SWITZERLAND Trends and Developments Contributed by: Marco Toni and Lara Pafumi, Loyens & Loeff
Foreign direct investment screening Currently, Switzerland does not have any general foreign direct investment (FDI) screening mecha- nisms in place. However, FDI controls apply to certain industries and sectors (eg, banking and real estate). Several additional business activities require a governmental licence and the licensing conditions include specific requirements regard- ing foreign investors. Examples of such business activities are aviation, telecommunications, radio and television and nuclear energy. In the adoption of a corresponding motion, the Swiss Federal Council published a preliminary draft for a new law on FDI screening and initiated its consultation in May 2022. Most of the partici- pants in the consultation process rejected this draft, arguing that restricting international invest- ment would be harmful to the economy, given that it would weaken Switzerland’s position as a business location. Based on these results, in mid-December 2023, the Swiss Federal Council adopted the dispatch of the Investment Screen- ing Act with a significantly reduced scope of application. Under this new draft legislation, takeovers of domestic companies operating in a particularly critical area by foreign state-controlled investors will require authorization – provided that certain de minimis or turnover thresholds are exceeded. These critical sectors include defence equip- ment, power grids and production, and water supply, as well as healthcare, telecommunica- tions and transportation infrastructure. Compared to equivalent legislation in other juris- dictions, the scope of the published draft is rath- er narrow. However, the Swiss Federal Council still opposes the introduction of an investment screening mechanism, arguing that the cost- benefit ratio is unfavourable, existing regulations
ise Swiss data protection law and, on the other hand, to bring it into line with EU law – in par- ticular, with the EU GDPR. Companies that were already compliant with the GDPR had only mini- mal adaptations to implement under the revDPA. Especially in technology M&A deals involving large databases, data protection is becoming increasingly important. The target company’s compliance with the newly enacted law needs to be monitored. Transfer and processing of personal data in the context of a due diligence exercise should also be made to comply with the revDPA. Failure to comply with the revDPA may result in criminal sanctions against the individu- als involved. Swiss–US Data Privacy Framework Switzerland’s new Data Protection Act, effective since 1 September 2023, allows personal data to be transferred to foreign countries without addi- tional safeguards – provided that those countries maintain an adequate level of data protection. The Swiss Federal Council is responsible for determining which countries meet this standard and publishes a corresponding list in Annex 1 of the Data Protection Ordinance. In July 2023, the EU and the USA implemented the EU–US Data Privacy Framework. To align with this, the Swiss Federal Council introduced the Swiss–US Data Privacy Framework (the “Swiss– US DPF”) on 14 August 2024. With effect from 15 September 2024, and limited to companies specifically certified under the Swiss–US DPF, the USA will be added to the list of countries with an adequate level of data protection. This deci- sion will facilitate the transfer of personal data, allowing data to be transferred to participating US companies without further action (eg, agree- ing on EU Standard Contractual Clauses).
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