Foreign exchange regime
The foreign exchange regime is fully liberalised. It is regulated by the Foreign Exchange Act and several other regulations issued by the Bank of Slovenia or by the Ministry of Finance, as well as by certain other sectoral laws.
Investment in securities portfolios
Residents may purchase all types of securities abroad. Non-residents may purchase all types of securities in Slovenia.
Residents, natural and legal persons may obtain credit from abroad or extend credit to non-residents. This relates to all types of credit, including consumer and mortgage loans. The freedom to perform credit operations relates to collateral and the sale of claims, as well as factoring and leasing transactions between residents and non-residents.
Deposits and current accounts
There are no restrictions on residents opening payment accounts abroad.
Non-residents may open foreign currency and euro accounts in banks and other payment institutions in Slovenia, but banks and other payment institutions must first establish and verify their identity. Non-resident legal entities may authorise natural persons, residents or non-residents who are its resident employees or authorised agents to conduct banking operations on its behalf.
Payments and transfers
There are no restrictions on current and capital transfers. Branches of third-country credit institutions wishing to provide payment services in Slovenia must establish a company (in one of the legal forms) in the EEA and apply for authorisation to become a payment institution and conduct payment services.
Cash payments between residents and non-residents
Residents (legal persons or self-employed entrepreneurs) may receive cash payments from non-residents in line with the measures applying to domestic cash transactions. According to the Prevention of Money Laundering and Terrorist Financing Act, the following measures apply:
- cash payments for sale of goods and performance of services are limited to EUR 5,000;
- in other cash transactions, the rules on reporting apply. Reporting entities (credit institutions, financial institutions, brokerage and management companies, post offices, real-estate agencies, casinos, lawyers and other entities with reporting obligations) must report to the Office for Money Laundering Prevention all cash transactions above EUR 15,000. Suspicious transactions must also be reported, regardless of the amount involved.
Cross-border cash transfers
There are no restrictions on the amount of cross-border cash transfers, but both residents and non-residents must report to the Customs Service every transfer in and out of the EU of cash when the amount of cash equals or exceeds EUR 10,000.
Cross-border transfer of securities
There are no restrictions on the amount of cross-border securities transfers, but both residents and non-residents must report to the Custom Service every transfer in and out of the EU of bearer negotiable securities (bearer shares or bonds) when the amount involved equals or exceeds EUR 10,000.
Transfers of privately-owned capital
There are no restrictions on the transfer of capital owned by residents or non-residents.
Foreign exchange transactions between residents
Slovenia introduced the euro as its own currency in 2007. Since then, there are no restrictions on foreign exchange transactions between residents who are free to conduct transactions and payments between themselves in either euros or any other currency.
Foreign exchange market
Residents (except for banks) and non-residents may only purchase and sell foreign currency at authorised banks and at contractual currency exchange operators.
Authorised participants in the securities market
According to the Financial Instruments Market Act, investment services and activities may only be conducted by:
- brokerage companies authorised for such services by the Securities Market Agency (Agencija za trg vrednostnih papirjev, hereinafter: ATVP);
- investment firms and banks authorised for such services in EU member states;
- branches of foreign investment firms authorised for such services by the ATVP;
- branches of foreign banks authorised for such services by the Bank of Slovenia;
- banks authorised for such services by the Bank of Slovenia;
- asset management companies (hereinafter: UCITS) authorised for portfolio management and ancillary services of investment advice by the ATVP or by a competent authority in EU member states; and
- alternative investment fund managers from Slovenia or the EU authorised by the ATVP for portfolio management and ancillary services of investment advice, safekeeping and administrative services connected by units of investment funds and the reception and transmission of orders in relation to one or more financial instruments.
A brokerage company may be organised in the legal form of a public limited company, a European public limited company or a limited liability company registered in Slovenia which obtains appropriate authorisation from the ATVP.
A brokerage company may provide the following services: investment services and activities; ancillary investment services and activities; mutually recognised financial services; auxiliary financial services; custodian and other services or activities with similar features to the previously mentioned services. A brokerage company may also provide individual investment fund management services for investment funds that meet the conditions for marketing and sales in Slovenia.
The minimum capital stock of a brokerage company is EUR 730,000 (EUR 125,000 where the brokerage company does not provide services related to an initial public offer for underwriting nor provides services relating to trade in securities for its own account, and EUR 50,000 where the brokerage company is regarded as a local company and only entitled to provide investment advice services).
The shares of a brokerage company can only be registered in a name after they have been wholly paid in cash prior to entry in the Companies Register, the company’s establishment or recapitalisation. There are no restrictions on non-residents in terms of their establishing and participating in the operations of such companies.
A brokerage company may choose a two-tier management system by appointing a management board and a supervisory board, or a one-tier management system by appointing a board of directors. When a brokerage company chooses a two-tier management system, the board of directors must appoint at least two executive directors (who may not exceed half the number of board members).
The management of a brokerage company must have at least two members who act jointly as agents and representatives of the brokerage company in the conduct of legal operations. No member of the management of a brokerage company may be authorised to operate independently as an agent or representative of the company with respect to the overall operations within their scope of work. At least one management board member must have working knowledge of the Slovenian language necessary to properly perform the duties of a management board member. The supervisory board must decide on appointing individual persons as management board members before such persons file a request for authorisation to perform this function. Only people approved by the ATVP can be members of management.
