Switzerland: The New Investment Review Act at a Glance

With the adoption of the Investment Screening Act by the Swiss Parliament on 19 December 2025, Switzerland is introducing for the first time an independent instrument for reviewing foreign company takeovers for reasons of public order and security. For investors and target companies, this raises the question of 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 limitation of the scope of application.

Background

The discussion about the introduction of an investment review for takeovers of domestic companies by foreign investors gained momentum after the Chinese state-owned company ChemChina sold the Swiss agrochemical giant Syngenta for USD 43 billion. . This takeover raised fears that foreign state-controlled actors could also target security-relevant Swiss companies and critical infrastructures in the future. Against this background, National Councillor 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.

A year later, the Federal Council concluded in its report that the laws already in force were sufficient and that the cost-benefit ratio of investment control was unfavourable. In addition, no takeovers were known up to that point in time that would have 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 is intended to better protect Swiss companies from unwanted takeovers from abroad. Subsequently, on 18 May 2022, the Federal Council published the preliminary draft of an Investment Review Act (“VE-IPG“) together with an explanatory report. The public discussion of the VE-IPG (consultation) lasted until 9 September 2022 (see blog post of 28 July 2022).

In its dispatch of 15 December 2023, the Federal Council submitted a deliberately narrow draft law (“E-IPG“). The investment screening is only to be applied if a takeover by foreign state investors could endanger or threaten public order or security in Switzerland. Takeovers of companies operating in a particularly critical area by foreign state-controlled investors are to be subject to approval.

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

Although the Council of States supported the bill in principle on 17 March 2025, it was already sceptical about the National Council’s far-reaching tightening measures. In its deliberations on 24 September 2025, the Council of States largely followed the original, narrowly worded draft of the Federal Council. He again limited the licensing requirement to foreign state-controlled investors and deleted the protection of the supply of essential goods and services from the draft law.

Since the positions of the two councils diverged, the difference settlement procedure was initiated. In its second deliberations on 2 December 2025, the National Council relented and fully followed the line of the Council of States. This cleared the way for a law that concentrates on the essentials: the control of takeovers of domestic companies by foreign state-controlled investors by means of an approval procedure if public order or security in Switzerland is endangered.

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

Which takeovers must be approved?

The Investment Review Act covers takeovers of domestic private and public companies by foreign state investors.

The VE-IPG already provided that the Investment Review Act (“IPG“) would apply to takeovers of domestic companies. However, the question of what a domestic company is was controversial. The Federal Council put two variants up for discussion: on the one hand, every company entered in the Swiss commercial register should be recorded (variant 1), and on the other hand, only those companies that are not also part of a foreign group of companies (variant 2). The second variant was abandoned in the further legislative process and in the IPG, the two councils decided on the first variant, according to which all companies registered in the Swiss commercial register are recorded as domestic companies.

Probably the most significant change compared to the VE-IPG concerns the group of investors covered. While the VE-IPG included both state and private foreign investors in the screening regime, the IPG is now limited exclusively to foreign state investors. The original approach of also subjecting private investors to a permit requirement did not find a majority in parliament. The legislator deliberately decided to focus specifically on foreign state investors in order not to impair Switzerland’s attractiveness as a business location. In the IPG, foreign state investors are foreign state bodies, state-controlled companies and companies with assets, as well as persons or companies acting on behalf of a foreign state body.

The term “takeover” has remained almost unchanged. As in the VE-IPG, the IPG is based on the concept of control under antitrust law. It covers any process through which an investor directly or indirectly gains control of a company or parts of it. The IPG mentions in particular the merger, the acquisition of a shareholding or the conclusion of a contract. In contrast to the VE-IPG, the “acquisition of significant assets” was deleted from the IPG.

The IPG provides for an exhaustive list of takeovers subject to approval. First of all, acquisitions of the following companies are subject to approval if they have an average of at least 50 full-time equivalents worldwide in the two financial years prior to the submission of the application or have generated an average annual turnover of at least CHF 10 million worldwide:

• companies that manufacture goods or transfer intellectual property that is of crucial importance for the operational capability of the Swiss Armed Forces, other federal institutions responsible for state security or space programmes 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 authorisation under the War Material Act or the Goods Control Act (export of so-called dual-use goods);
• companies operating in the energy and water supply sector, provided that certain thresholds are reached;
• companies that operate or control domestic high-pressure natural gas pipelines;
• Companies that supply central security-relevant IT systems or security-related services for the domestic authorities.

