Foreign investment control in France

Rules governing foreign investment control

Foreign investment control is governed by the Monetary and Financial Code, which defines the sectors subject to particular control. In France, any foreign investment in sectors considered strategic must be subject to prior authorization. This authorization is issued by the Ministry of Economy, Finance, and Recovery, after the opinion of an interministerial commission. The sectors considered strategic are those that are of interest to defense, national security, public order, public health, agriculture, energy, transport, telecommunications, or media. This list is established by decree and may be modified according to the evolution of the economic and geopolitical situation.

Procedures for foreign investment control

Foreign investments in strategic sectors are subject to a prior authorization procedure. This procedure is mandatory for investments made by foreign investors outside the European Union and the European Economic Area. The authorization request must be submitted to the Ministry of Economy, Finance, and Recovery. It must be accompanied by a complete file including information on investors, the purpose of the investment, risks to national security, and commitments made by investors. The interministerial commission responsible for giving an opinion on the authorization request is composed of representatives from several ministries, including the Ministry of Defense, the Ministry of the Interior, and the Ministry of Foreign Affairs. It examines the file and formulates a motivated opinion on the opportunity of the investment.

Consequences of a refusal of authorization

If the interministerial commission issues an unfavorable opinion on the authorization request, the Minister of Economy, Finance, and Recovery may decide to block or limit the investment. The refusal of authorization may be motivated by reasons of national security or the existence of other public interests. In case of refusal of authorization, the foreign investor has a right of appeal before the administrative court. It can challenge the minister’s decision by appealing to the competent administrative court.

Sanctions for non-compliance with the rules

Non-compliance with the rules governing foreign investment control may result in criminal and financial sanctions. Indeed, foreign investors who do not comply with the rules relating to investment control may be subject to a fine of up to 5% of consolidated worldwide turnover or, failing that, turnover in France. In addition, investments made without prior authorization may be canceled by the competent authorities. Finally, the foreign investor may be prohibited from making new investments in France in sectors subject to particular control.

Recent developments in foreign investment control in France

Foreign investment control has become a major issue for France in recent years. Indeed, the rise of certain foreign powers in key sectors of the French economy has raised concerns about the protection of national interests. In 2019, France strengthened the rules governing foreign investment control by adopting a law on the growth and transformation of businesses, known as the PACTE law. This law extended the scope of foreign investment control to new sectors of activity, such as online gambling or seeds. Furthermore, France has wished to strengthen European cooperation in the field of foreign investment control. It has thus supported the creation of a European cooperation framework for foreign investment control in 2019.

Foreign investments in sectors considered strategic are subject to prior authorization. Foreign investors who do not comply with the rules governing foreign investment control may be subject to criminal and financial sanctions. In order to secure their investments and fully understand the legal framework for foreign investments under French law, it is advisable to engage a specialized lawyer.