France Tightens Foreign Investment Rules in Sensitive Sectors

The prime minister's office at Matignon has decided to tighten the rules. In a decree published this Sunday 2 August (source in French), Prime Minister Sébastien Lecornu has strengthened state control over the purchase, by foreign investors, of companies in sensitive sectors.

Until now, the Ministry of the Economy had a right of scrutiny whenever a non-European investor acquired 25% or more of a French company listed on a regulated market outside the European Union. "From now on, any stake of at least 10% taken by a non-European investor in a French company listed on a regulated market outside the European Union will have to be authorised by the state", the prime minister wrote on X.

"Protecting our strategic companies means protecting our sovereignty. Our responsibility is twofold: to support the development of our companies while safeguarding our strategic interests", Sébastien Lecornu said.

The aim of this decision is to "guard against opportunistic non-European shareholdings in French companies listed outside the EU that could pose threats to national security", the prime minister's office said in a statement.

"To avoid unduly undermining companies' ability to raise funds on the markets, this strengthened oversight will be carried out under a fast-track procedure", the statement also said.

Investors will now have to notify their transaction to the Treasury Directorate-General. The economy minister will then have ten days to decide whether it requires an in-depth review.

"Protecting our companies is not enough"

This decree is in line with several recommendations set out in a parliamentary report calling for a "radical shift in posture" in order to strengthen the country's economic security. Drafted by Christophe Plassard (Horizons MP for Charente-Maritime), Jean-Louis Thiériot (Right-wing Republican MP for Seine-et-Marne) and Charles Rodwell (Ensemble pour la République MP for Yvelines), the report stressed that the French framework needed to be reinforced at a time when foreign investment "is taking on greater significance because of the geopolitical context".

"France has one of the most robust foreign investment screening mechanisms in Europe. But our sovereignty also depends on our ability to finance our strategic companies", Jean-Louis Thiériot said on X (source in French). "Protecting our companies is not enough. We must also give them the means to grow."