Joint Ventures in France

Joint ventures (JVs or JV) are not expressly recognized as a distinct legal concept under French law. In practice, however, two main types of “joint ventures” are commonly structured in France, either as contractual or corporate arrangements:

• Contractual joint ventures: such joint ventures, which are not incorporated entities with a separate legal personality, are ideal for short-term or project-specific collaborations; they consist in a commercial cooperation or partnership agreement between independent joint venture partners having a common purpose (R&D, production, purchasing, marketing, etc.); such an agreement specifies the key terms of their collaboration (such as each party’s asks, cost allocation, risk sharing, profit and loss allocation, tax considerations, etc.).
• Corporate joint ventures: the partner companies establish a legally independent jointly-owned company with limited liability; the corporate form depends on the parties’ needs, but joint ventures typically take the form of an SAS (société par actions simplifiée), sometimes an SA (société anonyme) or an SARL (société à responsabilité limitée); parties pool capital and share management responsibilities, risks and profits. Articles of Association (often supplemented by a shareholders’ agreement or a “joint venture agreement”, for confidentiality reasons) are drawn up to incorporate the joint company and set out the obligations and duties among the partner companies.

Having foreign partners in a French joint venture is not generally prohibited. However, foreign joint venture partners must navigate several legal and regulatory constraints:

General corporate law: foreign shareholders are permitted to hold shares in a corporate joint venture, subject to foreign direct investment (FDI) controls in certain sectors, and constraints in various regulated sectors.

Foreign investment control: a foreign joint venture partner must carefully check whether the planned investment falls within a regulated field that triggers FDI review, and ensure that all necessary filings and approvals are obtained in advance. The French authorities may indeed require prior authorization for certain foreign investments in strategic or publicly sensitive sectors, such as defense, energy, telecommunications, infrastructure, AI, semiconductors, etc. – for detailed guidance, see the guide on “FDIs in non-listed companies” in France.

Merger control and antitrust issues: when a joint venture effectively operates as an independent economic entity or involves collaboration among competitors, competition law constraints apply. The creation of a joint venture may constitute a concentration requiring notification to French or EU competition authorities, depending on applicable turnover thresholds or market impact.

Sector-specific regulations: certain industries impose specific regulatory requirements or restrictions on foreign investment; even where foreign investment is permitted in principle, the foreign joint venture partner or the joint venture itself may need to obtain licenses, regulatory approvals, or authorizations; they may also be subject to capital adequacy, local presence obligations, or ownership restrictions (e.g. defense, energy, broadcasting, banking, investment services, insurance, transportation, telecommunications industries, gambling and education industries, etc.).

In France, the selection of the appropriate form of joint venture is largely determined by commercial considerations, such as the intended duration of the cooperation between the joint venture partners (short-term versus long-term projects), liability exposure (limited or not) of the joint venture partners, tax, financial reporting and employment implications, governing law, etc.

If the parties opt for a corporate joint venture rather than a contractual arrangement, the entity must be established under French law and comply with the applicable French corporate governance and regulatory framework.

The French Competition Authority (Autorité de la concurrence) (the “FCA”), which is the independent competition regulator in France, only reviews corporate joint ventures above certain size thresholds, when the following three conditions are met cumulatively:

• the total global pre-tax turnover of all the companies or groups of legal persons or individuals involved in the joint venture exceeds 150 million euros,
• the total pre-tax turnover generated in France by at least two of the companies or groups of legal persons or individuals involved exceeds 50 million euros,
• the joint venture does not fall within the European Commission’s jurisdiction.

Lower thresholds apply to transactions in the retail sector and in French overseas territories. 

For detailed guidance on requirements, see the guide on “Merger Controls” in France.

French Competition authorities are increasingly scrutinizing contractual joint ventures, particularly in the agri-food, pharmaceutical, digital platform and distribution sectors. Such collaborations can create favorable conditions for breaches of competition law, particularly antitrust violations, such as the exchange of commercially sensitive information (pricing, customer lists, strategic plans), the coordination of competitive behavior (joint price-setting, market allocation) and the promotion of boycotts or exclusionary practices (e.g. refusing to deal with certain suppliers or customers).

To minimize antitrust risks, joint ventures should be necessary and proportionate to achieve legitimate business objectives, and must generate demonstrable efficiencies (such as shared R&D costs in expensive sectors). They must be carefully implemented with robust information-sharing protocols (e.g. firewalls, data anonymization). They must have a clearly defined and limited scope and duration. Those involved must receive competition law compliance training. Independent governance structures must be used where feasible. Records demonstrating compliance with competition law must be maintained.

Joint venture partners may contribute various types of assets to a JV, subject to specific valuation, formalities, and regulatory approvals.

