You live in London, New York, Dubai or Singapore and you have found the right French target: a profitable société par actions simplifiée (SAS, the flexible French joint-stock company), a small industrial supplier, a software publisher, a clinic network. The price is agreed, the letter of intent is signed, the calendar points to a closing before year-end. Then French counsel asks a question nobody raised on the Anglo-American side: has the foreign investment filing been made? France screens foreign investments in sensitive activities before they close. The procedure is called investissements étrangers en France (IEF, foreign investments in France), run by the Direction générale du Trésor (DG Trésor, the Treasury department of the Ministry of the Economy). Closing a covered deal without the prior authorization of the Minister for the Economy exposes the buyer to injunctions, suspension of voting rights, forced unwinding and fines running into millions of euros. And when authorization is refused or granted with heavy conditions, the buyer is not without remedies: the decision can be challenged before the administrative courts, and recent case law shows how judges review these files.
This guide explains, for a foreign founder or group buying from abroad, when the IEF authorization is required, which deals and which French activities trigger the control, how the filing and the review timetable work in practice, what conditions the Minister can impose, what happens if you close without authorization, and how to challenge a refusal or a sanction. It covers the rules in force in 2026, with the exact statutory wording and the leading court decision business readers should know. It does not replace advice on your file: the screening turns on the target’s real activities, and only the file review gives a reliable answer.
I. Do you need IEF authorization before buying your French company?
A. Are you a foreign investor buying control, a business line or a large stake from abroad?
The starting point is Article L. 151-3 of the French 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”. In plain English: covered foreign investments in an activity in France need the prior authorization of the Minister for the Economy, even where the link with public authority or the sensitive sector is only occasional. The word “prior” matters enormously: the authorization must be obtained before the investment is made, not regularized afterwards. Deal timetables, conditions precedent in the share purchase agreement and financing drawdowns must all be built around this sequence.
Who counts as a foreign investor is broader than many buyers expect. Article R. 151-1 of the same Code lists four categories, and the first is straightforward: “Toute personne physique de nationalité étrangère”, meaning any individual of foreign nationality. A British, American or Emirati passport holder buying directly is therefore a foreign investor even if they have lived in France for years. The second category catches French nationals who are not tax-resident in France, so an expatriate founder returning capital from abroad can fall inside the screening. The third and fourth categories cover any foreign-law entity and any French-law entity controlled by the persons or entities in the first three categories. A Dutch holding company, a Delaware LLC or a Luxembourg société à responsabilité limitée (the local equivalent of a private limited company) buying the French target is a foreign investor, and so is a French SAS set up for the acquisition if it is itself controlled from abroad. Control chains are expressly caught: where several investors belong to the same chain of control, every member of the chain is treated as an investor, which prevents sidestepping the filing through layered holding structures.
What counts as an investment is defined by Article R. 151-2 of the Code. The first case is: “D’acquérir le contrôle, au sens de l’ article L. 233-3 du code de commerce , d’une entité de droit français”, that is, acquiring control, within the meaning of Article L. 233-3 of the Commercial Code, of a French-law entity. Buying 100% or a majority of an SAS or a société à responsabilité limitée (SARL, the French close private limited company) is the textbook case, but control under Article L. 233-3 of the Commercial Code goes wider than 50%: “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” is only the first test, and the article also catches shareholders who hold the majority of votes by agreement, who determine decisions in fact through their votes, or who can appoint or remove most of the directors. A 40% stake with de facto control, a shareholders’ agreement giving veto or appointment rights, or convertible instruments that deliver control can therefore amount to acquiring control. The second case in Article R. 151-2 is acquiring all or part of a business line (branche d’activité) of a French entity, so an asset deal carved out of a French seller is screened like a share deal. The third case is crossing, directly or indirectly, alone or in concert, the threshold of 25% of the voting rights of a French entity. A 26% minority investment that nobody would call a takeover can still need prior authorization where the target operates in a listed sensitive activity. Buyers who reason only in terms of majority control miss this threshold trigger, and it is one of the most frequent sources of late discoveries in due diligence.
If you are still choosing how to enter France, read our companion guide on choosing between an SAS, a SARL, a branch or a subsidiary as a foreign founder: the vehicle you pick changes the control analysis, the filing position and the bermanfaat consequences, but it does not by itself remove a target-activity trigger, because the screening looks at the French activity being acquired, not at the label on the buyer.
Two practical consequences follow for deal structuring. First, map the buyer chain early: identify every foreign national, foreign entity and French acquisition vehicle, check who controls whom within the meaning of Article L. 233-3, and decide who will file, since the rules allow one member of a control chain to file for all the investors in that chain. Second, calendar the 25% threshold alongside the control test: shareholder pacts, warrants, convertible bonds and staged closings that cross 25% of voting rights in a sensitive company need the same prior authorization as a full buyout. Where the analysis is genuinely doubtful, the regulations provide a preliminary ruling procedure (demande d’avis, literally a request for an opinion) allowing the target company or the investor to ask the Minister whether all or part of the activity falls inside the screening, with an answer due within two months. A written “out of scope” answer is worth far more than counsel’s best guess when a bank, an auditor or a co-investor asks for comfort.
B. Does your French target operate in a listed sensitive activity?
The screening never applies to every sector: it applies where the French activity participates in the exercise of public authority or falls in listed sensitive fields. Article R. 151-3 of the Code opens with: “Les activités mentionnées au I de l’article L. 151-3 sont les suivantes : I.-Activités de nature à porter atteinte aux intérêts de la défense nationale, participant à l’exercice de l’autorité publique ou de nature à porter atteinte à l’ordre public et à la sécurité publique”. What follows is a long detailed list, and buyers should read it line by line against the target’s real operations rather than its marketing description. The list covers activities linked to weapons, munitions, powders and explosive substances, war materials and equivalent equipment, dual-use goods and technologies, information systems security, cryptology, activities covered by classified defence secrecy, energy supply and water supply where continuity matters, transport networks and electronic communications, public health protection, and certain research, production and marketing activities in these fields. Later extensions added critical technologies such as semiconductors, space, drones, photonics, robotics, quantum, artificial intelligence where it bears on the protected interests, and the protection of certain personal data. The perimeter has widened over time and continues to move with each government update, so a checklist downloaded two years ago is not a safe basis for a 2026 closing.
Three misunderstandings cause most filing failures. The first is believing that a small or non-defence company cannot be sensitive. The screening catches suppliers and subcontractors: a 40-person machining shop whose parts end up in defence programmes, a software firm whose encryption module sits inside a hospital system, a logistics company operating inside a port or airport zone, or a data-hosting provider holding health or telecom data can all fall inside the list through their customers, their certifications or their access rights. The statute says “même à titre occasionnel” (even on an occasional basis), so a marginal sensitive activity inside a largely civilian business still triggers the control for the whole investment. The second misunderstanding is reading the target’s code APE (the statistical activity code assigned at registration) or its articles of association as conclusive. The administration looks at activities actually exercised, including classified or regulated segments, public contracts performed as holder or subcontractor, and authorizations held, not at the headline business description. The third misunderstanding is assuming that buying through a French or EU vehicle neutralizes the issue. It does not: where the ultimate investor sits outside France, or where a French buyer is controlled from a third country, the filing analysis follows the control chain to the real decision-maker.
European Union buyers benefit from a lighter touch in some configurations but not from a blanket exemption: intra-EU investments are screened where they touch the listed activities, and the French control articulates with the EU cooperation mechanism for foreign direct investment screening, under which Member States and the Commission exchange information on sensitive cases. American, British, Gulf, Asian and Swiss buyers should assume full screening where the activity test is met. Sector practice confirms the trend: energy transition assets, health data businesses, telecom and hosting providers, semiconductor and photonics suppliers, drone and robotics companies, port and airport service providers and defence subcontractors at any tier are routinely filed, often on a precautionary basis. Filing where the scope is arguable costs time; failing to file where the scope is established costs the deal.
