The new Swiss Investment Screening Act at a glance

8 January 2026

With the adoption of the Investment Screening Act by the Swiss Parliament on December 19, 2025, Switzerland is introducing for the first time an independent instrument to review foreign company takeovers on grounds of public order and security. This raises a new question for investors and target companies: Which transactions are subject to approval, and which are not? A look at the development from the preliminary draft to the adopted law shows a clear narrowing of the scope of application.

Background

The discussion about introducing an investment screening for takeovers of domestic companies by foreign investors gained momentum after the Chinese state-owned company ChemChina acquired the Swiss agrochemical giant Syngenta for USD 43 billion. This takeover raised fears that foreign state-controlled actors could also target in Switzerland security-relevant companies and critical infrastructures in the future. Against this backdrop, National Council member Beat Rieder submitted the motion "Protection of the Swiss economy through investment controls" in 2018. The aim of the motion was to prevent critical takeovers of domestic companies by foreign investors.

One year later, the Federal Council concluded in its report that the existing laws were sufficient and that the cost-benefit ratio of an investment control was unfavorable. Furthermore, up to that point, there had been no known acquisitions that had endangered public order or security in Switzerland in the past.

The Swiss Parliament nevertheless adopted the motion and, in 2020, instructed the Federal Council to draft a law. This law is intended to better protect Swiss companies from unwanted takeovers from abroad. Subsequently, on May 18, 2022, the Federal Council published the preliminary draft of the Investment Screening Act ("PD-ISA") together with an explanatory report. The public consultation on the PD-ISA lasted until September 9, 2022 (see blog post from 28 July 2022).

With its dispatch of December 15, 2023, the Federal Council submitted a deliberately narrowly defined draft law of the Investment Screening Act ("D-ISA"). The investment screening is only to be applied if a takeover by foreign state investors could endanger or threaten Switzerland's public order or security. Takeovers of companies by foreign state-controlled investors that are active in a particularly critical sector shall be subject to an approval requirement.

The National Council debated the proposal on September 17, 2024, and, by a large majority, voted for a significant tightening of the draft. It decided to extend the scope of the law to all foreign investors (including non-state ones). In addition, the law is intended to protect not only public order and security, but also explicitly the supply of essential goods and services to Switzerland.

Although the Council of States fundamentally accepted the proposal on March 17, 2025, it was already skeptical of the far-reaching tightening measures proposed by the National Council. In its deliberation on September 24, 2025, the Council of States largely followed the original, narrowly defined draft of the Federal Council. It restricted the approval requirement back to foreign state-controlled investors and removed the protection of the supply of essential goods and services from the draft law.

Since the positions of the two councils diverged, a procedure to resolve differences was initiated. In its second deliberation on December 2, 2025, the National Council relented and fully aligned with the Council of States' position. This cleared the way for a law that focuses on the essentials: the control of takeovers of domestic companies by foreign state-controlled investors through an approval procedure if Switzerland's public order or security is endangered.

With the agreement of the two councils, the proposal was ready for the final vote, which took place on December 19, 2025. In the final vote, both the National Council and the Council of States adopted the proposal. The date on which the IPG will come into force has not yet been determined.

Which takeovers must be approved?

The scope of the Investment Screening Act covers takeovers of domestic private and public law companies by foreign state investors.

It was already envisaged in the PD-ISA that the Investment Screening Act ("ISA") would apply to takeovers of domestic companies. However, the question of what constitutes a domestic company was controversial. The Federal Council put two variants up for discussion: on the one hand, any company entered in the Swiss Commercial Register should be covered (Variant 1), and on the other hand, only those companies that are not additionally part of a foreign corporate group (Variant 2). The second variant was abandoned in the further legislative process, and in the ISA the two councils opted for the first variant, according to which all companies entered in the Swiss Commercial Register are considered domestic companies.