Branches of investment firms
An investment firm from an EU member state may perform business operations in Slovenia either directly or through a branch that it has established.
Investment firms from third countries may perform business operations in Slovenia through a branch. Branches of investment firms must obtain authorisation from the ATVP, which is responsible for supervising a third-country investment firm’s branch while, in order to acquire authorisation, it may also require the parent investment firm to deposit within Slovenia a specified amount of cash or other appropriate financial asset or to provide other appropriate assurance as a guarantee for the settlement of liabilities arising from transactions concluded within Slovenia.
The Securities Market Agency (ATVP)
The ATVP supervises and performs tasks and obligations defined by the Financial Instruments Market Act, the Investment Funds and Management Companies Act, the Alternative Investment Fund Managers Act, and the Takeovers Act. The ATVP’s tasks are also determined by the Book Entry Securities Act, the Banking Act, the Pension and Disability Insurance Act, the Prevention of Money Laundering and Terrorist Financing Act, the Companies Act, the Financial Conglomerates Act, the Macro-Prudential Supervision of the Financial System Act and several other acts.
The ATVP performs duties and tasks aimed at ensuring the observance and implementation of the provisions of the laws mentioned above, as well as creating the conditions for the securities market’s efficient functioning so as to provide incentives to potential investors and strengthen their confidence in the Slovenian capital market.
The ATVP is a legal entity of public law that is fully independent while performing its tasks and responsibilities.
There is currently one operator of the organised securities market in Slovenia – the Ljubljana Stock Exchange (Ljubljanska borza, d.d., hereinafter the LJSE).
The LJSE is a full member of the International Association of Stock Exchanges (FIBV) and a member of a co-operation project involving the stock exchanges of South-East Europe (SEM-ON.NET). In 2018, the LJSE joined the UN Sustainable Stock Exchange Initiative. The partnership initiative’s purpose is to promote and stimulate the capital market in certain key areas: transparency of the business of public companies, promotion of gender equality, promotion of the market of small and medium-sized enterprises, and the development and promotion of the capital market for financing environmentally-friendly projects.
|LJSE – general information|
|Firm||Ljubljana Stock Exchange|
|Owners||The only shareholder of the Ljubljana Stock Exchange is Zagrebačka burza d.d. (Zagreb Stock Exchange)|
|Number of member firms||9|
|Market segmentation||Equity market (Prime Market, Standard Market), Bond market (Bonds, T-bills, Commercial papers)Standard products market (Closed-end fund shares, Fund market, Certificates, Warrants, Rights)|
|MTF – SI ENTER market||Segment Basic (listed OTC stocks on LJSE initiative)Segment Advance Equity (listed on issuer’s application)Segment Advance Bonds (listed on issuer’s application)Segment Advance Commercial Papers (listed on issuer’s application)Segment Progress Equity (for SME issuers with greater operational transparency)Segment Progress Bonds (for SME issuers with greater operational transparency)Segment Progress Commercial Papers (for SME issuers with greater operational transparency)|
|Trading hours||Opening auction: 8.15 a.m. – 9.15 a.m.Open market: 9.15 a.m. – 2.20 p.m.Closing auction: 2.20 p.m. – 2.30/2.33 p.m.|
|Trading methods||Traders authorised by LJSE member firms use the Xetra electronic trading system. Continuous trading methodAuction trading method|
|Settlement||Standard T+2 settlement cycle, Central Securities Clearing Corporation (KDD)|
|Trading system||Xetra – LJSE electronic trading system|
|Capital market regulator||Securities Market Agency (ATVP)|
|International ties||The LJSE is a member of:WFE – World Federation of Stock ExchangesFESE – Federation of European Securities ExchangesSSE – UN Sustainable Stock Exchange InitiativeCooperation with the stock exchanges of South-East Europe at road-showsThe regional investor conferences|
|Legal framework||Financial Instruments Market ActTakeovers Act Companies Act Book Entry Securities ActInvestment Funds and Management Companies ActAlternative Investment Fund Managers ActEU legislation|
The LJSE uses a securities market segmentation based on types of listed securities and the size of the issuers. The core division includes: Stock market (organised market) and the MTF (Multilateral Trading Facility) market SI ENTER.
The LJSE is a shareholding company authorised by the Financial Instruments Market Act to organise trade. Banks and brokerage companies meeting the conditions established by the Financial Instruments Market Act, the Articles of Association and the Rules of the Stock Exchange can be members of the LJSE. Members of the LJSE employ brokers/experts with the exclusive right to trade securities.
The LJSE prime and standard markets
The Prime Market is the most prestigious LJSE market segment and lists larger companies renowned for their liquidity and transparent business operations. For investors, Prime Market shares represent a certain guarantee of quality, making them relatively safe. Another important factor is the lower transaction costs for the purchase or sale of Prime Market shares due to this segment’s higher liquidity. The Prime Market lists shares of issuers that meet special qualitative, quantitative and liquidity criteria. Prime Market issuers comply with the requirement of additional disclosure in the English language (on top of Slovenian), they publish their business results in line with the International Financial Reporting Standards (IFRS) and provide quarterly reports, all in an effort to make Slovenia’s capital markets ever more attractive to the international investment community.
