The foreign investment rules provided under the Monetary and Financial Code were recently amended by Decree 2017-932 of May 10 2017, which came into effect on May 12 2017. The purpose of this amendment was to simplify the procedures applicable to foreign investments in France.

As a rule, foreign investments in France are unrestricted, but the sensitive nature of certain investments justifies exceptions from this rule. Some investments may indeed be monitored or even prohibited. For a long time, the monitoring of foreign investments was structured around three principal independent regimes that sometimes applied cumulatively:

  • prior authorisation;
  • administrative declaration; and
  • post-completion statistical declaration.

Decree 2017-932 eliminated the obligation to file an administrative declaration, which before the reform had to be filed on the earlier of the entering into an agreement or the publication of a tender offer relating to a contemplated investment or the completion of such investment.

Prior authorisation of foreign investments in strategic sectors

In order to ensure the protection of French national interests, foreign investments in certain strategic sectors require prior authorisation from the Ministry of Economy and Finance if one of the following transactions is contemplated:

  • the acquisition of a controlling interest in a French resident company or the acquisition of all or part of a business held by a French resident company by investors from EU member states or from non-EU countries; and
  • the acquisition of interests exceeding 33.33% of equity or voting rights in a French resident company by investors from non-EU countries.

The strategic sectors concerned have been subject to several extensions in the past few years and relate to activities that might be inconsistent with public order, public safety or national defence. In this respect, the Monetary and Financial Code enumerates specific business sectors that require prior authorisation. The definitions of such business sectors vary depending on the provenance of the investments (ie, from EU member states or non-EU countries). Broader definitions apply in relation to investments from non-EU countries regarding activities – notably:

  • private security services;
  • the research and development of pathogenic or toxic agents;
  • the interception of communications;
  • auditing and certification of information technology systems;
  • the security of information systems; or
  • technology with dual civil and military applications.

However, some business sectors are considered highly sensitive and trigger the prior authorisation regime regardless of the investor's nationality – notably, the concerned activities include:

  • cryptology systems;
  • research and trade in weapons;
  • munitions and explosives for military and war purposes;
  • the supply of research or equipment to the Ministry of Defence;
  • activities relating to the supply of water, electricity, gas or other energy sources, the operation of transport services and telecommunications; and
  • businesses relating to the protection of public health.

The request to notify foreign investments must summarise the contemplated transaction and provide corporate information about the investor. On receipt of such request, the Ministry of Economy and Finance must respond within two months, failing which the authorisation is deemed granted. The authorisation may in some cases be contingent on specific undertakings in order to ensure that the contemplated investment does not endanger French national interests.

Foreign investments subject to post-completion statistical declarations

Foreign investors must file declarations for statistical purposes to the Bank of France within 20 business days following the completion of one of the following transactions, if the transaction exceeds €15 million:

  • the acquisition of 10% or more of the equity or voting rights in a French resident company or when equity or voting rights in the French resident company rise above a 10% threshold as well as any transaction between related companies, including loans, deposits or real estate investments; or
  • the acquisition or sale of real estate in France by a non-resident.

Penalties for non-compliance

Violations of French investment rules carry criminal and civil penalties. Moreover, any agreement, understanding or contractual provision relating to a foreign investment in one of the strategic business sectors and carried out without prior authorisation will be deemed null and void. Any third party may invoke such nullity before the relevant jurisdiction in order to request the cancellation of the transaction.


M&A practitioners have welcomed the reform of the foreign investment rules, as it reduces the paperwork for foreign investments not falling within the scope of the prior authorisation regime. In addition, this reform has removed a cumbersome administrative procedure considered redundant with the information otherwise provided for foreign investments to business formalities centres, tax authorities and in the context of post-completion statistical declarations.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.

For further information please contact Alain Levy, Gwenaëlle de Kerviler or Linda Erlandsson at AyacheSalama by telephone (+33 1 58 05 38 05) or email (, or The AyacheSalama website can be accessed at