A first draft of a German Investment Screening Act (Investitionsprüfungsgesetz, IPG) was circulated in early October 2026. The text is a so-called Referentenentwurf – a working draft prepared by the Federal Ministry for Economic Affairs and Energy (BMWE).
The IPG would bring together screening rules currently spread across the Foreign Trade and Payments Act (AWG) and the Foreign Trade and Payments Ordinance (AWV) in a single statute. It would also implement the revised EU FDI Screening Regulation (EU) 2026/1386, whose minimum standards apply from 17 January 2028. In several areas, the draft goes beyond what the EU requires.
The government has not yet agreed on the text. Several provisions are expressly marked as subject to the outcome of consultations between the federal ministries (Ressortabstimmung). Once the ministries have aligned, the draft would normally be sent to the federal states and industry associations for comment, then adopted by the Federal Cabinet and submitted to the Bundestag and Bundesrat. Changes are likely along the way.
Who Counts as a Foreign Investor
Investors from Switzerland, Norway, Liechtenstein and Iceland would be treated in the same way as other non-EU investors under the draft, as provided for by the EU Regulation. In addition, the draft would focus primarily on nationality rather than where an individual lives. Only individuals who hold exclusively German or other EU citizenship and live in Germany or the EU would count as domestic or EU investors. Dual nationals who also hold a third-country passport would therefore no longer benefit from EU investor status. In the defence sector, all non-German investors would remain covered, as before.
Because the test applies to the entire ownership chain, the nationality of founders, managers and co-investors may determine whether a transaction is notifiable.
New Thresholds and Sectors
Today, a review is triggered when an investor reaches 10%, 20% or 25% of the voting rights, depending on the target’s sector. The draft would remove the 20% threshold, which, according to market observers, has led to many filings but no interventions. The 10% threshold would continue to apply to defence, armaments and IT security, as well as to critical infrastructure. The remaining sector categories would generally be subject to a 25% threshold.
For publicly listed companies in the 25% sectors, a lower threshold of 15% would apply to reflect the greater practical influence that smaller stakes may confer on listed companies. Further acquisitions would be reviewable at 25%, 50% and 75% and, for the first time, at 100%. For listed companies, the current 40% step-up would be replaced by a 30% threshold, in line with the Takeover Act. The draft would not provide an exemption for pure portfolio investments, but listed companies could still be notified after closing, as under current rules.
The list of sectors subject to the 10% threshold would be expanded to include, among others, manufacturers of critical components and sector-specific software, larger cloud providers, telematics infrastructure, media with significant reach and providers of government communications infrastructure. The 25% list largely follows the EU minimum scope, and includes AI, semiconductors, quantum technology, critical raw materials, dual-use goods and electoral systems. It also covers aerospace, autonomous vehicles and robotics, network technology and agricultural land exceeding 10,000 hectares.
The draft would also add a factor to the substantive assessment. When evaluating whether a transaction could affect public order or security, the BMWE would be required to consider whether a significant number of other German companies in the same sector are already controlled by investors from the same third country.
Asset deals would remain covered, including sales by foreign companies of assets located in Germany. Greenfield investments would remain outside the regime for the time being.
Influence Without Voting Rights
Under the draft, a filing could be required even if the investor does not acquire a relevant shareholding. Board seats, veto rights over strategic decisions or special information rights would be sufficient if they give the investor influence comparable to that associated with a reviewable voting stake. This may be particularly relevant for minority investments with negotiated governance or information rights. The anti-circumvention rule would also be broadened: it would be sufficient for a structure to circumvent screening in practice, regardless of whether that was intended. Restructurings within a group would remain exempt from screening, provided the ultimate owner stays the same and no new jurisdiction is added to the ownership chain. For the first time, this exemption would also apply in the defence sector.
Procedure and Timelines
The BMWE would remain responsible for screening. The review would continue to have two phases, but both would begin only once the complete filing has been received, rather than when the BMWE becomes aware of the signing. Phase I would last 45 calendar days, with no possibility of extension. Phase II would last 120 calendar days and could be extended by up to 90 days in complex cases. It could also be suspended – for example, while the BMWE waits for information, consults other Member States or negotiates remedies.
The BMWE could call in non-notified transactions for three years after signing, instead of five years under the current rules. The draft would replace the current distinction between different forms of positive decisions with a single clearance (Genehmigung).
Notifiable transactions would remain provisionally ineffective until clearance. Until then, the acquirer would not be permitted to exercise voting rights or receive certain information about the target. The BMWE would also have express powers to impose interim measures during a review, including restrictions on voting rights and access to sensitive information. These powers would, for the first time, also apply in the residual cross-sector review before Phase II has been opened.
Remedies, Sanctions and Publication
The BMWE could clear a transaction, clear it subject to conditions or, as a last resort, prohibit it with the consent of the Federal Chancellery and the Federal Ministries responsible for foreign affairs, the interior, defence and finance. Unlike under the current regime, approval by the full Federal Cabinet would no longer be required. If the BMWE does not act within the applicable deadlines, the transaction would be deemed cleared.
The draft expressly provides for a broad range of mitigation measures, including governance and information restrictions, security requirements and obligations designed to safeguard supply or data. An independent trustee could be appointed to monitor compliance.
Closing a transaction before clearance, or intentionally breaching conditions or a prohibition, could be punished by imprisonment for up to five years or a fine. Negligent breaches, as well as late or missing filings, could result in administrative fines of up to EUR 1 million or EUR 100,000, respectively.
Prohibitions would be published on the BMWE website, and the BMWE could also decide to publish any conditions imposed. Press releases would identify the parties, the target’s sector and the general nature of the measures, but would not disclose business secrets. The notified transactions themselves would not be published.
What Remains Under Discussion
Several important questions remain under discussion among the ministries. These include whether intra-EU investments in critical infrastructure should also be subject to screening, a proposal that could raise significant concerns under EU law. It also remains unclear whether greenfield investments will be brought within the regime, and the list of covered sectors may still expand or contract. In addition, the current draft expressly leaves open the precise scope of the dual-use and cloud-computing triggers.
Outlook
Although the draft remains subject to change, investors may wish to review the acquirer chain, including founders, ultimate beneficial owners and relevant co-investors with dual citizenship, as well as board and information rights and the target’s activities. Potential suspensions during a Phase II review should also be factored into transaction timetables and closing conditions.
The same considerations may apply to existing structures involving Swiss or other EFTA investors and to special rights contained in articles of association, shareholders’ agreements, or other investor agreements.