Foreign Investment Control in France – Yearly Review and Perspectives

Executive summary

• Despite a global downturn, France remains the leading destination for foreign direct investment (FDI) in Europe for the sixth consecutive year, with leadership in industrial and R&D foreign investment projects.
• The 2024 Annual Report on Foreign Investment Control shows a significant increase in filings and a rise in conditional authorizations, reflecting heightened scrutiny and a risk-based approach.
• The 2025 updated Guidelines clarify definitions, expand the scope of control, and introduce procedural innovations, including digitalization and enhanced transparency.
• Perspectives look towards greater scrutiny and enhanced tools to protect national and economic security. The Parliament recommends further reforms, such as modular screening, ex post intervention, expanded sector coverage and stronger parliamentary oversight.
• Investors and legal practitioners must remain vigilant, informed and proactive to navigate this sophisticated environment.

In a year marked by heightened geopolitical tensions and economic uncertainty, France has maintained its position as a leading destination for foreign direct investment (FDI) in Europe. The government’s efforts to safeguard national interests —particularly in strategic sectors— remain at the forefront of its policy agenda.

With the simultaneous publication of several key indicators of the efficiency of the FDI regime in France, along with long-awaited updated Guidelines, a great deal of useful information and guidance are worth being brought to the attention of practitioners, clients and investors (and FDI lovers!).

1. Key insights from the 2025 Annual Report on FDI Control

The 2025 Annual Report on the Control of Foreign Investments in France, published a few weeks ago, provides a detailed account of regulatory activity, sectoral trends, and the evolving legal framework that happened in 2024:

• Significant increase in filings:

In 2024, the French Treasury received 392 filings relating to foreign investments, a substantial rise from 309 in 2023. This reflects both the growing complexity of international transactions and the broadening scope of the French FDI regime.

Out of these nearly 400 filings, 327 were applications for authorization, 4 were applications submitted through the “fast-track” procedure relating to listed companies and 61 were applications for advance ruling.

• Increase in conditional clearance:

It led to 337 decisions being issued in 2024 (255 in 2023), with 182 authorizations granted (135 in 2023), representing clearance for 54% of the applications.

The proportion of authorizations subject to conditions rose to 54% in 2024 (up from 44% in 2023), indicating a more nuanced approach by the authorities. This level is in line with previous levels (53% in 2022).

The rise in conditional authorizations reflects a more granular risk assessment, with conditions increasingly tailored to ensure the continuity of sensitive activities, to safeguard know-how and to maintain appropriate governance structures.

• Sectoral distribution:
  • Core sensitive activities: 26% of authorized investments in 2024 (up from 22% in 2023) involved sectors considered sensitive by nature, such as defense, dual-use goods and cryptology.
  • Critical infrastructure, goods or services: They represented 37% of clearances issued in 2024 (down from 43% in 2023), reflecting a normalization of this category after years of continued increase. These activities include, inter alia, the supply of energy and water, transportation and telecommunication services and network, agri-food business, public health, etc.
  • R&D in critical technologies: Despite the broadened list of critical technologies (with, for instance, the addition of photonics or the production of “low carbon” energy in 2024), this category remained stable, with 14% of clearances in 2024. The most represented technologies are biotechnologies, semiconductor technology, and cybersecurity.
  • Mixed activities: Designating activities at the crossroads of two or more of the above categories, they represented approximately 22% of clearances issued in 2024 (a figure stable compared to 2023).

• Origin of investors:

Non-EU/EEA investors accounted for 65% of filings in 2024 (down from 69% in 2023), with the United States, the UK and Switzerland being the primary sources of investment.

EU investments accounted for 35%, with Luxembourg, Germany and the Netherlands leading the charge.

These investments were mostly carried out by financial investors (e.g. PE firms), representing nearly half of all FDI filings (44% in 2024, 43% in 2023). The rise seen in 2023 of investments ultimately carried out by individuals continued in 2024 as they represented 28% of investments (up from 24% in 2023), whereas transactions led by industrial players continued to fall (27% in 2024, 33% in 2023).

• Procedural efficiency:

Although the Ministry does not communicate on the average time for issuing a Phase 1 non-conditional clearance, it indicates that the average time for conditional authorizations was 19 working days shorter than the regulatory timeline (75 days). While this seems accurate for most filings, recent political turmoil will likely affect this statistic, let alone for highly sensitive transactions.

The French FDI regime does provide for specific provisions for distressed companies, but the Ministry has long been praised for its pragmatism and responsiveness. The Report details that the Ministry collaborates with the other administrations (Interministerial Committee for Industrial Restructuring (CIRI), Interministerial Delegation for Corporate Restructuring (DIRE)) and insolvency advisors to ensure smooth interaction between the French FDI review process and French insolvency proceedings.

The Report also indicates that reviewing and clearing transactions involving distressed companies takes an average of 20 business days (17 decisions in 2024, 9 in 2023).

• Veto power:

The Ministry indicates that only six refusals have been issued over the past three years, with a view to emphasizing its proportionality and focus on risk mitigation. Based on our experience, this statistic –issued for the first time– is to be taken with care, as it is not specified whether this figure includes tacit refusals (i.e. expiry of the regulatory review period), and filings can also be withdrawn prior to the issuance of a formal veto.

2. Main contributions of the 2025 Guidelines

The 2025 edition of the French FDI Guidelines, published by the French Treasury, provides a well-deserved update since the 2022 edition and a comprehensive reference for practitioners.

Key contributions include:

• Addition of foreign branches:

Since the 2024 reform, the FDI regime covers not only French companies, but also branches of foreign entities, provided such branches are registered in France.

