Switzerland's Investment Screening Act and the approval of acquisitions by foreign state investors

A narrow regime by design

The Investment Screening Act (Investitionsprüfgesetz, IPG; parliamentary business 23.086) is, in our judgement, narrower than the regimes of the European Union's member states, the United Kingdom's National Security and Investment Act or the United States' CFIUS review. Article 1 confines it to acquisitions by foreign state investors, and Article 2(d) defines the term in four categories: a foreign state body; a company with its head office outside Switzerland that a foreign state body controls directly or indirectly; a company with legal capacity that a foreign state body so controls; and a natural or legal person acting for a foreign state body. The Act defines neither "foreign state body" nor "control". A privately owned foreign company acquiring a Swiss target is outside the Act whatever the sector, unless it acts for a foreign state body; a sovereign wealth fund, a state-owned enterprise or a company that a foreign state controls is inside it if the target is in a listed sector and above the thresholds. The acquisition that needs approval is a takeover in the sense of Article 2(a): any transaction by which one or more investors acquire, directly or indirectly, control over one or more previously independent domestic companies or parts of them, in particular by merger, acquisition of a shareholding or contract, and a domestic company is one entered in the Swiss commercial register. A minority stake that does not confer control is not a takeover in that sense.

Parliament's decision to keep the Act confined to state investors was the central political choice of the legislative process, and it shapes the practical work. In practice the first issue is often whether the acquirer is a foreign state investor, which turns on the acquirer's ownership and governance, including the position of state funds that hold stakes through layered vehicles and of companies in which a state holds a controlling interest through a listed parent.

The two tiers of sectors and the thresholds

Article 3 lists the sectors in two tiers. The first, in Article 3(1), covers companies that manufacture goods or transfer intangible goods which are of decisive importance for the operational capability of the Swiss Armed Forces, of other federal institutions responsible for state security or of space programmes in which Switzerland takes part under international agreements, and whose export or transfer abroad requires a licence under the War Material Act or the Goods Control Act; operate or control the Swiss electricity transmission grid, or distribution grids at grid level 3 or below through which at least 450 GWh are sold a year; operate or control Swiss power plants of 100 MW or more; operate or control Swiss high-pressure natural gas pipelines; supply water to more than 100,000 inhabitants; or supply central security-relevant IT systems or provide central security-relevant IT services to Swiss authorities. For this tier the target must, on worldwide averages over the two financial years before the application is filed, employ at least 50 full-time equivalents or have turnover of at least CHF 10 million. The second tier, in Article 3(2), covers general hospitals providing central care and university hospitals; the research, development, manufacture or distribution of pharmaceuticals, medical devices, vaccines and protective equipment; significant transport hubs and rail infrastructure; significant food distribution centres; telecommunications networks; and systemically important financial market infrastructures and banks. For this tier the target must have turnover or, for a bank, gross income of at least CHF 100 million on the same two-year basis. Article 3(3) allows the Federal Council to subject further categories of Swiss companies to the approval requirement for up to twelve months, extendable by up to twelve further months, where safeguarding public order or security requires it, and Article 3(4) allows it to exempt investors from states that cooperate sufficiently and directs it to seek reciprocity.

The thresholds are company-level figures, so a Swiss technology company with 50 full-time equivalents that supplies central security-relevant IT systems to a canton falls within the approval requirement if a foreign state investor acquires control, while a larger company in an unlisted sector does not. The sectoral terms, from "central security-relevant IT systems" to "significant transport hubs", are not defined in the Act.

The procedure: a prior ruling, two phases and the Federal Council

The Act gives the Swiss target an optional first step. Under Article 5 the Swiss company may ask the State Secretariat for Economic Affairs, SECO, for a binding prior ruling on whether its takeover is subject to the approval requirement. SECO issues it as a rule within two months of receiving the complete request; the ruling is valid for twelve months, can be extended once by twelve months, and may be revoked after material changes, which the company must report. The procedure itself begins with the application for approval, which Article 6 requires the foreign state investor to file with SECO before completion. In a first phase SECO has one month from receipt of the complete application to approve the acquisition or to open a review. In a second phase SECO examines the acquisition with the federal units concerned and has three months to decide. Where SECO or a unit consulted opposes approval, or the case is of considerable political significance, the decision passes to the Federal Council. Where the deadlines pass without a decision, the acquisition is deemed approved, but SECO may extend them where the investor or the Swiss company obstructs the review, where information from a foreign authority is outstanding or where the Federal Council decides (Article 9(2)). Article 8(4) defers the civil-law effect of the acquisition until it is approved, so a transfer of control completed before approval has no civil-law effect until approval is given, and Article 19 requires the Federal Council to order the measures needed to restore the lawful position where an acquisition is completed without approval or on an approval obtained by false information, or a condition is breached; it may in particular order divestment.

Under Article 4(1) approval is granted unless there is reason to assume that the takeover endangers or threatens public order or security in Switzerland; Article 4(2) lists the factors the authorities weigh and Article 4(3) allows conditions. Article 20 provides for administrative sanctions of up to 10 per cent of the Swiss company's average worldwide annual turnover in the two financial years before the takeover, imposed on the company resulting from the takeover, for completing an acquisition without approval, on false information or in breach of conditions, or for failing to carry out a restoration measure, and up to CHF 100,000 for breaches of the duties to provide information; Article 21 sets a limitation period of five years.

