Slovenia Adopts New State Aid Legislation

Slovenia adopted a new law regulating rescue and restructuring state aid, which entered into force in mid-February. When notified to the European Commission as a state aid scheme, it will allow the Republic of Slovenia to support companies and cooperatives in difficulty without having to notify support mechanisms in accordance with the provisions of the law as an individual aid measure to the European Commission.

Background

The Act Governing Rescue and Restructuring Aid for Companies and Cooperative Societies in Difficulty (the "State Aid Act") is based on the European Commission's Guidelines on state aid for rescuing and restructuring non-financial undertakings in difficulty (2014/C 249/01) (the "Guidelines") and regulates the conditions under which the Republic of Slovenia will approve state aid measures to companies and cooperatives in the form of credit lines, subventions, guarantees and capital investments.

Although the Government laid out that the Act was a pre-condition for establishing an institutional framework for an active role by the Republic of Slovenia in restructuring proceedings, if and when required in order to ensure national economic benefits, it also made clear that state aid measures will be granted only if, and to the extent that, they are necessary and justified by a cost-benefit analysis and economic-social impact for Slovenia and one of its regions.

The aim of the State Aid Act is to choose the measures and grant state aid to companies and cooperatives more selectively and to ensure efficient use of public resources by giving a more prominent role to economic stakeholders, applying adequate support mechanisms and preparing satisfactory restructuring plans.

The funds available for state aid support mechanisms are determined by the annual budget plan of the Republic of Slovenia, which is currently set at EUR 8 million for 2016 and 2017.

Which companies and cooperatives are eligible to receive state aid?

The State Aid Act lays down three conditions that companies must be able to demonstrate as fulfilled before asking for state support, namely:

The company or cooperative is in financial difficulty;1 It must have an important systematic role in the development of the Republic of Slovenia, any of its regions or the respective sector; and No insolvency or liquidation proceedings have been initiated against the company or cooperative. The definition of "important systematic role" is further specified and means that the...

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