AUSTRIA Law and Practice Contributed by: Clemens Hasenauer and Albert Birkner, CERHA HEMPEL
acquisition of a business unit (eg, by way of an asset deal) involves a mandatory automatic transfer of all employment contracts that are part of the affected business unit. Therefore, it is not possible to “pick and choose” employees and, consequently, the acquirer assumes the employment contracts as they exist at the time of the transfer (including all benefits, unset - tled claims, holiday entitlements yet to be taken and severance pay entitlements). 2.6 National Security Review In Austria, the legislation on FDI screening is based on the Federal Act on the Control of Foreign Direct Investments (Investment Control Act – ICA) at the national level, which has been in force since 25 July 2020. The ICA only applies to foreign direct investments (FDI) into Austrian companies. Foreign direct invest - ments include the direct/indirect acquisition of: • an Austrian undertaking (eg, mergers); • voting interests in such an undertaking; • a controlling influence over such an undertaking; and • the acquisition of control over significant assets of such an undertaking (eg, asset deals). Austrian companies are those that have their seat or place of administration in Austria. This also applies to subsidiaries of the undertaking in question. An investment is “foreign” if at least one acquirer does not have EU, EEA or Swiss nationality or Swiss nationality/headquarter or seat within the EU, EEA or Switzerland. Also, the chain of control up to the ultimate controlling shareholders of the acquirers and the beneficial owners have to be considered for the assessment. As a result, the BMAW interprets the term “foreign” very broadly and has repeatedly held that an investor is considered “foreign” as soon as any company in a chain of controlling companies is domiciled outside the EU, EEA and Switzerland. The ICA applies to an investment in an undertaking active in a sector listed in the ICA’s Annex. Part 1 of the Annex lists the following “highly sensitive areas”.
The (lower) 10% threshold applies to these areas, which are: • defence equipment and defence technologies; • operation of critical energy infrastructure; • operation of critical digital infrastructure, in particu - lar 5G infrastructure; • water; and • operating systems guaranteeing the data sover - eignty of the Republic of Austria. Part 2 of the Annex contains an extensive list of other areas which are critical for security and/or public order. The Ministry interprets the relevant sectors broadly. A FDI clearance is not required if the Austrian target company is a microenterprise (eg, a start-up), with fewer than ten employees and an annual turnover or an annual balance sheet total of less than EUR2 mil - lion. The request for approval must be filed without undue delay after the signing of the respective acquisition documents or the publication of the intention to file a bid. There are safeguards in place to enable the Ministry to commence proceedings even without a formal notification by the acquirer (including, inter alia, a prompt notification duty on the target once the tar - get learns of the acquirer’s intention). Where there is deemed to be a “serious threat” to the interests of public security and order, the approval may be subject to conditions (which are not specified in further detail). Prior to approval, an acquisition sub - ject to the Foreign Investment Control Act must not be implemented (which is backed by substantial fines, including criminal sanctions). A transaction subject to a clearance requirement is not valid until the clearance is granted.
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