France lowers foreign investment threshold to 10% for sensitive sectors, extends to companies listed abroad

The decree

On Sunday, August 2, French Prime Minister Sébastien Lecornu issued a decree tightening oversight of non-European investment in French companies. The measure lowers the threshold at which foreign share purchases require government approval, and extends the screening system to French firms listed on stock exchanges outside the European Union.

What changes

Previously, transactions were generally subject to review when a non-European investor acquired 25 percent of the voting rights in a French company. A lower 10 percent threshold already applied to certain French companies listed on regulated markets. The new decree broadens that 10 percent threshold to all French companies operating in sensitive sectors, regardless of whether their shares are traded in France or abroad. The government said the change was needed to close a gap that could allow opportunistic investors to build influential stakes in critical businesses through foreign-listed shares.

to guard against opportunistic, non-European equity acquisitions in French companies listed outside the EU that could pose threats to national security

Sectors under scrutiny

The screening system covers a wide range of activities deemed vital to public order, public security or national defence. These include defence, cybersecurity, artificial intelligence, semiconductors, quantum technology, robotics, space operations and goods with both civilian and military applications. Controls also extend to essential infrastructure and services in energy, water, transport, telecommunications and healthcare, as well as food security, political and general-interest news media, and critical raw materials. In recent years, low-carbon technologies, energy storage and biotechnology have been added to the list as France seeks to protect industries considered important to its future economic and technological independence.

Rationale and timing

The decree comes amid heightened geopolitical tensions and a broader European shift toward treating investment through a national security lens. France has gradually expanded its foreign-investment controls over the past decade, concerned that critical businesses could be taken over or weakened by investors whose interests do not align with those of the French state. The government framed the move as a necessary safeguard for companies and technologies essential to the country's security.

Implementation

To avoid hindering companies' ability to raise capital on markets, the finance ministry must decide within ten days of an application whether a transaction will undergo an in-depth review. The new rule is expected to take effect later this month.