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Sweden's New Foreign Direct Investment Regime Part 4 - Reviewing an Investment

7 December 2023

Throughout this week, we are highlighting the ins and outs of the new Swedish FDI regime, which entered into force on Friday, 1 December. Yesterday, we explained certain factors which may expand the scope of the investments covered by the act. Today, we will look into how the actual screening and review is done.

Filings under the FDI Act are done with the Swedish Inspectorate for Strategic Products (the "ISP"). Once a complete filing is received, the ISP has 25 working days to decide whether to review the filing or to not take further measures. Deciding to not take further measures means that the investment becomes authorised.

However, if the ISP during the first phase detects any potential risks or threats to public order, public security, or national security, it may initiate an in-depth review. An in-depth review should be finished within three months but can be extended by a further three months if there are specific reasons for it.

In both phases, the ISP must firstly consider the sensitivity of the activities conducted by the target. Secondly, the ISP must also assess the suitability of the investor. The assessment of the investor's suitability is based on all relevant factors and may in particular focus on whether the investor has ties to any non-EU government or authority, or if the investor (or its owners) has harmed the protected interests in the past. It's worth pointing out, though, that the assessment is primarily a matter of policy and not a matter of law ― there are no legally mandated “blacklists” or similar which entail that all investments from a certain country must be blocked. On the other hand, the rules on free movement in the EU mean that the possibilities for the ISP to block an investment by an EU investor are limited. 

If a review is initiated, the ISP must in the second phase liaise with certain Swedish authorities, including the Swedish Armed Forces, the Security Service, and the National Board of Trade. The ISP may also request information from other authorities, as well as from regions and municipalities. Via the EU FDI regulation, the ISP may also liaise with its counterparts in other EU Member States and with the European Commission. The idea is that the ISP will act as a hub, gathering and compiling relevant information from the relevant sources to create a comprehensive understanding of the investor and the investment. As the second phase entails involvement from other authorities, it is likely that these authorities will often need the full three months, or more, to form their own understanding of the investment and assess the connected risks. In fact, one example of when the ISP may extend the second phase is when the liaison authorities require more time to assess the investment.

And what happens if the ISP detects potential risks to public order, public security, or national security? Well, that's the topic of tomorrow's post ― so join us again tomorrow. Can't wait to know more about the Swedish FDI regime? Don't hesitate to contact us.

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