New legislation on transfer of security-sensitive activities and certain property entered into force in Sweden on 1 January 2021. Amendments to the Protective Security Act placed new obligations on operators of security sensitive activities who are considering such a transfer. Operators of security-sensitive activities must carry out a protective security assessment, a suitability examination and a consultation with the Armed Forces or the Swedish Security Service if the operator intends to transfer all or any part of its security sensitive activities; or property that is of significance to Sweden's security or an international protective security commitment that is binding on Sweden, with the exception of transfers of real property. A transfer may be prohibited if it is not appropriate from a protective security standpoint. Previously, and since the 1 January 2020, an amendment to the same law introduced the obligation to investors of entering into a protective security agreement on situations such as public procurement and public building contracts. The legislation is nationality neutral. The legislation is nationality neutral.
On 1 December 2023, Sweden's new FDI screening regime enters into force, introducing significant changes to foreign investment regulations. Authorization from the reviewing authority is mandatory for foreign investors in sensitive sectors, who may approve, conditionally approve, or prohibit investments based on public order or national security concerns. Sectors covered include essential services, security-sensitive activities, and critical raw materials. The review process involves two phases, with a maximum extension of 6 months. Sanctions, including fines up to SEK 100 million, apply for violations, with provisions for appeal.
"The law's purpose and scope of application
Section 1 This law aims to prevent foreign direct investment in Swedish protected activities that may have a harmful effect on Sweden's security or on public order or public safety in Sweden. 
Section 2 The Act applies to investments in activities worthy of protection that are conducted by such a limited liability company, European company or trading company or by such an economic association or foundation that has its seat in Sweden. 
The law also applies to investments in such protected activities that are conducted in Sweden in a simple company or as an individual business activity. 
Expressions in the law Section 
Section 3 In this law, activity worthy of protection means
1. socially important activity, 
2. security-sensitive activity according to the Security Protection Act (2018:585), 
3. exploration, extraction, enrichment or sale of critical raw materials or of metals or minerals that are strategically important for Sweden's supply, 
4. large-scale processing of sensitive personal data or of location data in or through a product or service, 
5. manufacture or development of, research into or provision of military equipment according to the Act (1992:1300) on military equipment or provision of technical support regarding such munitions, 
6. manufacturing or development of, research on, or provision of dual-use products or provision of technical assistance for such products, and 
7. research on or provision of products or technology in emerging technologies or other strategically protectable technology or business with the ability to manufacture or develop such products or develop such technology.
Section 4 Foreign direct investment in this Act refers to an investment made by
1. a natural person with citizenship in a state outside the European Union, 
2. a legal person with registered office in a state outside the European Union, 
3. a legal person that directly or indirectly owned or controlled by a state outside the European Union, or 
4. a legal person that is directly or indirectly owned or controlled by a legal person based in a state outside the European Union or by a natural person with citizenship in such a state. An investment carried out by an investor for the benefit of someone mentioned in the first paragraph also constitutes a foreign direct investment.
[...]
Obligation to notify
Section 7 Anyone who intends to directly or indirectly invest in activities worthy of protection must, before the investment is carried out, make a notification to the inspection authority, if 
1. the investor, someone in his ownership structure or someone on whose behalf the investor acts, after the investment, directly or indirectly, would come to have votes that correspond to or exceed any of the limit values ​​of 10, 20, 30, 50, 65 or 90 percent of the votes in such a limited liability company or European company or such an economic association that carries out activities worthy of protection, 
2. the investor through the investment would acquire such a joint-stock company or European company or form such a joint-stock company or European company or such an economic association that is to conduct activities worthy of protection and the investor, someone in his ownership structure or someone on whose behalf the investor acts, directly or indirectly, would come to dispose of 10 percent or more of the votes in the legal entity,
3. the investor through the investment would become a partner in such a trading company or simple company in which protected activities are conducted or are to be conducted or if the investment is intended to be made in a trading company or simple company in which protected activities are conducted and the investor is already a member of the company, 
4. the investor, through the investment, would form a foundation that will conduct activities worthy of protection, or 
5. the investor, someone in his ownership structure or someone on whose behalf the investor acts, in any other way than according to 1-4, through the investment would gain a direct or indirect influence in the management of such a limited liability company, European company, trading company or simple company or in the management of such an economic association or foundation that conducts or shall conduct activities worthy of protection. 
A notification according to first paragraph 1 is not required for the acquisition of shares which, in the case of a new issue, are acquired with preferential rights in relation to the number of shares the investor owns.
[...]
Section 9 Anyone who intends to directly or indirectly invest in an activity worthy of protection must, before the investment is carried out, make a notification to the inspection authority, if the investor or someone else would, through the investment, gain an influence over such activity that is conducted as an individual business activity.
Section 10 Anyone who intends to invest in activities worthy of protection in any way other than that specified in Sections 7 or 9 must, before the investment is carried out, make a notification to the inspection authority, if the investor would, through the investment, take over all or any part of the activities worthy of protection.
[...]
Review at the initiative of the review authority
Section 12 If the investor does not report an investment despite the fact that there is an obligation to do so according to this law, the review authority may draw up a document for the report.
Section 13 The review authority may decide to initiate an review of an investment in an activity worthy of protection that is not subject to notification obligations according to this law, if there is reason to assume that the investment may have a detrimental effect on Sweden's security or on public order or public safety in Sweden.
Conditions for the implementation of the investment and deadlines
Section 14 The review authority shall, within 25 working days from the time a notification is complete, decide to either leave the notification without action or initiate an examination of the investment.
