Acquisition Finance 2025 Comparisons

International and national credit institutions are the main providers and brokers of acquisition financing in Slovenia. Slovenian banks often provide financing to small and medium-sized enterprises (SMEs). In 2024, the Slovenian banking sector, comprising eight commercial banks, three savings banks, and branches of foreign banks, saw an increase in total assets, indicating a strong financial infrastructure supportive of both corporate and household sectors. In recent years, Slovenia has experienced significant consolidation in the banking and investment sectors – in 2021, Hungary’s OTP Bank, which had acquired SKB banka in 2019, acquired Nova KBM (combining the previously separate Nova KBM and Abanka). NLB d.d. acquired the Slovenian subsidiary of Sberbank. Nova KBM merged with SKB banka, and was renamed OTP banka d.d. in 2024. Consolidation is expected to improve the competitive landscape in the Slovenian market, including the competitiveness vis-à-vis international lenders, which could lead to a potentially more diverse range of financial services being offered to clients. However, due to the uncertain macroeconomic environment, credit institutions have become more cautious about granting large amounts of debt. Non-bank lenders, such as private debt funds, are expected to bridge the shortfall by providing more versatile financing for transactions that are difficult to finance using traditional funding sources.

The Slovenian market for corporate leveraged buyout (LBO) financing broadly mirrors prevailing trends across Europe, with leveraged loans continuing to serve as a key instrument in facilitating M&A. Despite periods of market volatility in recent years, the sector has demonstrated notable resilience and retains the capacity to support both large-scale and mid-market buyout transactions, provided that suitable opportunities arise. The cost of debt in LBO financings remains sensitive to macroeconomic conditions, fluctuating in response to changes in interest rates, investor sentiment, and broader geopolitical developments, including uncertainty in global trade policy.

Choosing foreign law as the applicable contract law is generally permissible, even if the contract is to be enforced in Slovenia. While English law is the default choice for large cross-border acquisition finance transactions, in recent years, Austrian or German law have become more common for transactions involving a Slovenian target, particularly following Brexit. More modest acquisition financings tend to be based on standardised loan agreements used by local or regional banks and governed by Slovenian law. Corporate loans to Slovenian borrowers would usually be governed by Slovenian law.

It is standard practice for security interests over assets located in Slovenia or provided by Slovenian-based transferors or pledgors to be documented in security documentation governed by Slovenian law.

For international syndicated loans, the recommended LMA forms are usually used, although syndicated loans are still not as common among Slovenian banks. In contrast, documentation for smaller domestic transactions tends to be shorter and less complex, based on Slovenian banks’ templates. More and more often, LMA forms are used in adapted form and subjected to local law.

For cross-border transactions, English is usually chosen as the language of the transaction. In contrast, local Slovenian transactions involving SMEs are usually documented in Slovenian.

Certain Slovenian law governing security agreements, which require the form of a notarial deed, are typically concluded in the Slovenian language. Documentation that has to be submitted to land or commercial registries have to be submitted in Slovenian.

Legal opinions are typically required and are set as a condition precedent to the disbursement of funds in connection with a financing transaction, particularly in cross-border or larger financing transactions. Opinions typically include confirming the authorisation and enforceability of loan documents and security documents, the formation and legal status of borrowers, guarantors and security providers, and the absence of conflicts with corporate charters and documents, applicable law and required consents or approvals.

There are two types of opinions: (i) enforceability opinions which confirm the validity and enforceability of loan and security agreements (usually issued by lender’s legal counsel), and (ii) capacity opinions, which verify the existence of the borrower or guarantor, the approval of necessary board resolutions, and the authority of the signatory to represent the entity. (usually issued by borrower’s legal counsel).

In Slovenia, senior loans are commonly used to finance acquisitions. They typically consist of a term loan or debt securities to finance part of an acquisition, as well as a working capital facility in the form of a revolving credit facility. Term loans, debt securities and revolving credit facilities may be secured against assets by a first priority collateral; therefore, they are considered to be more secure forms of financing than subordinated debt.

Mezzanine financing and pay-in-kind (PIK) instruments may be included in Slovenian acquisition financing structures but are less common. However, due to the economic uncertainty resulting from trade policy uncertainties and geopolitical conflicts, alternative forms of financing have increased in recent years. Such financings are offered by specialised funds, usually at high interest rates.

Mezzanine Financing

Mezzanine financing is considered a hybrid instrument because it typically incorporates debt- and equity-like components. In a company’s capital structure, it lies between equity and debt and is typically provided in the form of unsecured or subordinated loans. This asset class provides alternative financing to support the business reorganisations or expansions. Claims of mezzanine creditors may be contractually subordinated, usually by way of an intercreditor agreement which stipulates the relationship between mezzanine creditors and other (senior and junior) creditors.

PIK Debt

Subject to certain conditions, PIK debt enables the borrower to pay upcoming interest payments in kind, ie, by increasing the total outstanding principal amount of the relevant instrument. In this way, the borrower pays interest as additional debt rather than in cash. PIK debt is typically used in loans where there is insufficient liquidity to cover the full interest rate in cash. In Slovenia, this is a less common form of financing.

In the context of acquisition financing, short-term financial instruments serve to bridge the gap between the announcement of an acquisition and the finalisation of permanent financing. Lenders generally require bridge loans to be secured by real estate or other assets to mitigate risk. Given their short-term nature and higher associated risk, bridge loans often carry higher interest rates compared to conventional loans and may be structured with provisions for interest rate escalations, encouraging the borrower to refinance at the earliest opportunity.