Due diligence for an IEF file therefore differs from classic corporate due diligence. Ask the seller for the full activity mapping: sites, certifications, classified clearances, defence or interior ministry contracts, public procurement lots as prime or subcontractor, dual-use classifications, encryption products, health data hosting approvals (hébergeur de données de santé, the French health-data hosting certification), telecom declarations, energy or water concessions, and any prior IEF authorizations or conditions attached to earlier deals. Check the Kbis (the official company identity extract issued by the greffe, the court clerk’s office keeping the Trade and Companies Register) for the registered activity, then go beyond it with contracts and operational documents. If the target previously obtained an IEF authorization, read its conditions: they can run with the company and bind the new buyer after the acquisition. And keep the preliminary ruling procedure in mind for genuinely borderline files: a reasoned two-month answer from the administration beats months of post-closing exposure.
II. How do you file, close and defend the deal from abroad?
A. How do you file with the DG Trésor, what is the review timetable and what conditions can be imposed?
The filing is made by the investor to the Minister for the Economy, in practice to the DG Trésor office handling foreign investment screening (the bureau Multicom). Article R. 151-5 of the Code states the principle simply: “La demande d’autorisation d’un investissement étranger est déposée par l’investisseur.” Where several investors belong to the same chain of control, one member of the chain may file for all of them, which simplifies private-equity and group filings. The file must describe the investor chain up to the ultimate beneficial owners, the investment structure and financing, the target’s sensitive activities, and the commitments offered to protect the national interests at stake. Competitor guides and the administration’s own checklists converge on the same lesson: thin or evasive ownership disclosure is the fastest route to a prolonged review. The leading court decision on the former regime already required investment funds to identify the fund manager and, where the manager is itself a legal person, the individuals or public bodies ultimately controlling it, holding that no provision requires the identity of every investor in the fund. State the ultimate control clearly, document the fund manager’s regulated status and track record, and the file starts on solid ground.
The review runs in two phases. Article R. 151-6 of the Code provides: “Dans un délai de trente jours ouvrés à compter de la date de réception d’une demande d’autorisation, le ministre chargé de l’économie indique à l’investisseur ayant déposé la demande soit que l’investissement ne relève pas du I de l’article L. 151-3”. In practice the Minister answers within thirty working days either that the deal is out of scope, or that it is authorized unconditionally, or that an in-depth review is needed. Silence at the end of the thirty working days counts as a rejection of the request, so a buyer who files and hears nothing must chase the file rather than treat silence as consent. Where the in-depth review opens, the current texts allow up to forty-five working days of additional examination, during which the administration negotiates the conditions (engagements) attached to the authorization. The realistic timetable for a sensitive but uncontroversial file is therefore two to four months from a complete filing to a signed authorization, and complex files with defence, telecom or health-data dimensions run longer. Build the share purchase agreement around this: make the IEF authorization an express condition precedent (condition suspensive), allocate the risk of refusal or burdensome conditions, set a long-stop date consistent with the review, and prohibit closing before clearance. Lenders should align drawdown conditions the same way.
Authorization may be granted outright, granted with conditions, or refused by reasoned decision. The statute allows the authorization to carry conditions ensuring the planned investment will not harm the national interests defined in Article L. 151-3, and Article R. 151-8 of the Code explains: “Les conditions mentionnées au II de l’article L. 151-3 visent principalement, dans le respect du principe de proportionnalité, à : 1° Assurer la pérennité et la sécurité, sur le territoire national, des activités énumérées à l’article R. 151-3 exercées par l’entité objet de l’investissement”. In deal terms, expect commitments on keeping sensitive activities, jobs, research and production capacities in France for a defined period, maintaining supply and maintenance obligations towards French public customers, ring-fencing classified information and access rights, keeping data hosted in France or the EU, notifying future transfers or restructurings, and governance arrangements such as a French security officer or board reporting. For funds, commitments on holding periods and on prior notification of resale are common. These conditions are proportionate by design but they are enforceable: breach can trigger injunctions and fines, and the conditions can be revised only at the investor’s request where economic or regulatory circumstances have changed unforeseeably since closing. Negotiate them as carefully as the price, because they shape the industrial plan for years.