Arguably the most significant change compared to the PD-ISA concerns the group of covered investors. While the PD-ISA included both state and private foreign investors in the screening regime, the ISA is now limited exclusively to foreign state investors. The original approach of also subjecting private investors to an approval requirement did not find a majority in Parliament. The legislator deliberately opted for a targeted focus on foreign state investors in order not to impair Switzerland's attractiveness as a business location. Under the ISA, foreign state investors are considered to be foreign state bodies, state-controlled companies and entities with legal capacity, as well as persons or companies acting on behalf of a foreign state body.

The concept of a takeover has remained almost unchanged. As in the PD-ISA, the ISA is based on the concept of control under competition law. It covers any transaction through which an investor directly or indirectly acquires control of a company or parts thereof. The ISA specifically mentions mergers, the acquisition of an equity interest, or the conclusion of a contract. The "acquisition of significant assets" was deleted from the ISA, in contrast to the PD-ISA.

The ISA provides for an exhaustive list of takeovers subject to approval. First, takeovers of the following companies are subject to an approval requirement, provided they had an average of at least 50 full-time positions worldwide or generated an average annual turnover of at least 10 million Swiss francs worldwide in the two business years prior to the submission of the application:

• Companies that manufacture goods or transfer intellectual property that are of crucial importance for the operational capability of the Swiss Armed Forces, of other federal institutions responsible for state security, or of space programs in which Switzerland participates within the framework of international agreements;
• Companies that manufacture goods or transfer intellectual property whose export or transfer is subject to a license under the War Material Act or the Goods Control Act (export of so-called dual-use goods);
• Companies active in the energy and water supply sector, provided certain thresholds are met;
• Companies that operate or control domestic high-pressure natural gas pipelines;
• Companies that supply central security-relevant IT systems or provide security-relevant services for domestic authorities.

In addition, takeovers of the following companies are subject to an approval requirement, provided they generated an average annual turnover or, in the case of banks, gross income of at least 100 million Swiss francs worldwide in the two business years prior to the submission of the application:

• Domestic university hospitals and general hospitals providing central care;
• Companies active in the research, development, production, or distribution of pharmaceuticals, medical devices, vaccines, or personal medical protective equipment;
• Companies in the freight and passenger transport and logistics sector, such as operators/owners of airports, railway infrastructures, or food distribution centers;
• Companies that operate or control domestic telecommunications networks;
• Companies that operate or control systemically important financial market infrastructures, as well as systemically important banks.

Small companies remain exempt from the approval requirement. It cannot be ruled out that small companies such as start-ups may also have developed security-related technologies or products and that their acquisitions could pose a threat to public order or security. Nevertheless, takeovers of domestic companies are not subject to the approval requirement as long as they do not exceed the specified thresholds.

At the same time, the Federal Council reserves the right to subject other categories of domestic companies to the approval requirement for a maximum of twelve months for reasons of public order or security. While the twelve months were intended as an absolute maximum limit in the PD-ISA, this competence of the Federal Council was completely removed in the D-ISA. However, it was reintroduced in the ISA and supplemented by the possibility of a one-time extension for a maximum of a further twelve months.

In addition, the ISA was amended to allow the Federal Council to exempt takeovers by foreign investors from certain states from the approval requirement, provided that sufficient cooperation exists with these states to avert dangers and threats to public order and security.

What criteria are considered when approving a takeover?

A takeover is approved if there is no reason to believe that it endangers or threatens Switzerland's public order or security. The PD-ISA contained a non-exhaustive list of approval criteria, which was reviewed in terms of content and partially streamlined in the further legislative process. While the PD-ISA still required an assessment of whether the takeover would lead to significant distortions of competition, this criterion was dropped in the D-ISA and not included again in the ISA. The legislator makes it clear that the ISA is not designed as an additional competition law control instrument.

The first criterion to be considered is whether the foreign state investor is or has been involved in activities that have an adverse effect on the public order or security of Switzerland or other states. Of particular importance is whether the investor or its home state has attempted to obtain security-relevant information by means of espionage or whether it is or has been involved in corresponding activities that have or have had an adverse effect on the public order or security of Switzerland or other states.

It is also relevant whether sanctions under the Embargo Act have been imposed directly or indirectly against the foreign state investor.

