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I. Background
As economies become more intertwined internationally, Swiss companies are increasingly being taken over by foreign-controlled companies, particularly by companies from emerging economies. This development raises concerns that Switzerland's public order and security could be endangered or threatened and that critical know-how may be transferred abroad, especially if the foreign investors are state-owned or state-affiliated.1 In other Western countries, too, takeovers of domestic companies by foreign-controlled companies are gradually viewed more critically and are more frequently prohibited. For example, the German government prohibited the takeover of MAN's gas turbine division by the Chinese company CSIC Longjian.2 In the United Kingdom, the government prevented the sale of chip manufacturer Newport Wafer Fab to Chinese-controlled Nexperia, respectively attached such strict conditions to the planned deal that the company was ultimately sold to an American company.3 In the United States, the sale of US Steel to Nippon Steel was blocked by the Biden administration due to concerns with regards to national security, until the company was finally sold under the Trump administration under certain conditions.4 These examples illustrate that, particularly Western countries, are increasingly protecting themselves from foreign takeovers and creating the necessary legal framework to do so. This development has also reached Switzerland. Specifically, the 2017 acquisition of Syngenta by Chem China for around USD 43 billion initiated political action in this regard.5
II. Federal Swiss Investment Screening Act
1. Background and Status of the Procedure
With the adoption of Beat Rieder’s parliamentary motion dated February 26, 2018, bearing the title “Protecting the Swiss economy through investment controls”, Swiss Parliament instructed the Federal Council—against its will—to create a legal basis for controlling foreign direct investments.6 On May 18, 2022, the preliminary bill for an investment screening law was published. After conducting a consultation process, the Federal Council then adopted the dispatch for a Swiss Investment Screening Act on December 15, 2023, and presented the corresponding bill to the Swiss Parliament. The Federal Council once again expressed its opposition to the introduction of investment screening, as this would weaken Switzerland’s position as a business and innovation hub.7 At the beginning of the parliamentary debates, there was disagreement between the National Council and the Council of States regarding the scope of the law, in particular whether the investment screening should also apply to private foreign investors. In December 2025, the two councils agreed on the less interventionist approach originally proposed by the Federal Council. The final vote in the parliament took place on 19 December 2025.
2. Objective and Scope of the Federal Investment Screening Act
The bill of the Federal Investment Screening Act (Draft Investment Screening Act, D-ISA)8 aims to prevent takeovers of domestic companies by foreign investors if those takeovers would endanger or threaten Switzerland’s public order or security (Art. 1(1) D-ISA). The vague legal concept of public order and security grants the Swiss authorities considerable discretion in the application of the law. Although this enables the law to be applied on a case-by-case basis, it is also likely to harm the legal certainty of those affected (especially foreign investors). The scope of the new legislation applies to takeovers of domestic private and public-law companies by foreign state investors. Domestic companies are defined as companies that are registered in the Swiss commercial register; foreign state investors are defined as (i) foreign state bodies, (ii) companies with headquarters outside Switzerland that are directly or indirectly controlled by a foreign state body, (iii) companies with assets that are directly or indirectly controlled by a foreign state body, and (iv) natural or legal persons acting on behalf of a foreign state body. According to the Federal Council's version, takeovers by private foreign actors do not fall within the scope of the Investment Screening Act, even if the target company operates in a critical business sector.
3. Investment Screening
a. Criteria for Reporting Requirements
The bill contains a preventive and risk-based screening of foreign investments. The prerequisite for an investment review by the State Secretariat for Economic Affairs (SECO) is a takeover through which one or more foreign state investors gain direct or indirect control over a domestic company, namely through a merger, through the acquisition of a stake, or through the conclusion of a contract (Art. 2(a) D-ISA).
A reporting obligation only applies if the target company exceeds certain thresholds. The draft legislation distinguishes between security-relevant companies and critical infrastructures (Art. 3(1)-(2) D-ISA):
- Security-relevant companies: In the case of acquisitions of domestic companies in security-critical areas, such as the defence industry, energy and water supply, or in the area of security-related IT systems, investment control applies if these companies employ at least 50 full-time staff worldwide and have generated sales of at least CHF 10 million in the previous two financial years.
- Critical infrastructure: Domestic companies that operate critical infrastructure, such as university hospitals or general hospitals with central care, medical care, transport and logistics infrastructure, food distribution centres, telecommunications networks, or systemically important financial infrastructure (including systemically important banks) are subject to investment control if they have generated an average annual turnover of at least CHF 100 million worldwide in the last two financial years.
