You live in London, New York, Dubai or Singapore and you have found the right French target: an artificial-intelligence studio in Paris, a robotics supplier in Lyon, a health-data company, an energy contractor or a press publisher. The price is agreed, the letter of intent is signed, and your lawyer mentions three capital letters that can stop the closing: IEF. The contrôle des investissements étrangers en France, the French foreign-investment screening procedure, requires the prior authorization of the Minister for the Economy before a foreign investor takes control of a French company active in a strategic sector. Closing without it exposes you to injunctions, a court-appointed supervisor inside your own company, fines of up to twice the amount of the irregular investment, and orders to unwind the deal at your own expense. This article explains, for a business reader managing the file from abroad, which deals need authorization, how to file through the online portal of the Treasury, what conditions the Minister can impose, what the leading court decision teaches about challenging the outcome, and how to contest a refusal or a sanction within the two-month deadline. Every French acronym is explained, every decisive rule is quoted from its official text, and the procedure is described as it works in September 2026.
I. Buying Control of a French Strategic Company From Abroad: When Paris Must Authorize First
A. Which deals need prior IEF authorization and how to file from abroad
French law starts from freedom. Article L. 151-1 of the Monetary and Financial Code states: “Les relations financières entre la France et l’étranger sont libres.” Financial relations between France and foreign countries are free. That freedom is exercised under the conditions set by the same chapter, and the foreign-investment screening is the main exception a buyer of a French company will meet. The Direction générale du Trésor, the Directorate General of the Treasury within the Ministry for the Economy, runs the screening through its dedicated IEF office, and its official foreign-investment page publishes the procedure, the forms and the annual reports.
The authorization requirement applies when three cumulative conditions are met: the origin of the investor, the nature of the transaction, and the nature of the target activity. If any one of the three is missing, no authorization is needed. The statutory basis is Article L. 151-3 of the Monetary and Financial Code, which provides: “Sont soumis à autorisation préalable du ministre chargé de l’économie les investissements étrangers dans une activité en France qui, même à titre occasionnel, participe à l’exercice de l’autorité publique ou relève de l’un des domaines suivants” Foreign investments in an activity in France are subject to the prior authorization of the Minister for the Economy where that activity, even on an occasional basis, participates in the exercise of public authority or falls within listed sensitive fields. The same article adds: “Un décret en Conseil d’Etat définit la nature des activités ci-dessus et des investissements soumis à autorisation.” A decree in the Conseil d’État defines the activities and the investments subject to authorization.
On the investor side, the rule covers more buyers than most foreigners expect. An investor from outside the European Union or the European Economic Area is foreign for the whole procedure. An investor from inside the EU or EEA is also treated as foreign when the transaction gives it control of the French entity. In practice, an American, British, Swiss, Gulf or Asian buyer is screened for every covered transaction, while a German or Dutch buyer is screened only for takeovers conferring control. Groups must look through holding chains: the Treasury examines the chain of control up to the ultimate beneficial owner, the natural person who ultimately controls the investor, and parallel European notification is required whenever an entity from a non-EU country appears anywhere in that chain.
On the transaction side, the official conditions page of the Treasury describes three triggers. The first is the acquisition of control, within the meaning of Article L. 233-3 of the Commercial Code, of a French-law entity or of a registered establishment, whether the foreign investor is European or not. Control under that article includes the case where a person “détient directement ou indirectement une fraction du capital lui conférant la majorité des droits de vote dans les assemblées générales de cette société”, directly or indirectly holds a fraction of the capital conferring the majority of voting rights at general meetings. It also covers control through a voting agreement, de facto determination of meeting decisions, or the power to appoint or remove the majority of the management bodies. The second trigger is crossing, directly or indirectly, alone or in concert, the threshold of 25 percent of the voting rights of a French entity, for investors from outside the EU or EEA only. The third is crossing 10 percent of the voting rights of a French company listed on a regulated market, again only for non-EU and non-EEA investors. A minority stake of 15 percent taken by a New York fund in an unlisted French robotics company therefore needs authorization, while the same stake taken by a Berlin fund does not, unless it confers control in fact.
