As of 22 August 2026, a non-European investor cannot treat every French share acquisition as a routine closing exercise. A new rule applies from 17 August 2026: where the target is a sensitive French company whose shares are admitted to trading on a regulated market outside the European Union, crossing 10% of voting rights can trigger the French foreign-investment-control procedure. The rule matters to founders, private-equity funds, strategic buyers and foreign groups that are building a French subsidiary, acquiring a French business line or taking a minority position in a technology, energy, health, communications or defence-related company.<\/p>\n
The threshold is only one part of the analysis. The investor\u2019s nationality or control chain, the legal form of the target, the precise rights acquired, the target\u2019s activity and the planned timetable must be reviewed together. Some operations require prior authorisation; the new listed-company route may instead permit a notification followed by a ten-working-day waiting period, unless the Minister for the Economy objects. A transaction completed too early can expose the parties to nullity, injunctions, suspended voting rights, restrictions on dividends, asset controls and a forced restoration of the previous position. This guide sets out the decision process for a foreign business reader and the documents to prepare before signing or closing.<\/p>\n
The core provisions should be read together: Article R. 151-1<\/a> identifies the foreign investors; Article L. 233-3 of the Code de commerce<\/a> supplies the control test; Article R. 151-2<\/a> lists the transaction triggers; Article L. 151-3<\/a> sets the prior-authorisation principle; and Article R. 151-3<\/a> identifies protected activities. These links are the starting point for a transaction memo, not a substitute for mapping the actual control chain and business operations.<\/p>\n The first question is not whether the buyer calls itself a founder, a holding company, a fund or a strategic partner. The first question is whether the buyer falls within the statutory definition of an investor. Article R. 151-1 of the Code mon\u00e9taire et financier<\/em>, the French Monetary and Financial Code, covers four categories: a natural person of foreign nationality; a French national who is not tax-resident in France; a foreign-law entity; and a French-law entity controlled by one of those persons or entities. The text also treats the whole control chain as a set of investors. The official wording includes: \u201cToute entit\u00e9 de droit \u00e9tranger.\u201d A foreign parent therefore cannot assume that inserting a French subsidiary between it and the acquisition removes the transaction from the review.<\/p>\n The control analysis follows Article L. 233-3 of the Code de commerce<\/em>, the French Commercial Code. Control can arise through majority voting rights, a voting agreement, the ability to determine decisions in practice or the power to appoint or remove most management or supervisory-body members. The provision begins: \u201cToute personne, physique ou morale, est consid\u00e9r\u00e9e\u201d as controlling another in the circumstances it lists. A person or entity with more than 40% of voting rights is presumed to control the company when no other shareholder has a larger holding. Persons acting together can also be treated as exercising joint control. This is why a shareholder agreement, convertible instrument, call option, board appointment right or concert-party arrangement should be reviewed alongside the percentage shown in the share register.<\/p>\n The second question is the nature of the transaction. Article R. 151-2 identifies four principal triggers for an investor covered by Article R. 151-1:<\/p>\n The current wording of the third and fourth triggers is important because it measures voting rights, not simply the cash amount invested or the percentage of economic ownership. A transaction may also be caught even when the purchaser does not acquire a majority: a business-line acquisition, a governance right or a concerted acquisition can be more important than the headline percentage. The phrase \u201cD’acqu\u00e9rir tout ou partie d’une branche d’activit\u00e9\u201d in Article R. 151-2 is a warning against analysing only share purchases. An asset deal, carve-out or transfer of a strategic activity can require the same pre-closing review.<\/p>\n There is a limited European exemption for the 25% and 10% voting-rights triggers. Those two thresholds do not apply to an individual who is a national of an EU Member State or an EEA state that has entered into the relevant administrative-assistance convention with France and is domiciled in such a state. They also do not apply to an entity where every member of the control chain has the required EU or EEA connection. That exemption is narrower than many international groups assume. A French company controlled through a non-European fund, a trust or a non-European ultimate parent must be analysed through the entire chain. Conversely, the exemption from the percentage thresholds does not automatically eliminate the control or business-line triggers in Article R. 151-2.<\/p>\n The distinction between a French subsidiary and a French branch also matters. A subsidiary is a separate French-law company. A branch is an establishment of the foreign company, and its registration or activities may raise different questions. The foreign-investment regime expressly refers to an establishment registered in the RCS when describing the control trigger. The practical lesson is to map the legal object being acquired: shares, voting rights, a branch, a business line, a French-law entity or an establishment. The term \u201cKbis\u201d refers to the official extract evidencing a company\u2019s registration details, while the greffe<\/em> is the court registry handling commercial formalities. Those documents help identify the target, but they do not replace the investment-control analysis.