EY Law Alert, July 2024

GOVERNMENT OF THE REPUBLIC OF SLOVENIA ADOPTS THE DRAFT AMENDMENT TO THE COMPANIES ACT - ZGD-1M

On 26 June 2024, the Government of the Republic of Slovenia adopted the draft Act Amending the Companies Act, which transposes four directives of the European Parliament and the Council into the Slovenian legal order, and forwarded it to the National Assembly for adoption.

The objectives of the proposed amendment are primarily to align the Slovenian legal order with European legislation in the following areas:

1. Disclosure of tax information (public CBCR)

The proposal introduces mandatory public reporting of tax information relating to income for the largest companies. Reporting will be required from parent companies and non-group companies whose turnover in the previous two consecutive financial years has exceeded EUR 750 million both times and which operate on a multinational basis.

2. Corporate sustainability reporting

The amendment updates the existing rules on non-financial reporting by expanding the reporting obligations (to all large companies and to all medium and small listed companies - except micro companies), expanding the scope and content of the information to be reported, and also by increasing the scrutiny of the reporting content by auditors. The sustainability report replaces the obligation to prepare a statement on non-financial operations.

3. Ensuring balanced gender representation among company directors

The proposed amendments require listed companies and large companies in which the State or local community has a majority shareholding to achieve gender balance in management roles by 2026. Companies must therefore ensure that the under-represented gender achieves at least 40% representation among the members of supervisory bodies (non-executive directors) or 33% representation among members of management and supervisory bodies combined (executive and non-executive directors).

4. Adjustment of the size criteria for micro, small, medium and large companies or groups

The draft Act modifies the criteria for classifying companies or groups as micro, small, medium or large companies or groups. It is proposed that the criteria regarding the value of assets and net turnover be increased by approximately 25 %. The change in the criteria for determining the size of companies will reduce the scope for preparing, auditing and publishing reports and will also reduce the number of companies that will have to report.

5. Other changes

In addition to the above solutions, the draft amendment requires all companies and sole proprietors to prominently display their business identification data at their business addresses.

The amendment also redefines "public interest entity", so that medium-sized companies in which the State or local community have a majority shareholding will no longer be considered as public interest entities.