On the activity side, the target must operate in a sector listed by decree. The official sectors page groups them around public order, public security and national defence. The classic core covers defence secrecy holders, contractors and subcontractors of the Ministry of the Armed Forces for sensitive goods and services, cryptology, arms, munitions, powders and explosive substances. The critical-infrastructure layer covers energy supply, water supply, transport networks and services, space operations, electronic communications networks and services, establishments, installations and works of vital importance within the meaning of the Defence Code, and the protection of public health. The newer layers, added by the decree of 29 November 2018, the decree No. 2019-1590 of 31 December 2019 adopted under the PACTE law of 22 May 2019 and later extensions, cover the print and online political press, food security, critical raw materials from extraction to recycling, prison-establishment security, the hosting of certain data, and research and development on critical technologies. That technology list, set by ministerial order, expressly names cybersecurity, artificial intelligence, robotics, additive manufacturing, semiconductors, quantum technologies, energy storage, biotechnologies, low-carbon technologies and photonics. A Paris AI startup, a Lyon robotics supplier and a French semiconductor designer all sit squarely inside the screened perimeter, even when they are loss-making early-stage companies with a handful of employees.
Filing is done online from abroad. The request is lodged on the dedicated IEF filing platform of the Treasury, and its contents are listed in the order of 31 December 2019 on foreign investments in France: identity of the investor and of the persons ultimately controlling it, description of the target and of the sensitive activities, structure and financing of the transaction, and the European notification form in English whenever a non-EU entity appears in the control chain. The deal documents should make the filing a condition precedent to closing, with a long-stop date consistent with the review timetable, because the screening clock only starts on a complete file. From receipt of a complete file, the Treasury has thirty working days to tell the investor that the deal falls outside Article L. 151-3, that it is authorized unconditionally, or that a supplementary examination is needed. That second phase adds forty-five working days, so the maximum is seventy-five working days, and the European cooperation mechanism adds no extra time. The trap for foreigners is the silence rule: if no answer arrives within these periods, the request is deemed rejected. An unanswered file is a refusal, not an approval, and the buyer who closes on the assumption that silence means consent commits the central offence of the regime.
Three practical consequences follow for a buyer living abroad. First, the calendar of the share purchase agreement must be built around seventy-five working days plus the time needed to complete the file, not around the parties’ commercial urgency. Second, the financing, in particular any acquisition debt with a ticking commitment fee, should include an IEF extension clause. Third, the target’s French counsel should be engaged before signing, because the qualification analysis, control test, sector mapping and filing strategy determine whether the condition precedent is drafted as a routine formality or as a genuine deal risk with a walk-away right. Buyers who already plan the post-closing life of the company should read our companion guide on buying a business in France from abroad, funds and shares, creditors and staff alongside this authorization analysis, and foreign groups hesitating between structures should compare with branch versus liaison office registration, tax and closure before deciding that an acquisition is the right entry route.
B. Conditional authorization in practice: what Paris can demand and what the courts accept
Most authorizations are not blank cheques. Article L. 151-3 provides: “L’autorisation donnée peut être assortie le cas échéant de conditions visant à assurer que l’investissement projeté ne portera pas atteinte aux intérêts nationaux visés au I.” An authorization may include conditions ensuring that the planned investment will not harm the national interests listed in the first paragraph. In practice the Treasury negotiates a commitments letter before the authorization is signed: continuity of the French activity and jobs for a defined period, maintenance of research and development capacity in France, protection of sensitive know-how and data, continuity of supply to French strategic customers, governance undertakings such as a French board presence or prior information on further transfers, and sometimes security-clearance or sourcing obligations for defence-linked work. These conditions bind the investor for years, they are monitored, and breaching them triggers the same enforcement arsenal as closing without authorization. A buyer should therefore negotiate conditions like price terms: narrowly, measurably and with a realistic duration, because an undertaking to keep every job for ten years can cost more than a purchase-price adjustment.