Provisions of the Financial Instruments Market Act stipulate the levels of investor protection and informing of investors, especially with regard to their knowledge and experience with financial matters. It thus distinguishes three categories of clients, from the highest levels of protection and disclosure down to the lowest. The investor decides which category they wish to be treated as when they open a trading account. Client categories are retail client, professional client and eligible counterparty (only for certain investment services).
Custody services are intended for foreign investors investing in Slovenian securities. Custody services are subject to a special custody agreement which investors can enter into with a Slovenian bank authorised to provide custody services or with a bank co-operating with the local custodian bank.
The Standard Market is intended for larger companies with a dispersed ownership structure whose operations are characterised by higher levels of transparency.
LJSE trading system
The LJSE uses the Xetra electronic trading system in its operations. Orders may only be placed by Xetra traders authorised by LJSE member firms. This makes the Slovenian capital market easily accessible, internationally comparable and competitive because the Xetra system:
- simplifies remote members’ access to the LJSE and thus attracts international portfolio investors;
- fosters new listings of financial instruments and thereby widens the scope of LJSE-listed financial instruments;
- facilitates additional and improved services (providing liquidity etc.); and
- enables LJSE members’ easier access to other markets.
On the basis of meeting the LJSE’s liquidity criteria, securities are traded according to the continuous or auction trading methods.
The continuous trading method is intended for those securities that meet the LJSE’s liquidity criteria regarding the number of executed trades, turnover and market depth.
Less liquid securities not complying with the LJSE’s liquidity criteria are traded according to the auction trading method.
The two trading methods ensure greater market integrity, improve best-price-formation mechanisms, and enable the LJSE and its members to set up internal controls and thus help identify potential cases of market manipulation.
LJSE activities to promote and develop the local capital market
By providing supportive/training programmes – namely, the Partner Programme, the LJSE took on an initiative in the area of activities to develop the SME segment. Relying on remediation processes, the Partner Programme seeks to ensure SMEs are able to grow sustainably by renovating their business strategies/models and financial optimisation.
Support for the SME market’s development also comes from the EBRD, together with the EU and the ATVP via the SME Pre-Listing Programme. The objective is to help SMEs access capital market finance through initial public offerings or by issuing corporate bonds.
By establishing the MTF SI ENTER Market, the LJSE offers SMEs user-friendly access to alternative financing using the various financial instruments available in the SI ENTER Market.
One of the LJSE’s key roles in the local capital market’s future development is to promote responsible investment in sustainable development and advance corporate performance in terms of environmental sustainability. For these purposes, it operates the LJSE Green Exchange – a market intended for issues of Green Bonds and other environmental securities.
Clearing and settling trades executed on the LJSE
For trades transacted on the LJSE, securities and cash from trades executed on a specific trading day (T+0) become irrevocably eligible for settlement on that same day at 16:30. The settlement is performed on the second business day following the execution (T+2). The settlement of trades made on the regulated market is ensured through the guarantee fund operated by the central securities depository (CSD), which in Slovenia is the Central Securities Clearing Corporation (Centralna klirinško depotna družba - KDD).
Clearing and settlements – KDD
The settlement cycle for on-exchange trades is T+2. All trades are cleared and settled via a book entry made by the KDD. The KDD maintains a register for all Slovenian shares of joint-stock companies and for publicly offered debt securities.
The KDD’s own independent regulations (KDD Rules of Operation) govern the implementing procedures and detailed methods and deadlines for specific activities which the KDD, its members, issuers or other entities are obliged to respect.
In 2017, the KDD successfully migrated to TARGET2-Securities (T2S), the Eurosystem’s single platform for securities settlement.
Joining T2S provides the Slovenian environment of financial instruments with continuity in its participation in harmonisation and integration processes across Europe in the post-trade area. Slovenia’s inclusion in the T2S pan-European settlement platform makes it easier to access the Slovenian securities market and helps harmonise and standardise operational and technical solutions.
Public offer of securities
Rules for offering securities to the public and admitting securities for trading in the regulated market are determined by Regulation (EU) 2017/1129. The Financial Instruments Market Act provides that Regulation (EU) 2017/1129 does not apply to an offer of securities for which the total consideration does not exceed EUR 3,000,000 over a 12-month period and where the offer is not subject to notification under Article 25 of Regulation (EU) 2017/1129.
The ATVP approves prospectuses for the sale of securities to the public and the admission of securities to trading in a regulated market. The ATVP conducts proceedings for minor violations of the Financial Instruments Market Act and Regulation (EU) 2017/1129.
Public offer of securities issued by a third-country issuer
A third-country issuer that intends to offer securities to the public in Slovenia, or an applicant for the admission of this issuer’s securities to trading on the stock exchange, for all actions related to a public offering or stock exchange listing, including compiling and publishing a prospectus, authorises a person who is entitled to perform investment services and transactions in Slovenia.
Investment funds and management companies
Investment funds and management companies are governed by the Investment Funds and Management Companies Act (hereinafter: ZISDU-3) which, in line with the EU’s rules, determines:
- the conditions for establishing management companies;
- the conditions and manner of providing the service of managing investment funds that raise capital from the public;
- delegation of the service of managing investment funds that raise capital from the public to other persons;
- the conditions for marketing in Slovenia the units of investment funds that raise capital from the public, and the conditions for marketing the units of such investment funds established in Slovenia in a member state or a third country;
- the types of investment funds that raise capital from the public, and the conditions for their establishment and the manner of their operation;
- supervision of the management of investment funds that raise capital from the public, and supervision of their operations; and
- cooperation among the supervising authorities.
