Focus On Foreign Investments In France: Requirements, Overview And Recent Incentives

• Published date: 12 December 2023
• Subject Matter: Government, Public Sector, Strategy, Energy and Natural Resources, Inward/ Foreign Investment, Energy Law, Oil, Gas & Electricity, Economic Analysis, Renewables
• Law Firm: Soulier Avocats
• Author: Lydie Bontemps-Helmy

France offers many advantages for businesses, in particular thanks to its central location in Europe, the 2^nd largest market in the world, a well-trained workforce and one of the highest hourly productivity rates, an advantageous tax system, as well as an appreciable environmental protection.

The French Government has set up rules to screen foreign investments. This screening has not prevented a significant number of foreign projects from being authorized in 2022.

The French Government has recently been encouraging foreign investments in the industrial and green sectors.

Foreign investment control in France

Financial dealings between France and foreign countries are unrestricted.

However, foreign investments in France are subject to a prior authorization procedure by the Minister of the Economy, Finance and Industrial and Digital Sovereignty¹, in particular when they target specified business activities such as²:

• Activities involving infrastructures, goods or services essential to guaranteeing energy supply, water supply and the operation of transport networks and services;

• R&D activities involving critical technologies, such as cybersecurity, artificial intelligence, robotics, additive manufacturing, semiconductors, energy storage, biotechnologies and technologies involved in the production of renewable.

On August 24, 2023, Bruno Lemaire, France's Minister of the Economy, Finance and Industrial and Digital Sovereignty, announced his desire to tighten foreign investment control by extending it to "the extraction and processing of critical raw materials", identified by the European Commission on the basis of two criteria: economic importance and supply risk³.

The prior authorization procedure applies to foreign investors who carry out an investment which involves⁴:

• The acquisition of the control of an entity incorporated under French law within the meaning of Article L 233-3 of the French Commercial Code;

• The acquisition of all or part of a branch of activity of an entity incorporated under French law;

• If the investor is not from the European Union or the European Economic Area, the crossing, directly or indirectly, alone or in concert, of the threshold of 25% of the voting rights of an entity incorporated under French law; temporarily, until December 31 2023, the crossing of the threshold of 10% of the voting rights of a listed company incorporated under French law⁵.

Since October 2, 2023, foreign investors and their advisors can submit their...