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Foreign investment regime

With freedom as the guiding principle, foreign investments in France will not, as a rule, need to be authorised. However, the sensitive nature of certain investments justifies a departure from this principle. Thus, prior authorisation from the Ministry of Economy (the Ministry) will be required for all foreign investments that affect the exercise of public authority, or that involve an activity that may affect public policy, public safety or national defence, or an activity involving research into, or production or trading of, arms, munitions, or explosive powders or substances.

This rather catch-all provision is detailed in regulatory provisions that, until May 2014, limited the scope of the Ministry's authority to 11 specific business sectors. Since the Decree of 16 May 2014, six new sectors have been added to this list, and the Decree of 29 November 2018 supplemented it with five new sectors.

Authorisation is required for any foreign investment (in the meaning of the regulatory provisions of the Monetary and Financial Code, for which see Section IV.ii) made by non-EU investors, and for foreign investment made by EU investors and consisting of the acquisition of all or part of a line of business of a company having its registered office in France in the following six sectors:

  1. private security services;
  2. businesses involved in the research and development or manufacture of pathogens or toxic substances;
  3. wiretapping, mail interception and computer data capture;
  4. evaluation and certification services relating to the security of information technology systems and products;
  5. services relating to the security of information systems of public or private sector companies managing critical infrastructures; and
  6. businesses related to certain dual-use items and technology.

The definition of these sectors varies according to the origin of the investor, and is far broader for non-EU investors than for EU investors.

Most investments carried out by an EU investor in these sectors will be restricted only to the extent necessary to fight terrorism and criminal activities, although EU investors face tailored restrictions in certain sectors:

  1. in sectors related to private security services, where restrictions apply to companies intervening in public and private sector entities operating critical infrastructures to the extent necessary to protect these infrastructures; and
  2. in sectors where the national defence is at issue (for instance, the sector of dual-use items and technology).

Foreign investments in the gambling industry (except for casinos) are subject to prior authorisation only when they are carried out by non-EU investors.

Ten further sectors are considered highly sensitive; therefore, a uniform definition of 'sector' is applied to all foreign investors in:

  1. activities related to cryptology or services connected to cryptology;
  2. activities carried out by companies privy to national defence secrets;
  3. activities involving research into, and the development, manufacture and marketing of, weapons, ammunition, powder and explosive substances used for military or war purposes, or other restricted materials;
  4. activities carried out by companies that entered into design or supply agreements with the French Defence Ministry; and
  5. activities that are essential to France's interest in matters of public policy, public security and national security in the following sectors:
    • energy supply (energy, gas, oil or other energy sources);
    • water supply;
    • the operation of transport networks and services;
    • the operation of electronic communications networks and services;
    • the operation of a facility, installation or structure that is of vital importance within the meaning of Articles L1332-1 and L1332-2 of the French Defence Code; and
    • the protection of public health.

The Decree of 2018 substantially expands this list of highly sensitive sectors, as it provides for the application of the foreign investment regime to the following five new sectors:

  1. space activities;
  2. activities relating to the integrity, security and continuity of the operation of the electronic and computer systems necessary for the performance of the mission of the national police, of the national gendarmerie, of the civil security services or of the Customs authorities' public safety mission;
  3. certain research and development activities relating to cybersecurity, artificial intelligence, robotics, additive manufacturing, semiconductors;
  4. certain research and development activities relating to dual-use goods and technologies, when carried out as part of another listed activity; and
  5. data hosting activities whose compromise or disclosure is likely to harm the exercise of the above listed activity or interest (1) related to the supply of the French Ministry of Defence, or (2) essential to France's interest in matters of public policy, public security and national security, or (3) related to points (c) and (d) above.