ZISDU-3 enables Slovenian management companies to manage investment funds in other EU countries and, vice versa, introduces master feeder structures and clarifies rules that guide mergers of funds and permits management companies as well as investors to benefit from economies of scale.
Management companies are legal persons which have their registered office in Slovenia that provides the service of managing an undertaking for collective investment in transferable securities (hereinafter: UCITS) under the ATVP authorisation.
A management company may be established as a public limited company, a European public limited company or a limited liability company. The minimum amount of initial capital of a management company that exclusively manages investment funds is EUR 125,000. Where the asset value of an investment fund managed by a management company exceeds EUR 250 million, the capital in possession of the management company must be 0.02% higher than the difference between the overall managed funds and the threshold of EUR 250 million.
If a management company is organised as a limited liability company, it is governed, mutatis mutandis, by provisions of ZISDU-3 on the acquisition and shareholders of a management company organised as a public limited company. Shareholders seeking acquisition of a qualified holding in such a company (i.e. 10% or more, 20% or more, 33% or more, 50% or more etc.) must obtain prior approval from the ATVP.
A management company may select a two-tier management system with a management board and a supervisory board, or a one-tier management system with a board of directors. In line with the legally defined procedure, a company’s management must consist of at least two members who should have previously acquired the ATVP permission. If a management company selects a one-tier system of management, a board of directors including at least two executive directors must be designated.
Prior to court register entry, such founding management companies must be given the ATVP authorisation to manage investment funds. On behalf of the investment fund they manage, management companies must sign a contract with the depositories for the provision of custodian services. Pursuant to the law, depositories are:
- a bank with a registered office in Slovenia and authorised by the Bank of Slovenia to perform depositary functions; and
- a branch of an EU member state bank or a branch of a third-country bank established in Slovenia under the law governing banking and authorised by the Bank of Slovenia to perform depositary functions.
Depositories must be independent of their management companies. The ATVP is in charge of supervising depositories. An investment fund’s assets must be kept separate from the assets of the management company.
The financial crisis revealed many vulnerabilities of the financial system, requiring careful reviews of existing control measures for all stakeholders in the European financial market. These areas included depositary functions, remuneration policies and sanctions regarding UCITS.
According to the Investment Funds and Management Companies Act, investment funds are undertakings for collective investment whose sole purpose is to publicly collect investors’ funds and invest them, in compliance with an agreed investment policy, in different kinds of investment possibilities for the sole benefit of the unit-holders of such investment funds. In Slovenia, UCITS may be established as mutual funds and umbrella funds. ZISDU-3 also provides for alternative investment funds that raise capital from general public as an alternative mutual fund, alternative umbrella fund or an investment company with variable capital.
An investment company is an alternative investment fund that raises capital from the public as a limited company with its initial capital divided into freely transferable shares of equal class. A management company manages the investment company’s assets on behalf of and for the account of the investment company. The minimum initial capital of an investment company is EUR 1,000,000. An investment company may increase its initial capital with contributions provided that the issue price of shares is at least equal to the book-entry value of shares on the date of publication of the invitation to subscribe and pay for shares, increased by any costs associated with the increase in the initial capital of the investment company that the management company is entitled to claim. Notwithstanding the scope of participation in the capital of the investment company, no single person or persons acting in accordance with the Takeovers Act may have more than 33% of all voting rights of the investment company and more than 33% of participation in the profit of the investment company.
Investment companies’ shares must be paid in full prior to the investment company’s entry in the Court Register. Before entering its foundation in the Companies Register, an investment company needs to acquire the ATVP approval of its statute.
An investment company has no management board. The management functions are performed by a management company that conducts the investment company’s operations and acts as its representative on all matters, except those for which the supervisory board of the investment company is authorised. The supervisory board of an investment company performs all functions, like in other shareholding companies. It represents the investment company vis-à-vis the management company. The relationship between a management company and an investment company is regulated by an agreement on investment company management in which the management company assumes the obligation of managing the investment company and the task of conducting all activities related to management of the investment company’s financial assets in the name and on behalf of the investment company, and with the aim of securing conditions for the investment company’s management and operation. The investment company also agrees to pay compensation for the management company’s services.
A mutual fund is an UCITS whose assets are separate from the assets of the management company and from other assets managed by the management company, and is divided into units. Upon a unit holder’s request, the value of their units is payable out of the fund’s assets. Mutual funds consist of assets including investments in transferable securities that are generated by the funds of natural or legal persons and, therefore, are owned by those natural and legal persons. Assets owned by mutual funds must be kept separate from the assets owned by the management company which manages that fund. Mutual funds are established and managed only for the benefit of their owners and, thus, do not have the status of legal persons.
Natural or legal persons become the owners of a proportionate share in a mutual fund when they purchase investment coupons of that mutual fund. Investment coupons are registered securities related to one or more units of the property owned by the mutual fund and issued by the management company. Such coupons may be transferable or non-transferable (depending on the rules for managing the mutual fund).
