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Some foreign investments in the French economy require getting prior approval from the France’s Economic Ministry (a process referred to as FDI regulation in France). In 2020, the MEF announced the launching of a new FDI verification procedure. The procedure includes long-term & part-time measures aimed at regulating FDI in critical infrastructure sectors (e.g. energy, telecom, healthcare, cybersecurity, AI, digital & print media & biotechnology).

Foreign Investors

Pursuant to French legislation, foreign investors are:

  • any foreign citizens;
  • any French citizens who aren’t tax residents of this jurisdiction;
  • any foreign organizations;
  • any French organizations controlled by individuals or legal entities specified above.

Investor verification is required for acquiring control over a French enterprise & assessing its type:

  • exclusive or collaborative;
  • indirect or direct.

Also, the type of control can be evaluated pursuant to M&A legislation.

Regulated Investments

A regulated investment is:

  • acquiring ownership of a company in France;
  • acquiring some or all of a French enterprise’s business.

Investors from non-European countries that purchase more than thirty three percent of a French enterprise’s stocks must pass a verification procedure. Starting from August 2020, the FDI threshold for companies listed on a regulated market was lowered to ten percent (the rule will be in place until December 2020).

Foreign of French investors can submit a request to the MEF for its opinion on which of their activities are subject to FDI regulation in the Republic of France. The Ministry has 60 days to provide them with such an opinion.

2-Step Procedure

Only one investor or a group of investors (if an investment is made collectively) can apply for approval of FDI in France. After submitting an application, they’ll be required to pass a 2-step verification procedure:

  • fast (thirty business days);
  • extended (forty five business days).

By the end of the 2nd stage, the MEF must either allow or reject a request. If there’s no response from the MEF, an application is deemed rejected.

An exemption from prior authorization is granted:

  • for investments made within groups of companies;
  • if more than twenty five percent of an enterprise’s stocks is acquired (based on permission granted by the MEF).

Thinking about acquiring a French enterprise? Need advice on FDI regulation in France? Why not contact IQ Decision UK?