Translation of the Screening of Foreign Direct Investments Act

The Inspectorate of Strategic Products (ISP) publishes this translation as a service to interested parties but takes no legal responsibility for the translation or for any consequences arising from its use; translations of Swedish legislation have no legal effect.

 

Screening of Foreign Direct Investments Act (2023:560)

 

Swedish Code of Statutes: 2023:560

Ministry/public authority: Ministry of Justice L4

Issued: 21/09/2023

Register of amendments: SFSR (Government Offices)

Source: Complete text (Government Offices)

 

Entry into force I: 1 December 2023

 

Purpose and scope of the Act

 

Section 1   The purpose of this Act is to prevent foreign direct investment in Swedish protection-worthy activities that may have a harmful impact on Sweden’s security or on public order or public security in Sweden.

 

Section 2   This Act applies to investments in protection-worthy activities that are conducted by a limited company, European company or trading partnership or by an economic association or foundation with its registered office in Sweden.

 

This Act also applies to investments in protection-worthy activities that are conducted in Sweden in an unincorporated partnership or sole trader undertaking.

 

Terms in this Act

 

Section 3   For the purposes of this Act, ‘protection-worthy activities’ means: 

   1. essential services;

   2. security-sensitive activities under the Protective Security Act (2018:585);

   3. prospecting, extraction, enrichment or sale of critical raw materials or of metals or minerals of strategic importance for Sweden’s supply;

   4. large-scale processing of sensitive personal data or location data in or through a product or service;

   5. manufacturing or development of, research into, or supply of military equipment under the Military Equipment Act (1992:1300) or supply of technical support for military equipment;

   6. manufacturing or development of, research into, or supply of dual-use items or supply of technical assistance for such items; and

   7. research into or supply of products or technologies within emerging technologies, or of other strategic protection-worthy technologies or activities that have the capacity to produce or develop such products or to develop such technologies.

 

Section 4   For the purposes of this Act, ‘foreign direct investment’ means investment made by:

 

   1. a natural person who is a national of a state outside the European Union;

   2. a legal person with a registered office in a state outside the European Union;

   3. a legal person directly or indirectly owned or controlled by a state outside the European Union; or

   4. a legal person directly or indirectly owned or controlled by a legal person with a registered office of a state outside the European Union or by a natural person who is a national of such a state.

 

An investment implemented by an investor for the benefit of a person mentioned in the first paragraph also constitutes a foreign direct investment.

 

Section 5   For the purposes of this Act 

   1. ‘essential services’ means activities, services or infrastructure that maintain or ensure societal functions that are essential for society’s basic needs, values or security;

   2. ‘sensitive personal data’ means data referred to in Article 9(1) of Regulation (EU) 2016/679 of the European Parliament and the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (the ‘General Data Protection Regulation’);

   3. ‘location data’ means data processed in a public mobile electronic communications network indicating the geographical position of an end-user’s terminal equipment, or data in a public fixed electronic communications network indicating the physical address of the network termination point;

   4. ‘dual-use items’ means items listed in Annex I to Regulation (EU) 2021/821 of the European Parliament and of the Council of 20 May 2021 setting up a Union regime for the control of exports, brokering, technical assistance, transit and transfer of dual-use items.

 

Screening authority

 

Section 6   The public authority designated by the Government is the screening authority under this Act.

 

Duty to provide notification

 

Section 7  Anyone who intends to invest directly or indirectly in protection-worthy activities must, before the investment is implemented, notify the screening authority if: 

 

   1. the investor, any member of its ownership structure, or any person on whose behalf the investor is acting, would, following the investment, directly or indirectly, hold voting rights equal to or exceeding any of the thresholds of 10, 20, 30, 50, 65 or 90 per cent of the voting rights in a limited company, European company or economic association conducting protection-worthy activities;

   2. the investor would, as a result of the investment, acquire a limited company or European company or form a limited company or European company or economic association that will conduct protection-worthy activities, and the investor, a member of its ownership structure or someone on whose behalf the investor is acting, would, directly or indirectly, hold 10 per cent or more of the voting rights in the legal person;

   3. the investor would, as a result of the investment, become a partner in a trading partnership or unincorporated partnership in which protection-worthy activities are or will be conducted, or if the investment is intended to be made in a trading partnership or unincorporated partnership in which protection-worthy activities are carried out and in which the investor is already a partner;

   4. the investor would, as a result of the investment, create a foundation to conduct protection-worthy activities; or

   5. the investor, a member of the investor’s ownership structure or a person on whose behalf the investor is acting would, in some way other than under points 1–4, as a result of the investment have a direct or indirect influence on the management of a limited company, European company, trading partnership or unincorporated partnership, or on the management of an economic association or foundation that conducts or will conduct protection-worthy activities.

