What jurisdictional thresholds trigger a review or application of the law? Is filing mandatory?
There are no specific thresholds for share deals, except for investors from non-EU or EEA member states where the crossing of the threshold of 33.33 per cent of a company’s share capital or voting rights is an additional and specific trigger of the application of the French regulations on foreign investment. There are also statutory presumptions, applicable to all foreign investors (from other EU or EEA member states or from non-EU or EEA member states) regarding the acquisition of a ‘controlling interest’ in a company (see first condition in question 3).
There are no specific thresholds or statutory presumptions with respect to the acquisition of all or part of a branch of activity of a company (see first condition in question 3).
In this latter case and in case of applicable presumptions, it is therefore advisable to request an opinion from the French Minister for the Economy on the applicability of the French prior authorisation regime in accordance with the specific procedure set forth in question 7.National interest clearance
What is the procedure for obtaining national interest clearance of transactions and other investments? Are there any filing fees?
Clearance of transactions and other investments requires the filing of an application for authorisation with the Minister for the Economy. There is no filing fee.
The application must contain information on the investor, on the target of the investment and on the investment itself.
Regarding the investor: if the investor is a publicly traded (listed) company, it shall disclose the identity of the shareholders holding more than 5 per cent of its share capital or voting rights, and provide a list of its board members (including their names and addresses); if the investor is a privately held company, it shall disclose the names and addresses of the individuals or legal entities having the ultimate control of the investor, and detail the chain of control; if the investor is a fund, the identity of the fund manager must be provided.
Regarding the target of the investment: the application must contain the target company’s corporate name, address, registration number, details on its business activities and the turnover and financial results of the most recent fiscal year.
Regarding the investment itself: the application must contain the shareholding structure before and after the contemplated transaction; if applicable, the purchase option on the remaining share capital; the total transaction value; the financial terms and conditions of the transaction.
French regulations do not provide for a specific filing date or deadline, albeit the application must be submitted prior to the closing of the contemplated transaction, clearance being a condition precedent and taking several months (see question 11).
Which party is responsible for securing approval?
The investor is responsible for obtaining the clearance in due time. In practice, if the acquisition is friendly, it is common practice that the French seller or its adviser assists and cooperates with the investor, notably by providing supporting information regarding the French company and its business activities.
How long does the review process take? What factors determine the timelines for clearance? Are there any exemptions, or any expedited or ‘fast-track’ options?
The Minister for the Economy has a period of two months to review the application. This review period effectively starts from the date on which the Minister will have received a complete application (ie, from the date on which the last required document will have been submitted by the investor). This means that any request by the Minister for supplementary information will trigger a new period of two months to review the application; such new review period will start on the date on which the supplementary information will have been provided by the investor. Consequently, the authorisation procedure can in practice be extended well beyond the statutory time frame of two months.
If the Minister fails to take a formal decision within the applicable time frame, the authorisation will be deemed granted.
There is no ‘fast-track’ option.
There are two exemptions, which relate to:
- investments carried out between companies belonging to the same group (ie, companies of which a same shareholder holds, directly or indirectly, more than 50 per cent of the share capital or voting rights), except if the investment is intended to transfer all or part of a branch of a ‘protected’ activity (see question 3); and
- investors from non-EU or EEA member states, crossing the threshold of 33.33 per cent of the share capital or voting rights of a French company (see question 8), who have already been authorised to acquire control (as defined by French law) of that company.
Must the review be completed before the parties can close the transaction? What are the penalties or other consequences if the parties implement the transaction before clearance is obtained?
The clearance is a condition precedent to the transaction.
In case of potential breach, the Minister for the Economy may carry out investigations and can send a formal notice to the investor requesting the latter to make observations within a period of 15 days. After this period, the measures and penalties discussed in question 15 may apply.
Involvement of authorities
Can formal or informal guidance from the authorities be obtained prior to a filing being made? Do the authorities expect pre-filing dialogue or meetings?
It is possible and generally recommended to consult with the Treasury Department of the French Ministry for the Economy on a contemplated transaction falling within the scope of the prior authorisation requirement, prior to the filing of the application. The main purpose is to informally exchange views on the contemplated investment, including its consequences. This informal approach may significantly reduce the review period following the filing of the application for authorisation.
It is also normal practice to have meetings with the Treasury Department during the review period following the filing of the application for authorisation, in order to clarify specific points, particularly in highly sensitive sectors (eg, production or trading of weapons, ammunitions, explosive powder or substances).
Meetings with other governmental bodies and administrative regulators, which may be consulted during the review process conducted by the Treasury Department, are also highly advisable.
When are government relations, public affairs, lobbying or other specialists made use of to support the review of a transaction by the authorities? Are there any other lawful informal procedures to facilitate or expedite clearance?
In most situations it is sufficient for the investor to be assisted by financial and legal advisers. In some sensitive or complex cases, the additional contribution of public affairs or lobbying specialists or sector experts can be valuable, especially for investments in a sector regulated by multiple authorities or regulatory supervisory bodies (eg, Ministry of Defence and Ministry for the Economy) as well as in highly technical or specialised sectors (eg, telecommunications).
What post-closing or retroactive powers do the authorities have to review, challenge or unwind a transaction that was not otherwise subject to pre-merger review?
If an investor proceeds with a transaction without obtaining the required prior authorisation, the Minister for the Economy can issue, after having made investigations (see question 12), an injunction under which the investor must refrain from carrying out the transaction, modify the transaction, or cause the previous situation to be restored at its own expense within a maximum period of 12 months. In the event of non-compliance with this injunction, the transaction is considered null and void.
In addition, non-compliance with the prior authorisation requirement constitutes a criminal offence, which may be punished by imprisonment of up to five years or a fine of up to twice the amount of the irregular investment.