• Lowered thresholds:

The 10% voting rights threshold for listed companies, initially a temporary COVID-era measure, has been made permanent, enhancing the regime’s ability to address minority acquisitions with potential strategic impact.

As for the 25% threshold applicable to listed and non-listed companies, the 10% threshold is not applicable to EU/EEA investors, to the extent that their entire chain of control is within the EU/EEA.

Finally, the updated Guidelines clarify that where a foreign investor has been authorized to cross the 10% threshold, it must still submit a new request for authorization if it intends to cross the 25% voting rights threshold (when the 10% rule was temporary, the authorization to cross 10% also covered the 25% threshold –this is no longer the case).

• Greenfield investments:

At this point, greenfield investments remain out of the scope of FDI scrutiny in France. This may change in the near future (see Perspectives, below).

• Calculation of thresholds:

Although already applied by practitioners, the Guidelines clarify the calculation method for indirect ownership of voting rights. The calculation must include any interest held by an investor through entities they control.

For instance, where an investment results in the investor holding 25% of voting rights in the acquisition vehicle that acquired or will acquire the control of a French target, this constitutes an investment eligible for FDI control, as the investor will be considered as having crossed the 25% threshold in the French target.

Likewise, an investor that has crossed the 25% threshold in a French target will be deemed to have crossed this threshold in all the subsidiaries controlled by such target.

• Investment funds:

For investors structured as investment funds, the FDI filing must provide the identity of the fund manager(s) as well as the entities or individuals that/who ultimately control those fund managers.

However, the Guidelines clarify that this disclosure obligation does not extend to the fund’s limited partners or investors, provided these individuals or entities are passive and do not control or influence the fund’s management or operations (through specific rights or a portion of the capital). The authorities can however override this limitation if there is a specific need to obtain the identity of all or certain limited partners or investors in an investment fund.

• Sensitive activities:

The list of sensitive activities (Article R.151-3 of the French Monetary and Financial Code) continues to be broadened, depending on a wide range of factors, sometimes opportunistic. It includes activities relating to defense, dual-use goods, critical infrastructure, health, energy, critical raw materials, prison security, low carbon energy, energy storage, photonics, etc.

The list of critical raw materials, not defined in the FDI regulations, is clarified by the Guidelines by reference to the EU regulation on critical raw materials. Among the 34 materials listed therein, it includes lithium, magnesium, rare earth elements, copper, aluminum, etc.

As for the 2022 edition, these updated Guidelines do not provide much guidance in relation to sensitive activities. Certain informal indications made by the Ministry are surprisingly not included, such as the exclusion of certain investments in energy infrastructures with a production capacity under 50MW.

• Digitalization:

All filings must now be made via a dedicated FDI platform, streamlining the process and enabling real-time tracking for applicants.

Despite efforts to improve user experience, the platform is proving rigid and time-consuming, with constraints such as word limitations, size limits for attachments or burdensome boxes to be filled in (in particular in case of numerous subsidiaries), sometimes rendering the filing process far too complicated.

3. Perspectives: France attractiveness and parliamentary recommendations

• Top European destination:

For the sixth consecutive year, France is the leading European destination for FDI, with 1,025 projects in 2024, ahead of the UK (853) and Germany (608). France captured 19% of all FDI projects in Europe, a slight increase from 2019.

This attractiveness is particularly pronounced for industrial projects (over a quarter of all European manufacturing foreign investment) and R&D projects, particularly in AI and quantum technologies.

These investments are spread across France, with 75% of FDI projects located outside the Paris region, reflecting the attractiveness of regional ecosystems.

• Parliamentary recommendations for reform:

The 2025 Parliamentary Information Report provides a critical assessment of the French FDI regime and proposes 22 recommendations to enhance France’s economic security, transparency and sovereignty.

Key proposals include:

• • Modular and graduated screening: Introduce differentiated eligibility criteria (thresholds, nationality) based on asset sensitivity.
  • Ex post intervention: Allow the State to intervene after completion of a transaction in strategic sectors, following the UK model.
  • Broadened scope: Extend the definition of covered investments to include greenfield projects and transactions conferring significant influence, not just control.
  • Expanded list of strategic sectors: In the list of protected sectors, add or provide clearer definitions for certain activities, such as digital platforms, data centers, banking/finance, culture, certain real estate, and new technologies (including AI).
  • Strengthened resources and procedures: Increase staffing for the FDI agency within the Ministry unit and clarify the nature of conditions imposed on investors.
  • Enhanced parliamentary oversight and transparency: Create a parliamentary delegation for economic security, improve the publication of conditions and decisions, and clarify the application of lobbying transparency rules to advisors representing foreign investors.
  • Integration with broader economic security policy: Develop a national doctrine of economic intelligence, improve coordination among public financial operators, and consider controls on outbound investments in sensitive technologies.

Conclusion

France’s foreign investment control regime continues to evolve in response to global challenges and domestic priorities. The Annual Report, the new 2025 Guidelines, and the latest policy analyses all point to a more sophisticated, risk-based and transparent approach.

The rise in the use of mitigation measures reflects a stronger risk assessment and a continued tailored approach to ensure the continuity of sensitive activities and protection of national and economic security.

Most importantly, the efforts to provide for a stable and predictable framework for foreign investors continue to pay off and attractiveness remains strong.

Nonetheless, in a context of national and international political tensions and economic uncertainty, investors and legal practitioners advising on cross-border transactions in France must remain vigilant, adaptive, informed and proactive to navigate this sophisticated environment.