Sweden Expands FDI Screening – Proposed Rules Broaden the Scope

Geopolitical uncertainty is reshaping the regulatory landscape for foreign direct investment across Europe, and Sweden is at the forefront of this development. Since the entry into force of the Screening of Foreign Direct Investments Act (2023:560) (the “FDI Act”) on 1 December 2023, notification activity has surged, placing Sweden among the most active Member States in the EU. Against this backdrop, the Swedish Civil Defence and Resilience Agency (Sw. Myndigheten för civilt försvar) (“MCF”) published a proposal on 18 December for revised regulations that significantly expand the scope of the FDI Act.

The expanded scope of application through the MCF’s proposed revised regulations (see below) will most likely result in even more transactions being subject to notification obligations. Given that Sweden is already among the Member States with the highest number of FDI notifications, this trend is likely to intensify further. The uncertainty surrounding the scope of application, not least regarding new terminology such as “jointly operating a business worthy of protection”, is also expected to lead many investors to notify even borderline cases to avoid the risk of sanctions.

Thus, as the regulations are tightened, reviews under the FDI Act will become an even more critical component of the transaction process for a broad range of companies and industries, even though FDI notifications are already a well-established part of the transaction process in Sweden.

As a FDI process will affect the transaction timing and to some extent deal certainty, it is important to scrutinize deal risks early in the process, and in multi-jurisdictional deals in sensitive sectors, prepare for parallel assessments as national FDI rules vary between different jurisdictions.

The FDI Act – short background

The FDI Act requires mandatory notification to the Inspectorate for Strategic Products (ISP) prior to completing investments in businesses worthy of protection. The notification obligation arises when the investor gains influence, for example voting rights exceeding certain thresholds (as low as 10 per cent) or if the investor gains influence through a shareholders’ agreement. The ISP examines whether the investment poses a risk to national security, public order or public safety and during the review stand-still applies which affects timing of transactions.

As pure domestic transactions between Swedish companies and intra-group transfers are also covered, a large number of investments fall within the scope of the FDI Act and have been notified to the ISP.

New sectors and expanded scope

New “anti-circumvention” provision

The MCF’s proposal for revised regulations entails an expanded scope. The current regulation state that businesses, in addition to greenfield investments, are in general covered if they have at least five employees or an annual turnover of at least SEK 5 million, calculated as an average of the last three financial years. The turnover requirement refers to the total annual turnover of the investment object. In cases where the investment object is part of a corporate group, only the investment object’s own turnover is considered.

If implemented, the revised regulations would introduce a new provision in Section 5 aimed at preventing circumvention of the FDI Act. According to the provision, the entire business is covered by the FDI Act if several companies within the same corporate group jointly operate a business worthy of protection, even if no individual company meets the threshold values. The anti-circumvention provision ensures that fragmenting operations across multiple small entities within a corporate group does not exempt entities from screening obligations. However, the meaning of “jointly operating a business worthy of protection” remains unclear and likely requires further clarification.

Expanded areas of activity

The proposed regulation also expands the range of activities considered to be essential services, reflecting the heightened security situation. The chapter on essential services in manufacturing is suggested to also include traditional heavy industry and materials, such as the manufacture of cement and concrete, bitumen copper, iron and steel. Transactions that were previously ordinary industrial transactions will thus, if implemented, trigger a notification obligation in Sweden.

Proposed new sectors include, among others:

• Manufacturing or storage of components intended for bomb shelters which are included in the list specified in the Swedish Rescue Services Agency’s regulations (SRVFS 1993:6).
• Import of or wholesale trade in components intended for shelters.
• Provision of vehicle charging services.
• Provision of passenger or freight transport by rail.
• Biotechnological research or development, or postgraduate education, in areas such as genetic modification and vaccine development.
• Pre-hospital emergency care and patient transport in accordance with the Health and Medical Services Act (2017:30).
• Import or wholesale trade in solar cells, inverters, batteries or related equipment for solar cell or energy storage facilities.
• Import or wholesale trade in personal protective equipment in accordance with Article 3.1 of the European Parliament and Council Regulation on personal protective equipment.

Statistics – increased activity in both Sweden and the EU

Developments in Sweden

Since the entry into force of the FDI Act, the number of notifications to the ISP has increased significantly. As of 15 January 2026, a total of 3,362 notifications had been received. The increase between the years is significant:

• 2024: 1,261 notifications.
• 2025: 1,987 notifications.
• Increase: more than 50 per cent.

Most cases (3,067 out of 3,362) were closed without action. Only 46 notifications have proceeded to an additional 3-month in-depth review (“phase two”), following the initial 25 working days. Of these in-depth reviews, most have been closed without action, but six investments have been approved with conditions, and three investments have been prohibited. For investors, this additional time required may be problematic, especially if this was unexpected.

It could however be noted that the statistics do not provide the complete picture. There are indications that investors sometimes withdraw notifications when the ISP has indicated that it is considering a prohibition of the investment. The ISP has issued 10 decisions to discontinue cases after the review was initiated, four of which occurred after the ISP had communicated its intended decision to the investor.

Developments at EU level

Activity has also increased significantly within the EU. According to the European Commission’s fifth annual report on the screening of foreign direct investments, Member States with national screening mechanisms handled:
• 2022: 1,444 applications.
• 2023: 1,808 applications.
• 2024: 3,136 applications.

The Commission notes that the reported figures for 2024 are strongly influenced by Sweden having reported a very high number of cases during its first full year of operation under the FDI Act, which far exceeds the annual number of cases reported by any other Member State. See the European Commission’s annual report here.

In December 2025, the European Council and the European Parliament reached a provisional political agreement on the revision of the Foreign Direct Investment Screening Regulation. The agreement seeks to harmonise FDI screening across the EU by, inter alia, establishing a mandatory minimum scope of sectors subject to screening obligations and introducing a shared database for competent authorities. See the provisional agreement on the review of the FDI screening regulation here. In summary, as FDI scrutiny continues to intensify in Sweden and across the EU, regulatory considerations will play an increasingly central role in transaction planning. Investors and companies active in sensitive sectors should factor in FDI screening at an early stage to manage timing, risk and deal certainty in an evolving and more complex regulatory landscape.

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