Law and policy

Policies and practices

What, in general terms, are your government’s policies and practices regarding oversight and review of foreign investment?

In principle, foreign investments are free in France. However, the French Ministry of Economy (MOE) reviews certain types of foreign investments involving France’s national interests. In this regard, certain transactions projected by foreign investors (ie, EU and EEA investors as well as non-EU and EEA investors) in French entities active in ‘sensitive activities’ must obtain the MOE’s prior approval.

Main laws

What are the main laws that directly or indirectly regulate acquisitions and investments by foreign nationals and investors on the basis of the national interest?

Since 1966, pursuant to Law No. 66-1088 of 28 December 1966 regarding financial relations with foreign countries, foreign investments that are likely to adversely interfere with France’s national interests are subject to a prior declaration or approval of the MOE. This Law was later supplemented by Law No. 2004-1343 of 9 December 2004, which empowered the MoE to further regulate foreign investments, notably by injunctive relief.

France recently reinforced foreign investment control through the adoption of Law No. 2019-486 of 22 May 2019 on Business Growth and Transformation (the PACTE Law). This Law reinforced the MOE’s powers in the case of breach of prior authorisation requirements.

In addition, Decree No. 2019-1590 of 31 December 2019 (the Decree of 2019) and the Ministerial Order of 31 December 2019 relating to foreign investments reformed the French foreign investment control regime. This reform implemented the legislative modifications introduced by the PACTE Law and adapted the French legal framework to the coordination system introduced by EU Regulation 2019/452 of 19 March 2019 establishing a framework for the screening of foreign direct investment into the EU, which entered into force on 10 April 2019 and became effective on 11 October 2020. The main objective of the reform was to include new strategic sectors, refine certain concepts and provide a clearer review framework for foreign investors.

Finally, Decree No. 2020-892 of 22 July 2020 temporarily reduced the threshold triggering the MOE review of non-EU or EEA investments when targeting French listed companies in the context of the covid-19 pandemic. Foreign investments falling within these new provisions must be notified following a fast-track procedure.

The relevant provisions are currently codified in articles L151-1 to L151-7 and R151-1 to R151-17 of the French Monetary and Financial Code (MFC).

Scope of application

Outline the scope of application of these laws, including what kinds of investments or transactions are caught. Are minority interests caught? Are there specific sectors over which the authorities have a power to oversee and prevent foreign investment or sectors that are the subject of special scrutiny?

The scope of the MOE review includes the following types of foreign investments:

  • acquisitions by foreign investors of a direct or indirect controlling interest in a French entity,  including in the case of acquisitions of joint control;
  • acquisitions by foreign investors of all or part of a branch of activity of a French entity that would cover asset deals; and
  • for non-EU and EEA investors only, the acquisition of more than 25 per cent of the voting rights of a French entity whether made, directly or indirectly, by a sole investor or by several investors acting in concert; in view of the covid-19 pandemic, Decree No. 2020-892 of 22 July 2020 lowered this voting rights threshold to 10 per cent for investments in listed companies (this measure is temporary and should be in place only until 31 December 2020).


Acquisitions of joint control may also be captured.

The MOE only reviews foreign investments in the sensitive activities listed in the MFC. Previously, the scope of the review differed depending on the origin of the investor. The Decree of December 2019 abandoned this distinction.

Therefore, for both EU and EEA investors and non-EU and EEA investors, the list of strategic sectors includes the following:

  • a first block of defence and security-related activities:
    • relating to arms, ammunition, powders and explosive substances intended for military purposes or for war materials and assimilated materials;
    • relating to dual-use goods and technologies, or of undertakings holding national defence secrets or that have concluded a contract or subcontract to the benefit of the French Ministry of Defence; and
    • relating to the interception or detection of correspondence or conversations, capture of computer data, security of information systems, and electronic systems used in public security missions, treatment, storage and transmission of sensitive data;
  • a second block of activities relating to infrastructure, goods or services essential to guaranteeing the following: energy supply, water supply, transportation networks, telecom networks, space operations, public security, public health and vital infrastructure; and
  • a third ‘block’ of critical technologies: research and development activities in cybersecurity, artificial intelligence, robotics, additive manufacturing, semiconductors, certain dual-use goods and technologies, sensitive data storage, energy storage and quantum technologies. A Ministerial Order of 27 April 2020 broadened the list to include biotechnologies. These critical technologies must be related to activities listed in the first and second blocks above.