<\/p>\n Not every ordinary company-formation step automatically becomes a foreign-investment authorisation case. A founder who simply incorporates a non-sensitive French SAS, meaning a soci\u00e9t\u00e9 par actions simplifi\u00e9e<\/em> or simplified joint-stock company, still has to complete the normal formation process through the Guichet unique operated by INPI, the National Institute of Industrial Property. The foreign-founder route is described by Service-Public Entreprendre<\/a>, and the formalities are submitted through the INPI e-procedures portal<\/a>. But if the project involves taking control of an existing sensitive company, acquiring a strategic business line or crossing a protected voting threshold, the formation checklist is not enough. The investor should screen the transaction before the term sheet becomes binding.<\/p>\n The Court\u2019s case law shows why a functional analysis is safer than a label-based analysis. In Conseil d’\u00c9tat, Section, 23 October 1981, no. 23994<\/a>, the Court treated a materially distinct extension of a foreign-controlled business as a direct investment subject to prior authorisation under the rules then in force. The decision states, in the official text: \u201cQUE L’EXTENSION D’ACTIVITE DE LA SOCIETE SAGMAR ETAIT SUBORDONNEE A UNE AUTORISATION PREALABLE QUI N’ETAIT SOUMISE A AUCUNE CONDITION DE DELAI\u201d. The statutory framework has changed since 1981, but the practical principle remains useful: changing the activity of a foreign-controlled French operation can be legally significant even when the parties describe it as a commercial expansion rather than an acquisition.<\/p>\n Yes, where the other statutory conditions are met. The 2026 change is targeted at French companies whose shares are traded on a regulated market in a third country. The Decree no. 2026-718 of 30 July 2026<\/a> amended Article R. 151-2 so that the regulated-market definition is not confined to a French or EU trading venue. Its Article 2 states: \u201cLe pr\u00e9sent d\u00e9cret s’applique \u00e0 compter du onzi\u00e8me jour ouvr\u00e9 suivant sa publication.\u201d The decree was published in the Journal officiel on 2 August 2026, so the new rule applies from 17 August 2026.<\/p>\n The companion Order of 30 July 2026 concerning foreign investments in France<\/a> lists the relevant venues. It covers EU and EEA regulated markets, equivalent third-country markets recognised by the European Commission and six named third-country markets: London Stock Exchange in the United Kingdom, SIX Swiss Exchange in Switzerland, Toronto Stock Exchange in Canada, Singapore Exchange, Japan Exchange and Korea Exchange. The order\u2019s official Article 5-1 lists \u201cRoyaume-Uni : London Stock Exchange\u201d, \u201cSuisse : SIX Swiss Exchange\u201d, \u201cCanada : Toronto Stock Exchange\u201d, \u201cSingapour : Singapore Exchange\u201d, \u201cJapon : Japan Exchange\u201d and \u201cCor\u00e9e du Sud : Korea Exchange\u201d. A listing on one of these venues is therefore a specific screening fact, not a reason to assume that French rules do not apply because the market is abroad.<\/p>\n The new rule should be read together with the existing 10% rule. It does not mean that every non-European purchase of 10% of any French company needs ministerial approval. The target must be a French company, the shares must be admitted to a regulated market recognised by the rules, and the company\u2019s activity must fall within the protected categories. The investor must also be within the relevant foreign-investor definition. A non-European buyer purchasing 9.9% may still create issues if voting arrangements, derivatives, concert-party conduct or a separate control right effectively take the investor beyond the threshold. A buyer purchasing 10% of a company in an ordinary, non-sensitive sector does not satisfy the activity condition merely because the target is listed.<\/p>\n The activity test is the substantive centre of the regime. Article L. 151-3 of the Monetary and Financial Code provides that prior authorisation concerns foreign investments in a French activity that participates, even occasionally, in the exercise of public authority or falls within areas capable of affecting public order, public security or national defence. It also covers research, production or sale of weapons, ammunition, powders and explosive substances. The official text says: \u201cSont soumis \u00e0 autorisation pr\u00e9alable du ministre charg\u00e9 de l’\u00e9conomie les investissements \u00e9trangers\u201d. Article R. 151-3 then details the protected activities.<\/p>\n The list is broader than weapons manufacturing. It includes military materials, dual-use goods, national-defence secrets, information-system security, cryptology, lawful interception technologies, certified information-security assessment, gambling activities other than casinos, critical data processing and storage, energy, water, transport, space operations, electronic communications, police and civil-security missions, vital infrastructure, public health, food-security-related agriculture, political and general-interest press, online political and general-interest press and critical raw materials. It also includes research and development in critical technologies and dual-use goods. Article R. 151-3 is the link to use when the target operates in cyber-security, artificial intelligence infrastructure, telecommunications, medical supply, energy, defence supply chains or data services.