The Swiss Investment Control Act Explained: Scope, Risks, and Practical Impact

Introduction

For decades, Switzerland has been known as one of the most open and predictable jurisdictions for foreign investment. Unlike many comparable economies, it deliberately refrained from introducing a general foreign investment screening regime. This is now changing.

With the forthcoming Swiss Investment Control Act (Investitionsprüfgesetz, IPG), Switzerland introduces targeted scrutiny of certain foreign investments for the first time. While the new regime is deliberately narrow and proportionate, it represents a structural shift for cross-border M&A transactions involving Swiss target companies. In particular, acquisitions by foreign state-owned or state-controlled investors may become subject to approval, depending on whether control thresholds are reached in sensitive sectors or, under higher thresholds, in less sensitive sectors.

This Insight explains the new Swiss investment screening regime and answers five key questions that foreign investors, Swiss boards, and deal advisers should consider when planning transactions with a Swiss nexus.

Question 1: Why did Switzerland introduce an Investment Control Act now?

The IPG is Switzerland’s response to a broader international development. Over recent years, foreign investment screening has become a standard policy instrument across major economies. National security, public order, supply chain resilience, and geopolitical considerations increasingly shape investment regulation.

Until now, Switzerland stood apart. Political pressure mounted, however, particularly in connection with acquisitions of Swiss companies in sensitive sectors by state-owned or state-linked foreign investors. The concern was not about foreign capital per se, but about control over strategically relevant assets.

The IPG reflects a deliberate policy compromise. Switzerland acknowledges international expectations and closes a perceived regulatory gap, while at the same time rejecting a comprehensive or politically driven screening model. The stated objective is not to restrict investment, but to introduce a safeguard mechanism for exceptional cases.

In this sense, the IPG marks a shift in mindset rather than a turn towards protectionism.

Question 2: Which transactions and investors fall within the scope of the IPG?

The Swiss regime is designed to be selective, not universal.

First, the IPG focuses on foreign investors, with particular attention on:

• State-owned enterprises
• State-controlled or state-influenced investors

Second, the Act primarily targets acquisitions of control. From an M&A perspective, this means classic share deals resulting in decisive influence over a Swiss target. Purely passive minority investments generally fall outside the regime, unless combined with governance rights that effectively confer control. The applicable control thresholds will vary depending on whether the target operates in a sensitive or a less sensitive sector, with stricter thresholds expected in security-relevant areas and higher thresholds applying elsewhere.

Third, screening is limited to sensitive sectors. While the final scope will be further specified by ordinance, the focus is expected to lie on areas such as critical infrastructure, defence-related activities, and security-relevant technologies. Switzerland has consciously avoided an overly broad sector catalogue.

The result is a regime that intervenes only where three elements coincide: a foreign state-owned or state-controlled investor, the acquisition of control, and a sensitive Swiss business.

Question 3: How does the Swiss regime compare internationally?

Internationally, Switzerland is best described as a late but cautious follower.

Compared to the United States (CFIUS), the Swiss regime is considerably narrower: it does not systematically capture minority investments, non-controlling rights, or a wide range of downstream activities. Political discretion is intended to be more restrained.

The UK National Security and Investment Act is far broader in scope, with mandatory filings across numerous sectors and strict sanctions for non-compliance. Germany and France have similarly expanded their regimes, lowered thresholds, and increasingly impose conditions on transactions.

By contrast, Switzerland aims to remain an investment-friendly jurisdiction with a safety valve, rather than an aggressive gatekeeper. For investors familiar with EU or US screening processes, the IPG is unlikely to feel excessive — but it removes Switzerland’s former status as a “screening-free” outlier.

Question 4: What practical impact does the IPG have on M&A transactions?

Even a narrowly tailored screening regime has structural consequences for deal-making.

First, investment control becomes a standard issue in transaction planning. For deals involving foreign buyers and Swiss targets, the IPG must be assessed early — ideally already at the indication-of-interest stage.

Second, transaction timelines may be affected. While the Swiss authorities aim for efficiency, the possibility of a review process introduces a new variable between signing and closing. Long-stop dates, regulatory conditions precedent, and risk allocation clauses will require adjustment.

Third, deal documentation will evolve. Regulatory cooperation obligations, approval risk allocation, and termination rights linked to investment control outcomes will increasingly become standard features in relevant transactions.

In competitive processes, preparedness on IPG exposure may influence deal certainty and attractiveness.

Question 5: What risks and opportunities does the new Act create?

The key risk lies in uncertainty during the early phase of implementation. Market participants will need to develop a feel for how authorities interpret “control”, “state influence”, and sector relevance. For sensitive transactions, political considerations may also come into play.

At the same time, the IPG creates opportunities for disciplined investors. Early structuring, transparent governance concepts, and a clear long-term investment rationale can significantly reduce execution risk. Compared to more interventionist regimes, Switzerland may remain a relatively predictable jurisdiction for strategic acquisitions.

For Swiss target companies, the new regime can also act as a governance filter, encouraging earlier reflection on investor profiles and regulatory exposure.

Conclusion

With the Investment Control Act, Switzerland is carefully recalibrating its openness to foreign investment. The challenge will be to ensure that screening remains targeted and exceptional, rather than becoming a routine hurdle. For M&A transactions, the IPG does not change the fundamentals — but it does change the framework. Those who integrate investment control considerations early, assess control and sector exposure realistically, and structure transactions accordingly will continue to transact successfully in Switzerland.

Planning an M&A transaction involving a Swiss target or a foreign investor?

If you would like to assess how the Swiss Investment Control Act may affect your transaction strategy, timelines, or deal structure, get in touch with us — we are happy to support you.

Disclaimer

This publication contains general information only and does not constitute legal advice. The legal assessment always depends on the circumstances of the individual case. For advice on your specific situation, please contact us directly.