For the firm’s intervention on the filing itself, see foreign investment in France. Investors from China face additional scrutiny in several sectors, addressed on our page on Chinese investment in France.
Practical guide: foreign investment screening in France
A transaction completed without the authorisation required by the Monetary and Financial Code is void as of right. Not merely sanctionable: void. Yet French foreign investment screening is still not a reflex among M&A practitioners. It has neither the visibility of merger control nor a body of case law to guide practice. In 2024, 392 applications were filed, and 54% of the authorisations granted came with conditions attached. More than one in two. Here are the six points that decide whether your transaction falls within the scope of the regime, and what it costs to overlook it.
1. A “foreign investor” can be a French company
Article R. 151-1 of the Monetary and Financial Code defines the foreign investor through four categories, the fourth of which is the one most often overlooked: any French-law entity controlled, even indirectly and through a chain of several companies, by a foreign national, a French national not tax-resident in France, or a foreign-law entity. A société par actions simplifiée registered in Paris, with its seat, its directors and its employees in France, remains a foreign investor if its share capital is controlled from abroad. Setting up a French acquisition vehicle does not take the transaction out of the regime; the nationality of the holding company does not mislead the screening authority. Control itself is assessed first under Article L. 233-3 of the Commercial Code, then, failing that, under the concept of decisive influence in Article L. 430-1. This second reference allows the qualification to be retained in configurations that company law would not recognise, such as veto rights over strategic decisions.
2. The thresholds are successive steps, and one of them has just been widened
Four transactions trigger screening under Article R. 151-2: the acquisition of control of a French-law entity, the acquisition of all or part of a line of business, the crossing of the 25% voting-rights threshold, and the crossing of 10% for a listed company. Decree No. 2026-718 and the ministerial order of 30 July 2026, applicable since 17 August 2026, extended the notion of regulated market for this last threshold to six exchanges previously outside the regime (London, Zurich, Toronto, Singapore, Tokyo and Seoul), in addition to the New York Stock Exchange and Nasdaq, already covered by European Commission equivalence decision (EU) 2017/2320. A French-law company carrying on a sensitive activity and listed in London or Toronto therefore now falls under the reduced 10% threshold. Each step calls for a separate application: an authorised crossing of 10% carries no authorisation to cross 25% afterwards. Each threshold is applied for separately.
3. The material scope has expanded considerably
Article R. 151-3 distinguishes activities that are sensitive by nature (defence, cryptology, information systems security of an operator of vital importance), essential infrastructure and services (energy, water, public health, and critical raw materials since 1 January 2024), and research and development in ten critical technologies whose list, set by the order of 31 December 2019, covers artificial intelligence, semiconductors, quantum technologies and, since 2024, photonics. This last category fully exposes venture capital: the 25% threshold is easily crossed in a Series A or B round. Faced with this uncertainty, Article R. 151-4 opens an activity ruling procedure: the minister has two months to state whether an activity falls within the scope of screening. Of the 49 rulings issued in 2024, 73% concluded that the activity was out of scope. In nearly three cases out of four, the regulatory concern was unfounded, and the ruling demonstrated it before the deal timetable suffered.
4. Silence means refusal, and the statutory timeline is only a floor
Article R. 151-6 organises a two-phase review: thirty working days, extendable by forty-five working days where a further examination is opened, making seventy-five working days at most, excluding suspensions linked to requests for additional information. The administration’s silence never amounts to approval. There is no tacit authorisation: the expiry of the period without an express decision gives rise to an implied refusal that prohibits completion. For a non-sensitive, well-prepared file, completion within three months of signing is realistic; where commitments must be negotiated, a range of nine to twelve months should be assumed. The condition precedent relating to authorisation must therefore be drafted separately from the merger control condition, with an automatic extension of the long-stop date where a further examination is opened. Otherwise the agreement may lapse at the very moment the negotiation succeeds.
5. Nullity as of right cannot be cured after the event
Article L. 151-4 of the Monetary and Financial Code provides that any undertaking, agreement or clause giving effect to an unauthorised foreign investment is void as of right. The nullity is absolute, incapable of ratification, incurred even where intermediary vehicles are used, and time-barred five years from knowledge of the facts. To this are added the power to order restoration of the previous situation under Article L. 151-3-1, and the financial penalty under Article L. 151-3-2, capped at the highest of four amounts: twice the sum invested, 10% of the turnover of the company concerned, five million euros for a legal person or one million for a natural person. The five-million cap is only a floor, since the figure retained is the highest of the four. On a 100-million-euro transaction, the effective cap reaches 200 million. No warranty and indemnity insurer covers this risk, and the buyer’s title remains precarious for five years.
6. A case-law desert: security is built upstream
No published decision has ruled on a refusal of authorisation, on the proportionality of conditions imposed, or on a financial penalty. The only identified decision is that of the Conseil d’État of 3 April 2020 (No. 422580), on the scope of information that may be required from an investment fund. Unfavourable decisions most often take the form of a negotiated withdrawal rather than a formal refusal, which alone is open to challenge, and reasoning remains limited by national defence secrecy. At European level, Regulation (EU) 2026/1386 of 17 June 2026, applicable from 17 January 2028, makes screening mandatory in the twenty-seven Member States and closes the gap opened by the Xella Magyarország judgment (CJEU, 13 July 2023, C-106/22) by capturing investments made through a European subsidiary controlled from a third country. This will require revising the current exemption for EU investors, currently based on the formal nationality of the control chain alone. In the absence of foreseeable judicial review, securing a transaction is achieved through the quality of the file, the negotiation of commitments and contractual engineering, never through the expectation of an appeal.
The full guide, with the practitioner’s reading grid
The firm has prepared a 21-page practical guide setting out the full typology of commitments negotiated with the State, a checklist of the five most frequent causes of suspension of the review period, the contractual allocation of regulatory risk in the acquisition agreement, and a sector-by-sector reading grid to qualify a transaction before signing. It is available free of charge on submission of a professional email address:
Download the guide “Foreign Direct Investment in France”
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