Switzerland to Tighten Rules on Some Foreign Investments

(Bloomberg) — Switzerland will tighten rules around foreign investment as a shifting geopolitical backdrop pushes countries to take measures to protect domestic companies and industries.

The plans, approved in parliament on Tuesday, are intended to prevent takeovers that would threaten public order or security in Switzerland, according to a notice on the chamber’s website. The Investment Review Act, also known as “Lex China,” aims to make certain deals involving foreign state-controlled companies subject to increased scrutiny and mandatory sign-off, giving the government a power to intervene.

Tuesday’s decision paves the way for a final nod on the bill from parliament later this month. Unless it is challenged in a referendum, it could then enter force as early as next year.

Foreign influence over strategic companies and protection of supplies of key materials has become an area of heightened concern in Europe. In October, the Netherlands seized control of Chinese-owned firm Nexperia to ensure Europe retained unfettered access to the company’s chips. It suspended the order last month, though the issue isn’t fully resolved.

The European Union is also planning new rules on foreign investments to protect local industries, a move that’s largely seen as targeting China.

Switzerland’s discussions on its proposed law started almost a decade ago after the $43 billion takeover of Swiss agri-chemical company Syngenta AG by what was then ChemChina. Lawmakers debated putting all foreign investments under review before deciding to limit the measure to investors backed by foreign governments, and only under certain conditions.

In their decision, lawmakers are overruling the government, which pushed back against the idea of screening investments. Economy Minister Guy Parmelin had argued that openness to capital is of central importance for Switzerland’s prosperity and its standing as a business location.

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