Refusal is possible and reasoned. Article R. 151-10 of the Code provides: “Le ministre chargé de l’économie refuse, par décision motivée, l’autorisation d’investissement demandée, si la mise en œuvre des conditions prévues à l’article R. 151-8 ne suffit pas à elle seule à assurer la préservation des intérêts nationaux définis par l’article L. 151-3 .” The Minister may also take into account links between the investor and a foreign government or public body, and may refuse where there is a serious presumption that the investor could commit certain listed offences. A refusal ends the deal in its notified form, but it is not necessarily the end of the project: restructured perimeters, carve-outs of the sensitive branch, reinforced commitments or a different buyer vehicle can support a fresh filing, and the refusal itself can be challenged in court, as explained below. After a successful closing, remember the declaration step: completion of an authorized investment must be declared under the conditions set by ministerial order, so diary the post-closing notice alongside the registre des bénéficiaires effectifs (RBE, the beneficial-owner register), tax registrations and the annual corporate calendar described in our guide to your French company’s annual legal calendar from abroad.
Paris handling deserves a practical note for foreign buyers. The screening is national and filed centrally with the DG Trésor in Paris, in French, and the review is conducted in French with occasional English exchanges. Powers of attorney, foreign corporate documents with apostille (the Hague Convention authentication stamp) and sworn translations (traduction assermentée) should be prepared before filing, because the thirty-working-day clock runs from a complete file and translation gaps stall completeness. Once authorized, registration steps run through the guichet unique (the single online company formalities portal) and the greffe of the competent commercial court, and banking steps follow the path in our guide to opening a French corporate bank account and obtaining your Kbis as a foreign founder. None of these later steps cures a missing IEF authorization: the clearance comes first, the Kbis, the funds release and the publications at the BODACC (the official bulletin publishing company registrations and insolvencies) come after.
B. What if you already closed without authorization, and how do you challenge a refusal or a sanction?
Closing a covered investment without prior authorization is the scenario buyers fear discovering during an audit, a refinancing or a resale. The Code gives the Minister graduated tools. Article L. 151-3-1 of the Code opens: “I.-Si un investissement étranger a été réalisé sans autorisation préalable, 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.” These injunctions can carry daily penalty payments (astreinte), and where national interests are compromised or at risk, the Minister can take protective measures including: “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”. Companion measures can freeze or limit dividends, suspend disposals of sensitive assets, and install a government-appointed monitor inside the company, paid by the company, who can block corporate decisions harmful to national interests. For a buyer who closed in good faith reliance on faulty scope advice, the realistic path is immediate self-disclosure: file a regularization request, suspend exercise of the sensitive voting rights voluntarily, pause dividends and sensitive asset transfers, and negotiate conditions from a cooperating posture. For a seller, the lesson is symmetric: selling a sensitive company to a foreign buyer without a clearance condition exposes the whole transaction to unwinding at the buyer’s or the administration’s initiative.
Financial sanctions follow the same logic of escalation with procedural safeguards. Article L. 151-3-2 of the Code targets four situations: “En cas de réalisation d’un investissement sans autorisation préalable, d’obtention par fraude d’une autorisation préalable, de méconnaissance des prescriptions du II de l’article L. 151-3 , d’inexécution totale ou partielle des décisions ou injonctions prises sur le fondement de l’article L. 151-3-1 , le ministre chargé de l’économie peut, 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, lui infliger une sanction pécuniaire”. The adversarial safeguard is real: at least fifteen days to submit observations on the alleged facts before any fine. The ceiling is the highest of twice the irregular investment amount, 10% of the annual pre-tax turnover of the business exercising the sensitive activities, five million euros for legal persons and one million for individuals, with the amount proportionate to the gravity of the breaches. Fines are recovered like State debts unrelated to tax and domain. In practice the administration calibrates to cooperation, gravity and duration: a prompt voluntary filing with full disclosure and immediate compliance measures is treated differently from a concealed closing discovered through a third-party complaint or a resale audit. Document every step from discovery to remediation, because the sanction file and the later court review both turn on the paper trail.
