Foreign Investments in France: the end of naivety

14 December 2023
Frederic Saffroy

On October 6, the French Finance Ministry vetoed the US takeover of two “sensitive” French SMEs supplying the nuclear industry for both civil and military purposes. The transaction, initiated between a US purchaser and their Canadian parent company, meant a change of control of these two French companies. Such a transaction triggers the foreign investment screening regulations at French and European Union (EU) levels, the purchaser being a non-EU investor. 

In strategic and critical sectors (Defense, Security, Energy, Public Transportation, Communication, Healthcare, AI, etc.), takeover of French businesses – direct or indirect – is subject to the prior authorization of the Finance Ministry, like the approval of the US Treasury Department in accordance with the CFIUS Laws. Acquiring more than 10% of the voting rights of a listed French company (or 25% of the voting rights of a non-listed company) is also subject to prior authorization when the purchaser is a non-EU industrialist or financier. 

In order to protect national interests, especially in light of the growing international competition and the war in Ukraine, the French Finance Ministry, together with the French Defense Ministry, are stricter on the enforcement of this regulation and review with particular scrutiny cases where foreign Export Control regulations may impact the autonomy and/or the business of French companies.  Therefore, any investment in France in high-tech sectors requires preparation and a detailed advanced review.