Investment Screening Act: Political Debate

Switzerland plans to introduce an Investment Screening Act (Investitionsprüfgesetz) to prevent foreign takeovers of domestic companies if they pose a threat to public order or national security. Under the draft law, acquisitions in critical sectors would require government approval. The push for regulation was fueled by the $43 billion takeover of Syngenta by ChemChina, earning the draft the nickname “Lex China.” 

The rules target state-controlled foreign investors, including private companies that are directly or indirectly influenced by a foreign state. This focus reflects concerns that such investors could endanger Switzerland’s security interests.

Critical sectors covered include:

• Defense and dual-use goods
• Electricity grids and power generation
• Water supply
• Healthcare, telecommunications, and transport infrastructure

Swiss National Council’s Approval

The Swiss National Council (Nationalrat) has approved the Investment Screening Act with a clear majority, signaling a stronger stance on foreign takeovers of Swiss companies. Unlike the government’s initial proposal, the law will not only target state-controlled investors but also private foreign investors.

Supporters argue that Switzerland, which is home to the world’s highest per-capita foreign direct investment, must align with other OECD countries, most of which already have investment controls. They see the law as a protective tool against foreign influence over critical infrastructure and resources.

Opponents, including parts of the FDP and SVP, warn that stricter rules could reduce foreign investment by up to 16%, harm SMEs and startups, and add bureaucracy. Critics label the law “protectionist” and unnecessary, as no foreign takeover has yet been shown to endanger Swiss security.

Swiss Council of States Backs Investment Screening in Principle

On 17 March 2025, the Swiss Council of States (Ständerat) voted in favor of introducing an Investment Screening Act—joining the National Council in principle support. With a 29 to 16 majority, the upper chamber agreed that Switzerland should gain more control over foreign takeovers of domestic companies, though detailed debate will follow in committee.

Supporters in the Council of States have identical arguments to those in the National Council. Opponents warn of higher costs, bureaucracy, and reduced foreign direct investment. They argue that cyberattacks and espionage pose bigger threats than legal takeovers, and that existing safeguards are sufficient. Critics also stress that many critical infrastructures are already publicly owned, making hostile acquisitions unlikely.

The debate reflects a broader global trend: as major economies like the U.S. adopt protectionist policies, smaller countries like Switzerland are rethinking how to balance openness with security. Final decisions on the law’s scope and details remain pending.

Federal Council disapproves

The Federal Council continues to reject the introduction of an Investment Screening Act, arguing that the cost–benefit ratio is unfavorable and that existing regulations are sufficient. To date, no foreign takeover has been identified that has endangered Switzerland’s public order or national security.

The Investment Screening Act could reshape Switzerland’s traditionally open investment model. While aimed at protecting national security, stricter rules may also create barriers for SMEs and startups that rely on foreign capital. Whether the law will be adopted, and in what final form, remains to be seen.