Strengthening of foreign investment screening in France: permanence of the threshold for acquiring control, new controlled sectors and exemptions for intra-group transactions

21 May 2024
Frédéric SAFFROY & Alice BASTIEN,

France has once again strengthened and extended its foreign investment control regulations (“FDI“) with a decree and an order dated December 28, 2023. These measures came into force on January 1, 2024.

1 – Permanence of the 10% trigger threshold

As from 2020, the FDI procedure was adapted by lowering from 25% to 10% the threshold for holding a company’s voting rights triggering the authorization procedure for investors from third countries (outside of the European Union and the European Economic Area). The Decree of December 28, 2023, makes this – initially transitional – measure permanent.

2 – New sectors subject to authorization

The decree also added to the activities subject to the FDI procedure those ensuring “the integrity, safety or continuity of the extraction, processing and recycling of critical raw materials“, as well as the security of penitentiary establishments. The list of critical technologies has also been extended to include all technologies involved in low-carbon energy production (and not just renewable energies) and photonics.

3 – Exemption for intra-group transactions in two cases

In the first case, the investor is exempted if such investor is the last in the chain of control and has already acquired control of the target company within the meaning of Article L. 233-3 of the French Commercial Code. This chain of control is made up of the group formed by the investor – a foreign-law entity or a French-law entity controlled by one or more foreign-law entities – and the persons or entities controlling it.

An investor is also exempt from the authorization requirement when that investor crosses, directly or indirectly, alone or in collusion, the threshold of 10% of the voting rights of a listed French company, provided that the investment project has been notified in advance to the Minister of the Economy. In this case, unless the Minister objects, the exemption from the authorization requirement is valid at the end of a period of ten working days from the date of notification.

4 – Principles applicable to FDIs: for additional information regarding the applicable principles, you can refer to our previous articles on Alerion’s website.

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

Frédéric Saffroy, Partner & Alice Bastien, Attorney