Challenging a refusal, conditions, injunctions or fines runs before the administrative courts. The leading illustration is the Council of State decision of 3 April 2020, No. 422580, which reviewed a ministerial authorization granted under Article L. 151-3. The case concerned a decision by which the Minister “autorisé 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.” Third parties challenged the authorization, and the Council of State examined both the disclosure given on the fund chain and the merits of the clearance. On disclosure, it held that the applicant must identify the fund manager and, where the manager is a legal person, the individuals or public bodies ultimately controlling it, with no requirement to name every investor in the fund. On the merits, it found “que la décision litigieuse n’était entachée d’aucune erreur d’appréciation au regard de la nécessité de préserver les intérêts protégés par l’article L. 151-3 du code monétaire et financier”, noting the manager’s regulated status, eleven years of industrial experience, turnaround results and commitments capable of sustaining the target. The operative part is short: “Article 1er : Le pourvoi de Mme B… et M. B… est rejeté.”
Four litigation lessons matter for a foreign buyer. First, the judge reviews errors of law and manifest errors of assessment, not the political opportunity of the clearance: a well-documented file showing regulated-manager status, industrial experience and credible continuity commitments survives, while a thin file does not. Second, standing is not limited to the investor: third parties with a sufficient interest, such as the seller’s family shareholders in that case, can attack an authorization, which means authorizations with weak reasoning create litigation exposure even after clearance. Third, conditions must be proportionate and reasoned: commitments disconnected from the identified national-interest risk, or a refusal that fails to explain why conditions would not suffice, are the natural pressure points of an appeal. Fourth, procedure matters: respect the two-month appeal deadline for third parties, file the investor’s own appeal within two months of notification, brief the facts with exhibits rather than assertions, and seek interim relief (référé-suspension, the urgent application to suspend an enforceable decision) only where urgency and serious doubt about legality can both be shown, since suspension of a refusal rarely reopens a deal calendar on its own. Administrative litigation runs in French before the Paris administrative court with appeal to the Paris administrative court of appeal and cassation to the Council of State, so budget for sworn translations of exhibits and for a Paris procedure timetable measured in months.
Where the deal is already signed, three defensive moves protect value while the IEF track runs. Cap the exposure in the purchase agreement with a specific IEF warranty and a clearance condition precedent, plus a right to walk away or to restructure the perimeter if conditions exceed an agreed threshold. Keep the target’s sensitive operations in ordinary course and preserve the evidence of continuity: maintenance of sites, research teams, certifications, supply contracts and data hosting locations is exactly what the administration and, later, the judge will examine. And coordinate the IEF track with merger control, sectoral approvals and foreign-subsidy review where the buyer group received non-EU support: each clearance has its own clock, and the closing checklist must sequence them rather than assume one approval covers the others. Buyers who treat IEF as one line in a conditions-precedent list close on time; buyers who discover it at the notary’s office do not.
Conclusion
Buying a French company from abroad in 2026 means clearing the IEF screening wherever the target’s activities touch the listed sensitive fields. Check the buyer chain against Article R. 151-1, the deal shape against Article R. 151-2 including the 25% voting-rights threshold, and the target’s real operations against Article R. 151-3 before signing anything that assumes closing. File early with the DG Trésor, calendar the thirty-working-day first answer plus the in-depth review, negotiate proportionate conditions you can actually live with, and make the authorization a hard condition precedent to closing and financing. If the deal already closed without clearance, file immediately, freeze the sensitive rights voluntarily and build the remediation file. If the Minister refuses or fines, the decision must be reasoned and can be challenged before the administrative courts, where documented industrial commitments and clean procedure carry real weight, as the Council of State’s 2020 ruling illustrates. Handled early, the IEF track is a predictable step in a French acquisition; discovered late, it becomes the step that decides whether the acquisition survives.