In addition, acquisitions of the following companies are subject to approval if they have generated an average annual turnover worldwide or, in the case of banks, a gross profit of at least CHF 100 million in the two financial years prior to the submission of the application:

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

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

At the same time, the Federal Council reserves the right to make other categories of domestic companies subject to authorisation for reasons of public order or security for a maximum of twelve months. While the twelve months were provided for as the absolute maximum limit in the VE-IPG, this competence of the Federal Council was completely deleted in the E-IPG. However, it was resumed in the IPG and supplemented by the possibility of a one-time extension for a maximum of another twelve months.

In addition, the IPG has added that the Federal Council can exempt takeovers by foreign investors from certain countries from the authorisation requirement, provided that there is sufficient cooperation with these states to avert threats and threats to public order and security.

What criteria are taken into account when approving a takeover?

An acquisition is approved if there is no reason to believe that it endangers or threatens public order or security in Switzerland. The VE-IPG contained a non-exhaustive list of approval criteria, the content of which was reviewed and partially streamlined in the further legislative process. While the VE-IPG still had to assess, among other things, whether the takeover would result in significant distortions of competition, this criterion was dropped in the E-IPG and no longer included in the IPG. In doing so, the legislator makes it clear that the IPG is not designed as an additional competition law control instrument.

The first criterion to be taken into account is whether the foreign state investor participates or has participated in activities that have a detrimental effect on public order or security in Switzerland or other states. In particular, it is important whether the investor or his home country has tried to obtain security-relevant information by means of espionage or whether he has participated or participated in corresponding activities that have or have had a detrimental effect on public order or security in Switzerland or other states.

It is also relevant whether sanctions under the Embargo Act have been imposed directly or indirectly on 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 of time. A lack of substitutability can increase the security policy risk of the takeover. It is also relevant whether the takeover gives the foreign investor access to central security-relevant information or data that is particularly worthy of protection.

As a further criterion, the VE-IPG contained the willingness of the foreign state investor to cooperate with the competent authorities. This criterion has already been deleted in the E-IPG and has not been reintroduced in the IPG.

The approval of a takeover may also be subject to conditions or conditions, provided that the threat or threat to public order or security is eliminated.

Approval procedure: from preliminary decision to approval

The VE-IPG 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 has proven itself in the further legislative process and has been largely retained from the E-IPG to the IPG, but has been specified and supplemented in individual points.

The State Secretariat for Economic Affairs (SECO) is responsible for carrying out the approval procedure. The approval procedure is initiated by an application to SECO by the foreign state investor. 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 an investigation procedure is to be initiated. If no agreement can be reached, a review procedure must be carried out.

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

A significant development compared to the VE-IPG is the possibility of a binding preliminary decision introduced in the IPG. Domestic companies can thus have it clarified in advance whether a planned takeover is subject to approval requirements. The preliminary decision is valid for twelve months and can be extended once by twelve months upon request.

In addition, the IPG now gives the Federal Council the option of directly approving a takeover subject to approval in an urgent procedure, provided that 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 remains deferred. In this way, the law ensures that security-relevant transactions are not carried out before a final regulatory review has been carried out.

Consequences of a breach of duty

Although a takeover subject to approval is invalid under civil law until approval, the VE-IPG already expressly provided that the Federal Council may order the necessary measures to restore the orderly 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 expressly defines that the Federal Council can order measures if (i) a takeover requiring approval has been completed without approval, (ii) a takeover subject to approval has been completed that was approved on the basis of false information, or (iii) a condition or condition has been disregarded. The Federal Council can continue to order a divestment.

At the same time, administrative sanctions have been significantly tightened. While the VE-IPG still provided for a charge of up to 10% of the transaction value, according to the IPG, the company resulting from the acquisition is burdened with up to 10% of the global annual turnover that the domestic company achieved on average in the two financial years prior to the takeover if:

• a takeover subject to approval has been completed without approval;
• a takeover subject to approval has been completed, which was approved on the basis of false information;
• a measure to restore the proper condition has not been carried out; or
• a condition or condition has been disregarded.

SECO can charge foreign state investors or domestic companies an amount of up to CHF 100,000 if they do not comply with their obligation to provide information or do not do so in full. In addition, it can discontinue the approval procedure if a person obliged to provide information repeatedly fails to comply with his or her obligation to provide information.

What the Investment Review Act means for companies and investors

With the Investment Screening Act, Switzerland will in future have a targeted instrument that examines 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 that all takeovers are subject to comprehensive approval, but it does mean the need for an early legal classification of planned transactions. In the case of planned takeovers of companies in sensitive areas by state-owned or state-affiliated foreign investors, we recommend a careful examination of whether there is a requirement for approval and which requirements must be met in the procedure.