Swiss propose tighter rules for company takeovers by foreign interests

ZURICH (Reuters) - Switzerland has proposed a new mechanism to review and approve corporate takeovers by foreign countries or state-backed investors, responding on Wednesday to pressure from parliament to review the country's unrestricted access.

A government statement did not name specific countries, but calls to limit Chinese investment have increased since state-owned ChemChina bought Swiss agrichemicals group Syngenta in 2016 for $43 billion.

"The main threats are likely to come from investors close to the state. Accordingly, takeovers by foreign state or state-affiliated investors in all sectors should have to be reported and approved," the Swiss cabinet said in laying out principles for draft legislation.

It has yet to define the areas in which private foreign investors should face approval requirements for takeovers.

Free-market Switzerland has long opposed investment controls, arguing its open-door policy ensures Swiss companies get the capital and expertise needed to prosper and create jobs.

It said potential threats include companies that might fail to provide an indispensable service, dependence of the Swiss military on arms suppliers, public reliance on information technology suppliers, access by a malicious actor to sensitive personal data, or significant distortions of competition.

Switzerland will still seek to preserve its openness to foreign investments and its attractiveness as a business centre, the government said. It will also ensure that investment controls are compatible with international law.

The draft legislation should be available by the end of March for public comment, the government said.

(Reporting by Michael Shields; Editing by Mike Harrison)