Chinese groups, funds and private investors acquiring French companies, real estate or industrial assets face a screening regime that has been tightened every year since 2019, a compliance environment shaped by EU sanctions and export controls, and a corporate law that differs on essential points from PRC practice. Most difficulties do not come from the French rules themselves but from timing: the authorisation is requested too late, the commitments are discovered at signing, the target’s sensitive activity is identified after closing.
This page sets out, for Chinese investors and their advisers, the questions to settle before signing, and how the firm assists them in English, as French counsel coordinating with their lawyers in China, Hong Kong or Singapore.
The risk: prior authorisation, commitments and the EU cooperation mechanism
As a non-EU investor, a Chinese acquirer triggers French screening from 25% of voting rights (10% in listed companies) or on acquiring control or a line of business in a sensitive sector. Sensitive sectors are broadly construed: they include critical technologies (artificial intelligence, semiconductors, quantum, energy storage, biotechnologies), data hosting, food security, critical raw materials and, of course, defence and dual-use goods. Regulation (EU) 2019/452 allows other Member States and the Commission to comment on the transaction, which extends the timetable.
Beyond screening, the transaction is examined in light of EU sanctions and export control rules: a French target whose products fall under the dual-use regulation, or whose customers include designated entities, raises questions of compliance that the acquirer inherits. The Foreign Subsidies Regulation (EU) 2022/2560 may also require notification where the acquirer received financial contributions from the Chinese State.
Does your situation carry this risk? A first exchange allows us to measure it and to say how the matter would be organised.
The legal answer: sequence the deal around the authorisation
The firm recommends a request for prior opinion as soon as the target is identified, so that the screening question is settled before the price is negotiated. The share purchase agreement then provides for authorisation as a condition precedent, allocates the risk of refusal or of burdensome commitments, and organises the information flow with the Treasury Directorate. Commitments most often concern the continuity of supplies to French customers, the location of research and data, and governance rights.
On the corporate side, the acquirer must anticipate French rules on works council information and consultation, on directors’ liability and on the protection of minority shareholders, which differ from the structures familiar to Chinese groups.
How the firm works
The firm acts as French counsel, in English, coordinating with the investor’s lawyers in China or Hong Kong: characterisation of the target’s activity, request for prior opinion, authorisation file and commitments, sanctions and export control review, drafting of the acquisition documents and, after closing, follow-up of the commitments given to the Ministry.
It also assists Chinese companies already established in France in their commercial disputes, in the enforcement of French or Chinese decisions and in arbitration, and Chinese exporters facing EU customs measures.
Typical cases handled
The situations below are illustrative, anonymised scenarios. They show when the firm steps in and what the work consists of.
Acquisition of a French industrial sensor manufacturer
A Chinese group acquires a company whose sensors are used in critical infrastructure. The firm obtains a prior opinion, prepares the authorisation and negotiates commitments on supply continuity and data location.
Minority investment by a Chinese fund in a biotech company
The fund crosses 25% of voting rights. The work bears on the characterisation of the activity, on the authorisation and on governance rights compatible with the commitments.
Post-closing discovery of a dual-use product line
After closing, the target is found to export items listed in the dual-use regulation. The firm organises the export licences and the compliance programme required.
Does your situation carry this risk? A first exchange allows us to measure it and to say how the matter would be organised.
The general framework for the screening procedure, common to all non-EU investors, is set out on our page on foreign investment in France.
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Frequently Asked Questions
Does the French screening regime apply to Chinese investors?
Yes. A Chinese investor is an investor from outside the European Union and the European Economic Area, so the full regime applies, including the twenty five per cent voting rights threshold and the ten per cent threshold for companies listed on a French regulated market. Filings from certain jurisdictions attract closer scrutiny in the sensitive sectors, and the examination is more likely to go to a second phase and to end with conditions. That is a reason to file early and to present the industrial rationale properly, not a reason to avoid the process, since an unauthorised investment is void.
Which structures are used for a Chinese acquisition in France?
Most often a French acquisition vehicle, frequently a société par actions simplifiée, held by a European or Hong Kong holding company, financed by a mix of equity and shareholder loan set by the tax analysis. The chain of control has to be transparent for the screening filing, so a structure designed to obscure the ultimate investor works against the transaction. Joint ventures with a French partner are common in industrial sectors, and the shareholders agreement then does most of the work: governance, deadlock, transfer restrictions and exit.
How are funds transferred, and what should be anticipated?
Funds move under Chinese outbound investment rules as well as French ones, and the timetable of the outbound approvals is often the real constraint on the closing date. On the French side the bank runs its own checks on the origin of the funds, on the ultimate beneficial owner and against sanctions lists, and those checks take time when the ownership chain is long. Anticipating them means opening the account and supplying the corporate documents weeks before signing rather than in the days before completion.
What do French sellers ask for in the sale agreement?
Certainty of funds and certainty of closing. Sellers ask for evidence that the money is available and transferable, a limited set of conditions precedent, and a clear allocation of the regulatory risk, including who bears the consequences if screening authorisation is refused or granted subject to conditions. Break fees, escrow of part of the price and security for warranty claims are negotiated in that light. An offer that is higher but conditional frequently loses to one that is lower and deliverable.
How long does an acquisition take?
Between three and eight months for a private company, driven by three timetables running in parallel: the transaction itself, the screening procedure where it applies, and the employee information and consultation steps. A merger control filing extends it further. The realistic approach is to build the calendar backwards from the regulatory steps and to keep the commercial negotiation ahead of them, because every week lost in the early documents is a week added at the end.
Which employee steps are mandatory?
Where the target has a social and economic committee, it must be informed and consulted before the decision is taken, and that process cannot simply be compressed. In companies below the statutory size thresholds, employees have a prior right to be informed of a proposed sale of the business or of a controlling interest so that they may make an offer of their own. Failing to comply exposes the transaction to challenge. These steps are scheduled at the outset, because buyer and seller cannot waive them between themselves.