The issuance of corporate bonds by private or public companies is a common way to raise medium- to long-term finance. However, they are less common in M&A transactions. They can be arranged as secured or unsecured, convertible, subordinated, floating-rate or fixed-rate bonds.

Private issuance involves placing securities, particularly shares and bonds, with a limited number of pre-selected investors or institutions rather than offering them to the public. Although subject to fewer regulatory requirements, private issuance is still governed by certain aspects of EU law/Slovenian law, including anti-money laundering and market abuse regulations. Since the securities are sold to a limited number of professional investors who are expected to have the necessary knowledge to evaluate the investment, private placement generally involves less detailed disclosure.

Loan notes (zadolžnica) do not constitute a separate financing structure in Slovenia. Under Slovenian law, a loan note does not create an obligation, but is merely a means to prove the existence of a previously or simultaneously incurred obligation (eg, from a loan).

A typical asset-based financing arrangement involves a term loan facility secured by various security interests, with the business’ assets serving as collateral for the loan. The specific form of security granted depends heavily on the nature and value of the business’ assets, as well as its future business strategy and financial outlook.

In asset-based financing, common types of security interest include real estate mortgages, which are typically used when the business owns substantial property, as well as pledges over movable assets such as machinery, equipment, or inventory, and pledges over business shares. Intellectual property rights, such as patents, trade marks and copyrights, may also be used as security. Another common form of collateral is the pledge or fiduciary assignment of receivables and accounts receivable.

Intercreditor agreements are essential to ensure a clear and structured allocation of rights and priorities among creditors in transactions involving multiple layers of debt. As a general principle of law, all liabilities of a debtor rank pari passu (in proportion to their claims), with the exception of liabilities that are mandatorily preferred by law or those that are subordinated by law or by agreement between the parties. In cases where there are several pledges on the same collateral, their priority is determined either by the date of perfection of the security interest or by the specific agreement between the parties involved. Generally, holders of pledges are considered preferential creditors in the bankruptcy proceedings as they have a right to preferential satisfaction from the pledged assets as compared to ordinary unsecured creditors.

In Slovenia, both pledge subordination (for certain collateral) and claim subordination are available as mechanisms for adjusting the order of priority among creditors. Pledge subordination refers to the arrangement whereby the priority of security interests is determined according to the order of perfection of pledge. Claim subordination, by contrast, permits creditors to contractually deviate from the ranking of claims that would otherwise apply under general principles of law. This mechanism allows them to establish a bespoke priority framework, enabling a negotiated order of payment that may override the default sequence based on the timing of security interest perfection. Contractual subordination clauses are recognised and permitted under Slovenian law, both within and outside of insolvency proceedings (in accordance with the Slovenian Bankruptcy Act (Zakon o finančnem poslovanju, postopkih zaradi insolventnosti in prisilnem prenehanju (ZFPPIPP)).

Intercreditor agreements typically include several key provisions, including:

• a payment waterfall, which sets the priority of payments, ensuring that senior creditors are paid before any distributions are made to junior creditors;
• a standstill clause, which restricts junior creditors from enforcing their claims for a defined period, giving senior creditors the opportunity to control enforcement and manage the collateral;
• a turnover clause, requiring junior creditors to pass on any recoveries they receive to senior creditors until the senior obligations have been fully satisfied; and
• collateral control provisions, which designate which creditor has decision-making authority over actions involving the collateral, such as its disposal, enforcement, or restructuring.

For transactions involving multiple creditor classes, particularly acquisition financings that combine bank loans and bond or other debt instrument issuance, intercreditor agreements are important in Slovenia. Such transactions often result in differing expectations and risk profiles among creditors, as well as discrepancies in maturity, repayment terms, and security structures. An intercreditor agreement mitigates these risks by regulating the relationship between the various creditors via a contractual agreement.

In the context of complex financing transactions, derivative liabilities arising from hedging arrangements (such as interest rate or currency swaps) are often designated as senior obligations and rank pari passu with other senior obligations associated with the transaction and they usually participate in the benefits of the collateral pool established to secure the senior debt facilities. The terms of the hedge documentation typically include limited early termination rights for the benefit of the hedge provider; however, such rights are narrowly tailored and generally become exercisable only upon the occurrence of certain critical events of default, most notably bankruptcy proceedings or other events indicating severe credit deterioration. Intercreditor agreements often address the involvement of hedge counterparties in lender decision-making, typically by granting them limited voting or consultation rights concerning enforcement actions or amendments to intercreditor terms. However, in many cases, the scope of these rights is limited to prevent excessive influence in relation to their exposure.

The most common types of security used in Slovenia include guarantees, mortgages over real estate, pledges over movable property, shares and intellectual property rights, as well as pledges or fiduciary assignments of receivables and transfers of title to certain types of movable property. With regard to the form and registration requirements of the assets listed below, refer to 5.2 Form Requirements and 5.3 Registration Process.

