In the middle of this year, the Federal Council presented a new legislation to screen foreign direct investment seeks to prevent threats to public order and security posed by foreign investors acquiring Swiss companies. In 2023, we will find out what will happen next.

Switzerland is one of the world's largest recipients of foreign investment. Being open to inward foreign investment is of central importance for Switzerland as a business centre. The country must therefore remain attractive for foreign investment even if screening is introduced. However, in the last years Switzerland policy to remain open for investments was heavily discussed, when foreign investors acquired or invested in mid-size or large Swiss companies.

In the future, further possible threats are expected in particular from investors with ties to foreign governments. The acquisition of Swiss companies by foreign state-owned companies or by investors with ties to foreign governments should therefore be made subject to approval in all sectors. Furthermore, the new regulations will define in which critical areas all acquisitions by foreign investors - state or private - must be authorised. Small businesses are to be exempted from the screening process by setting a de minimis threshold.

Marc Baumberger from MLL Legal talked about this new draft legislation, which will now after the consultation be finalised as a draft law and then submitted to the Swiss States and National Council. Therefore, we expect this to become one of the key discussions points in M&A the following year. Listen to our podcast and become part of the discussion!