Section 15 The review authority shall, within three months of its decision to initiate an investigation pursuant to § 13 or 14, decide to either prohibit or approve the investment. If there are special reasons, the review authority may, however, notify the decision within six months.
[...]
Section 20 A foreign direct investment in an activity worthy of protection shall be prohibited, if it is necessary to prevent a harmful impact on Sweden's security or on public order or public safety in Sweden.
Section 21 If there is no reason to prohibit an investment that has been reviewed, it must be approved.
An approval of a foreign direct investment in an activity worthy of protection may be accompanied by conditions, if it is necessary to prevent a harmful impact on Sweden's security or on public order or public safety in Sweden.[...]" (Law (2023:560) on examination of foreign direct investments, Sections 1, 2, 3, 4, 7, 9, 10, 12, 13, 14, 15, 20 and 21 [google translation])
---------------------
"Chapter 1 - Scope of the law
Section 1 - The law applies to practitioners of security-sensitive activities
This Act applies to anyone who to some extent conducts activities that are important for Sweden's security or that are covered by an international commitment on security protection for Sweden (security-sensitive activities).
The law also contains provisions that apply to those who intend to transfer shares or participations in security-sensitive activities and on international cooperation in the field of security protection.
Section 2 - What is meant by security protection
Security protection refers to the protection of security-sensitive activities against espionage, sabotage, terrorist crimes and other crimes that may threaten the activities, as well as protection in other cases of security-classified information.
Security-classified information refers to information relating to security-sensitive activities and which is therefore covered by secrecy in accordance with the Public Access to Information and Secrecy Act (2009: 400) or which would have been covered by secrecy in accordance with that Act, if it had been applicable.
[...]
Chapter 2 - Basic provisions on security protection
Section 7 - Transfer of security-sensitive activities and certain property
An operator must conduct a specific protective security assessment and suitability examination in accordance with Section 8 and a consultation in accordance with Section 9 if the operator intends to transfer:
1. all or any part of its security-sensitive activities; or
2. property that is of significance to Sweden's security or an international protective security commitment that is binding on Sweden.
The first paragraph does not apply to transfers of real property.
The Government may issue regulations on further exemptions from the first paragraph. If there are special grounds to do so, the Government may also order such exemptions in individual cases.
Section 8 - Specific protective security assessments and suitability examinations
Before proceedings for a transfer referred to in Section 7 are initiated, the operator must, through a specific protective security assessment, identify any classified information or other security-sensitive activities to which the transferee may gain access and that require protective security.
Based on the specific protective security assessment and other circumstances, the operator must examine whether the transfer is appropriate from a protective security standpoint.
The specific protective security assessment and suitability examination must be documented.
If the suitability examination leads to the assessment that the transfer is inappropriate from a protective security standpoint, the transfer must not be undertaken.
Section 9 - Consultation, injunctions and prohibitions
If the suitability examination under Section 8 leads to the assessment that the transfer is not inappropriate from a protective security standpoint, the operator must consult with the public authority designated by the Government (consultation authority).
The consultation authority may decide to impose injunctions on the operator to take measures to fulfil its obligations under this Act and regulations issued in connection with it.
The obligation to consult and what is stated about the operator in the second paragraph also apply to anyone who intends to transfer shares in security-sensitive activities, except for shares in limited companies that are public under the Swedish Companies Act (2005:551).
[...]
Section 11:
If a decision to impose injunctions under section 9 is not complied with or if the transfer is inappropriate from a protective security standpoint even if additional measures are taken, the consultation authority may decide that the transfer must not be undertaken (prohibition). [...]" (Protective Security Act (2018:585), as amended 1.1.2021; Chapter 1, Sections 1 and 2; Chapter 2, Sections 7-9 and 11 [google translation/unofficial translation])
-----------------
"2 ch.
§ 6 State authorities, municipalities and regions that intend to carry out a procurement and enter into an agreement for goods, services or construction contracts
must ensure that a security protection agreement states how the requirements for security protection according to § 1 must be met by the supplier if
1. the procurement contains security-classified procurement poisons in the security protection class confidential or higher, or
2. the procurement in general refers to or gives the supplier access to secure sensitive activities of corresponding importance to Sweden's security. 
The operator must check that the supplier complies with safety the protection agreement. 
What is stated in the first and second paragraphs also applies to individual works joint ventures that enter into contracts for goods, services and construction contracts with external suppliers." (Protective Security Act (2018:585), as amended by Law 2019:985, effective 01.01.2020, Section 6 [unofficial translation])
Law (2023:560) on examination of foreign direct investments
Protective Security Act (2018:585), as amended 1.1.2021
Protective Security Act (2018:585), as amended by Law 2019:985, 01.01.2020, Section 6
[<a href="https://www.riksdagen.se/sv/dokument-lagar/dokument/svensk-forfattningssamling/sakerhetsskyddslag-2018585_sfs-2018-585">Act</a>],[<a href="https://www.riksdagen.se/sv/dokument-och-lagar/dokument/svensk-forfattningssamling/lag-2023560-om-granskning-av-utlandska_sfs-2023-560/">Law</a>],[<a href="https://www.lagboken.se/Lagboken/start/ordning-och-sakerhet/sakerhetsskyddslag-2018585//d_3805871-sfs-2019_985-lag-om-andring-i-sakerhetsskyddslagen-2018_585 ">Amendment</a>],[<a href="https://www.vinge.se/media/mnbpwbhz/vinge-brief-fdi-2023-16-mars-2023.pdf">Other</a>]