According to the FDI regulation rules in France, it is necessary to receive approval from the Economic Ministry of France before conducting some types of investments there. Last year MEF introduced a new verification procedure for FDI. Its goal is to regulate FDI in critical infrastructure sectors such as energy, healthcare, biotechnology, and others by using long-term and short-term measures.
French legislation defines foreign investors as:
- Any foreign citizens;
- Any foreign organizations;
- Any French citizens who are not tax residents of France;
- Any French organization governed by an individual or an entity mentioned earlier.
Investors must be verified before acquiring control over a French enterprise that can be exclusive or collaborative, indirect or direct. The type of control can also be based on the M&A legislation.
There are several types of regulated investments:
- Acquiring ownership of a company located in France;
- Acquiring a business of a French enterprise (fully or partially).
A verification procedure is obligatory to pass for non-European investors who are acquiring more than 33% of the enterprise’s stocks. According to the rule valid from August till December 2020, for companies listed on a regulated market, the FDI threshold is now reduced to 10%.
Obtaining an FDI permit
In France, the MEF provides its opinion about what activities of foreign or French investors are subject to FDI regulation upon investors’ request. The time limit for providing an opinion is 60 days.
An application for FDI approval in France should be submitted by one investor or a group of investors for collective investments. After an application is submitted, a 2-step verification process follows. There are two versions of this procedure:
- Fast – takes 30 business days;
- Extended – takes 45 business days.
As a result of the verification process, the MEF allows or rejects a request. It is important to remember that no response from the MEF is considered to be a rejection.
There are some occasions when prior authorization is allowed to be omitted:
- Investments performed within groups of companies;
- The MEF granted permission for acquiring more than 25% of an enterprise’s stocks.
For individuals who are planning an acquisition of a French enterprise, COREDO provides advice and consultation on FDI regulation.