Updates to the Slovenian Legal Framework in 2023–2025 and Their Impact on Mergers and Acquisitions
In recent years, the Slovenian legal framework in the field of commercial law has undergone changes, which have also strongly influenced mergers and acquisitions. (M&A). The amendments to the Companies Act (hereinafter: ZGD-1)[1] – specifically ZGD-1L and ZGD-1M – together with changes to the Investment Promotion Act (hereinafter: ZSInv),[2] have transposed key EU directives into Slovenian law and established rules that increase transparency, legal certainty, and efficiency, while at the same time requiring a higher degree of diligence in the planning and execution of transactions.
The ZGD-1L amendment, in force since July 2023, implemented Directive (EU) 2019/1151 on the use of digital tools and processes in company law and Directive (EU) 2019/2121 on cross-border conversions, mergers, and divisions. For the first time, a uniform legal basis was introduced for cross-border corporate transformations, clearly defining the mandatory phases of such procedures, publication requirements, and the involvement of stakeholders such as employees, creditors, and shareholders. Equally significant is the enhanced role of the court registry, which now examines not only the formal completeness of the documentation but also the substantive legality of the procedure. Furthermore, the amendment regulates the full digitalization of the incorporation of limited liability companies, including the possibility of executing the articles of association through video electronic means, which allows for the fast and cost-efficient establishment of so-called special purpose vehicle companies that often serve as the basis for structuring M&A transactions. The possibility of virtual shareholder meetings has also been legalized, which significantly contributes to greater flexibility and efficiency in corporate governance.
Another important legislative change in Slovenian company law is the ZGD-1M amendment, which entered into force in December 2024, with gradual application foreseen in the coming years. This amendment has transposed into Slovenian law a series of European directives in the fields of sustainability reporting, tax transparency, and gender balance in management bodies. It substantially expands disclosure obligations for larger and more significant companies. These companies will be required to publish more detailed information on their sustainability strategies, environmental and social impacts, and objectives, as well as to disclose country-by-country data on their tax operations. Such disclosures will enable investors and other stakeholders greater comparisons between companies and facilitate more detailed analyses within due diligence processes. The amendment thus strengthens transparency and elevates the importance of ESG factors in the valuation of target companies, while also imposing new obligations on companies that will require timely adjustments in reporting and internal processes.
A significant contribution to greater predictability of the investment environment was also brought by the amendment of the Investment Promotion Act in 2023, which newly regulated the notification of foreign direct investments in strategic sectors. Unlike the previous regulation,[3] the obligation to notify and undergo the screening process now applies only to investments in strategic sectors originating from non-EU countries, while the notification procedure and thereby the conditions for carrying out foreign direct investments in Slovenia have been more clearly defined. The new regulation significantly reduces regulatory risks and uncertainty for foreign investors, as the process is now more determined and predictable.
Between 2023 and 2025, Slovenian commercial law has been thoroughly modernized and aligned with European rules. For mergers and acquisitions, this brings greater clarity and security, but also an increased need for professional support already in the early stages. At the same time, sustainability factors are becoming ever more important – ESG indicators are now key in company valuations and investment decisions. Although the new solutions allow for greater efficiency and transparency, the successful execution of M&A transactions requires active monitoring of legislative changes and the timely involvement of legal experts already at the planning stage of the transaction.
[1] Zakon o gospodarskih družbah (Official Gazette of the Republic of Slovenia, no. 65/09 – official consolidated text, 33/11, 91/11, 100/11 - dec. US, 32/12, 57/12, 44/13 – dec. US, 82/13, 55/15, 15/17, 22/19 - ZPosS, 158/20 - ZIntPK-C, 175/20 - ZIUOPDVE, 18/21, 18/23 - ZDU-1O, 75/23, 102/24).
[2] Zakon o spodbujanju investicij (Official Gazette of the Republic of Slovenia, no. 13/18, 80/20 - ZIUOOPE, 203/20 - ZIUPOPDVE, 204/21, 29/22, 65/23, 131/23 - ZORZFS, 31/24).
[3] The procedures for foreign direct investments screening were previously defined by the Act on Intervention Measures to Mitigate and Remedy the Consequences of the COVID-19 Epidemic (Official Gazette of the Republic of Slovenia, no. 80/20, 152/20 – ZZUOOP, 175/20 – ZIUOPDVE, 203/20 – ZIUPOPDVE, 15/21 – ZDUOP, 112/21 – ZIUPGT, and 206/21 – ZDUPŠOP).