CMS Expert Guide to Foreign Investment Screening Laws in Switzerland

The Swiss foreign direct investment (FDI) regime is set out in the Federal Act on the Screening of Foreign Investments (Investment Screening Act, "ISA"), which was adopted by the Federal Assembly on 19 December 2025. It is expected to enter into force in 2027 at the earliest.

The ISA covers the acquisition of control (see 2.1) of certain domestic companies (see 2.3) by foreign state investors (see 2.2.)

An acquisition within the meaning of the ISA is any transaction by which one or more undertakings acquire direct or indirect control of one or more previously independent undertakings or parts thereof, namely through mergers, the acquisition of an equity interest, or the conclusion of a contract. The notion of "control" is aligned with that used for merger control under competition law. The scope therefore also includes, for example, the acquisition of a minority shareholding or the conclusion of an agreement where this confers control within the meaning of the Swiss Cartel Act.

The ISA exclusively applies to acquisitions by state-controlled foreign investors. This includes:

• foreign state bodies;
• companies or legal entities that are directly or indirectly controlled by a foreign state body; and
• natural or legal persons acting on behalf of a foreign government agency.

The Swiss Federal Council may exempt investors from certain states from the authorisation requirement.

In contrast, acquisitions by private foreign investors are not covered by the ISA.

The ISA applies to domestic companies that are registered in the Swiss Commercial Register. This includes both private and public-law companies. However, an acquisition is only subject to approval if the Swiss target undertaking (domestic company) operates in a security-relevant sector and meets certain size criteria. The threshold for the filing requirement is lower where the activity is deemed particularly critical for public order or security:

• Activities considered particularly critical include certain activities in the areas of the manufacture of goods or transfer of intellectual property relevant to the military, national security institutions, and space programmes, as well as in the areas of electricity, water, natural gas and central security-relevant IT services. In these areas, a filing is required if the target undertaking had on average at least 50 full-time employee positions or generated average worldwide annual turnover of at least CHF 10 million in the two financial years preceding the submission of the application.
• Less critical - yet still subject to authorisation upon reaching a higher turnover threshold - are acquisitions notably in the areas of hospitals, pharmaceuticals, transport hubs, rail infrastructure, food distribution centres, telecommunications, financial market infrastructure, and activities of systemically important banks. In these sectors, a filing is required if the average global annual turnover amounted to at least CHF 100 million in the two financial years preceding the application.

Moreover, the Federal Council may subject further categories of domestic companies to authorisation requirements for a period of 12 months if this is necessary to ensure public order or security. This period may be extended by another 12 months.

Acquisitions that are subject to authorisation require mandatory approval prior to completion.

The State Secretariat for Economic Affairs ("SECO") may initiate proceedings ex officio if it suspects that the authorisation requirement has been disregarded or circumvented.

 An acquisition is approved if there is no reason to believe that it endangers or threatens Switzerland's public order or security. In its assessment, the authority shall take into account in particular:

• whether the foreign state investor is or has been involved in activities that have or had an adverse effect on the public order or security of Switzerland or other states;
• whether the foreign state investor or its home state has attempted to obtain security-relevant information about the domestic company by means of espionage;
• whether the foreign state investor is or has been involved in espionage;
• whether sanctions under the Swiss Embargo Act have been imposed directly or indirectly against the foreign state investor;
• whether the services, products, or infrastructures of the domestic company can be replaced within a reasonable period;
• whether the foreign state investor gains access to central security-relevant information or particularly sensitive personal data through the acquisition.

The authorisation itself may be subject to conditions or requirements.

SECO is responsible for reviewing applications for approval of an acquisition. It makes its decision in consultation with other administrative units concerned and after consulting the Federal Intelligence Service.

Decision-making competence passes to the Federal Council if SECO or an administrative unit is opposed to approval, or where the matter is of considerable political significance.

The foreign state investor must submit the application.

The application for approval of an acquisition must be submitted by the foreign investor to SECO prior to completion.

• SECO must then decide, in agreement with the interested administrative units, within one month of receipt of the complete application whether to approve the acquisition directly or to open an in-depth review.
• If an in-depth review is initiated, SECO - again in coordination with the interested administrative units - must decide on the approval within three months.

SECO may extend these deadlines if:    

• the foreign investor is responsible for the delay in the review;
• the necessary information from a foreign authority is still pending; or
• the Federal Council decides on the approval.

The domestic company involved in the acquisition may also request SECO in advance to determine whether a transaction is subject to filing. Such a binding advance ruling, which SECO must issue in principle within two months, is valid for 12 months and may be extended once for a further 12 months.

The ISA does not currently specify fee amounts. However, the provisional Federal Council Dispatch and the Regulatory Impact Assessment of the Foreign Investment Review Bill indicate that the costs of preliminary investigations and approval procedures will be borne in part by the foreign investor through corresponding fees and in part by general tax revenues. The fees should not exceed the actual costs of the review and are primarily intended to finance personnel, operating and database licence costs.

It is expected that the costs will be specified in the implementing provisions, which are still to be issued.

SECO informs the public every four years about the implementation of the ISA, in particular about first-instance decisions on administrative sanctions.

In principle, the civil law validity of an acquisition that is subject to authorisation is suspended until approval is granted.

The Federal Council may order administrative measures to restore the proper state of affairs (including, in particular, divestment) if an acquisition subject to mandatory notification is completed without first obtaining approval or approved on the basis of false information, or if a condition or obligation in the approval decision is breached.

Further, the completion of an acquisition subject to mandatory notification without or prior to approval may be sanctioned with a fine of up to 10% of the worldwide annual turnover that the domestic company achieved on average in the two financial years prior to the acquisition.