The owners of investment coupons may at any time request in writing to have their investment coupons purchased by the management company according to the value of a unit in the mutual fund. The value of a mutual fund unit is calculated by dividing the net value of the fund’s assets by the number of units in circulation. Management companies must make the payment of investment coupons in cash within 5 working days of the day the value of mutual fund units is calculated.
Management companies are the only bodies allowed to establish mutual funds. Mutual funds are considered to be established with the acceptance of regulations on the management of the mutual fund and the entering into an agreement with the depository, as well as when the ATVP issues its permit. The rules for managing a mutual fund must be confirmed by the ATVP. These rules define the most important parameters of the management of funds, e.g. commissions for the purchase and sale of investment coupons, compensation for the management of a fund and other costs related to the property of a mutual fund as well as the investment policy etc. Management companies may only issue investment coupons when the ATVP receives authorisation to manage such funds. The authorisation is issued upon the written request of the management company.
Mutual funds can be merged pursuant to conditions as defined by law. A merger can be either domestic or cross-border. After a merger has been completed, the merging mutual fund ceases to exist without a liquidation procedure; all of its capital and rights and obligations are then transferred to the receiving mutual fund.
Alternative investment funds
The alternative investment funds are governed by the Alternative Investment Fund Managers Act (hereinafter: ZUAIS) which, in line with EU rules, determines:
- the conditions for and method of management of alternative investment funds (hereinafter: AIFs);
- the conditions for establishing and operating private alternative investment funds with the status of a specialised investment fund (hereinafter: SIF);
- the conditions for marketing units of AIFs in Slovenia and the conditions for marketing units of AIFs established in Slovenia, another member state or a third country;
- the supervision of the management of AIFs and the operation of SIFs; and
- cooperation between competent authorities.
In addition to management companies governed by ZISDU-3, ZUAIS introduces three new categories of managers of AIFs: alternative investment fund managers (authorised by ATVP to manage AIFs), registered alternative investment fund managers, who may voluntarily submit an application for authorisation to manage AIFs, and the operator of a specialised investment fund manager (managed by one of the predefined forms of an SIF).
State financial assets
Slovenia’s regime of corporate governance of state capital investments is in line with OECD standards.
The methods for managing, governing and disposing of state financial assets are governed by the Slovenian Sovereign Holding Act (hereinafter: SSHA-1), which aims to separate the state’s function as an asset owner from other state functions, ensure the effective management of assets (consistent with international guidelines), centralise the management of state assets, reduce the influence of interest and political groups, and decrease the risk of corruption and conflicts of interest.
The corporate governance of state financial assets is performed by the Slovenian Sovereign Holding (Slovenski državni holding, hereinafter: SSH).
The State Asset Management Strategy was adopted in 2015. Its objectives are to increase the value of the state’s assets, provide for the highest possible yield to the owner and attain other potential strategic objectives. The Strategy classifies 24 state-owned companies (SOEs) as “strategic” (regarding which the state will maintain a minimum level of ownership of over 50 percent), 21 companies as “important” (where the state will keep a minimum level of ownership of over 25 percent) and 46 “portfolio” companies (which the state aims to privatise). The Strategy has not affected the ongoing privatisation processes of 15 companies that were endorsed in 2013.
Based on the Strategy, the SSH prepared the Criteria for measuring the effectiveness of companies with a state asset and the annual asset management plan.
In line with the SSHA-1, the performance criteria refer to the type of asset. The criteria for strategic assets consider the strategic objectives set by the Strategy and also define economic and financial objectives.
Slovenia is applying the framework for screening foreign direct investments made in the Union envisaged in Regulation (EU) 2019/452.
Mergers and acquisitions
Acquisitions according to the Takeovers Act
The Takeovers Act regulates the manner, conditions and procedure for making a takeover bid. The Act’s main purpose is to protect minority shareholders. The Act regulates voluntary and mandatory takeover bids and gives minority shareholders the option to exit the ownership structure of the offeree company in which the takeover threshold has been reached. The Takeovers Act is based on the principle of the equal treatment of domestic and foreign legal and natural persons. It does not contain any special provisions concerning foreign investors.
A takeover involves a situation in which the offeror, either alone or together with persons acting in concert with them, achieves the takeover threshold. The takeover threshold is 1/3 of the voting rights in the company.
Provisions of the Takeovers Act apply if the offeree company is:
- a public corporation whose voting shares are traded in the regulated market; or
- a joint-stock company whose shares are not traded in the regulated market if such a company has at least 250 shareholders (on the last day of the preceding year that is relevant for the purpose of assessing whether the Takeovers Act applies); or total equity capital of more than EUR 4 million (as evident from the most recent public announcement of the annual report of the company concerned, according to the Companies Act).
A takeover bid is a publicly announced proposal to enter into a contract that has been addressed to everyone holding securities of the offeree company whose acceptance would represent the conclusion of a contract for the sale of these securities between the offeror as the buyer and the accepting party as the seller. The object of a takeover bid is all securities of the offeree company not held by the offeror.
Mandatory takeover bid
A mandatory takeover bid is made by an offeror that reaches the takeover threshold, namely, 1/3 of the voting rights in the offeree company.
If a takeover bid is successful, the offeror is obliged to make a renewed takeover bid after having acquired an additional 10% share of the voting rights (the additional takeover threshold). The obligation to make a renewed bid ceases when, following a successful takeover bid, the offeror acquires a 75% share of all the offeree company’s shares with voting rights (the final takeover threshold).
