You live in London, New York, Dubai or Singapore and you have found the right French target: a profitable SAS with strong know-how, a factory, a software team, or a portfolio of contracts with public-sector clients. The price is agreed, the letter of intent is signed, and your lawyer diaries the closing for next month. One question decides whether that calendar survives: does France require you to obtain the government’s prior authorization before you buy? Since the PACTE law reshaped the regime in 2019, the answer is yes for a wide range of deals, and closing without clearance exposes you to orders to unwind the transaction, daily penalties, and fines of up to twice the amount invested. This article explains the French foreign-investment screening procedure, known by its French initials IEF (investissements \u00e9trangers en France), exactly as a non-resident buyer needs it: who is caught, which targets trigger control, how the filing runs, and what sanctions follow a closing without authorization.<\/p>\n
France starts from an open principle. The French Treasury, the Direction g\u00e9n\u00e9rale du Tr\u00e9sor, states that financial relations between France and foreign countries are open, and that Article L. 151-3 of the Monetary and Financial Code<\/a> (Code mon\u00e9taire et financier) creates an exception for a closed list of sectors touching national defence or capable of raising public-order concerns and activities essential to the country’s interests. The Treasury applies a three-part cumulative test, published on its official IEF page: the T\u00fcrk\u00e7e test turns on where the money comes from, what the transaction does, and what the French target does. If any one of the three conditions is missing, the investment is not subject to authorization. The practical consequence for a foreign buyer is straightforward: run the three tests before you sign anything unconditional, because the procedure that follows is suspensive in effect and the sanctions for ignoring it bite the buyer, not the seller. Readers choosing between a French subsidiary, a branch, or an acquisition should also read our companion guide on choosing between a SAS, a SARL, a branch and a subsidiary when expanding into France<\/a>, which covers the vehicles an authorized investor most often uses to hold the target afterwards.<\/p>\n French screening is not a general approval of every foreign acquisition. It catches an investment only when three conditions coincide: a foreign investor, a qualifying transaction, and a sensitive activity. Each condition has a precise statutory definition, and each contains traps for buyers who assume that a minority stake, a European passport, or an off-market private deal keeps them outside the regime.<\/p>\n The first condition looks at you, the buyer. Article R. 151-1 of the Monetary and Financial Code<\/a> provides that an investor within the meaning of the screening chapter includes “Toute personne physique de nationalit\u00e9 \u00e9trang\u00e8re”, any individual of foreign nationality, and “Toute personne physique de nationalit\u00e9 fran\u00e7aise qui n’est pas domicili\u00e9e en France au sens de l’ article 4 B du code g\u00e9n\u00e9ral des imp\u00f4ts”, meaning that even a French passport does not exempt you if you are tax-resident abroad. The same article adds “Toute entit\u00e9 de droit \u00e9tranger”, any foreign-law entity, and any French entity controlled by one of those persons or entities. Two features of this definition matter enormously in practice. First, the test follows nationality and residence, not the language you negotiate in or the country from which the funds are wired: a French national living in Dubai or Montreal who buys a sensitive French company is a foreign investor for IEF purposes. Second, the definition climbs chains of control: where the buyer sits inside a chain of controlled entities, every member of that chain counts as an investor, so inserting a holding company between yourself and the target changes nothing.<\/p>\n The second condition looks at what you are doing. Article R. 151-2 lists four qualifying transactions<\/a>. The first is “D’acqu\u00e9rir le contr\u00f4le, au sens de l’ article L. 233-3 du code de commerce , d’une entit\u00e9 de droit fran\u00e7ais ou d’un \u00e9tablissement immatricul\u00e9 au registre du commerce et des soci\u00e9t\u00e9s en France”, acquiring control, within the meaning of Article L. 233-3 of the Commercial Code<\/a>, of a French-law entity or of a business establishment registered with the RCS, the Registre du commerce et des soci\u00e9t\u00e9s, which is the French Trade and Companies Register kept by the greffe, the registry office of the commercial court. Control under Article L. 233-3 covers three situations: “Lorsqu’elle d\u00e9tient directement ou indirectement une fraction du capital