Since the Decree of 2019, under the influence of EU law, the screening obligations also cover the editing, printing and distribution of print and digital political press as well as activities relating to the production, transformation or distribution of agricultural products enumerated at Annex I of the Treaty on the Functioning of the European Union when they contribute to food security objectives (ie, ensure access to safe, healthy, diversified food; protect and develop agricultural lands; and promote France's food independence).


How is a foreign investor or foreign investment defined in the applicable law?

A ‘foreign investor’ is defined as:

  • any natural person of foreign nationality;
  • any natural person of French nationality who is not domiciled in France;
  • any foreign entity; or
  • any entity incorporated under French law controlled by one or more persons or entities mentioned above.


All the entities controlling the direct investor shall be considered as investors. Therefore, in practice, an investor will be considered as a ‘foreign investor’ insofar as its chain of control includes a non-French investor, whether intermediate or ultimate.

The concept of ‘control’ must be interpreted by reference to article L233-3 of the French Commercial Code. This covers situations, inter alia, where the investor holds the majority of voting rights in a company, where it can solely determine the decisions at general meetings or where the investor holds the power to appoint or dismiss the majority of the members of the administrative, management or supervisory bodies of a company.

The concept of ‘control’ may also be interpreted in light of the merger control rules provided in article L430-1 of the French Commercial Code. This includes rights, contracts or other means conferring the possibility to exercise a decisive influence on the activity of an undertaking (ie, rights of ownership or use on the assets of the undertaking, rights or contracts conferring a decisive influence on the composition, deliberation or decision of the undertaking bodies).

Finally, it is specified that the definition of an ‘EU or EEA investor’ covers:

  • any legal person whose chain of control contains only entities incorporated under the laws of an EU or EEA member state or entities that are nationals of, and domiciled in, this state; or
  • any natural person who is a national of an EU or EEA member state and has his or her domicile in this state.


Any investor that does not fall within this definition must be considered as a non-EU and EEA investor.

Special rules for SOEs and SWFs

Are there special rules for investments made by foreign state-owned enterprises (SOEs) and sovereign wealth funds (SWFs)? How is an SOE or SWF defined?

There are no specific rules relating to investments made by foreign SOEs and SWFs. However, the MOE may take into consideration in its review the investor relationship with foreign governments or foreign public entities, eventually to veto the investment.

Relevant authorities

Which officials or bodies are the competent authorities to review mergers or acquisitions on national interest grounds?

The competent authority to review foreign investments on national interest grounds is the MOE. The Bureau Multicom 4 within the MOE’s Treasury Department is formally in charge of the review. A foreign direct investment review may also entail the consultation of other ministries or public agencies, depending on the relevant sectors affected by the investment. Since January 2016, a commissioner of strategic information and economic security (attached to the MOE) also assists the Treasury when coordinating inter-ministerial consultations. The MoE may also seek the cooperation of other national authorities.

Notwithstanding the above-mentioned laws and policies, how much discretion do the authorities have to approve or reject transactions on national interest grounds?

The MOE must verify that the foreign investment will not contravene France’s public order, public security or national defence.

The MOE does not need to give detailed reasoning when it approves a foreign investment or when it considers that the foreign investment is outside the scope of review.

The MOE should provide its reasoning when it refuses to clear a foreign investment. The MOE has rather wide discretion to decide whether an investment contravenes France’s national interests. The Decree of 2019 specified that the MOE may take into consideration the ties between the foreign investor and a foreign government or foreign public entity. In addition, the MOE may refuse to grant authorisation if there is a ‘serious presumption’ that the investor is likely to commit or has been punished for committing certain enumerated infringements (eg, drug trafficking, procuring, money laundering, financing terrorism, corruption or influence peddling). The MOE may also take into account the investor’s previous track record in breaching prior authorisation requirements or non-compliance with MOE injunctions and interim measures.

Law stated date

Correct on

Give the date on which the information above is accurate.

27 November 2020.