This information was provided by Thomas A. Frick on 15 September 2020,
and should be reviewed against any later legislative updates.

There is currently no general inward foreign investment control in Switzerland.

Only certain special sectors have rules that may directly or indirectly control foreign investments in Switzerland:

  • In the banking and finance sector, under the Swiss Federal Act on Banks and Savings Banks or 8 November 1934 and other acts; the relevant authority is the Financial Markets Supervisory Authority Finma;
  • In the residential real estate sector, under the Swiss Federal Act on the Acquisition of Real Estate by Per-sons Abroad of 16 December 1983; the authorities granting authorization are the cantonal authorities in which the real estate is located, determined by each Canton.
  • Furthermore, there are other business activities that require a license (e.g. aviation, telecommunications, nuclear energy and radio and television) which may limit foreign control.

Furthermore, the general rules of the Swiss competition act apply to M&A transactions, which are similar to the rules of EU competition law.

In case of banks (and certain other financial intermediaries), Finma needs to approve any shareholder controlling directly or indirectly 10% or more of the capital or voting rights of a bank; if a bank is under foreign control, additional requirements (such as the granting of reciprocal rights by the country of the controlling shareholder) may apply.

In case of residential real estate, any direct or indirect acquisition of residential (but not commercial) real estate by a person abroad requires a license. This also applies to acquisition of a share in a company holding such real estate (unless the company is listed).

Banking, residential real estate investments, aviation, telecommunications, nuclear energy and radio and television.

Swiss legislation is not concerned about investment but about “control”, which, however, is usually defined as control by means of a certain percentage of the voting rights or of the capital.

Yes; while for commercial real estate investments not listed at an exchange, even the acquisition of one share may trigger the license requirement, in case of banks any investment will only require a license if the threshold of 10% of the capital or of the voting rights is exceeded. Finma has wide discretion to determine when a bank will be deemed foreign controlled; if e.g. the largest shareholder is also the largest customer of the bank, a shareholding of 30-40% may already subject the bank to the rules applying to foreign-controlled banks.

Criteria vary and are different under the various applicable laws. In case of banks, the foreign shareholder must provide “Gewähr”, i.e. guarantee proper conduct. In case of real estate, there are quotas for foreign persons acquiring e.g. holiday homes. Otherwise, only in special cases (providing of low rents, acquisition by way of heritage) can an authorisation be granted. In case of other licenses (aviation, telecom etc.), the main criteria is usually that reciprocity is granted.

In case of all license requirements, the rules apply to Swiss and foreign investors. In case of residential real estate, the rules apply only to foreigners, defined as non-Swiss persons residing abroad or persons residing in Switzerland but are neither EEA citizens nor hold a type “C” residential permit.

Usually, the threshold is “control”, which may be 50% of the voting rights or of the capital, but could be less depending on an individual assessment. In case of commercial real estate, there is no minimum threshold.

In general yes; for the exception applying to residential real estate investment companies the shares of which are listed, see above.

As a rule, any screening procedure will be confidential but the ultimate decision may be published, subject to protection of confidential data.

There are no general provisions on mitigating provisions. In case of licenses, it is not uncommon that the license terms will be negotiated with the relevant authorities.

In case licenses are required, the authorities need to approve any transaction prior to closing. The same applies under competition law: merger control filings must be made after signing and prior to closing, but there is no deadline starting to run at signing.

Usually, the investor; in case of banks, both the investor and the bank.

Usually, information about the investor including the beneficial owner of the investor and its corporate structure, the financing, reciprocity rights, and in the banking sector, the competence of the persons in charge.

In case of license requirements, the steps will be determined by the authority granting the license; it is not under any time constraint. In case of competition law merger control filings, the Swiss Federal Competition Commission must decide within one month whether to further investigate the change of control; if it initiates a further investigation, it must decide within 4 months.

The competent authority may grant a license, may approve the transaction, may reject the application and block the transaction or approve the transaction subject to certain conditions.

In case of merger control and residential real estate acquisition, the transaction will be invalid, in addition to other sanctions. In general, non-obtaining of necessary licenses or approvals will subject the relevant persons subject to administrative and criminal sanctions and the company holding the license is under risk to lose its license.

Yes, irrespective of applicable act, all decisions may be appealed against, ultimately in a court of law.