedure for screening of foreign investments?

• The application should be submitted to the Ministry of Finance.
• The applicant must submit a application for approval of a foreign investment in the obligated entity to the Ministry of Finance prior to the acquisition, increase, or decrease of a qualifying share or the acquisition of control - and no later than before submitting a registration application to the court register, before adopting a decision on granting a concession, before concluding a concession or public-private partnership agreement, or before any registration in the Central Depository & Clearing Company (SKDD).
• The Commission for the Screening of Foreign Investments issues an opinion (prior to the Ministry of Finance’s decision on the application).
• The decision of the Ministry is a necessary prerequisite without which the foreign investment cannot be completed.

Key deadlines:

• Opinion of the Commission for the Screening of Foreign Investments: 90 days from the date of submission of a complete application for approval of the foreign investment.
• Decision of the Ministry of Finance on the application for approval: 120 days from the date of submission of a complete application.