Voluntary takeover bid
A voluntary takeover bid may be made by an offeror which holds less than 1/3 of the voting rights prior to announcing the intended takeover bid.
Successful bid threshold
The offeror may, if they want, define a successful bid threshold in its takeover bid. A successful bid threshold is the lowest percentage of all securities the bidder is obliged to acquire, together with securities already held, on the basis of a takeover bid in order to make the bid binding upon them. In the case of a mandatory takeover bid, the offeror must define the successful bid threshold, which may not be less than 50% of all of the target company’s voting shares plus one share, unless the acquirer’s share has already reached 50% of all the target company’s voting shares.
Compensation and fair price
A takeover bid must indicate the type of compensation involved. Compensation may be provided by way of cash or securities (cash, substitute, combined and alternative bids).
The price in a takeover bid must not be lower than the highest price at which the offeror acquired securities in the last 12 months prior to publication of the bid. If the offeror acquires securities within 1 year of expiry of the time limit for accepting the successful takeover bid at a price higher than the price in this bid, it must pay the accepting parties the difference in price within 8 days of the acquisition.
Persons acting in concert are persons acting on the basis of an explicit or implicit oral or written agreement and whose aim is to acquire or consolidate their control of the offeree company or to prevent the offeror from making a successful takeover bid.
Persons acting in concert and together achieving the takeover threshold in the offeree company must jointly announce a mandatory takeover bid for shares of the offeree company unless they reach an agreement that only one or some of them will announce the takeover bid.
Exemptions from the obligation to make a takeover bid
The Takeovers Act specifies cases in which persons which have achieved a takeover threshold are not required to make a takeover bid if this threshold was achieved through the acquisition of securities, for example, by inheritance or by transferring securities from the offeror after making a takeover bid to persons who acted or are considered to have acted in concert in making such a bid, or to groups of companies etc.
Suspension of voting rights of an unlawful offeror
An offeror which achieves the takeover threshold or an additional takeover threshold and has not made a takeover bid according to the law may not exercise the voting rights arising from the shares they hold until they have:
- made a takeover bid pursuant to the provisions of the Takeovers Act;
- disposed of securities and call options for shares or forward contracts that are not included in securities so that they no longer achieve the takeover threshold or the additional takeover threshold; or
- disposed of securities and share call options or futures contracts which are not included in securities, at least in the proportion of voting rights which resulted in the obligation to submit a takeover bid.
The takeover procedure
The takeover procedure starts with the offeror declaring their intention to make a takeover bid to the Securities Market Agency (ATVP), the Competition Protection Agency (CPA) and the management of the offeree company, while also publishing it on the same day in a daily newspaper circulated across Slovenia.
An offeror which has already achieved the takeover threshold (mandatory bid) is obliged to declare their takeover intention within 3 business days of the date when they achieved the threshold. In the case of a voluntary bid, no time limit is set.
The offeree company’s management must inform the ATVP about arrangements or negotiations on the takeover with the offeror or that there are no such ongoing arrangements or negotiations.
If the offeror withdraws their takeover intention after it was published without the ATVP’s approval, it cannot make another takeover bid within 1 year of the withdrawal. Conversely, a new bid can be made if the withdrawal was ATVP-approved.
The ATVP may ask an offeror to issue an explicit statement on their takeover intention within 24 hours of receipt of the ATVP’s request if it is evident from the situation in the capital market that the offeror intends to take the company over and, in particular, if there is any agreement between two persons to take over a company, if the price of a security on the regulated market rose significantly and it can therefore be assumed that a takeover bid will be made, or if the competent body of the offeror has finally set the price of the takeover bid that has not yet been published.
The offeror must announce their takeover bid simultaneously with the prospectus within 10 to 30 days of publishing the takeover intention and must obtain the ATVP’s authorisation prior to publishing the takeover bid.
The prospectus must comprise all necessary information so that shareholders can make appropriate decisions about the takeover bid.
Once the takeover bid has been published, the offeror may only change it by offering a higher price, a more favourable conversion rate or by establishing a lower successful bid threshold if one was specified in the takeover bid.
The offeree company’s management must publish and substantiate its opinion on the takeover bid within 10 days of its announcement. The offeree company’s management must communicate its opinion to employee representatives or employees.
Prior to announcing a cash bid, the offeror must make a cash deposit in a special cash account with the KDD, which is required for the payment of all securities subject to the takeover bid, or a bank guarantee. If the subject of a substitute, alternative or combined takeover bid is issued substitute securities, the KDD will accept such securities by way of a deposit.
|Takeovers step by step|
|Takeover intention||the offeror||declares its intention to make a takeover bid||ATVPCPAofferee company||mandatory bid: within 3 days of achieving the takeover threshold voluntary bid: no time limit (unless an explicit statement of takeover intention has been requested)|
|Publishing notice of the takeover intention||the offeror||publishes notice of the takeover intention||a daily newspaper circulated throughout the territory of Slovenia||the same day as it declares the takeover intention|
|Notice regarding the negotiations||the offeree company’s management||informs about the negotiations (or the absence of them)||ATVP||within 2 business days of publishing notice of the takeover intention|
|Cash deposit or bank guarantee||the offeror||cash deposit or a bank guarantee for the payment of all securities subject to the takeover bid||a special cash account with the KDD||prior to announcement of the takeover bid and before the ATVP grants its authorisation|
|Takeover bid and bid document – prospectus||the offeror||submits the takeover bid and prospectus||ATVP||as soon as possible after the takeover intention is announced|
|Authorisation to announce the takeover bid||ATVP||grants the authorisation to launch the takeover bid||offeror||prior to announcement of the takeover bid|
|Publishing the takeover bid||the offeror||publishes the takeover bid||a daily newspaper circulated throughout the territory of Slovenia||within 10 to 30 days of the publishing notice of the takeover intention and after the ATVP grants its authorisation|
|Opinion on the takeover bid||the offeree company’s management||publishes its opinion and communicates it to the employees||usually in a newspaper||within 10 days of announcing the bid|
|Acceptance of the offer||Shareholders of the offeree company||make a written statement of acceptance of the takeover bid||brokerage company that maintains a book entry securities account||not less than 28 and not more than 60 days after publication of the offer|
|Publishing the takeover bid results||the offeror||publishes a notice on results of the takeover bid||a daily newspaper circulated throughout the territory of Slovenia||within 3 days of the expiry of the time allowed for acceptance of the takeover bid|
|Notification of the takeover bid results||the offeror||notifies the results of the takeover bid||ATVP CPA||within 3 days of the expiry of the time allowed for acceptance of the takeover bid|
|Decision on announcement of the takeover bid results||ATVP||issues a decision on the announcement of the takeover bid outcome||offeror, the offeree company, the KDD and the securities market regulator||within 3 business days of the day the ATVP received the notice|
|Publishing the decision on announcement of the takeover bid results||the offeree company||publishes the decision on announcement of the takeover bid results||a daily newspaper circulated throughout the territory of Slovenia||within 3 days of receiving it|
From the date of receiving the notice of the intended takeover or, if the management does not receive such a notice prior to publication of the takeover intention, until the date of publication of the decision on announcement of the takeover bid results, the company’s management or supervisory bodies are only allowed to perform certain activities subject to a resolution of the general meeting of shareholders, such as an increase in capital.
The offeror cannot acquire shares subject to the bid outside of the procedure associated with the bid by the Takeovers Act from the date of announcement of the takeover bid until expiry of the deadline for accepting the bid.
The accepting party shall accept the bid by sending a written statement of acceptance of the takeover bid to the brokerage company (having the status of a registration member) that maintains a book entry securities account to which all securities subject to the statement of acceptance of the bid are credited. The deadline for accepting the takeover bid depends on the closing date for submitting the takeover bid stated in the offer, but may not be less than 28 days or longer than 60 days and no more than 60 days from the day of publication of the first takeover bid (final deadline). The deadline for accepting the takeover bid can be extended in certain cases, but not beyond the final deadline.
An offeror acting as a natural person or members of the offeror’s management board and supervisory board, and members of the offeree company’s management and supervisory authorities must send the ATVP information about all securities transactions carried out by themselves, their immediate family and legal entities in which they have a majority holding or a share of voting rights in the 12 months prior to starting the time period allowed for acceptance of the takeover bid.
After the announcement of the takeover bid and before it expires, the offeror may, if the prospectus allows, cancel the bid and withdraw from any contracts concluded by accepting such a bid in the case of a competitive bid or if circumstances arise that would no longer meet the offeror’s expectations such that maintaining the validity of the contracts would be generally deemed unfair. The offeror must notify the ATVP and the KDD of withdrawal of the takeover bid on the day of its announcement.
Outcome of the takeover bid
A takeover bid is declared unsuccessful if the offeror withdraws it, if the ATVP annuls the bidding procedure, if a resolute condition becomes effective, or if the offeror fails to demonstrate to the Agency that: a) for the payment of securities subject to the takeover bid the offeror did not in any way, directly or indirectly, give or pledge as collateral, or insured securities of the offeree company that are not the property of the offeror; and b) for the payment of securities of the offeree company the offeror did not in any way, directly or indirectly, give or pledge as collateral, or insured assets of the offeree company, if the offeror’s bid defines a successful bid threshold and that threshold has not been achieved or if the offeror fails to fulfil their obligation to deposit the difference in cash within the time limit defined. A takeover bid is successful when none of the above situations arises.
Within 3 days of expiry of the time allowed for accepting the takeover bid, the offeror must publish a notice on the results of the takeover bid. The offeror must notify the ATVP and the CPA about those results. The ATVP must issue a decision upon announcement of the takeover bid outcome to the offeror, the offeree company, the KDD and the organiser of the regulated market.
Special treatment of minority shareholders
The Companies Act defines the exclusion of minority shareholders as occurring when an offeror has already made a successful takeover bid and acquires at least 90% of all the offeree company’s voting shares.
Acquisitions according to the Competition Act
The Prevention of the Restriction of Competition Act (Competition Act) regulates concentrations in addition to the classic anti-trust provisions that prohibit restrictive agreements and the abuse of a dominant position. It prohibits concentrations which significantly impede effective competition in the Republic of Slovenia or a significant part of it, in particular due to the creation or strengthening of a dominant position.
