Policy Flash: French FDI Regulation

March 7, 2018

On February 16, Prime Minister Edouard Philippe announced a 3 part expansion of the Montebourg decree of 2014, bringing France closer to an FDI regulation system that resembles the United States (CFIUS).

Broaden list of sectors involved in the regulation
Due to legislation passed in 2005 and 2014, the French state has the ability block foreign investment projects in the fields of energy, defense, water, transport, electronic communications, and public health. New sectors will be added to this list, including: artificial intelligence, digital data storage, robotics, nanotechnology, space, and infrastructure.

Strengthen monitoring of commitments and sanctions
The French Government wishes to improve monitoring of commitments made by foreign investors in France as well as reinforce sanctions. 

The two existing sanction measures are:

  • Outright cancellation of a sale;
  • Penalty equal to one or two times the amount of the investment made.
Two additional proposed measures are:
  • The possibility of suspending voting rights in general assemblies of companies for foreign investors;
  •  Fixed fines in the event of noncompliance by foreign investors with commitments when entering the capital of a French company.

Facilitate the introduction of “golden shares”
The Philippe Government wishes to stabilize the system. Notably, the legislation gives the State veto power on the entry of an unwanted shareholder or the sale of strategic subsidiaries while being able to reduce the number of shares.

When a company is attacked by a hostile investor, the state would have the option to involve BPI France which would participate within a limited scope, sufficient to deter unwanted action.

These new provisions will be detailed in the future PACTE legislation. Presentation to the Council of Ministers is scheduled for 18 April.

AmCham’s Position
An exchange within the Policy Committee will be held to create a common position on this topic.