Measures to protect Sweden’s security when security-sensitive activities are sold
The Government has decided to submit proposals to the Council on Legislation for amendments to the Protective Security Act regarding the transfer of security-sensitive activities. The aim of the proposals is to prevent sales that may harm Sweden’s security.
“We know that some foreign states use strategic acquisitions of companies worthy of protection as a strategy to gain security benefits. Under the Government’s proposals, those planning to sell this type of activity must consult with the relevant authority, a consultation authority that can ultimately decide that the transfer will not be allowed,” says Minister for Home Affairs Mikael Damberg.
The Swedish Security Service and other agencies warn that foreign takeovers of sensitive infrastructure and technology in Sweden can harm Sweden’s security. The risk has increased during the COVID-19 pandemic as many companies are suffering financially and may be exposed to unwanted takeover bids from foreign players. The European Commission has also emphasised that the spread of the COVID-19 virus has increased the risk of foreign players trying to acquire companies, for example in the health care sector.
The Government proposes that new requirements be introduced for operators planning to transfer the whole or any part of their security-sensitive activities or certain property.
Before initiating a transfer, the operator will be required to conduct and document a special security assessment and a suitability assessment. Operators will also be required to consult with a consultation authority ahead of a transfer. The consultation authority should be able to order operators to take measures to fulfil their obligations under the Act and, ultimately, be able to decide on a prohibition, i.e. that a transfer may not be effected. If activities or property are sold in violation of the prohibition, the transfer will be void. Decisions on prohibition should be appealable to the Government
It is proposed that the legislative amendments enter into force on 1 January 2021.