On 28 December 2023, a decree and a ministerial order1 was issued that extends the French foreign direct investment (“FDI”) regime once again2 on various fronts.
As expected, the threshold of voting rights acquired by non-EU/EEA investors into public companies, which was lowered to 10% (from 25%) following the pandemic, will remain at 10%. Crossing 10% of voting rights in such situations must be pre-notified to the Ministry of Finance. Unless the Minister objects within 10 working days from the notification, the investment may proceed without prior authorization, but should be completed promptly (whereas the temporary regime provided for a six-month timeframe).
The French FDI screening, which applied to companies registered in France, has been broadened to the acquisition of control of branches of foreign companies registered in France.
Last but not least, the list of strategic sectors has been expanded to prison security, extraction, processing and recycling of critical raw materials, as well as research and development in photonics, and technologies involved in low-carbon energy production.
Effective 1 January 2024, these changes add to the strengthening of the control applied over the past few months, resulting in an increasing number of undertakings requested from investors to clear their transaction.
One question remains: how far will FDI control extend, and how will the French government ensure the right balance between protecting strategic assets without deterring foreign investors to support the French economy?
1) Decree No. 2023-1293 of 28 December 2023 relating to foreign investments in France and Ministerial Order of 28 December 2023 relating to foreign investments in France.
2) The Decree and the Ministerial Order also provide for other amendments (e.g., regarding the content of the application for authorization). However, as non-critical, these amendments are not detailed in this article.