lui conf\u00e9rant la majorit\u00e9 des droits de vote dans les assembl\u00e9es g\u00e9n\u00e9rales de cette soci\u00e9t\u00e9”, holding directly or indirectly enough capital to command a majority of votes at shareholder meetings; “Lorsqu’elle dispose seule de la majorit\u00e9 des droits de vote dans cette soci\u00e9t\u00e9 en vertu d’un accord conclu avec d’autres associ\u00e9s ou actionnaires et qui n’est pas contraire \u00e0 l’int\u00e9r\u00eat de la soci\u00e9t\u00e9”, commanding a voting majority alone under an agreement with other shareholders that does not run against the company’s interest; and determining in fact, through the votes available, the outcome of shareholder decisions, which is de facto control without a majority stake. The second qualifying transaction is “D’acqu\u00e9rir tout ou partie d’une branche d’activit\u00e9 d’une entit\u00e9 de droit fran\u00e7ais”, acquiring all or part of a business branch of a French entity, which catches asset deals that buyers sometimes wrongly treat as lighter than share deals. The third and fourth are threshold crossings: “De franchir, directement ou indirectement, seul ou de concert, le seuil de 25 % de d\u00e9tention des droits de vote d’une entit\u00e9 de droit fran\u00e7ais”, crossing, directly or indirectly, alone or acting in concert, the 25 percent voting-rights threshold in a French entity, and “De franchir, directement ou indirectement, seul ou de concert, le seuil de 10 % de d\u00e9tention des droits de vote d’une soci\u00e9t\u00e9 de droit fran\u00e7ais dont les actions sont admises aux n\u00e9gociations sur un march\u00e9 r\u00e9glement\u00e9”, crossing 10 percent of the votes in a French company whose shares trade on a regulated market. Acting in concert means that shares held by your allies count toward your threshold, and indirect means that stakes held through subsidiaries are aggregated.<\/p>\n Control is a legal characterization that judges review strictly, and buyers should not treat it as a commercial impression. In a ruling of 28 November 2025, pourvoi No. 25-14.362<\/a>, the Commercial Chamber of the Cour de cassation, France’s supreme court for civil and commercial matters, stated “Vu l’article L. 233-3, I, 3\u00b0, du code de commerce” and then “CASSE ET ANNULE, mais seulement en ce qu’il dit que M. [Y] [V] contr\u00f4le la soci\u00e9t\u00e9 Vivendi SE, au sens de l’article L. 233-3, I, 3\u00b0, du code de commerce”, quashing the lower court’s finding that a person controlled a company within the meaning of the de facto control limb. The case arose in stock-market litigation rather than in an IEF filing, but the lesson travels directly: whether your stake amounts to control within the meaning of Article L. 233-3 is a question of law that a court re-examines, and an aggressive reading that treats influence as control, or that assumes a 30 percent stake can never be control, can collapse on appeal. Document your analysis of control in the filing with the same rigour you apply to price.<\/p>\n One common misunderstanding concerns European buyers. The 25 percent and 10 percent thresholds, and only those thresholds, disapply where the investor is European: Article R. 151-2 provides that its third and fourth limbs do not apply to an individual holding the nationality of a European Union or European Economic Area State that has signed an administrative-assistance tax treaty with France and domiciled in such a State, nor to an entity whose entire control chain sits under the law, nationality and domicile of those States. Read that limitation carefully. A German fund taking a 30 percent non-controlling stake in a sensitive unlisted French company does not trigger screening on thresholds alone, but the same German fund acquiring control of the same target does, because the control limb has no European exemption. Non-European buyers get no threshold shelter at all: a US, British, Gulf or Asian investor crossing 25 percent of the votes of a sensitive French company needs authorization even without control, and needs it from 10 percent if the target is listed.<\/p>\n Investment funds receive specific attention. The Conseil d’\u00c9tat, France’s supreme administrative court, ruled on 3 April 2020, No. 422580<\/a>, on a challenge to an authorization granted “en application de l’article L. 151-3 du code mon\u00e9taire et financier”, in which the Minister had “autoris\u00e9 la soci\u00e9t\u00e9 FII Co, soci\u00e9t\u00e9 de droit luxembourgeois d\u00e9tenue indirectement par deux fonds d’investissement g\u00e9r\u00e9s par la soci\u00e9t\u00e9 de droit anglais Warwick Capital Partners LLP, \u00e0 prendre le contr\u00f4le de la soci\u00e9t\u00e9 B… Industries, sp\u00e9cialis\u00e9e dans la fabrication de fibres diverses pour les secteurs de l’automobile, de l’a\u00e9ronautique et de l’\u00e9lectronique”. The sellers’ heirs attacked the clearance; the Court rejected the appeal and, on disclosure, held that “il incombe au demandeur d’indiquer l’identit\u00e9 du gestionnaire du fonds et, lorsque ce gestionnaire est lui-m\u00eame une personne morale, l’identit\u00e9 des personnes physiques ou des collectivit\u00e9s publiques qui la contr\u00f4lent”, while “aucune disposition n’impose que soit pr\u00e9cis\u00e9e l’identit\u00e9 de tous les investisseurs participant \u00e0 ce fonds”. A fund-backed buyer must therefore identify the fund manager and, behind a corporate manager, the individuals or public bodies ultimately in control, but need not name every limited partner. Prepare that ownership chart before filing, because the administration will ask who stands at the end of the chain.<\/p>\n The third condition looks at the target. Article L. 151-3 provides<\/a>: “Sont soumis \u00e0 autorisation pr\u00e9alable du ministre charg\u00e9 de l’\u00e9conomie les investissements \u00e9trangers dans une activit\u00e9 en France qui, m\u00eame \u00e0 titre occasionnel, participe \u00e0 l’exercice de l’autorit\u00e9 publique ou rel\u00e8ve de l’un des domaines suivants : a) Activit\u00e9s de nature \u00e0 porter atteinte \u00e0 l’ordre public, \u00e0 la s\u00e9curit\u00e9 publique ou aux int\u00e9r\u00eats de la d\u00e9fense nationale ; b) Activit\u00e9s de recherche, de production ou de commercialisation d’armes, de munitions, de poudres et substances explosives.” Two words in that sentence deserve emphasis. “M\u00eame \u00e0 titre occasionnel”, even occasionally, means that a marginal or ancillary sensitive activity inside an otherwise ordinary company can drag the whole deal into screening: a software group whose clients include one defence ministry contract, or an industrial group with a small dual-use product line, is not safe merely because 95 percent of its revenue is civilian. And the reference to a decree for the detailed list sends you to Article R. 151-3<\/a>, which is long precisely because the protected perimeter extends far beyond weapons.<\/p>\n Article R. 151-3 organizes<\/a> the sensitive activities in three blocks. The first block covers defence, public authority and public order directly, including “Les activit\u00e9s, comprenant celles mentionn\u00e9es \u00e0 l’ article L. 2332-1 du code de la d\u00e9fense , relatives aux armes, munitions, poudres et substances explosives destin\u00e9es \u00e0 des fins militaires ou aux mat\u00e9riels de guerre et assimil\u00e9s”, activities concerning military arms, munitions, powders and explosives and war materials; “Les activit\u00e9s relatives aux biens et technologies \u00e0 double usage \u00e9num\u00e9r\u00e9s \u00e0 l’annexe IV du r\u00e8glement (UE) 2021\/821”, dual-use goods and technologies listed in Annex IV of EU Regulation 2021\/821 on export controls; “Les activit\u00e9s exerc\u00e9es par les entit\u00e9s d\u00e9positaires de secret de la d\u00e9fense nationale”, entities holding national-defence classified information; information-systems security work performed for designated vital operators, including as a subcontractor; contracts performed for the defence ministry covering those activities; cryptology equipment and services; interception and remote-surveillance technical devices defined by Article 226-3 of the Criminal Code; accredited IT-security evaluation centres; gambling except casinos; defences against pathogens and toxins; and the processing, transmission or storage of data whose compromise would endanger any of those activities. The second block covers essential infrastructure, goods and services: “L’int\u00e9grit\u00e9, la s\u00e9curit\u00e9 ou la continuit\u00e9 de l’approvisionnement en \u00e9nergie”, the integrity, security and continuity of energy supply; the same protection for water supply, for transport networks and services, for space operations, for electronic communications networks and services, for police, gendarmerie, civil security, prison and customs missions, for establishments and installations of vital importance within the meaning of Articles L. 1332-1 and L. 1332-2 of the Defence Code, for “La protection de la sant\u00e9 publique”, the protection of public health, for agricultural production contributing to national food-security objectives, for the press publishing and online political and general news services, and for the extraction, processing and recycling of critical raw materials. The third block extends screening to research and development on critical technologies designated by ministerial order and on dual-use goods listed in Annex I of the EU dual-use regulation, where that research serves the activities in the first two blocks. A buyer from abroad should therefore screen the target for energy, water, telecoms, transport, health, food, media, minerals, data hosting, cybersecurity and R and D exposure, not only for defence contracts: a nursing-home group, a water utility subcontractor, a press publisher, or a battery-metals recycler can each sit inside the perimeter.