Foreign Direct Investment –
Switzerland

Introduction

Switzerland has adopted a targeted FDI regime on 19 December 2025. Its scope is limited to acquisitions of control over Swiss entities active in critical sectors by foreign-state investors. The Investment Screening Act (ISA) and its implementing ordinance is expected to enter into force mid-2027.

1. What is the legal framework in force that regulates foreign investment?

Switzerland's FDI regime is enshrined in the ISA and its implementing ordinance (which, however, has not yet been adopted).

Transactions that: (i) confer sole or joint control over (ii) entities registered in the Swiss commercial register (iii) by a foreign-state investor (iv) which are active in specific critical sectors and (v) meet certain turnover or full-time equivalent (FTE) thresholds need to be notified and approved.

The policy focus of the Swiss FDI regime is the protection of public order and security. The prevention of loss of know-how and jobs or the prevention of distortions of competition is not a focus of the Swiss FDI regime.

The body responsible for reviewing foreign investments is the State Secretariat for Economic Affairs (SECO). SECO conducts the review in consultation with the other interested administrative units and the Federal Intelligence Service.

The implementing ordinance has still to be adopted yet and there is no relevant case law, as the ISA has not entered into force yet.

2. When does the regime apply?

Only transactions constituting a merger or the acquisition of sole or joint control (as understood under the Swiss merger control regulations) by a foreign-state investor are captured by the regime. Consequently, the acquisition of non-controlling minority shareholdings is outside of the scope of the Swiss FDI regime.

The object of the transaction, the target, needs to be an entity registered in the Swiss commercial register. Thus, the acquisition of entities not registered in the Swiss commercial register is not subject to a notification duty.

As to the thresholds, the ISA distinguishes between highly sensitive and critical sectors.

As regards highly sensitive sectors, the target must:

• have had at least 50 FTEs worldwide or have generated an annual worldwide turnover of at least CHF 10 million on average over the two fiscal years preceding the submission of the notification; and
• be a company that:
• manufactures goods or transfers of intellectual property: that are of critical importance to the operational capability of the Swiss Army, other federal institutions responsible for national security, or space programs in which Switzerland participates under international agreements; and the export or transfer of which abroad is subject to authorisation under the War Material Act of 13 December 1996 or the Goods Control Act of 13 December 1996;
• operates or controls the Swiss electricity transmission grid or distribution grids at grid level 3 or lower through which at least 450 GWh is transmitted annually;
• operates or controls Swiss power plants for electricity production with a capacity of 100 MW or more;
• operates or controls high-pressure natural gas pipelines in Switzerland;
• supplies water to more than 100,000 residents in Switzerland;
• provides key security-related IT systems or key security-related IT services to Swiss authorities.

As regards the critical sectors, the target must:

• have generated an annual worldwide turnover (or gross income in the case of banks) of at least CHF 100 million on average over the two fiscal years preceding the submission of the notification; and
• be a company that:
• is a Swiss university hospital or a general hospital providing centralised care;
• engages in the research, development, production, or distribution of pharmaceuticals, medical devices, vaccines, or personal medical protective equipment;
• operates or controls major Swiss hubs for the transport of goods or passengers, namely ports, airports, or transshipment facilities for combined transport;
• operates or controls domestic railway infrastructure;
• operates or controls major Swiss food distribution centres;
• operates or controls Swiss telecommunications networks;
• operates or controls systemically important financial market infrastructures pursuant to Article 25(2) of the Financial Market Infrastructure Act of 19 June 2015; or
• is a systemically important bank pursuant to Article 8(3) of the Banking Act of 8 November 1934.

The Federal Council may exempt state-controlled investors from certain states from the approval requirement. The current draft of the implementing ordinance exempts foreign-state-controlled investors of EU/European Free Trade Association (EFTA) Member States.

The Federal Council may also temporarily extend the list of critical sectors for up to 12 months (extendable once by another 12 months) if required to protect public order or security. Beyond that, the Federal Council has no call-in powers.

3. What is considered a foreign investor?

A foreign investor is a foreign-state investor. The term "foreign-state investor" is defined broadly to prevent circumventions. The term "foreign-state investor" includes:

• a foreign-state body;
• an undertaking headquartered outside Switzerland that is directly or indirectly controlled by a foreign-state body;
• an undertaking with legal capacity that is directly or indirectly controlled by a foreign-state body; and
• an individual or legal entity which is acting on behalf of a foreign-state body; this also captures the case where a person has been instructed by a foreign government to acquire a company, or when a person receives financial means (including subsidies or loans) from a foreign government without which they would not have been able to make the acquisition; note that a company that has been assigned a public service mandate by a foreign government is also be considered a foreign-state investor.

4. What is the notification process?

The notification is mandatory for notifiable acquisitions. The notification must be filed with SECO. There is no deadline to file the notification, but the transaction needs to have been approved prior to closing. Whether the notification can be filed prior to signing is not yet clear. It will be advisable to file draft notifications to make sure that the notification is deemed complete by SECO.

The approval requirement has a suspensory effect. Generally, a global closing before Swiss approval will not be possible, as a global closing will generally also affect the Swiss entity.

The foreign-state investor is responsible for the filing.

