Foreign investment in France has long attracted regulatory scrutiny in sensitive sectors. That scrutiny intensified significantly when French authorities expanded the list of activities subject to mandatory prior authorisation – and tightened the notification requirements that apply even below the full authorisation threshold. International investors who overlook these rules risk transaction voidance, financial penalties, and reputational exposure that can take months to resolve.
France's foreign investment screening regime requires non-EU acquirers to file a notification or seek prior authorisation before completing transactions in designated sensitive sectors. The obligation applies from the moment a binding commitment is made, not at closing. Failure to comply within the applicable deadline can result in an order to unwind the transaction and administrative fines calibrated to the deal value.
This alert covers the core regulatory change, the business categories affected, the threshold criteria that trigger the obligation, and the immediate steps international companies should take before signing any deal documents.
What changed and when it takes effect
France's investment screening rules operate under its national security and public order legislation governing foreign investment. Recent amendments extended the perimeter of sensitive activities to include a broader range of technology, infrastructure, and dual-use industrial operations. The changes also introduced a lighter-touch notification pathway – distinct from full prior authorisation – for acquisitions that cross specific minority-stake thresholds in listed French companies.
The notification pathway requires filing before the transaction closes. Authorities then have a defined review window to either clear the deal, request additional information, or escalate it to the full authorisation procedure. Where the acquirer proceeds without filing, the transaction is deemed non-compliant from the outset. French commercial legislation (Code de commerce) and the dedicated foreign investment framework both contemplate this outcome, and enforcement practice confirms that regulators will act on it.
The expanded perimeter entered force in the current regulatory cycle and applies to transactions signed or committed to after the effective date. Transactions already under binding heads of terms at the relevant date are generally assessed under the prior regime, but acquirers should seek specific advice rather than assume grandfathering applies.
Who is affected and which thresholds matter
The screening obligation falls on acquirers that are either incorporated outside the European Union or are EU-incorporated entities ultimately controlled by non-EU persons. The key point practitioners in France consistently emphasise is that the legal form of the French target is irrelevant. Whether the target is structured as a société à responsabilité limitée (SARL. a private limited company under French law) or a société par actions simplifiée (SAS. a simplified joint-stock company), the same threshold criteria apply.
Three categories of transaction trigger the obligation:
- Acquisitions of control over a French entity active in a designated sensitive sector
- Acquisitions of a branch or operations in France – even without acquiring a legal entity
- Minority stake acquisitions in listed French companies that cross the notification threshold established by the amended rules
Sensitive sectors now explicitly include critical infrastructure (energy, water, transport, digital), health products and technologies, dual-use goods, artificial intelligence systems used in regulated contexts, and certain financial market infrastructure. Transactions involving investment fund structures that hold controlling interests in these sectors are not exempt. The screening obligation follows the underlying asset, not the vehicle through which it is held.
The disclosure obligations imposed on the acquirer at the notification stage mirror those applicable in a full authorisation filing in substance, though the documentary burden is lighter. Acquirers must identify their beneficial ownership chain, describe the transaction rationale, and confirm that no security-sensitive information will be transferred prior to clearance. Incomplete filings restart the review clock – a practical risk in time-sensitive deals.
To receive an expert assessment of how France's investment screening rules apply to your transaction, contact us at info@ferrazwhitmore.com.
Immediate actions for international companies
Any non-EU investor with live or anticipated transactions in France should treat the following steps as urgent:
- Sector mapping: Confirm whether the French target's activities fall within the expanded sensitive-sector perimeter before executing any letter of intent or term sheet. This assessment should occur at the pre-signing stage, not post-signing.
- Ownership chain review: Identify whether the acquiring entity or any entity in its control chain is incorporated or ultimately controlled outside the EU. Intermediary EU holding companies do not automatically remove the screening obligation if the ultimate beneficial owner is non-EU.
- Transaction document review: Ensure that sale and purchase agreements, investment agreements, and shareholder agreements contain appropriate conditions precedent tied to regulatory clearance. Proceeding without this protection exposes both parties to completion risk.
- Timeline planning: Build the regulatory review window into the transaction timetable. The notification pathway is faster than full authorisation, but even a standard review takes several weeks. Assumptions based on prior deal timelines may no longer be reliable under the expanded rules.
- Liaison with French counsel: A huissier de justice (a court-appointed enforcement officer in French civil procedure) may become relevant if a non-compliant transaction is challenged post-closing. Engaging a lawyer in France at the pre-signing stage is the most effective way to avoid that exposure.
For the broader capital markets implications of this regime. including how the screening rules interact with prospectus requirements, securities offering documentation. Additionally. IPO listing requirements for companies active in sensitive sectors. see our dedicated service on capital markets in France.
Investors using leveraged or structured acquisition vehicles should also consider the interaction between screening obligations and credit facility conditions. Our analysis of banking and finance matters in France addresses how lenders are adjusting their conditions precedent frameworks in response to expanded screening requirements.
Comparable screening developments are unfolding across the EU. For context on how a neighbouring jurisdiction is handling similar changes, our alert on investment screening in Portugal offers a useful comparative reference.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. As a law firm with active practices in France, our team combines Portuguese civil law expertise with English common law tradition to support cross-border transactions, regulatory filings, and market entry strategies. Our capital markets practice covers securities offering structures, disclosure obligations, and investment fund regulation across EU jurisdictions. We have advised institutional investors, private equity sponsors, and corporate acquirers on foreign investment screening matters in France and comparable regimes across Europe. Engaging a law firm in France with cross-border experience at the earliest stage of a transaction materially reduces regulatory risk. To discuss how France's updated screening rules apply to your specific deal structure, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.