<\/p>\n Where doubt remains, French law offers a formal pre-filing ruling instead of guesswork. Article R. 151-4 allows<\/a> the French target company, and likewise the investor acting in agreement with the target, to ask the Minister whether all or part of the entity’s activity falls within Article L. 151-3, and provides that “le ministre charg\u00e9 de l’\u00e9conomie r\u00e9pond dans un d\u00e9lai de deux mois”. This written opinion, the rescrit in administrative practice, is the instrument to use when the target’s sensitive activity is debatable: a minority defence subcontract, a legacy clearance, a product line the seller describes as purely civilian. File the ruling request early, because its two-month clock runs in parallel with your negotiations, and never treat a seller’s assurance or a banker’s market practice as a substitute: only the Minister’s answer binds the administration, and only a clearance or a formal non-eligibility letter protects your closing. Keep the request consistent with the later authorization file, since contradictions between the ruling request and the filing undermine credibility.<\/p>\n Once the three tests point to screening, the transaction becomes a regulated administrative procedure with its own timetable, its own possible outcomes, and sanctions that reach the closed deal. Foreign buyers who plan the filing the way they plan merger control, as a condition precedent with a realistic long-stop date, close calmly; buyers who discover IEF during signing week renegotiate from weakness.<\/p>\n The filing is lodged by the investor. Article R. 151-5 states<\/a>: “La demande d’autorisation d’un investissement \u00e9tranger est d\u00e9pos\u00e9e par l’investisseur.” Where several investors in the same control chain participate, the request may be filed by one chain member on behalf of all of them, which simplifies fund structures with parallel vehicles. A lighter track exists for listed-company stake-building under the fourth limb of Article R. 151-2: the investor is exempt from the full authorization request provided the project has first been notified to the Minister, and “Sauf 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”, meaning silence for ten working days after notification creates the exemption, while an objection pushes you back into the full procedure. The file itself must contain the information listed by the order of 31 December 2019 on foreign investment in France, covering the investor, the target entity and the planned transaction; the Treasury’s filing guidance confirms that the dossier must document all three, and its online pages provide the composition checklist and the filing channel operated by the CIEF, the foreign-investment control unit of the Treasury. Build the file as you would a merger notification: full ownership chart up to the ultimate individuals or public bodies, financing sources and amounts, description of the target’s sensitive activities, post-closing business plan, governance of the French entity, and any commitments you already offer on jobs, sites, R and D, data location and supply continuity.<\/p>\n The statute then imposes a two-stage timetable with a trap at each stage. Article R. 151-6 provides<\/a>: “Dans un d\u00e9lai de trente jours ouvr\u00e9s \u00e0 compter de la date de r\u00e9ception d’une demande d’autorisation, le ministre charg\u00e9 de l’\u00e9conomie indique \u00e0 l’investisseur ayant d\u00e9pos\u00e9 la demande soit que l’investissement ne rel\u00e8ve pas du I de l’article L. 151-3 , soit qu’il en rel\u00e8ve et est autoris\u00e9 sans condition, soit qu’il en rel\u00e8ve mais qu’un examen compl\u00e9mentaire est n\u00e9cessaire pour d\u00e9terminer si la pr\u00e9servation des int\u00e9r\u00eats nationaux d\u00e9finis au I de l’article L. 151-3 peut \u00eatre garantie en assortissant l’autorisation de conditions.” Three outcomes are therefore possible within thirty working days of receipt of the request: a declaration of non-eligibility, an unconditional clearance, or a referral to deeper review. Then: “En l’absence de r\u00e9ponse dans ce d\u00e9lai, la demande d’autorisation est r\u00e9put\u00e9e rejet\u00e9e.” Silence at stage one means deemed refusal, not deemed approval, which reverses the reflex buyers bring from other filings where silence clears. The deeper review closes within forty-five working days of the investor’s receipt of the referral decision, ending in refusal or in authorization, possibly conditional, addressed to the filing investor and to any investors designated as responsible for compliance with the conditions; here too, silence means deemed refusal. Diary both deadlines from receipt, chase written confirmation of completeness so the clock has visibly started, and never close on the assumption that an expired silence period equals consent: under this regime it equals rejection.