Upcoming extension of French FDI control regime
In his fall speech (discours de rentrée) of 24 August 2023 following the summer break, the French Minister for the Economy, Bruno Le Maire, clarified his plans to reinforce industrial sovereignty and independence in France. The French foreign investment control regime is high on this agenda.
The Minister notably announced three forthcoming changes to the FI control regime.
- Most notably, the extraction and processing of critical raw materials will be included in the list of sectors eligible for control under the French FI rules. The Minister stated that these two areas have become decisive sectors for the country's sovereignty and industrial sector. Bruno Le Maire made an express reference to China, by quoting the decisions recently taken by China on gallium and germanium, which are essential components for the production of semi-conductors.
- Second, the Minister confirmed the threshold of 10% of voting rights for investments in listed companies – making permanent a lower threshold that was due to expire at the end of 2023. This is similar to measures we have seen in other countries - Austria applies a de facto lower threshold, looking at effective voting rights participation at AGMs, as is the case under the merger control rules. And Germany is also considering this as part of the current evaluation and recasting of its FI regime.
- Third, the extension of FI control to French branches (succursales) of foreign companies - as these branches have at times been found to be used to bypass notifications obligations. For the record, the guidelines published by the Ministry in September 2022 already provided a clarification on this point: they specify that a branch may constitute a “branch of activity”, and as such falls within the scope of the regulations, when it constitutes a collection of assets and persons capable of contributing to the performance of a given activity.
This agenda is not completely new and the exact scope of these changes will need to be assessed further in the forthcoming decree which will implement them. The decree is expected in the last weeks of 2023. We will use this blog to provide an update when the decree is published.