The leading court decision shows how judges review these authorizations. On 3 April 2020 the Conseil d’État, the supreme administrative court, ruled in case No. 422580 on an IEF authorization granted on 16 December 2015 to “la société FII Co, société de droit luxembourgeois détenue indirectement par deux fonds d’investissement gérés par la société de droit anglais Warwick Capital Partners LLP, à prendre le contrôle de la société B… Industries, spécialisée dans la fabrication de fibres diverses pour les secteurs de l’automobile, de l’aéronautique et de l’électronique.” A Luxembourg company indirectly held by two investment funds managed by an English manager had been authorized to take control of a French fibre manufacturer supplying the automotive, aeronautics and electronics sectors. Former family shareholders challenged the authorization before the Paris administrative court, lost, appealed to the Paris administrative court of appeal, lost again, and brought a final appeal, a pourvoi en cassation, before the Conseil d’État. The operative part of the judgment reads: “Article 1er : Le pourvoi de Mme B… et M. B… est rejeté.” The appeal is rejected.
Three lessons matter for a foreign buyer. First, the Conseil d’État confirmed that the Minister may authorize a takeover by a fund structure provided the commitments preserve the protected interests. The court noted the manager’s eleven years of industrial experience, its record of turning around distressed companies and the undertakings given to perpetuate the target, and held that the authorization showed no error of assessment in light of the interests protected by Article L. 151-3: the decision finds no error of assessment in the ruling under appeal and holds that the lower court correctly characterized the facts submitted to it. The review is therefore a limited one, an erreur d’appréciation test: the judge checks that the Minister did not manifestly misjudge the risks and the adequacy of the conditions, but does not substitute its own industrial policy. A buyer should expect deference, not a second negotiation in court. The review is therefore a limited one, an erreur d’appréciation test: the judge checks that the Minister did not manifestly misjudge the risks and the adequacy of the conditions, but does not substitute its own industrial policy. A buyer should expect deference, not a second negotiation in court.
Second, the decision fixes the disclosure standard for fund buyers. The court approved the disclosure standard applied to fund buyers. It held that the applicant must disclose the identity of the fund manager and, where that manager is itself a legal person, the natural persons or public bodies controlling it, with no obligation to name every investor participating in the fund. A foreign fund should therefore prepare a clean control chart running from the acquisition vehicle up to the manager and its ultimate owners, while resisting requests to name every limited partner, which the case law does not require. A foreign fund should therefore prepare a clean control chart running from the acquisition vehicle up to the manager and its ultimate owners, while resisting requests to name every limited partner, which the case law does not require.
Third, the judgment reproduces the refusal standard of the regulatory part of the Code, which every buyer should read before filing. Under Article R. 153-10, the Minister refuses by reasoned decision where, after examining the file, a serious presumption exists that the investor might commit serious offences such as drug trafficking, pimping, money laundering or terrorism, or where the conditions the Minister could attach would not alone preserve the interests protected by Article L. 151-3, for example where the continuity of activities, industrial and research capacities, know-how, security of supply, operation of vital establishments, transport and communications networks, public health, data protection or performance of public contracts would not be guaranteed. A refusal must therefore be reasoned, and that reasoning is precisely what a later challenge will attack.
The European layer adds a parallel track the buyer cannot ignore. The Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union, in force since 11 October 2020, organizes information sharing between Member States and the Commission on investments by non-European investors. The Treasury states the consequence bluntly: any transaction with an entity from a non-EU country anywhere in the investor’s control chain must be notified to the European network, using the English notification form attached to the French filing. The cooperation adds no days to the French seventy-five-day maximum, all exchanges are confidential through secured channels, and information the buyer wants withheld from the European network must be identified with reasons. A buyer with American, British or Asian capital above a European holding company is therefore screened twice in substance but once in timetable, and inconsistent disclosures between the French file and the European form are a needless source of questions.
