General concept and objectives
National Security Review is a process of assessing foreign investments by government authorities for potential threats to national security. In the modern world, many developed countries have significantly strengthened control over foreign capital investments, with particular attention to investments from Russia and China.
The main objective of such reviews is to ensure protection of strategic economic sectors and critical infrastructure from undesirable foreign influence. These mechanisms are designed to prevent acquisition of important assets by foreigners in cases where this may create national security risks.
Key aspects of the review process
- identification of UBOs and funding sources, including verification of links to sanctioned persons
- assessment of potential access to critical technologies, intellectual property and data (including establishing the location of data processing and persons having access to it — especially programmers);
- analysis of the possibility of using acquired assets for military or intelligence purposes
- verification of the transaction's impact on market concentration and economic security of the country
- assessment of foreign state involvement in management of the investor company
Historically, these mechanisms were significantly strengthened after 2014 due to geopolitical changes, and then received additional development after 2022. The result of a review may be full approval of the transaction, partial approval with certain conditions, blocking, or forced divestment of already acquired assets.
The 2024–2026 wave has raised the bar. The United States launched its Outbound Investment Security Program (informally the "reverse CFIUS") on 2 January 2025 and cemented the course with the America First Investment Policy memorandum. In December 2025 the EU agreed the first major reform of Regulation 2019/452, Canada tightened the Investment Canada Act, and Switzerland for the first time in its history adopted its own screening law. The common logic: the perimeter of control is shifting from classic M&A toward deals involving technology, data and critical raw materials.
USA: Committee on Foreign Investment (CFIUS)
In the USA, the key body for reviewing foreign investments is the Committee on Foreign Investment (CFIUS), which blocks transactions potentially threatening national security. CFIUS has broad powers to review and potentially block transactions, especially in the technology sector.
Types of transactions subject to review
- acquisition of control in US business by a foreign person
- investments in critical infrastructure
- investments in companies working with sensitive personal data
- acquisition of real estate near military facilities and sensitive infrastructure
- investments in critical technologies
Mandatory notification is required in cases of
Acquisition of 25% or more of direct or indirect voting interest in a US business dealing with critical technologies, where the investor has a substantial connection to a "country of special concern"
Acquisition by a foreign government of 25% or more of direct or indirect interest in a US business dealing with critical technologies, critical infrastructure or sensitive personal data
"Countries of special concern" (in the new rhetoric — foreign adversaries) are states whose investments undergo heightened scrutiny: China (including Hong Kong and Macao), Russia, Iran, North Korea, Cuba and Venezuela. The "America First Investment Policy" memorandum of 21 February 2025 established a two-pole approach: for investors from these jurisdictions control is tightened — especially in deals involving AI, semiconductors and quantum technologies — while for allies a fast-track regime is introduced, subject to "verifiable distance" from adversaries. Capital from adversary countries more often falls under mandatory notification and in-depth review.
Notification procedure
- Parties may file either a short-form declaration (5-page declaration) or a full notification (detailed description of the transaction)
- Review period for short-form declaration - 30 days
- Review period for full notification - 45 days with possible extension for 15 days
Practice shows that CFIUS can not only block transactions at the stage of their conclusion, but also require divestment of already acquired assets if they are subsequently deemed to threaten national security.
United Kingdom: National Security and Investment Act
In the United Kingdom, the key law for reviewing foreign investments is the National Security and Investment Act, adopted in 2021, which significantly expanded the British government's powers to review and block foreign investments.
Types of transactions subject to review
- acquisition of control in British companies by foreign investors
- investments in 17 key economic sectors (including defense, energy, AI, quantum technologies)
- acquisition of significant influence or control over assets in sensitive areas
Mandatory notification is required in cases of
- Acquisition of more than 25% of voting rights or shares in a company operating in one of the 17 specified sectors (including communications)
- Obtaining the ability to block or make management decisions in such a company (for example, when increasing the stake to 50% or 75%).
- Acquisition of substantial control or influence over assets related to critical infrastructure or other sensitive areas.
Transactions subject to mandatory notification cannot be completed without prior clearance: transactions completed without permission are considered legally void and may result in serious fines and criminal liability for participants.
The state also has the right to retrospectively initiate a transaction review within 6 months from the moment it became aware of the transaction, but no later than 5 years from the date of its completion.