<\/p>\n Conditional clearance is the normal outcome for sensitive deals, and the statute frames the conditions as proportionate safeguards rather than punishment. Article L. 151-3 states<\/a>: “L’autorisation donn\u00e9e peut \u00eatre assortie le cas \u00e9ch\u00e9ant de conditions visant \u00e0 assurer que l’investissement projet\u00e9 ne portera pas atteinte aux int\u00e9r\u00eats nationaux vis\u00e9s au I.” Article R. 151-8 details<\/a> that these conditions aim principally, consistent with proportionality, to “Assurer la p\u00e9rennit\u00e9 et la s\u00e9curit\u00e9, sur le territoire national, des activit\u00e9s \u00e9num\u00e9r\u00e9es \u00e0 l’article R. 151-3 exerc\u00e9es par l’entit\u00e9 objet de l’investissement, notamment en veillant \u00e0 ce que ces activit\u00e9s ne soient pas soumises \u00e0 la l\u00e9gislation d’un Etat \u00e9tranger susceptible d’y faire obstacle, ainsi que la protection des informations qui leur sont li\u00e9es”, alongside preserving know-how and blocking its capture, adjusting internal organization, governance and the exercise of the acquired rights, and setting reporting duties to the supervising authority. To that end, “le ministre peut notamment conditionner son autorisation \u00e0 la cession d’une partie des parts ou actions acquises au capital de l’entit\u00e9 objet de l’investissement ou de tout ou partie d’une branche d’activit\u00e9 \u00e9num\u00e9r\u00e9e \u00e0 l’article R. 151-3 exerc\u00e9e par l’entit\u00e9 objet de l’investissement \u00e0 une entit\u00e9 distincte de l’investisseur et agr\u00e9\u00e9e par le ministre”, meaning the Minister can require divestiture of part of the acquired stake or of a sensitive branch to an approved third party. Expect commitments on maintaining French sites, R and D spending, staffing of sensitive functions, ring-fencing classified or health data in France, continuity of supply to French public customers, prior notification of onward sales, and sometimes a French-government-approved trustee or observer. Negotiate these conditions as commercial terms: each one has a cost, a duration and a compliance owner, and the authorization designates among the investors those responsible for compliance.<\/p>\n Outright refusal is available where conditions cannot fix the risk. Article R. 151-10 provides<\/a>: “Le ministre charg\u00e9 de l’\u00e9conomie refuse, par d\u00e9cision motiv\u00e9e, l’autorisation d’investissement demand\u00e9e, si la mise en \u0153uvre des conditions pr\u00e9vues \u00e0 l’article R. 151-8 ne suffit pas \u00e0 elle seule \u00e0 assurer la pr\u00e9servation des int\u00e9r\u00eats nationaux d\u00e9finis par l’article L. 151-3 .” The Minister may weigh the investor’s links with a foreign government or public body, and must refuse by reasoned decision where there is serious presumption of enumerated criminal exposure, from drug trafficking to corruption, money laundering, terrorism and tax fraud, or where the investor suffered a definitive criminal conviction for such offences, an IEF fine, or grave and persistent breach of IEF injunctions within the previous five years. Judicial review of these assessments is deferential but real. In the 3 April 2020 FII Co ruling<\/a>, the Conseil d’\u00c9tat upheld the clearance after finding “que la d\u00e9cision litigieuse n’\u00e9tait entach\u00e9e d’aucune erreur d’appr\u00e9ciation au regard de la n\u00e9cessit\u00e9 de pr\u00e9server les int\u00e9r\u00eats prot\u00e9g\u00e9s par l’article L. 151-3 du code mon\u00e9taire et financier”, considering the fund manager’s regulated status, eleven years of industrial experience, turnaround record and commitments capable of sustaining the target. The standard that emerges is an error-of-assessment review: the judge does not substitute its own industrial policy, but it verifies that the Minister examined the file, stated reasons, and did not misjudge the facts. A refusal, like a clearance with heavy conditions, can therefore be challenged before the administrative courts, but the challenge tests reasoning and evidence, not business merit.<\/p>\nI. Is your deal caught? The three cumulative tests for prior authorization<\/h2>\n
A. Are you a foreign investor acquiring control or crossing 25 percent, or 10 percent if the target is listed?<\/h3>\n
B. Is the French target active in a protected sector, and how do you remove doubt before signing?<\/h3>\n
II. How do you get cleared, and what happens if you close without clearance?<\/h2>\n
A. How do you file with the Minister, and what can the answer be?<\/h3>\n
B. What sanctions follow an unauthorized closing or a breach of your commitments?<\/h3>\n