Investment · Legal explainer

Switzerland’s Investment Screening Act: which takeovers need approval

Switzerland’s new law sets out when a foreign state-controlled investor must seek approval to take over a company in an especially critical sector. The consultation on its implementing ordinance has closed; the rules are expected to take effect in 2027.

The Bridgewire12 October 2026

6 minute read

AI-generated image of high-voltage power lines crossing a Swiss Alpine valley — AI-generated illustrative image. The landscape and infrastructure shown are fictional.

At a glance

The Act applies to acquisitions that give a foreign state investor control of a Swiss company in a listed critical sector, subject to size thresholds and any country exemption.
The Federal Council’s consultation on the implementing ordinance closed on 5 October 2026. The ordinance has not yet been adopted.
The Act is expected to enter into force in 2027. SECO says applications cannot yet be submitted or reviewed.

Current situation

Parliament adopted the Federal Act on the Screening of Foreign Investments (Investitionsprüfgesetz, IPG) on 19 December 2025. It was published as BBl 2026 31 on Fedlex. On 12 June 2026, the Federal Council opened consultation on the implementing ordinance, the Investitionsprüfverordnung (IPV). The consultation ran until 5 October 2026. The Federal Council’s notice describes the proposed implementing rules. SECO currently expects the Act to enter into force in 2027 and says applications cannot yet be submitted or reviewed.

The Act does not cover every foreign investment. It applies to takeovers that give a foreign state investor direct or indirect control of a Swiss company. The statutory definition includes a foreign state body, a company headquartered outside Switzerland that a foreign state body controls, certain controlled legal entities, and a person acting for a foreign state body. The acquisition must also concern a company in a listed sector and meet the applicable threshold. Articles 1 to 3 of the Act set out this scope.

Which deals need approval?

Under Article 3(1), the Act sets two groups of sectors. In the first group, the target must have averaged at least 50 full-time positions worldwide or CHF 10 million in worldwide annual turnover over the previous two financial years. The sectors are:

producers of goods or providers of intellectual property decisive to the readiness of the Swiss armed forces, other federal security bodies or space programmes involving Switzerland under international agreements, where export or transfer abroad requires a licence under the War Materiel Act or the Goods Control Act;
operators or controllers of the electricity transmission grid and distribution networks at voltage level 3 or below that distribute at least 450 GWh a year;
power plants in Switzerland with capacity of 100 MW or more;
high-pressure natural-gas pipelines;
water suppliers serving more than 100,000 people; and
suppliers of central security-relevant IT systems or services to Swiss authorities.

Article 3(1) of the Act sets out the first group and its thresholds. The second group uses a higher size threshold: an average annual worldwide turnover of at least CHF 100 million over the previous two financial years, or that level of gross income for banks. It covers university hospitals and general hospitals providing central care; companies researching, developing, producing or distributing medicines, medical devices, vaccines or personal medical protective equipment; major passenger or freight transport hubs; rail infrastructure; major food distribution centres; telecommunications networks; systemically important financial market infrastructure; and systemically important banks. Article 3(2) sets out this group and its threshold.

Article 3(4) of the Act allows the Federal Council to exempt acquisitions by state investors from specified countries where there is sufficient cooperation to address threats to public order or security. The ordinance will set out the exempted states. The consultation documents describe the proposed country list, application documents, data protection and fees. Those details are not final.

The Act also allows the Federal Council to add other company categories to screening temporarily for up to 12 months, with one extension of up to 12 months if needed to protect public order or security. That power is in Article 3(3).

How the review works

Before completing a deal that requires approval, the foreign state investor must apply to SECO. Within one month of receiving a complete application, SECO decides whether to approve the takeover directly or open an in-depth review. If it opens that review, SECO has up to three months to decide. The clock can be extended in defined circumstances, including delays attributable to the parties, information pending from a foreign authority or a decision by the Federal Council. If no decision is made within the applicable deadline, the takeover is deemed approved. Articles 6 to 9 of the Act set out the application process, deadlines and deemed-approval rule.

SECO decides in agreement with the federal offices involved and after hearing the Federal Intelligence Service. The Federal Council decides if SECO or another involved office opposes the deal, or if the decision has significant political weight. A takeover requiring approval has no civil-law effect until approval is granted.

A Swiss target company can ask SECO for a binding advance ruling on whether a proposed takeover requires approval. SECO generally issues it within two months of receiving a complete application. The ruling is valid for 12 months and may be extended once for another 12 months on request. This is provided for in Article 5.

What happens if the rules are breached?

The Act allows an administrative sanction of up to 10% of the Swiss target’s average annual worldwide turnover over the two financial years before the takeover. This sanction may also apply in specified cases involving false information, failure to restore the lawful position, or breach of conditions. A foreign state investor or Swiss company that fails to provide required information may face a sanction of up to CHF 100,000. Article 20 sets out the sanctions and their conditions.

Overall benefit

Switzerland did not previously have this screening mechanism. The Act’s purpose is to prevent takeovers that endanger or threaten public order or security. Under Article 4, a takeover must be approved if there is no reason to believe it poses such a threat. Approval may include conditions that remove an identified threat. This gives authorities a way to address specific risks while allowing transactions that meet the statutory test to proceed.

What it means for Switzerland

The business federation economiesuisse remains critical of investment screening. In its response to the ordinance consultation, it argues for a proportionate process, limited information demands and a precise control test. These are the federation’s recommendations, not rules already adopted. Its full consultation response sets out these positions.

What it means for China

The Act does not single out China. Its rules concern qualifying state investors from countries that are not exempted. For a China-linked transaction, the questions are whether the buyer falls within the statutory state-investor definition, whether the Swiss target is in a listed sector, whether it meets the threshold, and whether the investor’s state is exempted under the final ordinance.

economiesuisse asked the Federal Council to consider including China, alongside the United States, the United Kingdom, Canada and Japan, on the list of exempted states. That is the federation’s position; it is not a government decision. The full response records the request.

What it means for both countries

Editorial assessment based on the sources above: routine trade and investment by buyers who are neither state-controlled nor acting for a foreign state fall outside this approval regime. A minority stake also falls outside it when it does not give the investor control. Because the Act defines a takeover through direct or indirect control, a minority holding with rights that confer control cannot be treated as automatically exempt. The rules therefore concern a limited set of deals, and the final ordinance will determine which states are exempted. See Article 2(a) for the Act’s control-based definition of a takeover.

What it means for our readers

Companies, investors and advisers can use the Act to screen a proposed acquisition early: identify who controls the buyer, check whether the Swiss target operates in a listed sector and meets the relevant threshold, and determine whether the investor’s state is exempted. If approval is required, it must be obtained before the takeover is completed.

What we advise readers to do

Follow the Federal Council’s final country list, filing requirements and fee schedule when the ordinance is adopted;
watch for clarification on how authorities apply the control test, including minority rights and passive fund investments;
track the Federal Council’s decision on when the Act will enter into force.

Companies considering a transaction can read the adopted Act and follow SECO’s investment-screening page for updates. Once the Act is in force, an eligible Swiss target may request an advance ruling from SECO. Parties to a specific deal should seek qualified legal advice.

Editorial note

This is a high-risk legal explainer based on the adopted Act and official Swiss government information. It is general information, not legal advice. The implementing ordinance has not been adopted, and its details may change. The Switzerland-China assessment is editorial analysis based on the cited scope of the Act.

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