Furthermore, it must be examined whether the services, products, or infrastructures of the domestic company can be replaced within a reasonable period. A lack of substitutability can increase the security policy risk of the takeover. It is also significant whether the foreign investor gains access to central security-relevant information or particularly sensitive data through the takeover.

The PD-ISA contained the foreign state investor's willingness to cooperate with the competent authorities as a further criterion. This criterion was already removed in the D-ISA and not reintroduced in the ISA.

The approval of a takeover can also be made subject to obligations or conditions, provided that the danger or threat to public order or security is thereby eliminated.

Approval procedure: from preliminary decision to approval

The PD-ISA already provided for a clearly structured, two-stage approval procedure aimed at quickly distinguishing between takeovers with a low need for review and those with a more extensive need for review. This basic concept proved its worth in the further legislative process and was largely retained from the D-ISA to the ISA, but was specified and supplemented in individual points.

The State Secretariat for Economic Affairs (SECO) is responsible for conducting the approval procedure. The approval procedure is initiated by an application from the foreign state investor to SECO. Within one month of receipt of the complete application, SECO decides, in agreement with the co-interested administrative units and after consulting the Federal Intelligence Service ("FIS"), whether the takeover can be approved directly or whether a review procedure should be initiated. If no agreement is reached, a review procedure must be carried out.

In the review procedure, SECO decides on the approval of the takeover within 3 months, in agreement with the affected administrative units and after consulting the FIS. The ISA now grants the Federal Council a right of have a say. If SECO or a co-interested administrative unit opposes the approval of the takeover or if the decision is of considerable political significance, the Federal Council decides on the approval.

A significant further development compared to the PD-ISA is the possibility of a binding preliminary decision introduced in the ISA. This allows domestic companies to obtain a binding clarification in advance as to whether a planned takeover is subject to the approval requirement. The preliminary decision is valid for twelve months and can be extended once for twelve months upon request.

In addition, the ISA now gives the Federal Council the option of directly approving a takeover subject to approval in an urgent procedure, if this is necessary for the protection of public order or security.

Until the approval is granted, the civil law validity of a takeover subject to approval is suspended. This ensures that security-relevant transactions are not completed before a final official review has taken place.

Consequences of a violation of law

Although a takeover subject to approval is ineffective under civil law until it is approved, the PD-ISA already explicitly provided that the Federal Council can order the necessary measures to restore the proper condition, in particular a divestment, if a takeover is completed despite the lack of approval. In the course of the legislative process, this provision was then specified and expanded. The legislator now explicitly defines that the Federal Council can order measures if (i) a takeover subject to approval was completed without approval, (ii) a takeover subject to approval was completed that was approved on the basis of false information, or if (iii) an obligation or condition was disregarded. The Federal Council can still order a divestment.

In parallel, the administrative sanctions were significantly tightened. While the PD-ISA provided for a charge of up to 10% of the transaction value, according to the ISA, the company resulting from the takeover will be charged up to 10% of the worldwide annual turnover that the domestic company achieved on average in the two business years prior to the takeover, if:

• a takeover subject to approval was completed without approval;
• a takeover subject to approval was completed that was approved on the basis of false information;
• a measure to restore the proper condition was not carried out; or
• an obligation or condition was disregarded.

SECO can charge foreign state investors or domestic companies an amount of up to 100,000 Swiss francs if they do not or do not fully comply with their duty to provide information. It can also terminate the approval procedure if a person subject to the duty to provide information repeatedly fails to comply with this duty.

What the Investment Screening Act means for companies and investors

With the Investment Screening Act, Switzerland will in future have a specifically designed instrument that screens security-relevant company takeovers by foreign state investors. The legislative process clearly shows that the legislator has deliberately opted for a narrow scope of application in order to maintain the attractiveness of Switzerland as a business location.

For companies and foreign investors, this does not mean a comprehensive approval requirement for all takeovers, but it does mean the need for an early legal assessment of planned transactions. For planned takeovers of companies in sensitive sectors by state or state-affiliated foreign investors, we recommend a careful examination of whether an approval requirement exists, and which requirements must be met in the procedure.

Authors: Lukas Züst, Nikola Atanasijevic