 

Notification under the first paragraph, point 1 is not required for the acquisition of shares that are acquired in a new share issue with preferential rights in relation to the number of shares held by the investor.

 

Section 8   When calculating voting rights under Section 7, first paragraph, points 1 and 2, votes held directly or indirectly by a related party are included.

 

‘Related parties’ means spouses, registered partners, cohabiting partners, parents and children, as well the spouses, registered partners or cohabiting partners of any children.

 

Section 9   Anyone who intends to invest directly or indirectly in protection-worthy activities must, before the investment is implemented, notify the screening authority if the investor or someone else would, as a result of the investment, gain an influence over activities conducted as a sole trader undertaking.

 

Section 10   Anyone who intends to invest in protection-worthy activities in any way other than that specified in Sections 7 and 9 must, before the investment is implemented, notify the screening authority if the investor would take over all or any part of the protection-worthy activities as a result of the investment.

 

Section 11   A company that is the subject of an investment requiring notification under this Act must inform the person who intends to implement such an investment that the Act applies to the activity and, in particular, of the obligation for them to provide notification.

 

The requirement to provide this information does not apply to acquisitions on a regulated market referred to in Chapter 1, Section 4b of the Securities Market Act (2007:528), a corresponding market outside the European Economic Area or a Multilateral Trading Facilities platform referred to in Chapter 1, Section 4b of the Securities Market Act.

 

Screening initiated by the screening authority

 

Section 12   If the investor fails to make notification of an investment despite an obligation to do so under this Act, the screening authority may compile data for notification.

 

Section 13   The screening authority may decide to initiate screening of investments in protection-worthy activities that are not subject to the obligation to notify under this Act if there is reason to assume that the investment may have a harmful impact on Sweden´s security or on public order or public security in Sweden.

 

Pre-conditions for investment and deadlines

 

Section 14   The screening authority must decide within 25 working days of completion of the notification whether to take no action or whether to initiate screening of the investment.

 

Section 15   The screening authority must, within three months of its decision to initiate screening under Section 13 or Section 14, either prohibit or authorise the investment. However, the screening authority may issue a decision within six months if there are special grounds.

 

Section 16   An investment subject to the obligation to notify under this Act may only be implemented if

   1. notification of the investment resulted in no action; or

   2. the investment has been authorised following screening.

 

If the screening authority has initiated screening under Section 13, the investment may only be implemented if the investment has been authorised following the screening.

 

Examination by the screening authority

 

Section 17   In its examination, the screening authority must take into account the nature and scope of the activities and the circumstances of the investor

 

Section 18   In its examination, the screening authority must take into account

   1. whether the investor is directly or indirectly controlled, in whole or in part, by a non-EU state through its ownership structure, significant financing or otherwise:

   2. whether the investor or someone in its ownership structure has previously been involved in activities that have had or could have had a harmful impact on Sweden´s security or on public order or public security in Sweden or in another Member State of the European Union; and

   3. whether there are any other circumstances surrounding the investor that mean that the investment may have a harmful impact on Sweden’s security or on public order or public security in Sweden.

 

Section 19   A notification should not lead to action if the screening authority finds that there is no reason to assume that it concerns a foreign direct investment that may have a harmful impact on Sweden’s security or on public order or public security in Sweden.

 

Section 20   Foreign direct investment in protection-worthy activities must be prohibited if this is necessary to prevent harmful impact on Sweden’s security or on public order or public security in Sweden.

 

Section 21   Where there is no reason to prohibit an investment that has been screened, it must be authorised.

 

Authorisation of foreign direct investment in protection-worthy activities may be subject to conditions, if this is necessary to prevent harmful impact on Sweden’s security or on public order or public security in Sweden.

 

Section 22   If a condition issued under Section 21 is not complied with, the screening authority may order the investor to fulfil the condition or prohibit the investment if the conditions for a prohibition under Section 20 are met.

 

An order may be issued on penalty of a fine.

 

Section 23   Prohibition of an investment under this Act invalidates any action with legal consequences that forms part of the investment or has the purpose of implementing the investment.

 

The first paragraph does not apply to acquisitions on a regulated market referred to in Chapter 1, Section 4b of the Securities Market Act (2007:528), a corresponding market outside the European Economic Area or a Multilateral Trading Facilities platform referred to in Chapter 1, Section 4b of the Securities Market Act. In such cases, the screening authority may instead order the investor to divest themselves of such acquisitions. An order may be issued on penalty of a fine.