II. Closing Without Authorization and Fighting the Decision: Sanctions, Deadlines and Remedies From Abroad
A. What you risk if you close without authorization or breach your conditions
The PACTE law of 2019 deliberately built a graduated enforcement ladder, and each rung hurts. The police powers come first. Article L. 151-3-1 of the Monetary and Financial Code provides that where a foreign investment was completed without prior authorization, “le ministre chargé de l’économie prend une ou plusieurs des mesures suivantes : 1° Injonction à l’investisseur de déposer une demande d’autorisation ; 2° Injonction à l’investisseur de rétablir à ses frais la situation antérieure ; 3° Injonction à l’investisseur de modifier l’investissement.” The Minister orders the investor to file a request, to restore the previous situation at its own expense, or to modify the investment, and these injunctions may carry a daily penalty payment, an astreinte, whose amount and start date the order specifies. Where national interests are compromised or at risk, the Minister may add conservatory measures: suspension of the voting rights attached to the shares that should have been authorized, prohibition or limitation of dividends and remuneration on those shares, temporary freeze of disposal of assets linked to the sensitive activities, and appointment of a supervisor, a mandataire, inside the company. That supervisor “peut faire obstacle à toute décision des organes sociaux de nature à porter atteinte à ces intérêts”, may block any corporate decision likely to harm those interests, and its fees are charged to the company itself. A buyer who closed without authorization can therefore find itself the legal owner of shares it cannot vote, paying dividends it cannot receive, under the watch of a supervisor it must remunerate.
Breaching the conditions of an authorization triggers a parallel set of measures. The Minister may withdraw the authorization, in which case the investor must restore the previous situation or file a new request, order compliance with the unfulfilled conditions within a fixed period, or substitute new requirements including unwinding or divesting all or part of the sensitive activities. The Treasury sanctions page then describes the financial penalties. Four failures can draw a fine: completing a transaction without prior authorization, disregarding the conditions of an authorization, obtaining an authorization by fraud, and disobeying an injunction. The statute sets the ceiling as the highest of three amounts: twice the amount of the irregular investment, 10 percent of the annual pre-tax turnover of the company carrying on the sensitive activities, and five million euros for legal persons or one million for natural persons. The operative text of Article L. 151-3-2 states the maximum as “la plus élevée des sommes suivantes : le double du montant de l’investissement irrégulier, 10 % du chiffre d’affaires annuel hors taxes de l’entreprise qui exerce les activités définies au I de l’article L. 151-3, cinq millions d’euros pour les personnes morales et un million d’euros pour les personnes physiques.” The amount must remain proportionate to the gravity of the breaches, it is recovered like a State claim unrelated to tax, and, crucially, it can only be imposed “après avoir mis l’investisseur à même de présenter ses observations sur les faits qui lui sont reprochés dans un délai minimal de quinze jours”, after giving the investor at least fifteen days to submit observations on the alleged facts. That fifteen-day adversarial phase is the first place where counsel earns its fee.
Beyond the administrative ladder, an unauthorized closing poisons the rest of the file. The Kbis, the official extract proving the company’s registration, is issued by the greffe, the registry of the commercial court, through the single online window onto the RNE, the National Companies Register, with publication in BODACC, the official gazette of commercial announcements. Registration may proceed while the IEF breach sits undetected, but the buyer then owns a duly registered company whose acquisition the State can still unwind, fine and place under supervision. Lenders know this: acquisition financing routinely requires the IEF authorization as a condition precedent to drawdown, and a target’s key contracts, especially public procurement and defence subcontracts, may themselves require notifications on change of control. The beneficial-owners register adds a final tripwire. Article L. 561-46 of the Monetary and Financial Code requires companies to declare to the commercial register “les informations relatives aux bénéficiaires effectifs”, the information on beneficial owners, so the foreign control chain becomes visible to the administration shortly after closing. An undisclosed takeover surfaces on paper even when nobody denounces it.
