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Restrictions to Foreign Investments in France


The French system for foreign direct investment in assets and activities in France is often disregarded or misunderstood when planning and organizing future investments, until the moment of realization comes, too often too late.

Our guide will explicitly help you identify your case so you can know what rules apply and what rules just don’t.

Which activities and assets are subject to limitations?

The recent regulations of the Foreign Investment Control (FIC) regime have recently been strengthened, so much so that the procedure to obtain an authorization from the Minister of the Economy and Finance (MINEFI) is clarified and the remedial and sanction powers of the MINEFI got relatively reinforced.

It is known for a fact that one can make foreign investments in France freely. Nevertheless, foreign persons and corporations need prior authorization to invest in France in industries deemed strategic.

Foreign investments needing MINEFI approval are those made for any activity that involves or participates in the exercise of governmental power, even if only infrequently, or related to activities may jeopardize public order, public safety, or national defense interests; or activities that concern weapons, ammunition, gunpowder, or explosive substances research, manufacturing, or commercialization.

The investments that require a prior authorization from the MINEFI are those that involve the acquisition of control of a legal entity controlled by French law as specified in article L. 233-3 of the Commercial Code. Or the purchase of a French-law entity’s line of operation. Or the crossing directly or indirectly, of the threshold of 25% of a legal entity under French law. Finally, the acquisition of a non-French company that controls a French company also requires an MINEFI approval.

What are the strategic sectors?

These sectors are the ones included and listed in the article R. 151-3 of the Monetary and Financial Code. The scope of activities subject to control has been recently expanded so it includes topics like food safety, energy storage, and printed and online press services for political and general information for instance.

What does a foreign investor mean?

As far as it goes, accordingly to the FIC regulations, an investor consists of any non-French person, non-French individual that’s not considered as a resident of France within the definition given for tax regulation purposes. It can also be a legal entity, controlled by one or more person or entity that enters in the definition of foreign investors, even if governed by French law. And finally, it could be a legal entity controlled by foreign laws, or even any legal entity or person implicated in a chain of control (Article R. 151-1 of the Monetary and Financial Code).

What procedure to follow for clearance?

The regulation provides for a preliminary ruling procedure if there is question about the applicability of the FIC regulations, so they know whether all or part of its operations come under those rules.

Within thirty 30 working days of receiving a request for authorization, the MINEFI must notify the Investor by notice, whether the contemplated investment falls within the scope of FIC regulations, or not (Article R. 151-6 of the Monetary and Financial Code). Note that the MINEFI could impose conditions and covenants on their authorizations.

An obligation of information also pends, since it can be requested from the company or investor in question, to send any information or document that might seem useful to fulfill its mission. And a declaration should be filed within 2 months in case of authorization.

How far can the French government’s authorities go?

The panel of sanctions, may they be protective measures, administrative or penal sanctions, or financial penalties, has recently been enlarged. So much so, that a transaction will be considered void if it closes without the said authorization.  We at DELCADE make sure your investment stays far from sanctions, and as prosperous as it gets, by advising and guiding you every step of the way. Strategic information is key!


About the Author :

Business lawyers, bilingual, specialized in acquisition law; Benoit Lafourcade is co-founder of Delcade lawyers & solicitors and founder of FRELA; registered as agents in personal and professional real estate transactions. Member of AAMTI (main association of French lawyers and agents).

FRELA : French Real Estate Lawyer Agency, specializing in acquisition law to secure real estate and business transactions in France.

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