Decree no. 2023-1293 of December 28, 2023, on foreign investment in France came into force on January 1, 2024.
The purpose of the decree is to continue the monitoring of non-European investors exceeding the threshold of 10% of voting rights in companies listed on a regulated market, introduced by Decree No. 2020- 892 of July 22, 2020. This follows the statements made by the French Ministry of the Economy (the “MoE“) to the press on January 5, 2023, announcing that the measure would be made permanent.
According to this decree, any investor exceeding the 10% threshold will be exempt from the authorization requirement, provided that the investment project has been notified in advance to the MoE, who will be deemed to have granted the exemption after 10 days.
In another important new development, the review of foreign direct investment (FDI), has been extended to the acquisitions of branches in France of entities governed by foreign law. Prior to January 1, 2024, only the acquisition of an entity governed by French law constituted an investment within the meaning of the French Monetary and Financial Code (MFC). According to the Ministry, this extension was adopted to prevent any intention of circumventing the FDI rules.
In addition, FDI control has been extended to new sectors, including the processing and extraction of critical raw materials considered essential for the protection of national interests, or activities essential for the security of prisons. It should also be noted that a parallel decree (arrêté) added photonics to the list of critical technologies mentioned in Article R. 151-3 of the MFC and replaced the reference to technologies involved in the production of “renewable energy” with the term “low-carbon energy”.
Lastly, the Decree includes simplification measures related to the exemption of intra-group reorganizations and the revision of conditions, as well as various coordination amendments.
Regarding the intra-group reorganizations’ exemption, the revised article R. 151-7 of the MFC now states that an investor does not need to apply for authorization if the investor of last resort in the chain had, prior to the investment, already acquired control of the entity that is the investment object.
However, this exemption does not apply where it has the effect of preventing an investor from complying with conditions imposed by a previous authorization or where the purpose of the investment is to transfer abroad all or part of a branch of one of the activities subject to FDI control.
Finally, regarding the revision of conditions, the Decree extends the Ministry’s power of review by amending article R. 151-9 of the MFC. Prior to January 1, 2024, it was stipulated that new conditions could only be set if the investor acquired control of the entity that was the investment object. This condition has been removed by the new Decree. From now on, the Ministry may impose new conditions in the event of a change in the shareholding of the entity that was the investment object (or a change in the chain of control) or by the application of one of the conditions set at the time of authorization.