The compliance sequence for a buyer living abroad is therefore straightforward. Qualify the deal before signing, file through the online platform with a complete control chart, make closing conditional on express authorization and not on the expiry of a timetable, refuse any side arrangement to close first and regularize later, calendar the thirty-plus-forty-five working-day periods with proof of the completeness date, and diarize every condition attached to the authorization with an internal owner and an evidence file. Where the target’s situation is distressed, with unpaid suppliers, a disputed lease or social liabilities, the IEF analysis should run together with the commercial due diligence described in our guide on buying a business in France from abroad, because the Treasury’s questions on continuity of activity will overlap with the creditors’ and employees’ questions, and inconsistent answers damage both files. And where the group already owns a French company, the general first-year roadmap in setting up a company in France as a foreign founder remains the reference for bank account, Kbis, VAT and first hire once the acquisition has closed lawfully.
B. How to challenge a refusal, an injunction or a fine from abroad
A refusal, a withdrawal of authorization, an injunction with penalty payments, conservatory measures or a fine are administrative decisions, and they are challenged before the administrative courts. The starting point is the two-month rule of Article R. 421-1 of the Administrative Justice Code: “La juridiction ne peut être saisie que par voie de recours formé contre une décision, et ce, dans les deux mois à partir de la notification ou de la publication de la décision attaquée.” The court can only be seized by an action against a decision, within two months of its notification or publication. For a buyer abroad, the notification date is everything: registered letter with acknowledgment of receipt, personal delivery, or electronic notification through counsel. The file should preserve the envelope, the acknowledgment, the email headers and the platform timestamps, because the administration will plead lateness if the date is unclear. The complementary protection is Article R. 421-5 of the same Code: “Les délais de recours contre une décision administrative ne sont opposables qu’à la condition d’avoir été mentionnés, ainsi que les voies de recours, dans la notification de la décision.” Time limits can only be held against the applicant if they were stated, with the available remedies, in the notification itself. A refusal letter that omits the remedies leaves the deadline unenforceable, but no buyer should bet a deal on that omission: file within two months in every case.
Deemed refusals deserve special attention because they are the most dangerous decisions in the regime. Silence at the end of the thirty-day or forty-five-day periods is a rejection, and it must be challenged within two months of its implied birth. The buyer should therefore fix in writing the date on which the file became complete, count thirty working days, then forty-five if the supplementary examination was opened, and treat the morning after expiry as the notification date of an implied refusal. An action against an implied refusal should ask the court to annul it and to order the Minister to re-examine the file or to grant the authorization, combining annulment with injunction. Article L. 911-1 of the Administrative Justice Code allows this: “Lorsque sa décision implique nécessairement qu’une personne morale de droit public ou un organisme de droit privé chargé de la gestion d’un service public prenne une mesure d’exécution dans un sens déterminé, la juridiction, saisie de conclusions en ce sens, prescrit, par la même décision, cette mesure assortie, le cas échéant, d’un délai d’exécution.” Where its judgment necessarily implies that a public body must take an enforcement measure in a determined sense, the court, when asked, orders that measure in the same judgment, with a deadline if needed. The injunction request must be expressly pleaded; a court will not invent it.
Standing, the intérêt à agir, is broader than buyers assume. The investor refused or sanctioned obviously has standing. But the 2020 Conseil d’État case shows that third parties can also reach the judge: the former family shareholders of the target obtained a full review of the authorization granted to the Luxembourg buyer, all the way to the supreme court, even though they were sellers, not the investor. Competitors, minority shareholders squeezed by a conditioned takeover, customers dependent on the target’s supply, and arguably local authorities where a vital establishment is concerned, may each argue an interest depending on the conditions imposed. Conversely, a buyer challenging a refusal must expect the Minister to defend the file with classified or commercially sensitive material, and should prepare for protective procedures around business secrecy, the secret des affaires, rather than assuming full disclosure of the intelligence behind the decision.
On the merits, the pleas that work are precise and documented. Against a refusal: misreading of the control test, for example treating a 20 percent non-EU stake without de facto control as a takeover; error on the sector qualification, where the target’s activity only marginally touches a listed field; manifest error of assessment where the conditions offered plainly neutralized the identified risk, measured against the R. 153-10 standard quoted above; breach of the duty to give reasons, since a refusal must be a reasoned decision; and procedural pleas such as disregard of the fifteen-day observations period before a fine. Against an injunction or conservatory measure: disproportionality, urgency wrongly characterized, voting suspension wider than the unauthorised fraction, or a supervisor’s obstruction going beyond national-interest protection into day-to-day management. Against a fine: failure to respect the fifteen-day adversarial phase, miscalculation of the base, confusion between the turnover of the sensitive activity and group turnover, or double punishment of the same facts through stacked measures. Useless pleas include invoking the freedom of financial relations in the abstract without addressing the L. 151-3 exception, arguing commercial urgency or financing costs as a ground for annulment, or attacking the European notification as an additional delay when the Treasury’s published rule caps the national timetable at seventy-five working days regardless.
Evidence from abroad must be organized to French standards. The court will want the complete filing with its completeness acknowledgment, the control chart with ultimate owners, the share purchase agreement with its IEF condition precedent, board minutes showing no closing occurred before authorization, the commitments letter and its monitoring reports, the fifteen-day observations with proof of dispatch, and the sanction calculation with audited turnover of the French sensitive entity. Witness statements, attestations de témoin, follow a fixed form and add little unless the witness states precise facts with identity documents attached. Expert examinations of the target’s technology help only when they answer the exact question the Minister asked: does this activity, in these hands, with these conditions, threaten the listed interests. Urgent interim relief, the référé-suspension, can suspend an injunction or a voting freeze while the main case runs, but it requires both urgency and a serious doubt on legality, and it is decided in weeks, so counsel should prepare it in parallel with the main action rather than after losing months. Throughout, the Paris administrative court has jurisdiction over ministerial IEF decisions, with appeal to the Paris administrative court of appeal and final review by the Conseil d’État, exactly the path the 2020 case travelled.
Conclusion
For a buyer living abroad, the French foreign-investment screening is neither a formality nor a wall. It is a defined administrative procedure with published conditions, published time limits and published sanctions. The three cumulative tests of investor origin, transaction type and target activity decide whether a filing is needed; control catches every nationality while the 25 percent and listed-company 10 percent thresholds catch only non-European buyers. The Treasury reviews a complete file in thirty working days plus forty-five if needed, silence is a deemed refusal, and the European notification runs inside the same timetable. Conditions on jobs, research, data, supply and governance are the normal price of authorization in sensitive sectors, and the Conseil d’État reviews them for manifest error rather than re-deciding industrial policy. Closing without authorization or breaching conditions invites restoration orders at the buyer’s expense, voting and dividend freezes, a paid supervisor inside the company, and fines of up to twice the investment, 10 percent of the target turnover, or five million euros. Each of those measures can be challenged within two months before the Paris administrative courts, with injunction powers available where the judgment dictates a specific outcome. The file that wins is the file prepared early: qualified before signing, filed complete, closed only on express authorization, and monitored condition by condition. That discipline turns a strategic-sector acquisition from a regulatory gamble into a closable deal.
Need a quick opinion on your case
You have received an IEF questionnaire, a conditional authorization, a refusal letter or a fifteen-day sanction notice, or you are about to sign for a French strategic target and need the filing done right. Arrange a telephone consultation within 48 hours with a lawyer from the firm to qualify your transaction, map the control chain and prepare the Treasury file or the court challenge.
Call Maître Reda Kohen on +33 6 46 60 58 22 or write through the contact page of the firm.