Austria: New Approval Regime On Acquisitions Of Austrian Companies In Certain Industry Sectors By Non-EU/EEA and Non-Swiss Persons

Last Updated: 14 December 2011
Article by Herbst Christian, Wendelin Ettmayer and Katharina Oberhofer
Most Read Contributor in Austria, September 2019

An amendment of the Austrian Foreign Trade Act (FTA), in force since 08/12/2011 subjects the acquisitions of relevant interests in enterprises in specific industries, including telecoms and energy, to review and approval by the Austrian Ministry of Economic Affairs

Summary: Under the 17/11/2011 amendment to the Foreign Trade Act (FTA) which became effective as of 08/12/2011, acquisitions of 25 percent or more or a controlling interest (the "Relevant Interest") by non-EU, non-EEA and non Swiss persons in an Austrian enterprise engaged in a particular – protected - industry sector defined under the Act will be subject to advance approval by the Austrian Ministry of Economic Affairs. The list of protected sectors is extensive and includes inter alia not only the defense equipment industry but telecoms, energy, water supply, hospitals, railway and road traffic as well as universities (the "Protected Sector"). The application for approval by the Ministry will have to be submitted before entering into a legally binding agreement to acquire the Relevant Interest or before announcing the launch of a public offer in an enterprise of the Protected Sector. Additionally, the FTA provides for an ex officio review procedure. The waiting time for the approval is between 1 to max 3 months from the notification. Any prohibition will have to be reasoned and is subject to appeal. The sanctions for violation of the approval requirement include the invalidity of the acquisition agreement. Additionally, even negligent violations of the approval requirements are subject to fines amounting to up to 360 days income or up to 1 year imprisonment; intentional violation is subject to up to 3 years imprisonment. The approval procedure and sanctions are broader in scope than the foreign investment procedure of other EU regimes, in particular the ex post review regime in Germany. Unfortunately, the FTA includes many ambiguities including as to scope of applicability. Practice by the Ministry of Economic Affairs over the next 12 months will tell how uncertainties and ambiguities under the FTA will be resolved.

Which transactions qualify for advance approval under the FTA?

Transactions resulting in the acquisition of an enterprise, of a participation of 25% or of a (co-)controlling interest in an enterprise with seat in Austria, engaged in a Protected Sector as listed under sec 25a FTA by a foreign investor who is either a non-EU or non-EEA or non-Swiss citizen or has its seat in a third country, if such country is not a member of the EEA or Switzerland (the "Foreign Investor"), fall under the scope of the ex-ante approval requirements.

Which industry sectors qualify as "Protected Sectors"?

The FTA defines and lists the following industry sectors as Protected Sectors:

(a) The sectors relating to the internal and external security of Austria, in particular of the defense equipment industry and security services.

(b) The sectors relating to public order and safety and to procurement and crisis services. These sectors include (i) hospitals, ambulance and emergency physician services, (ii) fire fighters and civil protection service, (iii) energy and gas supply, (iv) water supply, (v) telecoms, (vi) railway, water and road traffic, and (vii) universities, schools of various types and pre-schooling institutions.

Who qualifies as "Foreign Investor"?

No approval is required if the foreign investor is an EU / EEA or Swiss citizen or has its seat in the EU / the EEA (i.e. Iceland, Liechtenstein and Norway) or Switzerland.

Thus, third country investors subject to the approval regime are non-EU, non-EEA and non-Swiss.

Political commentators suggested that the approval regime was introduced specifically to protect the partially state-owned oil group OMV, currently co-controlled by the Austrian state holding ÖIAG and IPIC, Abu Dhabi, and Telekom Austria, currently controlled by ÖIAG, against unwanted takeovers by non-EU acquirers. Clearly, all overseas investors, including from the US, Australia, Asia, Central Europe (if not EU) and CIS and Middle Eastern countries need to review whether a particular intended investment into a specific Austrian target requires advance approval by the Austrian Minister of Economic Affairs.

Compliant avoidance of Approval Requirement?

Pursuant to the legislative materials, indirect investments by Foreign Investors via EU or EEA acquisition vehicles are not captured by the approval regime, since EU law would not allow such investment restrictions. Accordingly, in case a Foreign Investor invested via an EU domiciled acquisition vehicle, in particular with a multilayered ownership structure or under a technical non-control structure involving non-controlled private foundations, no approval requirement should apply. However, Austrian Ministry practice could still – initially – establish and apply a substantive review in application procedures, resulting in a beneficial ownership test. Moreover, any structure could be tested under the ex-officio review procedure as to – illegal – circumvention of the approval requirement.

Given that (i) participations of parties acting in concert are to be added together, and (ii) approval is required prior to entering into a legally binding agreement and in case of a public offer prior to the announcement of such public offer, and (iii) sanctions in case of a violation of the approval requirement include invalidity of the acquisition agreement, monetary fines and even imprisonment of up to 1 year (negligent violation) and up to 3 years (intentional violation), (iv) the Minister for Economic Affairs also has ex post ex officio investigation rights (without statutory time limit) and (v) there are ambiguities as to the scope of application and possible exemptions under the FTA, the new approval requirement will likely caution Foreign Investors to invest at or above 25% without approval by the Austrian Minister of Economic Affairs.

Which procedures apply, what are the timelines to obtain approval?

The FTA distinguishes two types of procedures, (i) the ex ante approval procedure, and (ii) the ex officio review procedure. The ex ante approval procedure is 1 month (phase I) and, in case of in depth review, additional 2 months (phase II). The ex officio procedure has no trigger date within which such ex officio review must be initiated.

The application in the ex ante approval procedure must be submitted before (i) entering into a binding commitment to acquire the relevant interest in the target engaged in a Protected Sector, (ii) announcing the launch of a public offer in such target. During phase I of the approval procedure, the Minister of Economic Affairs must either approve the acquisition within 1 month from the filing of the application or issue a decree initiating a phase II; if no decree is issued, the acquisition is deemed approved. The phase II procedure is up to 2 months. During phase II the Minister may prohibit the acquisition. Alternatively the Minister may issue an unconditional approval decree or approve the transaction subject to the fulfillment of certain conditions to mitigate the risks associated with the acquisition. If the Minister prohibits the transaction, the prohibition order can be appealed. Unfortunately, the FTA does not provide for a fast track non-binding assessment or negative statement procedure as to a contemplated transaction. To obtain legal certainty, Foreign Investor would need to formally initiate the approval procedure.

The ex officio review procedure under sec 25a/11 FTA applies in limited cases (i.e. the sectors relating to internal and external security of Austria), however the requirements and trigger events are not entirely clear. From the statutory wording the ex officio review is aimed at suspicious circumvention structures and requires a reasonable suspicion as to a reasonable threat to certain protected interests. Unfortunately, the FTA does not provide for a time limit within which the ex officio procedure must be initiated. An ex post prohibition order following from a late ex officio review may be practically impossible to implement.

What are the legal consequences and sanctions of a violation of the approval requirements?

The FTA requires the Foreign Investor to file for approval prior to entering into a legally binding agreement regarding such acquisition. Any acquisition entered into without required approval is invalid and, if implemented, can be unwound. Additionally, even negligent violations of the approval requirements are subject to fines amounting to up to 360 days income or up to 1 year imprisonment of the managers of the acquirer; intentional violation is subject to up to 3 years imprisonment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions