SWITZERLAND Law and Practice Contributed by: Philippe Nordmann, Marion Bähler, Christian Hagen, Samuel Lieberherr and Dario Glauser, Walder Wyss Ltd
1. Legal System 1.1 Legal System and Judicial Order
and applies only to acquisitions of Swiss companies by foreign state-controlled investors in certain sen - sitive sectors. The law distinguishes between sec - tors that are particularly critical to public order and security, which are subject to a lower turnover thresh - old, and other sensitive sectors with a higher turno - ver threshold. In the most critical areas, approval is required if the target company had, on average, at least 50 full-time employees worldwide or achieved at least CHF10 million in annual worldwide turnover in the two financial years preceding the application. These areas include companies that produce goods or transfer intellectual property essential for the opera - tional capability of the Swiss Armed Forces. In other security-sensitive areas, acquisitions are subject to approval only if the target company had an average worldwide annual turnover of at least CHF100 mil - lion in the previous two financial years. These areas include hospitals or operators of important transport hubs such as airports or ports. Switzerland is one of the world′s largest recipients of foreign investment. It is also one of the world′s larg - est investors abroad. Being open to inward foreign investment is important for Switzerland as a business centre. The country, therefore, aims to remain attrac - tive for foreign investment by introducing a limited investment screening regime. 2.2 Procedure to Obtain Approval and Sanctions for Non-Compliance Under the new regime, filings need to be submitted to the State Secretariat for Economic Affairs (SECO) if the intended transaction falls within the scope of the new regulation. SECO must make its decision within three months. If an acquisition is completed without the required approval, or if approval was obtained on the basis of false information, the Federal Council may order appropriate administrative measures to restore law - ful conditions. This may include the divestment of the acquired participation. In addition, administrative sanctions may be imposed: the company resulting from an unapproved or improperly approved transac - tion can be fined up to 10% of the average worldwide annual turnover generated by the domestic target in the two financial years preceding the acquisition. For
Switzerland has a civil law legal system. The most important source of law is written law. Switzerland’s
federalist structure has three levels: • the Confederation (the federal state); • the cantons (the states); and • the municipalities (the local areas).
The Federal Constitution ranks first in the order of priority. It allocates certain authorities to the Federal Confederation. Where an area is not allocated to the Federal Confederation, the cantons exercise sover - eign rights. The different forms of written law generally have the following order of priority: • federal laws prevail over cantonal laws; • constitutional rules prevail over ordinary statutes; and • statutes enacted by a legislative body prevail over regulations prepared by a government or adminis - trative body. 2. Restrictions on Foreign Investments 2.1 Approval of Foreign Investments A new regime regarding foreign investment control will enter into force in 2027. Until then, Switzerland has no foreign investment control regime in place. No notification or clearance of a governmental agency is required when a foreign national or a foreign company invests in Switzerland or acquires a Swiss company. However, in specific sectors such as residential real estate, banking, insur - ance, national defence and electricity, sector-specific restrictions apply. The new Federal Act on the Screening of Foreign Investments (the “Investment Screening Act”, or IPG) is scheduled to enter into force in 2027. It will intro - duce for the first time a dedicated foreign investment screening regime. The regime remains limited in scope
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