“Foreign Investments in France: The End of Naivety

21 December 2023

On October 6th, the French Ministry of Finance vetoed the takeover by the United States of two “sensitive” French SMEs supplying the nuclear industry for civil and military purposes. The transaction, initiated between an American buyer and its Canadian parent company, led to a change of control of these two French companies. Such an operation triggers the regulation on screening of foreign investments at the level of France and the European Union (EU), the acquirer being a non-European investor.

In strategic and critical sectors (Defense, Security, Energy, Public Transport, Communication, Health, AI, etc.), the takeover of French companies – direct or indirect – is subject to prior authorization by the Ministry of Finance, as is the approval by the U.S. Treasury Department in accordance with CFIUS laws. The acquisition of more than 10% of the voting rights of a listed French company (or 25% of the voting rights of an unlisted company) is also subject to prior authorization when the acquirer is an industrialist or financier outside the EU.

In order to protect national interests, especially in the context of increasing international competition and the war in Ukraine, the French Ministry of Finance, in collaboration with the French Ministry of Defense, are stricter in applying this regulation and examine with particular scrutiny cases where foreign export control regulations may impact the autonomy and/or activity of French companies. Consequently, any investment in France in high-tech sectors requires thorough preparation and review in advance.”