 

Section 24   If a prohibition has been issued under this Act, the screening authority may issue against the investor, the company that is or has been the subject of the investment or the transferor any orders that are necessary to prevent harmful impact on Sweden’s security or on public order or public security in Sweden.

 

An order may be issued on penalty of a fine.

 

Powers of the screening authority

 

Section 25   The investor and the company that is or has been the subject of the investment must, at the request of the screening authority, provide any information or documents that the authority requires for its screening or to verify compliance with conditions issued.

 

Section 26   To the extent necessary to obtain the information or documents referred to in Section 25, the screening authority has the right to access areas, premises and other spaces, except for dwellings, used in activities conducted by the investor or the company that is or has been the subject of the investment.

 

Section 27   The screening authority may order the investor or the company that is or has been the subject of the investment to provide information or documents under Section 25 and to grant access under Section 26.

 

An order may be issued on penalty of a fine.

 

Section 28   The screening authority may request judicial assistance from the Swedish Enforcement Authority to carry out an action under Section 26. In the event judicial assistance is provided, the provisions of the Enforcement Code on the enforcement of obligations other than payment obligations, eviction or removal apply.

 

Information exchange and cooperation

 

Section 29   The screening authority may request information from municipalities, regions and government agencies in connection with its screenings or checks of compliance with conditions issued.

 

Municipalities and regions and the government agencies designated by the Government must provide information to the screening authority following a request under the first paragraph if this is necessary for the screening authority to discharge its duties under this Act.

 

Section 30   When conducting screening under this Act, the screening authority must cooperate with the government agencies designated by the Government.

 

Administrative sanction charges

 

Section 31   The screening authority may impose a sanction charge on a person who:

   1. has failed to notify the screening authority despite an obligation to notify under Section 7, 9 or 10;

   2. has implemented an investment before the screening authority has issued a final decision under Sections 19–21;

   3. has implemented an investment in contravention of a prohibition under Section 20;

   4. has acted in contravention of a condition imposed in connection with authorisation under Section 21;

   5. has submitted incorrect information in connection with notification under Section 7, 9 or 10 or in fulfilling an obligation to provide information under Section 25; or

   6. has failed to fulfil an obligation to provide information under Section 25.

 

Section 32   The sanction charge is set at no less than SEK 25 000 and no more than SEK 100 000 000.

 

Section 33   When assessing whether to impose a sanction charge and when determining the amount of the charge, particular consideration is given to:

   1. the harmful impact on Sweden’s security or on public order or public security in Sweden that has arisen or could have arisen as a result of the infringement;

   2. whether the infringement was intentional or due to negligence;

   3. what the person who infringed the rules has done to stop the infringement or to limit its effects;

   4. whether the person who infringed the rules has previously committed an infringement; and

   5. what profit the infringement generated for the offender.

 

Section 34  A sanction charge may be reduced or remitted if the infringement is minor or excusable, or if, in view of the circumstances, it would otherwise be unreasonable to impose the charge.

 

Section 35   A sanction charge may not be imposed if the infringement is subject to an order issued on penalty of a fine and the infringement is the basis of an application for that fine to be imposed.

 

Section 36   A sanction charge may only be imposed if the person who is to pay the charge has been given the opportunity to comment within two years of the infringement taking place.

 

A decision to impose a sanction charge must be served.

 

Section 37   A sanction charge must be paid to the screening authority within 30 days of the decision to impose it becoming final and non-appealable, or within a longer period specified in the decision.

 

If the sanction charge is not paid within that time, the screening authority refers the unpaid charge for recovery. Provisions on recovery are found in the Act on the Collection of Debts to the State (1993:891).

 

Sanction charges accrue to the State.

 

Section 38  A sanction charge is annulled in so far as the decision to impose it has not been enforced within five years of the decision becoming final and non-appealable.

 

Appeals

 

Section 39   Decisions on orders under Sections 22–24 and 27 and decisions on sanction charges under Section 31 may be appealed to the Administrative Court in Stockholm. Leave to appeal is required in the Administrative Court of Appeal.

 

Decisions on prohibitions under Sections 20 and 22 and decisions on conditional authorisation under Section 21 may be appealed to the Government.

 

Other decisions under this Act may not be appealed.

 

Regulations on enforcement

 

Section 40   The Government or the public authority designated by the Government may, pursuant to Chapter 8, Article 7 of the Instrument of Government, issue regulations on the enforcement of this Act.

 

Authorisation

 

Section 41   The Government or the public authority designated by the Government may, for the purpose specified in Section 1, issue regulations on:

   1. what essential services are to be covered by this Act;

   2. what critical raw materials and metals and minerals are to be covered by this Act; and

   3. what emerging technologies and other strategic protection-worthy technologies are to be covered by this Act.