Shares

The most common form of security in Slovenia is a pledge on the shares of a joint-stock corporation (delniška družba (d.d.)) or limited liability company (družba z omejeno odgovornostjo (d.o.o.)). The pledgee may sell the secured assets if the borrower defaults on the relevant secured obligations and use the proceeds to satisfy the debt. In principle, security is also given over rights attaching to or arising from the (company) shares, including the right to receive dividends and other distributions. Typically, the security documentation would also include special powers of attorney under which the pledgee has the right to vote in the name and on behalf of the pledgor at any shareholders’ meeting and under which the pledgee has the right to sell the shares (in or out of court) in the event of an event of default.

Real Estate

A mortgage (hipoteka) is the only form of security over real estate. Mortgage can only be created over real estate registered in the land register (zemljiška knjiga). A mortgage may also be created over ancillary rights (izvedene pravice) to the real estate, such as a building right (stavbna pravica) or a right of usufruct (pravica do užitka). The mortgagee may sell the secured assets in foreclosure proceedings if the borrower defaults on the relevant secured obligations and use the proceeds to satisfy the debt up to the amount for which the mortgage was granted. In cases where mortgages secure the financing of real estate portfolios, it is common for them to be created in a comprehensive form in the form of a joint mortgage where all properties secure the obligations (skupna hipoteka).

Maximum mortgage (maksimalna hipoteka) is a form of a mortgage where the parties agree on a maximum amount to which the property may be encumbered (including principal, interest, costs, etc).

Movable (Tangible) Assets

The most common form of security over movable (tangible) assets is a pledge (except for registered movable assets, ie, registered ships, aircraft and registered networks consisting of one or more cables or pipelines over which a mortgage is established). A pledge may be granted in the form of (i) a possessory pledge, in which case the pledgee must become the possessor (posestnik) of the relevant movable property in order to perfect the pledge, or (ii) a non-possessory pledge, in which case the pledged movable asset remains in the possession (posest) of the pledgor. In practice, a non-possessory pledge is the most commonly used security over movables .

As an alternative, a fiduciary transfer of the relevant movable asset is possible, whereby the pledgor retains possession and the pledgee obtains the title (lastninska pravica) to the movable asset. Under the Slovenian Property Code (Stvarnopravni zakonik (SPZ)), the provisions on the transfer of ownership rights apply mutatis mutandis to a fiduciary transfer. Due to practical limitations, fiduciary transfer of ownership is almost never used in (acquisition) loan transactions.

Inventory

Under Slovenian law, a (non-possessory) registered pledge may be established over all inventory located in a specific area at any given time. During the validity of the pledge, pledged inventories may be exchanged.

Bank Accounts and Receivables

Bank accounts and receivables may be subject to security arrangements such as pledges and fiduciary assignments. As a general rule, security over credit claims will most often take the form of a pledge or fiduciary assignment, unless precluded by law or by the nature of the claim (including where the performance of the obligation is deemed to be personal to the creditor) or by agreement between the creditor and the debtor.

Fiduciary assignment of receivables (odstop terjatev v zavarovanje) is a form of security where the assignor assigns a receivable to an assignee. Unless otherwise agreed, the assignee is deemed to have acquired the receivable only until the secured obligation is paid, and such payment terminates the original assignment.

Any excess payment received shall be returned to the assignor. In the event of the insolvency of the assignor, the assignee is entitled to separate satisfaction in respect of the receivables assigned by way of a fiduciary assignment, if such an assignment agreement has been executed in the form of a notarial deed.

Creditors in financing transactions often opt for a global fiduciary assignment of receivables (globalna cesija), under which the assignor assigns all its present and future receivables arising and to arise under a particular legal relationship. The global fiduciary assignment of receivables is perfected only when each individual receivable arises.

It is not possible to provide security over contractual rights that are subject to a restriction on transfer or security, as such contractual arrangements are considered to have a proprietary effect, ie, the pledgor does not have the right to dispose (razpolagalna sposobnost) of the receivable. If a contractual agreement requires the prior consent of the other party in order to assign or pledge the receivables arising thereunder, the express consent of the other party is required. However, the prohibition of assignment or the requirement of consent does not apply to commercial contracts (ie, contracts between commercial entities), where the pledge or assignment is effective despite the prohibition, while the debtor is released from its obligation if it fulfils it to the assignor.

Deposits of cash are considered to be receivables against the bank where the deposit account is maintained. Such receivables may be pledged by way of a pledge of receivables, provided that the depository bank is notified of the pledge. A pledge or a fiduciary assignment of an account balance may be effective only if the pledgor/assignor, as the account holder, has a full and unencumbered title to the balance on such account and has the power to dispose of such balance.

Intellectual Property Rights

In the case of intellectual property and other intangible assets, the only form of security available is a pledge – only transferable intellectual property rights can be pledged. As trade names can only be transferred with (part of) the business to which they relate, it is debatable whether a trade name can be pledged separately from the business. Personal rights relating to intellectual property are not transferable and therefore cannot be pledged. Furthermore, it is possible to pledge rights related to an intellectual property right (eg, licences).

Financial Collateral Arrangements

Slovenia has implemented Directive 2002/47/EC on financial collateral arrangements by adopting the Financial Collateral Act (Zakon o finančnih zavarovanjih (ZFZ)). As a result, financial collateral may be provided through a financial collateral arrangement (dogovor o finančnem zavarovanju). The financial collateral to be provided may, inter alia, consist of cash (ie, cash credited to an account or deposit), financial instruments (ie, securities traded on capital markets, provided that the securities are easily transferable and quickly tradable) or loan receivables, and the collateral taker and collateral provider must meet certain eligibility criteria. A financial collateral arrangement may create a security interest in the form of a pledge or a fiduciary transfer whereas the collateral taker may dispose of the collateral or may enforce the collateral by offsetting the value of the collateral against the secured claim.