Notification procedure
- Submission of notification through a special online portal
- Review period - 30 working days with possible extension for 45 days
Canada: Investment Review Division
In Canada, foreign investments are reviewed under the Investment Canada Act; the relevant body is the Investment Review Division (IRD) within ISED. With the adoption of the National Security Review of Investments Modernization Act (Bill C-34, royal assent — March 2024), the regime tightened noticeably. Since September 2024 the minister may extend a review, impose interim conditions and close a case through investor undertakings, and the ceiling on daily penalties has been raised to 25,000 Canadian dollars. As a separate step — through 2025–2026 secondary legislation — a mandatory pre-closing filing is being introduced for sensitive sectors; failure to file carries a penalty of up to 500,000 Canadian dollars.
Types of transactions subject to review
- acquisition of control in Canadian business
- investments in critical sectors (technology, resources)
- transactions involving state-owned foreign investors
National security reviews may be initiated for any transactions within 45 days after notification.
European Union: Regulation 2019/452
In the European Union, the framework for foreign investment control is set by Regulation (EU) 2019/452. On 11 December 2025 the EU Council and the European Parliament agreed its first comprehensive reform (the provisional text was published in February 2026): all member states will be required to have national screening with mandatory filing in a number of sectors — dual-use goods and military products, AI and quantum technologies, critical raw materials, and energy, transport and digital infrastructure. A common database of screening authorities and a single filing portal will appear; full application is expected around 2027.
Types of transactions subject to review
- acquisition of control in EU companies by foreign investors
- investments in critical sectors (semiconductors, AI, quantum technologies, etc.)
- direct and indirect acquisitions of control, including greenfield investments
Key elements of the system
- Two-tier structure: national control taking into account pan-European standards
- Coordination mechanism: information exchange between member states
- Veto power: final decision remains with national authorities
Review procedure
- Submission of notification through national or pan-European procedures
- Maximum review period - up to 75 days
- Possibility of appeal in national courts and through the European Commission
Switzerland: Investment Screening Act
Switzerland has historically maintained the principle of openness and long did without any sectoral screening at all. Parliament adopted the country's first investment control law (Investment Screening Act) on 19 December 2025, but it has not yet entered into force: the launch is expected no earlier than 2027 — after secondary legislation is issued and the deadline for a possible referendum expires. The regime is deliberately narrow and reflects a liberal approach: only transactions involving foreign investors controlled by a state, in strictly defined critical sectors and above high thresholds, are subject to review.
Types of transactions subject to review
- acquisition of control in Swiss companies, especially in critical sectors
- investments by state-owned foreign investors
Critical sectors
- Defense industry, dual-use goods
- Energy, water supply
- Healthcare, transport and telecommunications infrastructure
Review procedure
- Two-phase scheme: preliminary application to SECO, then official application
- Federal Council makes decisions on politically sensitive transactions
- Administrative fines up to 10% of transaction value (maximum up to 10 million Swiss francs)
- Possibility of declaring the transaction legally invalid
- Requirement for divestment (forced sale of acquired assets)
- In case of intentional violation - criminal liability for company executives
Risk minimization strategies
Various strategies are used to minimize risks of investment blocking:
Structuring the business through trustees with "neutral" or "friendly" citizenship
Correct assessment of thresholds and the transaction structure in advance. Artificially splitting a transaction to stay below a threshold is high-risk: regulators treat it as circumvention and apply retroactive review.
Voluntary notification
Voluntary notification is rarely an optimal strategy, considering substantial costs for GR support and lobbying (from $50,000 to $100,000 minimum). This is advisable only in cases where the transaction is public and regulatory attention is obviously predictable.
Evolution: global convergence of control
Over a decade, disparate national practices have converged into a recognizable standard: mandatory notification for a list of sensitive sectors, the right to retrospective review, and sanctions up to the forced sale of assets. In parallel, the transparency requirement has intensified — the regulator wants to see the ultimate beneficial owner, so beneficial ownership and nominee structures increasingly become the subject of a separate review, while formal holding structures without real presence raise questions.
For the investor, this changes deal preparation. It is no longer enough simply to register a conduit jurisdiction — you will have to prove economic substance and disclose the ownership structure down to individuals in advance. Choosing a country for the holding (for example, Switzerland or another neutral jurisdiction) and carefully packaging the asset into an SPV do not eliminate screening, but they reduce the risk that a transaction will be blocked or unwound after the fact.