The Federal Council reserves the right to subject further categories of domestic companies to SECO's approval requirement if there are sufficient indications at the time of the takeover that the change of ownership could endanger or threaten public order or security (Art. 3(3) D-ISA). Conversely, it may also exempt acquisitions by foreign state investors from certain countries from the approval requirement, provided that public order and security are ensured (Art. 3(4) D-ISA). It can also be assumed that the Federal Council will use this room for manoeuvre in the interests of economic foreign policy.
b. Procedure
The screening procedure needs to be initiated by the foreign investor by submitting an application to the State Secretariat for Economic Affairs (SECO). Subsequently, SECO reviews within one month whether the planned takeover could threaten public order, national security, or strategic economic interests. If SECO – in agreement with the other administrative units concerned and after consulting the Swiss Federal Intelligence Service (FIS) – concludes that the takeover does not cause any impairment, the application is approved directly (Art. 6 in conjunction with Art. 7(1) D-ISA).
However, if SECO identifies a risk of impairment after conducting a preliminary assessment within one month, it will initiate a formal reviewing procedure. In this procedure, the takeover will be examined in depth within a three-month period. SECO is entitled to request the necessary documents from foreign investors, domestic companies, and all persons involved in the takeover for its investigations. The decision is made again in agreement with the administrative units concerned and after consultation with the FIS. In exceptional cases, the Federal Council decides directly on the approval, namely if SECO or an administrative unit concerned opposes the approval of the takeover, if the decision has significant political implications, or in urgent cases if this is necessary to protect public order or security. The approval or rejection of the takeover is issued in writing to the foreign state investor and the domestic company. The takeover remains suspended until it has been approved (Art. 8 D-ISA).
If no decision is made within the statutory period of one or three months, the acquisition is deemed to have been implicitly approved. However, SECO may extend these periods for specific reasons, in which case it must notify the parties involved in writing. It remains unclear how often and for how long such extensions might be granted (Art. 9 D-ISA). In general, the proposed procedure is modelled on the merger control procedure of the Swiss Competition Commission (COMCO).9 It is therefore likely that SECO will follow the procedural principles and processes established there in the practical application of the Investment Screening Act.
The Federal Council's draft also provides that persons involved in a takeover can have a non-binding assessment carried out to determine whether the takeover is likely to be subject to approval (Art. 5 D-ISA). The non-binding nature of this clarification has been criticised, as it does not constitute a suitable instrument for investors seeking legal advice. Accordingly, both the National Council and the Council of States have now provided for a binding preliminary assessment. The preliminary assessment must also be completed within a deadline of two months after receipt of the application.
c. Administrative Measures and Sanctions
The Federal Council is authorised to order administrative measures and sanctions (including the order to divest) to restore the proper state of affairs (i) if a takeover subject to approval has been carried out without authorisation, (ii) in case approval has been granted based on false information, or (iii) if a requirement or condition has been disregarded. In such cases, as well as in the event of non-compliance with a measure to restore the proper state of affairs, the company resulting from the takeover may also be sanctioned with administrative penalties up to 10% of its global annual turnover, calculated based on the two preceding financial years (Art. 19-20 D-ISA).
The foreign state investor and the domestic company concerned may appeal against the decisions of the authorities, whereby the procedure is governed by the provisions of the Swiss Administrative Procedure Act (APA) (Art. 18 D-ISA). Before acquiring a domestic company, it is therefore advisable to determine whether the target falls within the scope of the Investment Screening Act, particularly because the associated penalties can be very severe and completed takeovers may be unwound.
4. Summary
In summary, Switzerland is adopting a moderate approach to investment control, which is now limited to foreign state investors, while private foreign investors are not affected. After the final vote in December 2025, the deadline for the optional referendum now runs until 17. April 2026. In addition, the Federal Council will issue an ordinance containing the implementing provisions for investment screening and establish the administrative structures necessary for the enforcement of the law. The Swiss Investment Screening Act can therefore be expected to come into force at the earliest around one year after the final vote has been passed.
1 TOPLENSKY/ATKINS, ChemChina purchase of Syngenta clears main regulatory hurdles, Financial Times, April 5, 2017;
TANNER, Die Angst vor dem Ausverkauf der Heimat – ein Lehrstück darüber, wie sich die Schweiz verändert, NZZ vom
17.05.2024.
2 HEIDE/OLK, Habeck sieht bei China-Deal von MAN öffentliche Sicherheit gefährdet, Handelsblatt vom 03.07.2024.
3 GROSS/PICKARD, Nexperia sells Newport Wafer Fab to US chip company for $177 million, Financial Times, November 8,
2023.
4 ISIDORE, US Steel, once America's biggest company, is now under foreign ownership, CNN, June 18, 2025.
5 AIOLFI, Syngenta definitiv in chinesischer Hand, NZZ vom 05.05.2017.
6 WASER/HAECHLER, Einführung einer Schweizer Investitionskontrolle, GesKR, 3/2022, p. 312.
7 Dispatch of December 15, 2023, on the Investment Screening Act, p. 68.
8 This article is based on the bill of the Federal Council.
9 Art. 32 ff. of the Federal Act on Cartels and other Restraints of Competition (Cartel Act, CartA).
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Dr. Benjamin Fehr
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