Certain security agreements must be formalised as notarial deeds (notarski zapis) in order to ensure their validity and enforceability or to safeguard against bankruptcy risks. If no specific form is required, opting for a notarial deed can enhance the lender’s security and offer extra benefits, such as the right to enforce the agreement directly, provided it contains the features that are required to ensure direct enforceability. In the case of a directly enforceable notarial deed, the creditor can directly request the enforcement of the claim in an enforcement procedure against the debtor/pledgor, as the directly enforceable notarial deed is considered as an enforcement title (for more detail see 5.7 General Principles of Enforcement).

The forms required to establish a security interest over the most common security interests are listed below.

Share Pledge

The agreement on the creation of a pledge of business shares in a Slovenian limited liability company must be concluded in the form of a notarial deed, while a pledge agreement over shares in a Slovenian joint-stock company must be concluded in writing.

Real Estate

A mortgage is established on the basis of a written agreement and a land registration permit (zemljikoknjižno dovolilo) authorising the registration of the mortgage in the land register (zemljiška knjiga). The land registration permit may be included in the agreement and must be notarised. In practice, mortgages are usually concluded in the form of a (directly enforceable) notarial deed (notarski zapis).

Pledge of Receivables

A pledge is created by a written pledge agreement and notice to the underlying debtor of the credit claim (the latter is not required in the case of financial collateral).

Fiduciary Assignment of Receivables

A fiduciary assignment is created by a written agreement which must be concluded in the form of a notarial deed (notarski zapis) in order to secure the assignee’s (i) right to separate satisfaction (ločitvena pravica) in bankruptcy proceedings and (ii) objection of inadmissible execution (ugovor nedopustnosti izvršbe) against the assignor’s creditors in enforcement proceedings.

Movables Pledge

A non-possessory pledge is created by a notarial deed. For certain types of uniquely identifiable real property, a non-possessory pledge is created by concluding the agreement in the form of a notarial deed and registration in the Slovenian Register of Non-Possessory Pledges. Such a pledge is typically used to pledge stock and equipment. Possessory pledge is created by a written pledge agreement and the transfer of the movable property to the pledgee or to a third-party holding the property on behalf of the pledgee. Special rules apply to registered ships, aircraft and registered networks consisting of one or more cables or pipelines where a mortgage is the only form of security that can be created over such registered property.

A fiduciary transfer of ownership as security must be made in the form of a directly enforceable notarial deed.

IP Pledge

A pledge of intellectual property rights requires a written agreement.

When it comes to creating and enforcing security interests over certain types of collateral in Slovenia, specific registration requirements must be met. These processes also typically necessitate the involvement of a notary. In order to ensure the enforceability and priority of the secured creditor’s rights, particularly against third parties, proper registration is essential. There are different registration systems and procedures for movables, shares, real property, intellectual property and receivables.

Shares

The creditor obtains a pledge over shares in a joint-stock corporation by registration in the Slovenian Central Securities Register maintained by the Slovenian Central securities clearing corporation (KDD, CEntralna klirinško depotna družba, d.o.o." to "KDD – Centralna klirinško depotna družba d.d.) The registration of a pledge over dematerialised securities has the following effects:

(i) the holder of the securities is no longer entitled to dispose of the securities;

(ii) any cash proceeds may only be paid to the pledgee (the proceeds will be set off against the costs, interest and principal of the secured claim, unless the pledgee and the pledgor have agreed that the proceeds will be paid to the pledgor); and

(iii) all rights under dematerialised securities not transferred to the pledgee pursuant to (i) and (ii), such as, voting rights, shall remain with the holder.

Shares in a Slovenian limited liability company are pledged by concluding the pledge agreement in the form of a notarial deed. For publicity purposes, the pledge is registered in the Slovenian court and commercial registry.

Real Estate

Mortgage over real estate is perfected by registration in the Land Registry.

Fiduciary Assignment and Pledge of Receivables

In the case of a pledge of receivables, notice to the underlying debtor of the loan receivable (the latter not required in the case of financial collateral) is required for perfection, while in the case of a fiduciary assignment, notice to the underlying debtor is not required (silent assignment).

Movables Pledge

For certain types of immovable property that can be clearly identified, a non-possessory pledge is established by registration in the Slovenian Register of Non-Possessory Pledges. Such a pledge is typically used to pledge stock and equipment. Special rules apply to registered ships, aircraft and registered networks consisting of one or more cables or pipelines. Such registered movable property must be registered in the relevant Slovenian public register.

IP Pledge

Some intellectual property rights and pledges of such rights may be registered with the following registries (however, this is not a prerequisite for the validity of the pledge):

• Slovenian Intellectual Property Office (Urad za intelektualno lastnino Republike Slovenije);
• European Union Patent Office; and
• European Union Intellectual Property Office.

If a Slovenian company guarantees or secures the obligations of its parent company (upstream), which results in a benefit to the parent company, the capital maintenance rules must be taken into account, which apply, inter alia, to all joint-stock companies and limited liability companies having their registered office in Slovenia. The rules differ depending on whether the company is a limited liability company or a joint-stock company. The restrictions applicable to limited liability companies are less strict than those applicable to joint-stock companies. With regard to financial assistance, refer to 5.5 Financial Assistance.

