On December 1, 2023, Sweden introduced the Act on Screening of Foreign Direct Investments (the FDI Act), a full framework regulating foreign investments into the country. This marked a significant shift from Sweden’s previous approach, which relied solely on the Protective Security Act for reviewing transactions with potential national security implications. Prior to joining the European Union in 1995, Sweden had a foreign direct investment (FDI) regime in place, which was abolished upon accession. The new FDI Act represents a return to a full FDI screening mechanism, addressing the limitations of the Protective Security Act, which only applied to direct changes of ownership in a company or assets that carry out security-sensitive activities.
A Universal Regime with Broad Scope
The FDI Act establishes a universal regime, applying equally to Swedish, EU, and foreign investors. It covers a wide range of sectors and business activities, categorized as “protected activities”. These include investments in limited liability companies, European companies, partnerships, economic associations, trusts, non-registered partnerships, and individual businesses domiciled in Sweden. The Act explicitly defines the local nexus, requiring the legal person to be domiciled in Sweden or, for non-registered partnerships and individual businesses, the activities to be carried out in Sweden. Branch offices and sales by entities domiciled outside Sweden fall outside this scope.
Notification Obligations and Strict Enforcement
The FDI Act mandates notification for any investment falling within its scope. This obligation rests with the direct investor, who must provide detailed information about their ownership structure, including entities and individuals holding 10% or more voting rights. Notifications are submitted to the Inspectorate of Strategic Products (ISP), the designated review authority. The ISP has taken a strict approach in interpreting the FDI Act.
The ISP has also made clear that they will only provide guidance during the review of a notification. In our experience, however, which is also confirmed by other Swedish law firms, even when asking to discuss the applicability of a provision or another question in a notified case, the ISP is reluctant to engage in discussion and will not provide any information on the reasonings behind reaching a certain conclusion.
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The notification process is confidential and free of charge. However, a standstill obligation applies until clearance is received. Failure to notify can result in administrative fines of up to SEK 100 million. In 2024, the first full year of the FDI Act, 1,263 notifications were filed, highlighting the significant administrative burden the new regime has introduced.
The ISP’s review process consists of two phases. Phase 1 involves an initial assessment within 25 business days, leading to either clearance or a Phase 2 review. Phase 2 reviews take up to three calendar months, with the possibility of a three-month extension. The ISP can approve, approve with conditions, or prohibit an investment. In practice, the ISP often delivers decisions towards the end of the review period, although there are exceptions where decisions are issued within 10 business days.
Since its implementation, the FDI Act has seen a significant increase in notifications, with nearly 2,000 filed in 2025. This surge reflects the Act’s broad reach and the importance of careful compliance for investors. The expansion of “protected activities” on July 15, 2026, further broadened the scope of investments subject to screening, exacerbating the administrative load on both investors and the ISP.
Expanding Scope and Streamlined Processes
On July 15, 2026, the scope of the FDI Act’s “protected activities” was further expanded, broadening the range of investments subject to screening. This expansion followed a nearly 60% increase in notifications from 2024 to 2025, showing the growing importance of the regime in Sweden’s investment environment.
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To address the surge in notifications, the ISP introduced a simplified form for intra-EU investments on May 12, 2026. This form requires less detailed information, excluding pre and post-transaction ownership structures and transaction documents for investments where both the investor and all entities in its ownership structure are domiciled in or citizens of an EU Member State. This measure aims to streamline the process for intra-EU investments while maintaining the rigor of the screening process for other investments.
The average screening time for Phase 1 reviews decreased from 18.5 working days in 2024 to 16.5 in 2025. Conversely, Phase 2 reviews saw an increase in average screening time from 100 calendar days to 130.3 calendar days during the same period. These trends reflect the ISP’s efforts to manage the increasing workload while maintaining thoroughness in its reviews.
Enforcement and Appeals
As of the source’s writing, the ISP has issued one fine amounting to SEK 200,000 for a case where the investor voluntarily disclosed the oversight after completing the investment. This case highlights the ISP’s willingness to enforce the Act, even in instances of voluntary disclosure.
Investors can appeal prohibitions and conditional approvals to the government, while information requests and administrative fines are appealed to the Stockholm Administrative Court. The appeal process ensures that investors have recourse against decisions they believe are unjustified or overly restrictive. However, the ISP’s strict interpretation and limited engagement in discussions mean that appeals may be necessary to address perceived inconsistencies or lack of clarity in the review process.
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