Foreign Direct Investments in France

Practical Guide

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How are foreign investments regulated in France?

In principle, there are no restrictions on foreign investments in France. However, in certain sensitive or strategic business sectors prior authorisation of the investment needs to be obtained from the Directorate of the Treasury of the Ministry of Economy and Finance (the “Ministry”).

In addition, if a foreign investment exceeds €15 million, there are also statistical declarations to file with the Bank of France.

Which foreign investments are subject to clearance in France?

The prior authorisation process applies to investments from foreign investors in strategic sectors.

Targeted investments:

  • acquisition of control by a foreign investor in a French legal entity or acquisition of all or part of the business of a French company;
  • investments leading to the direct or indirect detention by a non-EU/non-EEA investor of 25% or more of the voting rights in a French company operating in strategic sectors.

Strategic sectors: these include activities related to gambling, private security, research and development activities on pathogenic or toxic agents, phone-tapping systems, information technologies, information systems security, goods and technologies with a dual use, but also defence-related activities (i.e. weapons, security of information systems, national defence secrets), energy activities, electronic communications, aerospace, transport networks, public health, print and online press services for political and general information, food safety, R&D activities in critical technologies (i.e. cryptology, cybersecurity, robotics, AI, quantum technologies, energy storage, biotechnologies).

What is the foreign investment clearance process in France?

The clearance process with the Ministry generally occurs between the signing and the closing of a transaction and is a condition precedent of said closing. It is a two-step regime.

The Ministry has an initial 30-business-day period from the receipt of the complete application file to notify the foreign investor that the investment is either (i) outside of the scope of review, (ii) that clearance is granted without conditions, or (iii) that it will need further examination to determine whether French national interests can be preserved with the grant of an authorisation subject to conditions.

If no response is received by the investor at the end of the 30-business-day period, the clearance is deemed refused. If no response is received by the investor at the end of an additional 45-business-day period allotted to the Ministry for further examination, the clearance is also deemed refused.

The Ministry’s decision may be challenged before the French administrative courts. The investor is granted 15 days to present its observations (unless there is a degree of urgency or there are exceptional circumstances or imminent harm that would be caused to public policy, public safety, or national defence).

The Ministry’s decisions are not made public, but aggregated statistics are published on its website regarding the number of filings, the country of origin of the foreign investors and the strategic sectors involved.

Are there specific conditions that can be imposed on the foreign investment by French authorities?

The Ministry can indeed impose that the clearance is conditional (mitigation measures) insofar as the conditions are proportional to the objective of ensuring that the contemplated transaction will not adversely affect public policy, public safety, or national security. Conditions may be such as the continuation of the line of business in France, governance or organisation measures (rarely), safeguard of knowledge and know-how, or reporting requirements. The Ministry can condition its clearance to the sale of part of the target’s share capital or part of its business to a separate entity approved by the Ministry.

These conditions may be amended at the investor’s request, at the time of completion, (i) in the event of an unforeseeable change in the economic and regulatory conditions for the carrying out of the strategic activities, (ii) in the event of a change in the shareholding structure or chain of control of the target, or (iii) pursuant to a condition set out in the initial authorisation of the Ministry.

Conditions may also be amended at the Ministry’s own initiative, (i) in the event of a change in the shareholding structure or chain of control of the target, or (ii) pursuant to a condition set out in its initial authorisation.

What other main challenges do foreign investors face in France?

Employee rights:

  • In share or asset deals, impacted companies must inform and consult with their employee representatives or Social and Economic Committee.
  • At least 2 months before signing, all employees of companies with less than 250 employees must be informed by the seller of any proposed change of control of the business or of the company, in order to give the employees the opportunity to make an offer to purchase (although there is no obligation on the seller's part to consider or accept any such offer).

Antitrust clearances:

  • EU antitrust clearance is required if the French operation is deemed to have an EU dimension.
  • French Competition Authority clearance is required if: the operation is not deemed to have an EU dimension, the aggregate turnover in France exceeds €150 million and at least two of the participants individually have a turnover in France exceeding €50 million.

UBO declarations: companies (and branch offices) registered with the French Trade and Companies Registry must disclose and keep updated the mandatory declaration on the identity of their ultimate beneficial owners (i.e. all individuals directly or indirectly holding more than 25% of the company or exerting control over it).

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