Types of asset contributions:

• Cash: must be deposited into a dedicated bank account; generally at least 50% of the subscribed capital must be paid upon incorporation, with the remaining balance within 5 years;
• In-kind: tangible and intangible assets (real estate, IP, receivables, shares, equipment, etc.) require valuation, often by an independent statutory auditor (commissaire aux apports), unless the value of the contribution does not exceed €30,000 and represents ≤50% of the total share capital;
• Know-how: permitted in an SAS or SARL (but not in an SA); such contributions entitle the contributor to shares but do not form part of the share capital.

Examples of specifically regulated assets:

• Real estate: contributions require a notarial deed and registration with the land registry;
• Business as a going concern: requires publication formalities and triggers a creditor opposition period;
• IP: typically requires a written agreement and filing with the French National Institute of Industrial Property (INPI) to be enforceable;
• Specifically regulated assets (such defense-related assets, telecommunication licenses, energy permits): require prior consent or authorization before being able to be contributed to a JV.

When structuring a joint venture in France, parties should carefully consider the following key legal and commercial issues:

• Choice of structure: a contractual joint venture (cooperation agreement, without a separate entity, but subject to heightened antitrust scrutiny) versus a corporate joint venture (new company with its own legal personality);
• FDI and regulatory clearances: FDI screening, sector-specific licenses and approvals, merger control notification obligations if applicable thresholds are met;
• Contributions and capital: cash versus in-kind contributions (independent valuation); consider whether contributions of know-how are appropriate and permissible;
• Governance and control: management structure, reserved matters requiring unanimous or supermajority approval, veto rights, decision-making processes to ensure operational efficiency, deadlock resolution mechanisms, compliance with mandatory French corporate law;
• Profit distribution and funding: dividend policies and reinvestment strategies, rules governing capital increases, potential dilution and shareholder loans or other funding arrangements;
• Competition law compliance: contractual joint ventures may raise antitrust concerns and require careful structuring to avoid prohibited coordination; corporate joint ventures may trigger merger control filing obligations; in both cases, the parties should implement clear information-sharing protocols and limit the scope of collaboration to what is necessary and proportionate;
• Commercial and strategic issues: alignment on the business plan, definition of the scope of activities, exclusivity arrangements; non-compete and non-solicitation obligations; IP and technology ownership, licensing, rights to future developments; access to distribution channels, trademark usage rights;
• Dispute resolution and exit strategy: governing law (French law is mandatory for corporate joint ventures); jurisdiction or arbitration clauses; exit mechanisms (including buyout rights, drag-along and tag-along provisions, and put and call options), and valuation methodologies for share transfers in a corporate joint venture;
• Tax and accounting implications: a corporate joint venture will be subject to French corporate income tax; foreign partners should consider withholding tax obligations on dividends and capital gains (subject to applicable tax treaties); transfer pricing rules for cross-border transactions between the joint venture and its parents;
• Employment obligations: if assets or operations are contributed to the joint venture, employment transfer rules may apply; the joint venture must comply with French labor law requirements, including employee consultation procedures, mandatory profit-sharing schemes, and all applicable employee rights and protections.

Corporate joint ventures in France are subject to the same governance requirements as other French companies, with mandatory rules that vary depending on the chosen legal form (SAS, SA, SARL, etc.).

French law generally imposes no nationality or residency requirements for corporate officers or board members. However, some regulated sectors (defense, banking, insurance, etc.) may require prior vetting, “fit and proper” tests, or even local presence. Joint venture partners should verify sector-specific requirements early in the structuring process to ensure compliance and avoid delays in the appointment of key personnel.

Depending on the legal form (SAS, SA, SARL, etc.), the mandatory corporate officers to be appointed differ (at least a President in an SAS, a Manager in an SARL, a General Director, a Board of Directors and a Chairman in an SA with a one-tier system, etc.).

The ability to choose a foreign governing law depends on whether the joint venture is structured as a corporate or contractual arrangement.

Corporate joint ventures that choose to establish their registered office in France are necessarily governed by French law. A shareholders’ agreement or JV agreement linked to a French company may be governed by foreign law but will always be subject to French corporate law (such as share transfers, capital increases, distributions, and dissolution) and public policy rules.

For a contractual joint venture, partners are generally free to choose the governing law of the contract provided it does not conflict with French law’s overriding mandatory rules (and in accordance with EU regulations on the law applicable to contractual obligations). If the agreement is largely to be performed in France, French mandatory rules (e.g. competition law, labor law, consumer protection law, and sector-specific regulations) and public policy will still apply regardless of the chosen law. Parties should therefore carefully assess which French mandatory rules may apply to their contractual arrangement, even if they select a foreign governing law.