France, similarly as many other countries, has recently tightened its legal regime with respect to foreign direct investment in the name of national security, encouraging investors to be increasingly vigilant. This requires being aware of the fundamentals of the control procedure.
There are three conditions for this procedure to apply :
the involvement of a foreign investor, defined as (i) any natural person of foreign nationality, (ii) any natural person of French nationality who is not domiciled in France within the meaning of Article 4 B of the French Tax Code, (iii) any foreign entity, and (iv) any French entity controlled by one or more of the persons or entities mentioned in (i), (ii) or (iii) ;
an investment in a French entity, defined as (i) any acquisition of control (within the meaning of Article L. 233-3 of the French Commercial Code), (ii) the direct or indirect crossing, alone or in concert, of the threshold of 25% of voting rights, and lastly, (iii) the acquisition of all or part of a business line ;
the conduct by the entity in which the investment is made of one or more activities which are involved, even occasionally, in the exercise of public authority or are likely to prejudice public order, public security or national defence interests (known as "sensitive activities").
The application for authorisation is filed by the investor. Within 30 days of receiving the application (phase 1), the Minister of the Economy makes his decision and states :
either that the investment does not come under the regulations ;
or that it does and is authorised ;
or that it is subject to the regulations but further examination is required, in which case the application moves to phase 2.
After receiving notice of the start of the second phase, another 45 working days period begins, at the end of which the investment is either refused or authorised, subject to compliance with certain conditions.
With regard to the aim of protecting national interests, the most common conditions relate to the governance of the target company or the implementation of measures to ensure the protection of information deemed sensitive and confidential.
In any event, be it during the application for authorisation or monitoring compliance with the conditions, meticulous preparation is required when the applications are submitted and dialogue with the Ministry of the Economy is ongoing.
This allows a pragmatic approach to be taken to this procedure.