Effective January 1, 2022, and with the addition of sectors in which foreign investments are subject to prior authorization by the Minister of the Economy, France has taken another step in its ongoing expansion of foreign investment control. This initiative began in 2014, with the famous "Montebourg decree," and has been further reinforced during the COVID-19 crisis. Further, foreign investors in all sectors must now provide new information to the authorities when applying for an authorization.

In related developments, with respect to the acquisition of voting rights by non-EEA investors, the 10% threshold triggering the authorization is maintained. The European Commission also has updated its list of projects and programs of EU interest.

Research and development in renewable energies is now subject to authorization

The order (arrêté) of September 10, 2021[1], on foreign investments in France, amends the order of December 31, 2019, and, effective January 1, 2022, adds a ninth technology — production of renewable energy — to the list of critical technologies subject to the foreign investment control procedure. Those sectors already subject to the requirement include cybersecurity, artificial intelligence, robotics, additive manufacturing (3D printing), semiconductors, quantum technologies, energy storage and biotechnologies (see Article 6 of the order of December 31, 2019, as amended).

Extension of the 10% threshold for the acquisition of voting rights

Decree n°2021-1758 of December 22, 2021, extends for an additional year the provision reducing from 25% to 10% the threshold triggering the mandatory prior authorization for the acquisition of shares in a listed company performing controlled activities. Through December 31, 2022, non-EEA investors acquiring more than 10% of voting rights, regardless of the amount of the transaction, are subject to the prior authorization by the Ministry of the Economy.

New information to be provided to the authorities

Effective January 1, 2022, new information shall be provided by the investor in the application for authorization: (i) how French customers' data of the target is managed, (ii) the list of the target's EU customers (in addition to its French customers), (iii) the list of all of the target's intellectual property rights (e.g., patents, trademarks, licenses), and (iv) the global strategy of the investor in France and in the EU, with examples of previous transactions and a focus on the relevant industry market.

Updated list of projects and programmes of Union interest

On September 29, 2021, the European Commission updated the list of projects and programs of EU interest to include those involving a substantial amount or a significant share of EU funding, or projects and programs relating to critical domains, mainly in the defense, infrastructure, space, nuclear, research, innovation, technology and health sectors. (See EU Commission Delegated Regulation 2021/2126, September 29, 2021, amending the Annex to the EU Regulation 2019/452.) Where a foreign direct investment is likely to affect these programm, the Commission may issue an opinion addressed to the Member State on grounds of security or public order.

Reminder of the principles applicable to foreign investments

It is important to remember that, regardless of the amount of the transaction, any direct or indirect investment made through the acquisition of shares (takeover of a company, or for non-EEA investors, acquisition of more than 25% — or, until December 31, 2022, 10% if the target company is listed on the stock exchange — of the voting rights of the target company), or acquisition of goodwill or assets (all or part of a branch of activity of a company) of a French company performing critical activities is subject to a prior authorization by the Minister of the Economy, under penalty of nullity and heavy financial fines.

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