In the case of a Slovenian limited liability company, under Article 495 of the Slovenian Companies Act, the assets necessary to maintain the share capital and the restricted reserves cannot be returned to a shareholder of the company. This rule is generally interpreted broadly and covers also the granting of a guarantee or security up-stream or side-stream in a way that could result in a prohibited reduction of its assets. Thus, it is usual to include language into the finance documentation limiting the company’s liabilities to a level which does not contravene the aforementioned rule.

In the case of joint-stock companies, capital contributions are not repayable and do not bear interest, as set out in Article 227 of the Slovenian Companies Act. The only permitted payments are dividends and payments relating to the authorised acquisition of treasury shares. Unlike limited liability companies, all of the corporation’s assets are protected by the capital maintenance provision. As the prohibition on repaying capital contributions is to be interpreted broadly, it prohibits any form of hidden profit distribution, including the granting of security in favour of a parent company’s creditor(s). In order to limit the risk that such up-stream security could be regarded as void, such transactions should be subject to a proper compensation and prior accounting assessment of the balance sheet, taking into account the respective probabilities of repayment.

According to case law, the assumption of a liability that would conflict with the capital maintenance rules is not always void, but the shareholder must then repay the benefit received. A guarantee would only be null and void vis-à-vis the creditor if the creditor did not act in good faith, ie, if the creditor knew or should have known that the guarantee was inconsistent with the capital maintenance rules (in the case of a bank, its good faith is presumed).

The provision of an upstream or downstream guarantee or security by the Slovenian company is not permitted if it can be reasonably expected that its enforcement would affect the liquidity of the Slovenian company and lead to its insolvency, even if the Slovenian company receives adequate consideration for such guarantee or security.

Under Article 248 of the Slovenian Companies Act, a joint-stock company is strictly prohibited from providing financial assistance for the acquisition of its own shares, except in cases expressly permitted by the Slovenian Companies Act (ie, in the case of day-to-day legal transactions of financial organisations and transactions in which shares are acquired by employees of the company or a company affiliated with it, under the conditions of the applicable legislation). The prohibition of financial assistance must be interpreted broadly and includes legal transactions with similar effects, including granting of collateral provided by a company for a loan to be granted by a third party to an existing or future shareholder for the purchase of the company’s shares.

The Slovenian Companies Act does not provide any specific provisions regarding financial assistance for limited liability companies. Instead, financial assistance for limited liability companies in the broader sense is assessed under the capital maintenance rules applicable to limited liability companies (see 5.4 Restrictions on Upstream Security).

Article 36(2) of the Slovenian Takeover Act (Zakon o prevzemih (ZPre-1)) stipulates a restriction for the financing of a takeover bid. The approval of the publication of a takeover bid by the Slovenian Securities Market Agency (Agencija za trg vrednostnih papirjev) is subject to the acquirer proving to the satisfaction of the Agency that (i) as consideration for the securities to which the bid relates, it has not in any way, directly or indirectly, pledged or undertaken to pledge or encumber any securities of the target company which are not owned by the acquirer; and (ii) as consideration for the securities of the target company, it has not in any way, directly or indirectly, pledged or undertaken to pledge or encumber any assets of the target company.

If, after an acquisition, the acquiring company intends to merge with the acquired company (or vice versa) and any of the merging companies holds more than 25% of the shares of any other merging company and has given or promised to pledge these shares in the target company as security for a financing used for the acquisition of such shares, the following is required for the validity of the merger:

• approval of the majority of creditors of each of the merging companies (majority approval) – deemed to be given when the consent is given by creditors whose total claims account for at least 75% of the total liabilities of the company, as evident from the balance sheet as per the cut-off date of the merger;
• approval of creditors of each of the merging companies that have claims exceeding 5% of all liabilities of the company (individual approval by creditors); and
• approval of employees of each merging company – on their behalf and in their name, the approval is given by their representative in compliance with the act governing the participation of employees in the management (employees’ approval).

Specific financial assistance rules apply to Slovenian banks. A bank may not directly or indirectly provide credit or guarantees for the purchase of its own shares or those of companies in which it holds at least 20% of the capital or voting rights. The same applies to legal transactions with a comparable effect, as well as to capital and other instruments issued by the bank (or another company in which the bank holds at least 20% of the capital or voting rights), which are to be included in the calculation of the bank’s or that other company’s capital.

In addition, (i) the rules of concerning corporate groups (koncern) may impose obligations on both the controlling and the controlled companies; and (ii) the articles of association or by-laws may impose restrictions on the creation of security interests or stipulate that additional approvals may be required.

If necessary, a secured creditor will have to pursue judicial enforcement with regard to its collateral in accordance with the Slovenian Enforcement Act (Zakon o izvršbi in zavarovanju (ZIZ)), which, among other things, requires the completion of the following steps:

• obtaining an enforcement title (izvršilni naslov), eg, a court ruling on non-payment by the borrower;
• filing a motion for enforcement (predlog za izvršbo) with the relevant Slovenian county court;
• obtaining a decision from the relevant Slovenian county court that enforcement is permissible (sklep o izvršbi);
• enforcement through a public auction; and
• distributing the proceeds of the public auction to the secured creditor to settle secured claims.