<\/p>\n The activity does not have to be the target\u2019s only business. The text expressly includes activities carried out even occasionally. A company may therefore be a normal software, manufacturing or logistics business while a small division, contract, dataset or subcontracting activity falls within a protected category. Before signing, prepare an activity map that identifies products, customers, government contracts, data flows, licences, facilities, subcontractors and research programmes. The French administration may look beyond the company\u2019s marketing description and examine what the business actually does, what it supplies and how its technology could affect protected interests.<\/p>\n The Conseil d’\u00c9tat\u2019s decision in no. 422580, 3 April 2020<\/a>, is directly relevant. The case concerned the ministerial authorisation for a Luxembourg company, indirectly held by funds managed by an English company, to acquire control of a French industrial company supplying the automotive, aeronautics and electronics sectors. The Court upheld the decision and explained that the applicant had to identify the fund manager and, where appropriate, the persons controlling that manager. The official decision states: \u201cil incombe au demandeur d’indiquer l’identit\u00e9 du gestionnaire du fonds\u201d. For a modern transaction, that means an investor should not wait until the administration asks for the ultimate-owner chart. The chart, governance documents, fund-management agreement details and financing chain should be ready at the beginning.<\/p>\n Article L. 151-3 also allows the authorisation to contain conditions protecting national interests. The authorisation is not necessarily a simple yes-or-no outcome. A buyer may be asked to preserve a French activity, protect know-how, maintain a governance arrangement, keep sensitive data in a specified environment, retain industrial capacity or provide information to the administration. That is why the legal and commercial teams should model the conditions that the business can actually perform before agreeing a price, a closing date or a post-closing integration plan.<\/p>\n The procedural rules are equally important: Article R. 151-4<\/a> governs an activity-scope request; Article R. 151-5<\/a> governs the filing and notification routes; Article R. 151-6<\/a> governs the review timetable; and Article R. 151-8<\/a> and Article R. 151-9<\/a> govern conditions and later changes. The investor should keep these provisions attached to the transaction timetable and closing checklist.<\/p>\n The safest workflow has four stages: classify the investor, classify the operation, classify the activity and choose the correct filing route. The investor should then build the transaction timetable around the applicable waiting period instead of placing the filing after signing. A foreign parent, buyer or fund should appoint one person responsible for the accuracy of the ownership and financing information. In a multi-layered group, the file should explain every entity between the buyer and the ultimate beneficial owner, the governing law of each entity, voting rights, veto rights, concert arrangements and the role of any investment manager.<\/p>\n Stage one is an investor memorandum. It should identify the nationality and residence of individual investors; the law under which each entity is incorporated; the control chain; government or public-entity links; the fund manager; the persons who control the manager; the source and structure of financing; and the rights that will be acquired. This is more than a corporate chart. A shareholder with 8% of voting rights may have a board appointment right; a fund may act with another fund under an agreement; and an instrument convertible into voting shares may affect the practical analysis. The official information should be consistent with the target\u2019s corporate records, its Kbis, its beneficial-owner filing and its transaction documents.<\/p>\n Stage two is an operation memo. Describe the shares or assets acquired, the percentage of voting rights before and after closing, the price, the financing, the acquisition vehicle, any business-line transfer, the governance rights and the planned closing mechanics. State whether the purchaser will seek control, nominate directors, change the target\u2019s strategy, move data, merge operations or transfer intellectual property. If the buyer is acquiring a French branch or an operating division, describe the employees, contracts, premises, licences and assets included. A document titled \u201cminority investment\u201d should not conceal a veto or management right that changes the substance of the operation.<\/p>\n Stage three is an activity memorandum. The target should list its activities against Article R. 151-3, identify the relevant business lines and explain why an activity is or is not within a protected category. The analysis should include activities performed through subsidiaries, subcontractors and controlled affiliates when they are part of the investment perimeter. The buyer should obtain a written description from the target\u2019s management, but should also test it against licences, public contracts, data classifications, technology export controls and customer concentration. A company that supplies an essential operator or handles sensitive infrastructure data may require a different analysis from a similarly named company serving only private customers.<\/p>\n If the parties are unsure whether the activity is covered, Article R. 151-4 provides a preliminary route. A French-law entity can ask the Minister for the Economy whether all or part of its activity falls within Article L. 151-3. An investor can make the same request with the agreement of the entity carrying out the activity. The article states that \u201cle ministre charg\u00e9 de l’\u00e9conomie r\u00e9pond dans un d\u00e9lai de deux mois\u201d. This opinion route can be useful before a competitive sale, but its two-month period should be built into the timetable and the question must be framed with enough facts to produce a meaningful answer. A vague request about a group with several activities may not resolve the transaction\u2019s real risk.