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23 July 2020
The Decree n°202-892 of July 22, 2020 temporarily lowered the voting rights threshold that triggers foreign investment control. Its provisions are exclusively applicable to investments made in French entities listed on Euronext Paris, with a threshold set at 10% of the voting rights of the relevant entity. This change comes alongside the introduction of a lighter procedure.
Foreign investment control now applies to the direct or indirect crossing, by an investor acting alone or in concert, of the 10% threshold of the voting rights of a company governed by French law and which is listed on Euronext Paris [1].
The procedure only applies where the French listed target company falls into the list of sensitive sectors set forth in article R. 151-3 of the French Monetary and Financial Code.
The only investors concerned are those located outside the EEA. Indeed, European investors do not fall within the scope of the new provisions, provided that their chain of ownership does not include non-European entity(ies).
For investments falling within the scope of the control, a prior notification procedure with the Direction Générale du Trésor is organized.
The information to be provided as part of the notification is set out in an order (arrêté) dated July 22, 2020. It is substantially similar to that already required to be provided to both the Autorité des marchés financiers (AMF) and the listed company, under securities law, when the 10% threshold is crossed, i.e.:
At the end of a period of 10 business days, the authorization is deemed granted (silence is equivalent to acceptance) and allows completion of the investment to take place within six months.
During this period of 10 business days, the government may oppose this simplified procedure and force the investor to apply for authorization under the standard procedure. This will significantly delay the investment, given the time required to file for authorization and the initial 30 business days available to the government to review the application.
This new foreign investment authorization regime immediately comes into effect and will remain into force until the end of 2020. However, an extension by the Government cannot be excluded.
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[1] Both active (increase in shareholding) and passive (lowering of the total voting rights) crossings are covered. In case of passive crossing, the investor may not be informed in advance, preventing it from complying with the prior notification procedure.
