Foreign Investments Screening in France: new extended scope

17 January 2022
Frédéric Saffroy and Alice Bastien

Continuing the expansion of foreign investment control, undertaken as early as 2014 (the famous “Montebourg decree” ) and reinforced in recently through the Covid-19 crisis, France has again extended the list of sectors for which foreign investments are subject to prior authorization by the Minister of the Economy. As from January 1, 2022 , foreign investors of all sectors must also provide new information to the authorities when applying for an authorization. Concerning the acquisition of voting rights by non-EEA investors, the 10% threshold triggering the authorization is maintained. The European Commission has updated its list of projects and programmes of Union interest.

R&D in renewable energies now subject to authorization

The order (“arrêté”) of September 10, 2021[1], on foreign investments in France, amending the order of December 31, 2019, adds a 9th technology – production of renewable energy – to the list of critical technologies subject to the foreign investment control procedure, namely cybersecurity, artificial intelligence, robotics, additive manufacturing (3D printing), semiconductors, quantum technologies, energy storage and biotechnologies (Article 6 of the order of December 31, 2019, as amended).

As from January 1, 2022 , foreign investments in France in research and development activities relating to technologies involved in the production of renewable energy will thus be subject to authorization.

According to the French Ministry of the Economy, this change should “strengthen the production of essential activities to ensure the greening of the French energy mix”. It is also justified by an objective of ensuring a self-sufficiency in the renewable energy sector, so that France does not depend on foreign actors.

Extension of the 10% threshold for the acquisition of voting rights

A new decree [2] extends for an additional year the provision reducing from 25% to 10% the threshold triggering the mandatory prior authorization for the acquisition of shares in a listed company performing controlled activities. Until December 31, 2022, non-EEA investors acquiring more than 10% of voting rights, regardless of the amount of the transaction, are subject to the prior authorization by the Ministry of the Economy.

New information to be provided to the authorities

As from January 1, 2022 [3], new information shall be provided by the investor in the application for authorization: (i) how French customers’ data of the target is managed, (ii) the list of the target’s EU customers (in addition to the French ones), (iii) the list of all target’s intellectual property rights (patents, trademarks, licenses) and (iv) the global strategy of the investor in France and in the EU, with examples of previous transactions and a focus on the relevant industry market.

Updated list of projects and programmes of Union interest

On September 29, 2021, the European Commission has updated the list of projects and programmes of Union interest to include those involving a substantial amount or a significant share of Union funding or projects and programmes regarding critical domains, mainly in the sectors of defence, infrastructure, space, nuclear, research, innovation, technology and health [4]. Where a foreign direct investment is likely to affect these programmes, the Commission may issue an opinion addressed to the Member State on grounds of security or public order.

Reminder of the principles applicable to foreign investments

Regardless of the amount of the transaction, any investment – direct or indirect – made through the acquisition of shares (takeover of a company, or for non-EEA investors, acquisition of more than 25% – or, until December 31, 2022 [5], 10% if the target company is listed on the stock exchange – of the voting rights of the target company) or acquisition of goodwill or assets (all or part of a branch of activity of a company) of a French company performing critical activities is subject to a prior authorization by the Minister of the Economy, under penalty of nullity and heavy financial fines.

Since October 11, 2020 [6], foreign investments made by non-EEA investors shall also be notified to the European Commission and to other Member States. This screening mechanism reinforces the protection of activities and essential assets of the Union and coordinates the responses brought to the investors. Over the past year, just over 400 applications have been submitted. Nearly 80% have been authorized. Only 2% have been refused, 12% have been conditionally authorized and 7% have been abandoned [7].

For European and non-European investors, the controlled sectors include (i) activities likely to affect national defence, public order, or public safety (war materials and similar, dual-use goods, national defence secrets, information systems security, encryption, sensitive data storage, etc.) or (ii) the same activities when they concern essential infrastructures, goods or services (energy, water, transport, space operations, communications, integrity, security and continuity of a vital operator, public health, agricultural products, press) and (iii) R&D activities in the above-mentioned sectors and related to the critical technologies listed above and defined in the order of December 31, 2019 as well as to dual-use goods and technologies.

For any additional information, please contact the Compliance and Regulatory team.

Frédéric Saffroy & Alice Bastien

[1] : Order of September 10, 2021, regarding the foreign investments in France.

[2] : Decree n°2021-1758 of December 22, 2021.

[3] : Supra footnote 1.

[4] : EU Commission Delegated Regulation 2021/2126, September 29, 2021, amending the Annex to the EU Regulation 2019/452.

[5] : Supra footnote 2.

[6] : Date of entry into force of EU Regulation 2019/452 of March 19, 2019.

[7] : See the Commission’s summary: