You live in London, New York, Dubai or Singapore and you are about to buy a French company, take a large minority stake, or acquire a business line from a French seller. The price is agreed, the letter of intent is signed, and your lawyer in your home country tells you the deal can close in three weeks. In France, that timetable can collapse on a single point: the prior authorization for foreign investments, known by its French acronym IEF (investissements étrangers en France). If your deal falls within the screening, closing without the green light of the French Minister for the Economy exposes you to orders to unwind the transaction at your own expense, suspension of your voting rights, a freeze on dividends, and a fine that can reach twice the amount of the irregular investment. This article explains, for a foreign buyer or investor who does not live in France, which deals need that authorization, how to check before you sign, how the filing works in practice, what conditions the minister can impose, and how to react to a refusal or a sanction. French acronyms are explained as they appear: the DG Trésor is the Treasury department of the Ministry for the Economy that handles filings, the RCS (registre du commerce et des sociétés) is the French trade and companies register, and the Kbis is the official certificate proving a company is registered.
French foreign-investment screening is not a formality stamped after closing. It is a condition that must be cleared before you take control, and the calendar is counted in working days with silence meaning rejection. The good news is that the rules are written, the administration publishes detailed guidance, and a preliminary ruling procedure lets you ask whether your target is even sensitive before you file. The keys are the three cumulative conditions described by the DG Trésor: who you are, what you are buying, and what the French target does. If all three are met, you must file on the dedicated IEF platform and wait. If one is missing, no authorization is needed, but you must be able to prove it. The sections below walk through each step with the exact legal texts, the official links, and the leading court decision that shows how judges review these authorizations. Readers who are creating a French vehicle from scratch rather than buying an existing business will find the companion steps of registration, bank account, Kbis and VAT in our guide to setting up a company in France as a foreign founder.
I. Which foreign investments need prior French authorization and how do you check before signing?
Many foreign buyers discover the IEF screening when the seller’s counsel inserts a condition precedent into the share purchase agreement, sometimes only days before the planned closing. Others discover it after closing, when a letter from the administration asks on what basis they took control of a sensitive French business. Both situations are avoidable. The screening applies only when three conditions coincide, and each of them can be tested in advance with the help of the published texts. Take them in order, because the analysis stops as soon as one condition fails, and document each conclusion in writing so that your file shows a serious pre-closing review.
A. Who counts as a foreign investor and which deals are caught by the screening?
The first condition concerns you, the investor. The statute provides that “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” (Article L151-3 of the Code monétaire et financier). The regulation then defines who is a foreign investor, and the net is deliberately wide. It covers “Toute personne physique de nationalité étrangère” and “Toute entité de droit étranger” (Article R151-1 of the Code monétaire et financier). A French national who is not domiciled in France for tax purposes is also treated as a foreign investor, and a French company controlled by any of these persons is itself an investor, so that interposing a French holding company does not escape the screening. Where several persons or entities form a chain of control above the buyer, every member of that chain is an investor, although a single member of the chain may file on behalf of all of them.
The second condition concerns the nature of your deal. The regulation lists four types of transactions, and meeting any one of them is enough. The first is acquiring control, within the meaning of company law, of a French-law entity or of an establishment registered with the RCS in France: “D’acquérir le contrôle, au sens de l’ article L. 233-3 du code de commerce , d’une entité de droit français ou d’un établissement immatriculé au registre du commerce et des sociétés en France” (Article R151-2 of the Code monétaire et financier). Control under company law is broader than holding half the shares. It includes holding, directly or indirectly, a fraction of the capital giving the majority of voting rights: “Lorsqu’elle détient directement ou indirectement une fraction du capital lui conférant la majorité des droits de vote dans les assemblées générales de cette société” (Article L233-3 of the Code de commerce). It also includes holding the majority of votes under a shareholders’ agreement, actually determining general-meeting decisions through the votes held, or having the power to appoint or remove the majority of the management or supervisory bodies. A presumption of control arises above 40 percent of voting rights where no other shareholder holds more. De facto control therefore counts, and the courts apply this definition strictly: the Cour de cassation recently recalled the need to examine “l’existence d’un contrôle au sens et pour l’application de l’article L. 233-3 du code de commerce” (Cour de cassation, commercial chamber, 28 November 2025, No. 25-14.467, full decision on courdecassation.fr). If your shareholders’ agreement gives you the decisive vote or the right to name the management, you may be acquiring control even with a minority of the capital.
The three other transactions caught by the screening are acquiring all or part of a business line of a French entity, crossing directly or indirectly, alone or in concert, the threshold of 25 percent of the voting rights of a French entity (crossing, directly or indirectly, alone or in concert, the 25 percent voting-rights threshold in a French entity), and crossing the 10 percent threshold in a French company listed on a regulated market. The last two thresholds apply only to investors from outside the European Union and the European Economic Area, while acquisitions of control and of business lines concern EU and non-EU investors alike. Acting in concert matters: shares held by allies bound by an agreement to act together are aggregated, so splitting a 30 percent stake into two friendly 15 percent holdings does not avoid the threshold. Before signing, map the entire chain above you, identify every person who could be treated as acting in concert with you, compute voting rights rather than capital percentages, and check whether any listed-company threshold is crossed even temporarily during the transaction steps, because each step is examined.
B. Which French activities are sensitive and how do you get a binding answer before filing?
The third condition concerns what the French target does, and it is the one buyers most often underestimate. The sensitive sectors are listed in the regulation and they extend far beyond weapons and defence (Article R151-3 of the Code monétaire et financier). The first group covers activities affecting national defence, public authority or public order and security: arms and military equipment, dual-use goods and technologies listed in Annex IV of EU Regulation 2021/821, entities holding national-defence secrets, information-systems security work for designated operators, contracts performed for the Ministry for the Armed Forces, cryptology, interception and remote-surveillance equipment, certified security-evaluation services, gambling except casinos, protection against illicit use of pathogens and toxins, and the processing, transmission or storage of data whose compromise would harm any of these activities. The second group covers essential infrastructure, goods and services: energy supply, water supply, transport networks and services, space operations, electronic communications networks and services, police, gendarmerie, civil security, prison and customs missions, approved private-security companies, public health protection, and the food-supply chain, among others. A software company, a logistics firm, a telecom subcontractor, a data-hosting provider, a medical-device maker or a food distributor can therefore be sensitive even though none of them manufactures weapons. Read the target’s actual contracts and certifications, not only its corporate purpose, because a subcontract for a defence ministry programme or a security qualification can bring an apparently ordinary company within the list.
If you hesitate, do not guess: ask. The regulation provides a preliminary ruling, sometimes called a rescrit, open both to the French target and to the investor acting in agreement with it. The administration must answer, since “le ministre chargé de l’économie répond dans un délai de deux mois” (Article R151-4 of the Code monétaire et financier). A copy of the opinion given to the investor is sent to the target company. This two-month step is the cheapest insurance in the transaction: a written answer that the deal falls outside the screening can be shown to the seller, the bank and a future auditor, while an answer that it falls inside lets you file the full application early instead of discovering the problem at closing. The DG Trésor confirms that an investment is eligible for the IEF procedure only when the three conditions on the investor, the transaction and the target’s activity are cumulatively met, and it publishes the list of sensitive activities and the filing guide on its dedicated pages (Direction générale du Trésor, Contrôle des investissements étrangers en France, official IEF hub and conditions for a transaction subject to prior authorization). In practice, send the rescrit request as soon as the target is identified, attach a precise description of its activities, sites, licences, sensitive contracts and customer base, and make the share purchase agreement conditional on either a negative rescrit or the authorization itself, with a long-stop date consistent with the deadlines described below.
II. How do you obtain the authorization, what can the minister impose, and what happens if you close without it?
Once the three conditions are met, the path is administrative and written, handled through a dedicated online platform with short deadlines and a strict rule: silence means refusal. Foreign buyers accustomed to merger-control tacit approvals must reverse their reflex. Every week of the timetable should be planned from the signing date, the financing documents should reflect the possibility of conditions, and the closing mechanics should prevent any premature transfer of control, because taking control before the authorization is the act that triggers the sanctions. The minister can authorize outright, authorize with conditions, or refuse with reasons, and each outcome has concrete consequences for your governance, your industrial commitments and your remedies before the administrative courts.
A. How do you file on the IEF platform, how long does it take and what answers can you receive?
The application is filed by the investor, and where several investors belong to the same chain of control, one member of the chain may file for all of them. The rule states that “La demande d’autorisation d’un investissement étranger est déposée par l’investisseur” (Article R151-5 of the Code monétaire et financier). Since October 2023 filings are made on the IEF platform of the DG Trésor, which also accepts the preliminary activity-review request, and the administration’s user guide describes the documents to upload, including the identity of the ultimate controllers, the chain of control, the transaction documents and the description of the target’s sensitive activities. For investment funds, expect detailed questions on the manager and the persons ultimately controlling it: in the leading case on IEF authorizations, the Conseil d’État approved a court of appeal for holding that the applicant must disclose the fund manager’s identity and, where the manager is itself a legal person, the identity of the individuals or public bodies controlling it, since “il incombe au demandeur d’indiquer l’identité du gestionnaire du fonds” (Conseil d’État, 6th and 5th chambers combined, 3 April 2020, No. 422580, full decision on legifrance.gouv.fr). In that case the minister had authorized a Luxembourg company held indirectly by two investment funds managed by an English management company “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”, and the third-party challenge to the authorization was rejected. Prepare ownership charts down to the ultimate natural persons, fund documents, financing letters and French-law transaction drafts before opening the file, because an incomplete file delays the starting point of the deadlines.
The examination runs in two stages. Within thirty working days of receipt, the minister tells the investor either that the deal falls outside the screening, that it is authorized without conditions, or that a further review is needed; without a reply, the request is deemed refused, since “En l’absence de réponse dans ce délai, la demande d’autorisation est réputée rejetée” (Article R151-6 of the Code monétaire et financier). Where further review is opened, the refusal or the authorization, with conditions if any, is issued within forty-five working days of the investor’s receipt of that interim decision, and silence again means deemed refusal. Count only working days (jours ouvrés), keep proof of receipt of each notification, and diary both deadlines from the day after receipt. A special lighter track exists for listed-company 10 percent investments through prior notification with a ten-working-day opposition period, but do not assume it applies to your deal without checking the text.
The authorization may be unconditional or conditional. The statute allows conditions protecting the national interests at stake: “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.” (Article L151-3 of the Code monétaire et financier). The regulation details their purpose: keeping the sensitive activities, knowledge and know-how in France, shielding them from foreign legislation that could obstruct them, adjusting internal organization and governance and the exercise of the rights acquired, and setting information duties toward the administration (Article R151-8 of the Code monétaire et financier). The minister may in particular require the sale of part of the acquired shares or of a sensitive business line to a separate buyer approved by the minister, and must designate which investors in the chain are responsible for complying. Conditions can later be revised at the investor’s request where unforeseeable economic or regulatory changes, a shareholding change or the authorization itself justifies it, with a forty-five-working-day decision period and deemed rejection if silent (Article R151-9 of the Code monétaire et financier), or at the minister’s initiative in defined cases with adversarial procedure. Refusal must be reasoned and is possible where conditions cannot sufficiently protect national interests; the minister may consider the investor’s links with a foreign government or public body, a serious presumption of criminal risk among listed offences, a definitive criminal conviction within five years, or a prior IEF sanction or grave persistent breach (Article R151-10 of the Code monétaire et financier). Negotiate the SPA accordingly: allocate the risk of conditions and refusal, define which conditions the buyer must accept, cap the industrial commitments, and provide for termination or price adjustment if the authorization is refused or granted with unacceptable strings attached.
B. What sanctions apply if you close without approval and how do you challenge a refusal?
Closing without the required authorization is the scenario to avoid at all costs, because the minister holds a graduated arsenal that bites the investment itself, not only the investor’s wallet. Where a foreign investment was made without prior authorization, the minister may order the investor to file an application, to restore the previous situation at its own expense, or to modify the investment, and these injunctions may carry a daily penalty payment whose amount and start date are specified: “Injonction à l’investisseur de rétablir à ses frais la situation antérieure” (Article L151-3-1 of the Code monétaire et financier). Where national interests are compromised or at risk, conservatory measures can be added: suspension of the voting rights attached to the shares that should have been authorized (“Prononcer la suspension des droits de vote attachés à la fraction des actions ou des parts sociales dont la détention par l’investisseur aurait dû faire l’objet d’une autorisation préalable”), a ban or cap on dividends and remuneration, a temporary freeze on disposing of assets linked to the sensitive activities, and the appointment of a trustee inside the company empowered to block decisions harming national interests, paid by the company. Breach of authorization conditions can lead to withdrawal of the authorization, injunctions to comply or substitute prescriptions including sale of the sensitive activities, under the same penalty and conservatory regime. These measures, except in emergencies, follow a fifteen-day adversarial phase, and they are subject to full judicial review: “Ces décisions sont susceptibles d’un recours de plein contentieux.”
On top of these measures, a financial penalty can be imposed after the investor has been given at least fifteen days to comment. The ceiling is the highest of three amounts: twice the irregular investment, 10 percent of the annual pre-tax turnover of the company carrying on the sensitive activity, five million euros for legal persons and one million for natural persons. The operative words provide that the minister may “lui infliger une sanction pécuniaire dont le montant s’élève au maximum à 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” (Article L151-3-2 of the Code monétaire et financier). The penalty must be proportionate to the gravity of the breaches and is recovered like State claims unrelated to tax. A buyer who closed a fifty-million-euro takeover without authorization therefore faces, in theory, a fine of up to one hundred million euros alongside the unwinding order, which explains why lenders and sellers now systematically require proof of filing before releasing funds.
Remedies exist but they are framed and time-limited. Injunctions and sanctions are open to full review (recours de plein contentieux), meaning the administrative court can annul and also reform the decision, while refusals and conditional authorizations are challenged before the administrative courts under the standard two-month limit: “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.” (Article R421-1 of the Code de justice administrative). The Conseil d’État case cited above shows the intensity of review: judges verify the completeness of the investor’s disclosures and the absence of manifest error in assessing national-interest protection, but they uphold authorizations supported by serious industrial commitments and a clean compliance record. A refusal should be challenged by attacking the minister’s assessment of the sensitive activity, the proportionality of the conditions that were deemed insufficient, and any error in identifying the ultimate investor or the applicable threshold, supported by expert evidence on the target’s markets and by comparable authorizations. In parallel, use the European dimension: the EU cooperation regulation on screening of foreign direct investment (Regulation (EU) 2019/452) organizes information-sharing between Member States and the Commission, so a filing in France can trigger comments from other States where the target has establishments, and the timetable of your French closing should be aligned with any parallel filings abroad. Practical conclusion: never close conditionally on a post-closing filing, never exercise voting rights or take dividends before clearance, keep the target’s sensitive activity ring-fenced between signing and closing, and mandate French counsel to log every notification date, because a missed two-month appeal deadline or an undocumented gun-jumping step is far harder to repair than a delayed closing.
Conclusion
Buying a French company from abroad succeeds when the IEF question is treated as a deal point from day one rather than a post-closing formality. Test the three cumulative conditions in writing: your status as investor including the full chain of control, the precise transaction against the control and threshold definitions, and the target’s real activities against the sensitive-sector list. Where doubt remains, seek the two-month preliminary ruling before filing, then file a complete application on the IEF platform and count the thirty and forty-five working-day periods knowing that silence means refusal. Structure the purchase agreement around the authorization with conditions, commitments and long-stop dates that reflect what the minister can lawfully require, and never take control, vote the shares or distribute profits before clearance. No accident, intrusion or harm is established by an official source in the abstract situation described here, no liability is determined by this general analysis, signed contracts and the minister’s individual decision govern each case, and only the courts decide disputes. With that discipline, the French screening becomes a manageable closing condition instead of the obstacle that unwinds your investment.