SWEDEN Law and Practice Contributed by: Annika Blomqvist, Sanna Frånlund, Henrik Lindstrand and Viktor Eriksson, Advokatfirman Cederquist
5.9 Interaction Between National Security Regulation and Other Regimes Refer to the previous sections in 5. National Security Regulation . 6. M&A, Joint Ventures and Foreign Direct Investment in the Defence Sector 6.1 FDI Screening Legislation and Regulatory Framework In Sweden, foreign direct investments are governed by the FDI Act and the Ordinance (2023:624) on Screen - ing of Foreign Direct Investments. The regime applies to both direct and indirect investments in “protected activities” conducted by entities domiciled in Sweden. “Protected activities” are broadly defined under Sec - tion 3 of the FDI Act, and include: • essential services, as further defined in the Swed - ish Civil Defence and Resilience Agency’s Reso - lution on Essential Services in Connection with Foreign Direct Investment (MCFFS 2026:13); • security-sensitive activities as defined in the Pro - tective Security Act (2018:585); • activities related to critical raw materials; • processing of large amounts of personal data or location data; • manufacturing, development, research or supply of military equipment; • manufacturing, development, research or supply of dual-use products; and • emerging technologies or other strategic protected activities, such as AI, biotechnology, and informa - tion and cybersecurity. ISP is the designated screening and supervisory body. 6.2 Transactions Subject to FDI Screening There is no separate screening procedure for trans - actions in the defence sector. Such transactions are subject to the standard FDI screening process, pro - vided that the target company’s business activities fall within the definition of “protected activities” under Section 3 of the FDI Act and constitute a covered type of transaction.
sensitive information as well as commitments and documentation to ensure security of supply require - ments, also in a crisis. 5.7 Counter-Espionage and Insider Threat Obligations Under the Protective Security Act, when a business carries out security-sensitive operations, particular care must be taken to ascertain that it protects infor - mation, assets and activities against espionage, sabo - tage, terrorist offences and other threats deemed nec - essary for the particular business operations deemed as security-sensitive. A notification must be urgently sent to the Security Services in the case of certain events, such as: • where there is reason to believe that a security- classified piece of information has been wrongfully disclosed; and • where an IT incident in an information system that the business is responsible for, and that is of importance to security-sensitive activities and the security of the system, may be seriously affected. 5.8 Foreign Ownership, Control and Influence (FOCI) Mitigation Mitigation in relation to foreign ownership, control and influence over defence sector entities is available through the FDI Act and the Protective Security Act in relation to investments, and through the Protective Security Act in relation to clearance to handle securi - ty-sensitive information. If issues are raised in relation to an investigation, ISP may impose commitments on the investor to mitigate identified risks under the FDI Regime. The relevant supervisory authority under the Protective Security Act may also impose conditions to approve an investment. Relevant commitments may include: • that the board of directors and/or management should comprise Swedish nationals to a certain extent; • that security clearance is granted or that ISP must approve directors; and • that certain operations shall be conducted subject to certain rules.
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