Critical technologies list
Foreign nationals are free to invest in French companies in accordance with the legally recognised principle of free financial relations between France and foreign countries. However, to protect national interests, the government has defined the rules for these investments.
Foreign investments in France must be subject to the minister of the economy's prior authorisation in certain sectors or activities:
- where public order, public safety and security, or defence of national interests is at stake; or
- relating to the research, production or marketing of:
- powders; and
- explosive substances.
The activities requiring prior authorisation are listed in article R151-3 of the Monetary and Financial Code. They include the research and the development activities in "critical technologies" – a list of which was established in a 31 December 2019 order of the minister of the economy. Critical technologies include cybersecurity, artificial intelligence and semiconductors (for further details please see "Private M&A transactions: new regulations strengthen French state control over foreign investments").
This order has been supplemented by the 27 April 2020 order, which added biotechnologies to the list (for further details please see "Private M&A transactions: tightening state control over foreign investment due to COVID-19 pandemic").
More recently, a 10 September 2021 order has made a few additions to the 2019 order and extended the meaning of "critical technologies" to include companies operating in the renewable energy sector. As a result, foreign investors wishing to invest in French companies specialising in renewable energy production will now have to obtain the minister of the economy's prior authorisation. The government's approach, which aims to establish greater independence in the energy field, was confirmed by the words of Bruno Le Maire, minister of the economy and finance, in a 30 September 2021 speech:
I say it very strongly as the Gaullist that I am, we have not built France's energy independence in fifty years only to squander it in a few years. I am committed to political independence and therefore to the energy independence of our country.
This order comes with additional changes as it has added documents that must be provided by the foreign investor when submitting its application for authorisation. The investor is now required to complete a notification form for the European Commission when an entity in its chain of control is a national of a non-EU country. The latter must also indicate, at the time of the request for authorisation, not only its global strategy in France and in the European Union (ie, the nature of the operations to be carried out, examples of operations carried out and the duration of the investments), but also its strategy in the sectors concerned by the operation (in France and in the European Union).
As for the French company that is the subject of the investment by the foreign investor, the latter is required, as part of the application for authorisation, to draw up a list of the target's French competitors or those operating within the European Union (specifying the market share held in France by each competitor) and a list of the intellectual property or licences (ie, patents or trademarks) that the target holds or licenses.
The list of sectors requiring the prior authorisation of the government has not stopped growing in recent years and it is likely to continue growing. The additional layer of interactions with the French administration, the time that they require and the new issues that these rules create must be taken into account when organising a transaction.
For further information please contact Alain Levy, Gwenaëlle de Kerviler or Valérie Attia at AYACHE by telephone (+33 1 58 05 38 05) or email ([email protected], [email protected] or [email protected]). The AYACHE website can be accessed at www.ayachelaw.com.