As regards the information to be supplied, the current draft implementing ordinance provides that the notification has to include the following information:

• The name and address of the investor and the target, as well as the name of the respective contact person.
• The name, address, and power of attorney of the representative, if the application is submitted by a representative.
• The location of the investor's headquarters and its principal place of business.
• The name, date of birth, nationality, place of residence, and position of the members of the board of directors, members of senior management, and members of all other bodies of the investor that may have a decisive influence on key management issues and the investor's general business policy; in each case, it must be specified whether the individual is a politically exposed person (PEP) or a person closely associated with a PEP (including details regarding the respective PEP).
• The name, location of the principal place of business and principal administrative office (for legal entities) or nationality and residence (for natural persons) of the investor's direct and indirect owners, extending to the natural or legal persons under whose control the investor ultimately falls; for individuals, it must also be specified whether they are a PEP or a person closely associated with a PEP (including details regarding the respective PEP).
• A detailed description of the extent to which the investor is under the direct or indirect control of a government body or acts on behalf of such a body.
• A detailed description of the business activities of the investor and the persons under whose control the investor ultimately falls.
• Legal violations committed by the investor and the persons above, as well as concluded or ongoing legal proceedings against these persons over the past 10 years (both domestically and abroad).
• Sanctions imposed on the investor and on the persons mentioned above over the past 10 years (both domestically and abroad).
• The highly sensitive or critical sectors into which the domestic company could fall.
• A detailed description of the domestic company's business activities, including, for the highly sensitive and critical sectors, a description of products, services, and other economic activities; information on patents and other intellectual property; and a list of the most important customers in Switzerland and abroad.
• A list of the domestic company's major competitors in Switzerland and abroad, along with an assessment which of the domestic company's products and services are difficult for other companies to substitute.
• The domestic company's revenue or the bank's gross income, as well as the number of employees — both in absolute terms and as full-time equivalents — for the two fiscal years preceding the submission of the notification.
• A detailed description of the planned acquisition, as well as the purpose and objectives pursued by the acquisition, including the purchase price in CHF, the financing and the source of the funds, and the date on which the acquisition is scheduled to close.
• A detailed description of the extent to which control over the domestic company would be acquired.
• A statement indicating whether this acquisition, or an acquisition related to it, is also subject to an investment screening review in another country, including the name of the country, the respective authority, and the investment screening procedure (specifying the reference number, if applicable), the start date and the completed or expected completion date of the screening procedure, as well as the outcome, if any.
• Information on the investment screening procedures that the investor has undergone or is currently undergoing in other states over the past 10 years, including the name of the state, the respective authority, and the investment screening procedure (specifying the reference number, if applicable), the start date and the completed or expected completion date of the screening procedure, as well as the outcome, if any.

As regards the filing fee, according to the current draft of the implementing ordinance, the filing fee is CHF 10,000 for a Phase 1 clearance and CHF 20,000–60,000 for a Phase 2 decision, depending on the amount of the purchase price. These fees can be doubled in case of extraordinary expenditures.

Generally, the decisions will not be published.

5. How are notifications reviewed?

SECO conducts the review in consultation with the other interested administrative units and the Federal Intelligence Service.

Upon receiving the complete notification, SECO decides within Phase 1 (one month) whether the acquisition can be approved within Phase 1 or whether a Phase 2 has to be initiated. This decision is made in consultation with the other interested administrative units and after consulting the Federal Intelligence Service. If no agreement is reached between SECO and the other interested administrative units, a Phase 2 is initiated.

If a Phase 2 is initiated, SECO decides within three months whether to approve the acquisition. Again, this decision is made in consultation with the other interested administrative units and after consulting the Federal Intelligence Service.

If either: SECO or another interested administrative opposes the approval of the acquisition; or the decision has significant political implications, the Federal Council decides.

SECO may extend the above timelines if:

• the review is hindered by circumstances for which the foreign-state investor or the target is responsible;
• necessary information from a foreign authority is outstanding; or
• the Federal Council is deciding on the approval.

The test against which transactions are reviewed is whether there is no reason to believe that the transaction would endanger or threaten public order or security.

Public order or security may be endangered, in particular, if the target would cease to operate and:

• provides a service that is indispensable to the entire economy and cannot be replaced within a reasonable period of time;
• supplies critical defence components to the Swiss Army or other federal institutions responsible for national security;
• supplies key security-related IT systems to domestic authorities; and
• supplies key components to international space infrastructure in which Switzerland participates.

Public order or security may also be endangered if the foreign-state investor pursues destabilising or geopolitical intentions. For example, following the acquisition, the foreign-state investor could intentionally cease or withhold the services provided by this company to exert pressure on Switzerland.

Against this background, in assessing whether the public order or security is endangered, consideration is given, in particular, to whether:

• the foreign-state investor is engaged in, or has been engaged in, activities that adversely affect or have adversely affected public order or security in Switzerland or other states;
• the foreign-state investor or its home state is attempting, or has attempted, to obtain information about the domestic company through espionage;
• the foreign-state investor engages in or has engaged in espionage;
• sanctions have been imposed directly or indirectly against the foreign-state investor under the Embargo Act of 22 March 2002;
• the services, products, or infrastructure of the domestic company can be replaced within a reasonable period of time; or
• the foreign-state investor gains access, through the acquisition, to significant security-related information or to personal data requiring special protection under the Data Protection Act of 25 September 2020.

The outcomes of the review process can be an approval, a prohibition or an approval with conditions or obligations. While there is not yet any case law, conditions or obligations could include divestitures, guarantees to continue to supply the critical goods, and so on.

6. What are the timescales for notification?

Phase 1 takes one month.

Phase 2 takes three months.

SECO may extend the above timelines if:

• the review is hindered by circumstances for which the foreign-state investor or the target is responsible;
• the necessary information from a foreign authority is outstanding; or
• the Federal Council is considering the approval.

7. What are the effects of and penalties for failure to file?

Fines of up to 10% of the worldwide turnover generated by the target in the two financial years prior to the acquisition can be imposed on the parties for:

• closing the transaction without approval;
• providing false information leading to an approval;
• not implementing measures that restore public order and security; and
• not implementing remedies (conditions and obligations).

The Federal Council may also order divestments if an acquisition was closed without approval, an approval was granted on the basis of false information or if remedies were not implemented.