The concept of concentrations
The Competition Act states that a concentration arises when a change in control over an undertaking on a lasting basis occurs as a result of:
- two or more previously independent undertakings or parts of undertakings merging; or
- one or more natural persons already controlling at least one undertaking, or one or more undertakings, acquiring, whether by purchase of securities or assets, by contract or by any other means, direct or indirect control of the whole or parts of one or more other undertakings; or
- two or more undertakings creating a joint venture performing on a lasting basis all the functions of an autonomous economic entity.
Rights, contracts or any other means that give persons, or undertakings which are the holders of these rights or have the power to exercise them, the possibility of exercising a decisive influence on an undertaking establish control of an undertaking. The concept of concentration does not include instances where banks, insurance undertakings, savings banks or other financial organisations whose normal activities include transactions and dealing in securities held on a temporary basis which they have acquired in an undertaking with a view to reselling them, provided the disposal of those securities takes place within 1 year of the date of acquisition and that they do not exercise voting rights in respect of those securities with a view to determining the competitive conduct of that undertaking in the market or providing they exercise such voting rights only with a view to preparing the disposal of those securities and that any such disposal takes place within 1 year of the date of the acquisition, which can be extended by the CPA.
Concentrations must be notified to the CPA by participants in the transaction no more than 30 days after conclusion of the agreement or announcement of the public bid, or acquisition of a controlling interest if:
- the combined aggregate annual turnover of all the undertakings concerned, including affiliated undertakings, exceeded EUR 35,000,000 in the Slovenian market in the preceding year; and
- the annual turnover of the acquired undertaking, together with other undertakings in the group, exceeded EUR 1,000,000 in the Slovenian market in the preceding financial year; or
- in cases of joint ventures, the annual turnover of at least two undertakings concerned exceeded EUR 1,000,000 in the Slovenian market in the preceding financial year.
In addition, in cases involving concentrations which do not meet thresholds stated above, but where the undertakings concerned, including affiliated undertakings, as a result of the concentration jointly achieve more than a 60% market share of the Slovenian market, the undertakings concerned must inform the CPA of such concentration and the CPA may within 15 days request that they notify this concentration.
Procedure on concentrations
The notifying party must file with the CPA a special application form determined by government decree.
The procedure for the appraisal of a concentration usually begins with this notification, but it can also be initiated by the CPA ex-officio in some cases.
Until the concentration is declared compatible with the Competition Act, it cannot be implemented by the parties. The CPA can also issue a special decision requiring the undertakings participating in the concentration and the competent bodies suspend any implementation of the concentration until a final decision is issued. However, this does not prevent implementation of a public bid which has been notified to the competent body under the Takeovers Act, provided the acquirer does not exercise the voting rights attached to the securities, or does so only to maintain the full value of those investments and on the basis of an approval granted by the CPA. The undertakings concerned can also apply for permission to implement the concentration in a limited scope prior to the final decision on compatibility of the concentration.
The CPA is obliged to examine the received notification as soon as it is received. If the notification is not complete, the CPA will request the notifying parties to amend their notification by a certain deadline. If parties do not fulfil this request, the concentration is deemed not to have been notified.
At the outset, the CPA examines whether provisions of the Competition Act apply to the concentration. If it finds that it does not, this finding is codified by means of a special decision. Even if the Competition Act does apply to a notified concentration, this in itself might not raise a serious doubt about compatibility with the competition rules. In this case, the CPA issues a non-opposition decision declaring that the concentration is compatible with the competition rules. This decision might also include remedies. It is only when a notified concentration that the Competition Act applies to raises a serious doubt as to its compatibility with the competition rules that the CPA issues an order to commence the procedure. The decisions referred to above, published on the CPA’s website and served immediately on the participants, and an order to commence the procedure, must be issued within 25 working days of receipt of the complete notification, which is extended for a further 15 working days in cases when the notifying parties propose remedies.
The CPA has the following decision-making powers:
When a notified concentration is not incompatible with the Competition Act, the CPA issues a decision declaring the concentration is compatible with the competition rules. This decision might also include remedies proposed by the notifying parties during the appraisal procedure which eliminate any serious doubts about compatibility of the concentration with the competition rules.
When a notified concentration is incompatible with the Competition Act, the CPA issues a decision declaring the concentration is incompatible with the competition rules. The CPA may attach additional measures to its decision that aim to eliminate the effects of a prohibited concentration that have already occurred. The Competition Act provides several examples of such measures: the de-merger of undertakings and the disposition of all interests acquired.
The CPA issues the decisions referred to above within 60 working days of the date on which the order to commence the procedure was issued. This time limit is extended by 15 working days in cases where the notifying parties offer remedies.
Prior to issuing a decision declaring a concentration is incompatible with the Competition Act, the CPA must send to the notifying parties a statement of its objections in which it states its findings and sets a deadline by which the notifying parties must respond to these objections.
The CPA can revoke a decision finding a concentration compatible with the competition rules within:
- 3 years following the issue of the decision in cases where the decision was based on the incorrect, incomplete or misleading information provided by one of the undertakings concerned; or
- 2 years following expiration of the date for implementing the remedies imposed in the decision in cases where an undertaking commits a breach of an obligation included in the remedies.
Judicial protection against decisions issued by the CPA is ensured in judicial proceedings before the Administrative Court of the Republic of Slovenia.