Timing: what is fixed, what is open

The Act was adopted in the final vote of both chambers on 19 December 2025 (text of the final vote) and published for the referendum in the Federal Gazette (BBl 2026 31), with a referendum period running to 17 April 2026. Under Article 25 the Federal Council determines the entry into force. On 12 June 2026 it opened the consultation on the implementing ordinance, the Investitionsprüfverordnung, which ran to 5 October 2026, and SECO's page on the regime states that entry into force is planned for 2027. As at the date of this update no date had been set. According to the Federal Council's press release, the ordinance governs the details of the approval requirement and procedure, including which states are exempt and what information and documents an application must contain, together with data protection and the fee tariff.

For transactions being negotiated now, the issue is a deal signed before the Act applies and closed after. The Act contains no transitional provision. Because Article 3 requires approval before completion, an acquisition completed before entry into force is, in our judgement, outside the approval requirement. A transaction signed before and completed after is, on the wording, a takeover at the time control passes, and in our judgement should be planned on the basis that it will need approval if the Act is in force at closing, which makes the date of entry into force a long-stop and condition point for any sale of a Swiss company in a listed sector to a foreign state investor in 2027.

What to put in the deal documents now

Four points belong in current transaction documents involving a possible foreign state investor and a Swiss target in a listed sector. A representation from the buyer on its ownership and control, drawn to the Act's definition of a foreign state investor, so that the parties know whether the Act can apply. A condition precedent for approval under the Act (including deemed approval under Article 9(1)), or a prior ruling, applied for by the target and valid at completion, that the approval requirement does not apply, with a seller covenant to have the target apply, drafted to apply if approval is required at completion, re-tested immediately before completion and not treated as satisfied or waived because the Act was not yet in force when the other conditions were met. A long-stop date that allows for the two-month prior ruling or the one-plus-three-month procedure, with an allowance for extensions under Article 9(2) and the Federal Council stage on top in a contested case. And an allocation of the risk of conditions and of a refusal, including who bears the cost of a divestment order under Article 19 if the parties close in breach. Sellers should resist completion mechanics that transfer control before approval, because Article 8(4) defers the civil-law effect of such a transfer and Article 20 attaches the larger fine to it.

Lenders have their own point. In our judgement taking security over the shares of a Swiss company in a listed sector will not usually confer control by itself, but enforcement by a lender that is a foreign state investor, or a vehicle it controls, can be a takeover under Article 2(a), and the Act contains no exemption for it. Enforcement provisions in financings to be signed now should contemplate the approval step.

What this means for you

• Check the buyer first. The Act applies only to foreign state investors as Article 2(d) defines them: foreign state bodies, companies they control directly or indirectly, and persons acting for them. Sovereign wealth funds and state-controlled enterprises, including those investing through layered vehicles, are the cases to check.
• Then the sector and the size. Tier one (defence, security and space goods requiring an export licence, grids, power plants, gas pipelines, water, central security IT for authorities) from 50 FTE or CHF 10 million turnover; tier two (central and university hospitals, pharmaceuticals and medical devices, significant transport hubs and rail, significant food distribution centres, telecoms, systemically important financial market infrastructures and banks) from CHF 100 million turnover or, for banks, gross income. Two-year worldwide averages before the application.
• Prepare for the prior ruling. Once the Act is in force, Article 5 will allow the Swiss target to obtain a binding SECO ruling on whether its takeover needs approval, as a rule within two months, valid for twelve months. Where the sector or size test is borderline, the buyer should ask the seller now for a covenant to have the target apply at that point, and the sector and size analysis can be prepared in the meantime; the ordinance will set the documents the request requires (Article 5(6)).
• Plan for the Act at closing, not at signing. Entry into force is planned for 2027, with no date set. A deal signed in 2026 and closed after the date is, on the wording, a takeover when control passes; draft the condition, the long-stop with room for extensions under Article 9(2), and the risk allocation accordingly.
• Do not transfer control early. Article 8(4) defers the civil-law effect of an unapproved acquisition until approval, Article 19 requires restoration measures including divestment, and Article 20 carries fines of up to 10 per cent of the Swiss company's average worldwide annual turnover over the two preceding financial years.

Isak Legal advises acquirers, sellers and lenders on cross-border transactions involving regulated or critical-sector targets, on how the Swiss Act interacts with the EU member state regimes, the UK National Security and Investment Act and US CFIUS review, and on the conditions, long-stop and risk allocation that carry those regimes into the documents, working with established local counsel in Switzerland and the member states where required. See our Corporate, Market Entry and Switzerland pages, or get in touch.

This client update is provided for general information only, reflects the position as at 9 October 2026 and does not constitute legal advice or create a lawyer-client relationship. The statutory position is taken from the text of the Investment Screening Act adopted in the final vote of 19 December 2025, as published by the Federal Assembly; the Act is not yet in force and the implementing ordinance has not been adopted, so the sector definitions and procedural detail may change. The Federal Council's and SECO's statements on timing are the authorities' published material and rank below the Act; SECO's page is undated and its statement on timing was read on the date of this update. Verify the current status at the official sources linked above before acting. For advice on a specific matter, please contact us.