Foreign investments

The measures adopted to adapt the control of foreign investments in France during the health crisis are again extended until December 31, 2022 – Company law/Commercial law

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The principle in French law is that financial relations between France and foreign countries are free.

However, some investors making certain types of investments in so-called “sensitive“Sectors of activity must follow a prior authorization procedure with the French Ministry of the Economy.

The control of foreign investments in these sectors of activity has been considerably strengthened in recent years, in particular since the outbreak of the health crisis resulting from the emergence and spread of COVID-19.

At European level, a legal framework common to the Member States, resulting from a regulation dated March 19, 20191 establishing EU direct investment screening and cooperation mechanisms between Member States, entered into force on 11 October 2020.

At the French level, the so-called “PACT“Law of 22 May 20192its implementing decree of December 31, 20193 and an order of the same day remodeled and broadened the prior authorization procedure, strengthened the powers of the Minister responsible for the economy and introduced a new system of pecuniary sanctions.

For a detailed description of the applicable rules, please refer to our previous articles on the subject4.

With the outbreak of the health crisis resulting from COVID-19, a further strengthening of the control of foreign investments appeared necessary.

In a communication dated March 26, 2020, the European Commission among others alerted member states to the impact that “acquisitions of health-related assets” would have on the European Union as a whole5.

Two measures aimed at strengthening the control of foreign investments in France were quickly adopted under French law.

To begin withan order dated April 27, 2020 completed the list of “critical technologies“protected under article 6 of the decree of December 31, 2019 referred to above by the addition of a reference to”biotechnologies“.

As a reminder, said article 6, taken pursuant to article R. 151-3, III, 1° of the Monetary and Financial Code, defines “the list of research and development activities involving critical technologies” for which foreign investments are subject to prior authorization.

These include among others cybersecurity, artificial intelligence and robotics.

Bruno Le Maire, French Minister of Economy, justified the addition of “biotechnologies“remembering that”several thousand companies are involved in the search for vaccines against COVID-19″6.

Even if he announced that it would be a transitional measure, the decree of April 27, 2020 does not set a date for the end of its application and this measure is therefore still in force today.

The absence of a precise legal definition of the concept of “biotechnology“has been criticized by some legal writers who have emphasized the need for”rigorously define the term, since the scope of the foreign investment authorization regime depends on it”seven.

The definition of the Organization for Economic Co-operation and Development, according to which biotechnology includes “the application of science and technology to living organisms, and their parts, products and models, to modify living or non-living materials for the production of knowledge, goods and servicesappears too general to avoid any objection from foreign investors.

It is worth noting the effectiveness of this measure since between 2020 and 2021, controls on foreign investments in biotechnology have almost doubled8.

In a second timea decree of July 22, 20209 lowered the threshold for acquiring voting rights that could trigger control by foreign investors of listed French companies.

A new decree had extended the duration of this measure from July 22, 2020 to January 31, 2021ten.

As the current health situation still does not allow “exclude national security risks related to opportunistic minority stakes in listed French companies”11a new decree12 recently extended this temporary measure to lower the threshold until December 31, 2022.

It should be recalled that Article R. 151-2, 3° of the Monetary and Financial Code specifies that when a foreign investor “crosses, directly or indirectly, alone or in concert, the threshold of 25% of the voting rights of an entity governed by French law“, this constitutes an investment subject to authorisation.

The decree of July 22, 2020 provided for a temporary and exceptional exemption by lowering, until December 31, 2020, this threshold from 25% to 10%, for investments in French companies whose shares are admitted to trading on a market regulated.

However, this temporary lowering is applicable “nor to a natural person who is a national of a Member State of the European Union or of a State party to the Agreement on the European Economic Area which has concluded with France an agreement on administrative assistance in the fight against fraud and tax evasion and which is domiciled in one of these States, nor to an entity of which all the members of the chain of control, within the meaning of II of Article R. 151-1 of the [French] Monetary and Financial Code, are governed by the law of one of these States or are nationals and domiciled in one of these States”13.

In order to limit the impediment to market liquidity during these operations involving the acquisition of a minority of voting rights, the procedure to be followed by foreign investors crossing the 10% threshold has been simplified.14.

The investment project must in fact simply be notified in advance to the Minister responsible for the economy and is only subject to the filing of an application for authorization at the latter’s request within ten working days of the said notification.


1 Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments in the European Union

2 Law n° 2019-486 of May 22, 2019 relating to the growth and transformation of companies

3 Decree No. 2019-1590 of December 31, 2019 relating to foreign investments in France

4 See articles titled
Screening of Foreign Direct Investments by the European Union and
Control of foreign investments in France: reinforced rules but more clarity for investors published on our Blog on September 12, 2019 and February 28, 2020

5 See the article entitled
Covid-19: What consequences for foreign direct investment? published on our Blog on April 29, 2020

6 Statement by Bruno LeMaire to LCI on April 29, 2020

7 Dalloz news, X. Delpech, May 5, 2020, Addition of biotechnologies to the list of foreign investments subject to authorization

8 Press release no. 1733, Paris, November 29, 2021, “Bruno Le Maire and Franck Riester announce the one-year extension of the exceptional lowering of the control threshold for foreign investments in France from 25% to 10%

9 Decree No. 2020-892 of July 22, 2020 temporarily lowering the control threshold for foreign investments in French companies whose shares are admitted to trading on a regulated market

10 Decree No. 2020-1729 of December 28, 2020 amending Decree No. 2020-892 of July 22, 2020

11 Press Release No. 1733 mentioned above

12 Decree No. 2021-1758 of December 22, 2021 extending the temporary lowering of the control threshold for foreign investments in French companies whose shares are admitted to trading on a regulated market

13 Article 1 paragraph 2 of decree no. 2020-892 of July 22, 2020

14 Article 2 of decree no. 2020-892 of July 22, 2020

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