Enforcement titles include:

• an enforceable judgment or court settlement;
• a directly enforceable notarial deed; and
• any other decision or instrument provided for by law, a ratified and published international treaty, or a directly applicable legal act of the European Union, which is recognised as an enforcement title.

The enforcement for recovering of monetary claims is allowed also on the basis of on an authentic instrument (invoice, bill of exchange, cheques with protest, and return invoices) evidencing the claim, provided that the creditor specifies the claim’s due date in its application.

If the collateral agreement grants the creditor the right to enforce out of court, they can proceed with the sale outside of enforcement proceedings. This is usually stipulated in a share pledge agreement, an intellectual property pledge agreement, and in certain cases, a movable pledge agreement. In the case of a mortgage, enforcement is highly formalised – only a sale through court proceedings is possible. The mortgaged real estate is typically sold in a public auction, whereas after the enforcement procedure has been initiated, the parties, may agree that the real estate is sold through a bilateral agreement rather than in a public auction.

Guarantees are commonly used as a form of security in the context of financing transactions. In Slovenia, there are two main types of guarantees: a surety (poroštvo) and a bank guarantee (bančna garancija), which is typically drafted as “unconditional or first demand” guarantee (ie, abstract (bank) guarantee). A bank guarantee is specifically regulated and provided for in the Obligations Act (Zakon o obligacijskih razmerjih (ZOR)), whereby surety is regulated under the Obligations Code (Obligacijski zakonik (OZ)).

Surety

In a suretyship agreement, the guarantor promises the creditor that it will fulfil the debtor’s valid and outstanding obligations should the debtor fail to do so. There are two types of surety: ordinary (eg, the surety’s obligation is subordinate to that of the debtor) and “joint and several” (eg, surety is jointly and severally liable with the debtor). The basis of suretyship is an agreement. This may be a written agreement or a statute (law). In order to create a suretyship obligation, the guarantor must have full legal capacity and there must be a written suretyship agreement. The subject matter of a suretyship may be any type of obligation. Most often, suretyship is provided for a monetary obligation. Primarily, suretyship is an accessory obligation. When the main obligation ceases, the suretyship obligation also ceases. The surety’s liability may not exceed that of the principal debtor.

Bank Guarantee

A bank assumes an obligation towards the recipient of a bank guarantee (the beneficiary) to fulfil a third party’s obligation if it is not fulfilled by the time it is due, provided that the conditions set out in the guarantee are met. The guarantee must be issued in writing. It can be an abstract/independent guarantee, in which case the guarantor is obligated to pay the beneficiary upon demand, regardless of its relationship with the debtor or whether the debt is overdue. There is a limited exception to this in the case of an unfair calling.

See 5.4 Restrictions on Upstream Security and 5.6 Other Restrictions.

A guarantee fee is not required under Slovenian law, but rather it is subject to an agreement between the parties, although it may be necessary to comply with the applicable capital maintenance rules.

Under the Companies Act, if a company is in financial distress, any shareholder loan granted to it is treated as an equity contribution in the event of subsequent bankruptcy or compulsory settlement proceedings (ie, an equity-replacing shareholder loan). These provisions apply to direct shareholders of limited liability companies and to shareholders of joint-stock companies whose voting rights exceed 25%. Repayment of an equity-replacing shareholder loan is prohibited in the event of insolvency. There are similar rules regarding security interests provided by a shareholder to their company’s creditors while the company is in financial distress. Should an equity-replacing shareholder loan be repaid within one year of an insolvency application being filed, the relevant shareholder will be required to repay the amount received to the company.

Claw-Back Risk in the Event of Bankruptcy Proceedings

The claw-back provisions in the Slovenian Bankruptcy Act are vital for safeguarding creditors’ interests and protecting them from preferential or fraudulent asset transfers designed to reduce the available bankruptcy estate or hinder financial recovery.

Under Article 269 of the Slovenian Bankruptcy Act, the bankruptcy administrator and other creditors may challenge any legally significant act performed by the bankrupt party within one year prior to filing a petition for bankruptcy proceedings (in certain limited cases, the period is 36 months), provided that:

• the consequence of the bankrupt’s act of legal significance would be to reduce the payment to the bankrupt’s creditors (damage to the bankrupt’s creditors);
• an individual creditor obtained a more favourable position as a result of the bankrupt’s act of legal significance (granting of advantages to individual creditors) (both referred to as the objective element); and
• provided that the other party (creditor), for whose benefit the bankrupt performed the act of legal significance, knew or should have known that the debtor was insolvent (the so-called subjective element).

The act of legal significance performed by the bankrupt party, by which the other party (creditor) received something without a reciprocal obligation or for a reciprocal obligation of minor importance, may be contested even if the subjective element is missing. Such an act may be contested if it was performed within 36 months prior to the filing of the petition (Article 269 of the Bankruptcy Act). Moreover, not only acts of commission but also acts of omission of the bankrupt may be contested (Article 271(3) of the Bankruptcy Act).

A transaction or act performed by the bankrupt debtor prior to the 12 and 36 months preceding the filing of the bankruptcy petition may also be contested if the person contesting the transaction or act proves that the bankrupt was already insolvent at the time of the transaction or act or that the insolvency arose as a result of the transaction or act.

