Germany Unveils Draft Overhaul of Its Foreign Investment Screening Regime
Germany's draft Investment Screening Act and Investment Screening Ordinance would move investment screening into a standalone regime and implement Regulation (EU) 2026/1386, the European Union's new Foreign Direct Investment Screening Regulation.
On October 22, 2026, Germany's Federal Ministry for Economic Affairs and Energy ("BMWE") released drafts of a new Investment Screening Act and a new Investment Screening Ordinance. The drafts implement Regulation (EU) 2026/1386, which applies from January 17, 2028. Key provisions include the following:
- Uniform procedure. A single procedure will cover the sector-specific review (defense, IT security), the case-group-specific review of the sensitive sectors listed in the Investment Screening Ordinance, and the review of all other targets. Transactions falling under the first two categories will require approval.
- Thresholds. Whether the BMWE can review an acquisition of shares depends on whether certain voting-rights thresholds are reached. These thresholds can vary based on the circumstances of each case.
- Scope. Acquisitions of a substantial part of a company's assets will continue to be reviewable. The current "atypical acquisition of control" will be replaced by an "atypical acquisition of influence." This provision will capture the acquisition of board seats or veto rights even without any voting rights. EFTA investors will lose their EU-equivalent status, and dual nationals holding a non-EU passport will count as foreign investors. Many intra-group restructurings will be exempt.
- Sensitive The current catalog of sensitive activities will be moved to the Investment Screening Ordinance. New case groups include semiconductors, quantum technologies, certain AI models, critical raw materials, electoral systems, and all listed dual-use items, as required by Regulation (EU) 2026/1386.
- Timelines. Phase 1 will last 45 days, and Phase 2 will last 120 days, extendable by up to 90 days. The call-in period will be shortened from five years to three years.
- Procedure. The BMWE will gain powers to impose interim measures and information rights against third parties. Prohibitions will be published with the parties named, and the BMWE will be entitled to publish clearances subject to conditions.
The drafts must still advance through Germany's legislative process, which has only just begun. The new regime is expected to apply to agreements signed after a cutoff date in 2027 that has yet to be determined.
Jones Day will provide updates on any material changes that occur during the legislative process.