<\/p>\n For a transaction requiring a full authorisation, Article R. 151-5 places the filing responsibility on the investor. The official text begins: \u201cLa demande d’autorisation d’un investissement \u00e9tranger est d\u00e9pos\u00e9e par l’investisseur.\u201d A member of the control chain may file for the group, which is practical for a fund or a parent company with multiple acquisition vehicles. The file should be submitted through the current Direction g\u00e9n\u00e9rale du Tr\u00e9sor process and should match the information in the signed transaction documents. The official Treasury page on foreign-investment control<\/a> explains the three cumulative conditions and the information expected for the investor, target and operation.<\/p>\n The 10% listed-company route has a specific procedural feature. Article R. 151-5 provides that an investor carrying out the operation described in Article R. 151-2, 4\u00b0 is dispensed from the ordinary authorisation application if the project has been notified in advance to the Minister for the Economy and no opposition is made. The dispensation arises after ten working days from the notification. The provision says: \u201cSauf opposition du ministre, la dispense de demande d’autorisation na\u00eet \u00e0 l’issue d’un d\u00e9lai de dix jours ouvr\u00e9s \u00e0 compter de la notification.\u201d This is not permission to close on the day the email is sent. The transaction documents should make the notification, the end of the ten-working-day period and the absence of opposition conditions to closing.<\/p>\n For other applications, the timetable is longer. Under Article R. 151-6, within thirty working days after receipt of a complete authorisation application, the Minister indicates whether the investment is outside the regime, is authorised without conditions or requires a further examination. The text says: \u201cDans un d\u00e9lai de trente jours ouvr\u00e9s \u00e0 compter de la date de r\u00e9ception d’une demande d’autorisation\u201d. If further examination is required, the final authorisation, refusal or conditional authorisation is issued within forty-five working days from the notice of further examination. Silence at the end of either period is deemed to be a rejection. This should be reflected in the sale agreement: a long-stop date, termination rights, cooperation covenants, an obligation to answer information requests and a restriction on voluntary closing should all be addressed.<\/p>\n Stage four is conditions planning. Article R. 151-8 allows conditions aimed at preserving the target\u2019s activity and security, preventing the capture of know-how, adapting internal organisation and governance, and ensuring information flows to the administration. The Minister may even condition authorisation on the disposal of shares or of a protected business line to an approved separate entity. Article R. 151-9 allows conditions to be revised after an unforeseen change in economic or regulatory circumstances, a change in shareholding or a change in the control chain. A buyer should therefore conduct a post-closing compliance review rather than treating authorisation as a one-time administrative certificate.<\/p>\n The enforcement framework must be included in the risk register: Article L. 151-3-1<\/a> addresses injunctions and protective measures; Article L. 151-4<\/a> addresses contractual nullity; and Article R. 151-10<\/a> sets out refusal considerations. A board paper that addresses only the purchase price and regulatory approval should be expanded to cover these consequences.<\/p>\n The first risk is contractual invalidity. Article L. 151-4 states: \u201cEst nul tout engagement, convention ou clause contractuelle\u201d that directly or indirectly carries out a foreign investment in a protected area when the required authorisation has not been obtained. A share-purchase agreement should therefore distinguish signing from completion and make completion conditional on the correct clearance. The parties should avoid giving the buyer voting rights, board control, operational instructions or access to protected assets before the condition is satisfied. A clause calling the transaction \u201csubject to regulatory approval\u201d is not enough if the parties behave as though the transaction has already closed.<\/p>\n The second risk is an administrative order to repair the transaction. Article L. 151-3-1 allows the Minister, where an investment was made without prior authorisation, to order the investor to submit an application, restore the previous situation at its own cost or modify the investment. Those orders may carry a daily penalty payment, known in French as an astreinte<\/em>. The same article also allows protective measures where national interests are compromised or at risk. The official text includes \u201cInjonction \u00e0 l’investisseur de r\u00e9tablir \u00e0 ses frais la situation ant\u00e9rieure\u201d. In practice, restoration may mean unwinding a share transfer, returning assets, disposing of a business line or reorganising the ownership chain.<\/p>\n The protective measures are commercially serious. The Minister may suspend voting rights attached to the shares that should have been authorised; prohibit or limit dividends or remuneration attached to those shares; suspend, restrict or temporarily prohibit the disposal of assets connected with the sensitive activity; and appoint a representative to protect national interests inside the company. The representative can block corporate decisions that threaten those interests. These are not abstract penalties. They can prevent the buyer from implementing its business plan, moving cash, changing directors or integrating the French target.