Claw-Back Risk Outside Bankruptcy Proceedings

Outside the insolvency proceedings, creditors with due claims may challenge the debtor’s legally significant acts (including any omissions) pursuant to Article 255 et seq of the Slovenian Obligations Code. Any act of legal significance performed by the debtor to the detriment of the creditors may be contested. An act is detrimental to creditors if, as a result of such act, the debtor does not have sufficient assets to satisfy creditors’ claims.

In this context, inter alia:

• a transaction for profit may be contested if, at the time of the transaction, the debtor knew or should have known that it would be detrimental to the creditors and the third party with whom or for whose benefit the transaction was carried out knew or should have known this; or
• in the case of a transaction without consideration and equivalent transactions, the debtor shall be deemed to have known that the transaction was detrimental to the creditors and the question whether the third party knew or should have known this shall not be a prerequisite for contesting the transaction.

A challenging action may be filed within a year in the case of disposal referred to in point a of the preceding paragraph, and within three years in other cases.

There is no stamp duty in Slovenia.

Under Slovenian law, withholding tax (WHT) applies to payments made by residents and non-residents on Slovenian-source income to recipients outside Slovenia. The standard WHT rate applicable to companies is 15% and covers payments of dividends, interest and royalties/fees in respect of copyrights, patents, licences, real estate leases and certain services. WHT on dividends, interest and royalties may be reduced under the applicable tax treaty or where other exemptions or relief apply, such as under the EU Interest and Royalties Directive (2003/49/EC).

Most relevant to acquisition financing is the WHT levied on certain income, including interest (no withholding tax is payable on the payment of principal), derived from a Slovenian source by non-residents under Article 70 of the Slovenian Income Tax Act (Zakon o davku od dohodkov pravnih oseb (ZDDPO-2)). In certain cases, however, it is possible to apply for a reduced withholding tax rate or even an exemption from withholding tax. Such benefits may be available under double taxation treaties which Slovenia has concluded with foreign countries. The most commonly used exceptions applying to interest are as follows.

• Interest on listed debt securities, ie, no withholding tax on interest payments on debt securities issued by a company incorporated in Slovenia if:
1. the securities do not contain an equity swap option (or do not contain an option for holders to exercise a swap for a security if the issuer is a bank); and
2. the securities are admitted to trading on a regulated market or traded on a multilateral trading system in a member state of the EU or in a member state of the Organization for Economic Co-operation and Development.
• Interest paid by banks, with the exception of interest paid to persons having their registered office or place of business or residence in countries other than EU member states in which the general or average nominal tax rate is less than 12.5%, if such country is published on a special list issued by the Ministry of Finance and the Slovenian Tax Authority (so-called tax havens).

There are no thin-capitalisation rules in Slovenia. These have been abolished as of 1 January 2025. Interest expenses for tax purposes are limited to 30% of EBITDA or an absolute threshold for the recognition of excess borrowing costs (which is currently EUR3 million).

Acquisitions in various sectors are often subject to regulation and require prior approval or notification. Different types of industry, such as banking and insurance, have specific rules in place to monitor and control ownership stakes that could significantly influence the operation or management of entities within these sectors.

Examples include:

• Credit institutions – under Article 67 of the Slovenian Banking Act (Zakon o bančništvu (ZBan-3)), acquiring a qualifying holding in a Slovenian credit institution requires approval from the European Central Bank, submitted through the Bank of Slovenia. A qualifying holding is defined as owning 10% or more of the capital or voting rights, or reaching higher thresholds (20%, 30%, or 50%). This applies to co-ordinated acquisitions, and acquiring control over the board or management may also be considered a qualifying holding.
• Insurance companies – under Article 31 of the Slovenian Insurance Act (Zakon o zavarovalništvu (ZZavar-1)), acquiring a qualifying holding in a Slovenian insurance company requires approval from the Slovenian Insurance Supervision Agency (AZN). A qualifying holding is defined as owning at least 10% of the share capital or voting rights, or holding less than 10% but having significant influence over management.

Acquisitions in other regulated industries (eg, media and energy) may also require prior approval or subject to reporting requirements to the relevant regulatory authority.

In addition, FDI screening, antitrust regulations and threshold disclosure requirements in Slovenia may be relevant, as outlined below.

FDI Screening

Slovenia has a foreign direct investment control mechanism that gives the Ministry of Economy, Tourism and Sport (the “Ministry”) the authority to authorise, condition, prohibit or unwind a foreign direct investment if it poses a threat to the security or public order of the Republic of Slovenia. A foreign direct investment is defined as (i) an investment by a foreign (non-EU) investor intended to establish or maintain permanent and direct or indirect relations between the foreign investor and a company with its registered office in Slovenia through the initial and any subsequent acquisition of at least 10% of the shares or voting rights (share deals, capital increases, and reorganisations) or (ii) an investment into tangible or intangible assets with which an investor acquires at least 10% of shareholdings or voting rights in a newly established company with its seat in the Republic of Slovenia (establishment of a new company).

A foreign direct investment under the Slovenian Investment Act (Zakon o spodbujanju investicij (ZSInv)) must be notified to the Ministry for screening if it may have an impact on the sectors listed in Article 31.č(5) of the Investment Act if the target company with its registered office in the Republic of Slovenia is actually and predominantly active in one of the critical sectors (eg, critical infrastructure, critical technology and dual-use goods, supply of critical resources, access to sensitive information, freedom and plurality of the media and Projects in the interest of the European Union from Annex I of Regulation 2019/452/EU).