<\/p>\n The third risk concerns a breach of conditions after an authorisation has been granted. Article L. 151-3-1 permits withdrawal of the authorisation, a new injunction to comply, substitute measures and, where appropriate, the sale of all or part of the protected activities. The investor may be required to request a new authorisation if it does not restore the previous position. Article R. 151-8 identifies the types of conditions that can be imposed, including continuity of activity, protection of know-how, internal governance and reporting. The compliance team should maintain evidence of each undertaking, appoint an owner for each obligation and obtain clearance before making a later change to the shareholding or control chain.<\/p>\n The fourth risk is the quality of the investor\u2019s information. Article R. 151-10 directs the Minister to refuse an application where the proposed conditions cannot protect national interests. It also allows consideration of links between the investor and a foreign government or public body. Refusal can additionally be based on serious criminal-risk indicators, relevant final convictions during the previous five years or a serious and persistent breach of earlier orders or measures. This is not a prohibition on foreign investment. It means that a foreign group should disclose its ownership and governance structure accurately, explain its financing, identify public links and show how the proposed investment protects the French target\u2019s critical capacity.<\/p>\n The 2020 decision of the Conseil d’\u00c9tat in no. 422580 illustrates the level of detail that can matter. The Court upheld the authorisation of a foreign-controlled acquisition after examining the fund manager, the experience of its managers and commitments intended to preserve the French industrial company. It found no error in requiring the applicant to identify the manager and the persons controlling the manager. For a founder or corporate buyer today, the lesson is straightforward: do not provide a generic group chart when the administration needs the real control chain, and do not promise industrial or technological safeguards that the post-closing business cannot implement.<\/p>\n A transaction team should use the following pre-signing checklist:<\/p>\n The terminology used in the French file should also be translated correctly for the business team. The RCS is the Register of Commerce and Companies. The RNE is the National Register of Enterprises. INPI is the National Institute of Industrial Property, which operates the Guichet unique for many formation and modification filings. BODACC, the Official Bulletin of Civil and Commercial Announcements, may publish certain corporate and insolvency notices, but a BODACC notice is not evidence that a foreign-investment authorisation has been obtained. URSSAF, the body collecting social-security contributions, is relevant when the acquisition changes employees or director status, but it does not replace the Ministry of the Economy\u2019s foreign-investment review. Keeping these functions separate prevents a corporate-registration document from being mistaken for regulatory clearance.<\/p>\n Finally, the foreign-investment analysis should be repeated when the deal changes. A higher stake, a new shareholder agreement, a change in fund manager, a new government contract, a transfer of intellectual property, a reorganisation of the French branch or a later sale of the target can alter the original risk. Article R. 151-9 expressly addresses changes in shareholding and control chains when conditions are reviewed. The right time to ask whether a change needs a fresh filing is before the board approves it, not after the transaction has been announced.<\/p>\n For a non-EU investor, the French 10% rule is a screening trigger, not a standalone answer. The complete test combines the investor and control chain, the transaction, the voting rights, the target\u2019s legal form, the listing venue and the protected activity. The 2026 decree extends the listed-company regime to specified regulated markets outside the EU, while Article R. 151-5 creates a notification route with a ten-working-day period unless the Minister objects. Other cases may require an opinion or a full application lasting considerably longer.<\/p>\n The practical decision is to perform the analysis before signing, condition closing on the correct clearance, prepare a transparent control-chain file and budget for possible conditions. An acquisition that is commercially attractive can become unusable if the parties transfer voting rights too early or omit the foreign-investment process. A foreign founder or group planning a French acquisition should therefore have the transaction documents, ownership chart and activity map reviewed together by counsel familiar with French corporate and regulatory procedure.<\/p>\n For the wider incorporation and operating steps around a French subsidiary, see the firm\u2019s French company formation and corporate services guide<\/a>.<\/p>\n Arrange a telephone consultation within 48 hours with a lawyer from the firm.<\/p>\n Receive a focused first review of your French investment, company or closing timetable.<\/p>\n\n
B. Does the 10% rule apply to a French company listed outside the EU?<\/h3>\n
II. How should a foreign investor secure approval before signing and closing?<\/h2>\n
A. What must the investor file and how long does the review take?<\/h3>\n
B. What happens if the investment closes without approval?<\/h3>\n
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Conclusion<\/h2>\n
Need a quick opinion on your case<\/h2>\n