Antitrust Regulations

Under the Prevention of Restriction of Competition Act (Zakon o preprečevanju omejevanja konkurence (ZPOmK-2)), transactions constituting a concentration must be notified to the Slovenian Competition Protection Agency (Javna agencija Republike Slovenije za varstvo konkurence – the CPA) if in the business year preceding the concentration (cumulatively):

• the combined turnover of the undertakings concerned (including undertakings belonging to the same group) in Slovenia exceeds EUR35 million; and
• either the turnover of the acquired undertaking (ie, the target), including undertakings belonging to the same group, in Slovenia exceeds EUR1 million or, in the case of the creation of a full-function joint venture, the turnover of at least two undertakings concerned (including undertakings belonging to the same group) in Slovenia exceeds EUR1 million.

Even if these turnover thresholds are not met, the undertakings concerned should notify the CPA if the combined market share of the undertakings concerned in Slovenia exceeds 60%.

The Slovenian merger control regime (one-stop shop principle) does not apply to concentrations falling within the scope of the European Merger Regulation.

Threshold Disclosure Requirements

Under the Slovenian Market in Financial Instruments Act (Zakon o trgu finančnih instrumentov (ZTFI-1)), any person who, directly or indirectly, reaches, exceeds or falls below the respective thresholds of 5%, 10%, 15%, 20%, 25%, 33%, 50% or 75% of the voting rights in a joint-stock company is obliged to notify the Slovenian Securities Market Agency and the company upon reaching the respective threshold of voting rights. The company must then publish the notified change within three trading days of receipt of the stakeholder’s notification.

Investors seeking to acquire a publicly listed company in Slovenia must adhere to a comprehensive regulatory framework designed to promote transparency, protect shareholder interests and maintain market integrity. This framework is based on several key pieces of legislation and rules. The most important of these is the Slovenian Takeover Act, which sets out the rules for mandatory takeover bids and ensures that shareholders are treated fairly during the acquisition process. The Slovenian Market in Financial Instruments Act regulates trading practices and disclosure obligations, while the EU Market Abuse Regulation (MAR) imposes strict standards to prevent insider trading and market manipulation. The Slovenian Companies Act establishes corporate governance principles and procedural requirements, while the Ljubljana Stock Exchange Rules (Pravila borze) set out further obligations for companies and investors operating in the Slovenian capital market.

The Slovenian Takeover Act, which regulates, among other things, the mandatory bid rule, takeover (voluntary) bids, and restrictions on the defence of targets, applies to acquisitions of (i) public joint-stock companies (ie, joint-stock companies whose shares are admitted to trading on an organised market in Slovenia), and (ii) private joint-stock companies that have either more than 250 shareholders or more than EUR4 million in total equity.

Methods of Acquisition

The acquisition of a Slovenian joint-stock company that fulfils the conditions set out above can be carried out either through a voluntary public offer or through a mandatory public offer.

Mandatory Offer

Under the provisions of the Slovenian Takeover Act, the obligation to make a mandatory offer for the shares of the target company is triggered if an individual shareholder or shareholders acting in a concert have acquired one third of the voting rights in the company. In addition, if the first takeover bid is successful and the shareholder acquires at least a further 10% of the voting rights in the undertaking, an additional takeover bid must be published (dodatni prevzemni prag). The obligation to make an additional mandatory offer ceases when at least 75% of the voting shares of the undertaking have been acquired (končni prevzemni prag).

In general, the offer procedure includes the following steps:

• notification of the bidder’s intention to launch an offer to the Securities Market Agency, the target company’s management and the CPA and publication of the intention within three working days of reaching the threshold;
• obtaining the Securities Market Agency’s permission to publish the offer documents;
• publication of the offer documents no later than 30 days and no earlier than ten days after the publication of the intention to launch an offer;
• the offer period must be no less than 28 days and no more than 60 days from the date of publication of the offer (the offer period may be extended in certain cases, but only until the expiry of the final deadline – 60 days from the date of publication of the first offer);
• the announcement of the result of the offer within three days from the expiry of the offer period; and
• a three-month sell-out period (see point Squeeze-Out Procedures below in this respect).

Funding

Before announcing the cash offer, the acquirer must deposit the required amount of cash in a special account with the central securities depositary to pay for all the target company’s securities. Alternatively, the acquirer may provide the central securities depositary with a bank guarantee from an EU member state.

Squeeze-Out Procedures

If a person holds 90% or more of the voting shares of the undertaking, it has the right to squeeze-out the minority shareholders, for a fair compensation.

Within three months of the announcement of the result of a takeover offer (the sell-out period) in the course of which a person or persons acting in concert have acquired 90% or more of the voting rights, (i) the person or persons holding more than 90% may squeeze-out the minority, whereas the price offered in the takeover bid is regarded as the fair compensation, or (ii) the minority shareholders can request that the principal shareholder (holding 90% or more) acquires their shares in exchange for a compensation of such type and amount as was specified in the takeover offer.

In Slovenia, there is no legal structure comparable to a British or American trust, and the consensus among legal experts is that such a trust does not establish ownership of secured claims, which is necessary to create a valid and enforceable accessory security interest. To address this issue, a parallel debt structure is typically employed, whereby the parties to an funding agreement agree that the security agent shall be the joint and several creditor (solidarni upnik) of each obligation of the borrower towards each financing party (other than the security agent).