On July 23, 2020, France added a new measure to further strengthen its FDI rules, which have been amended twice since December 31, 2019 (see Jones Day publications, "French Foreign Direct Investment Rules Set for Overhaul" and "France Ramps up Foreign Investment Regulation in the COVID-19 Era").
France's FDI screening mechanism ordinarily applies to foreign investors in relation to, among others, any transaction giving the investor, alone or in concert, directly or indirectly, 25% threshold or more of the voting rights in an entity governed by French law. Following a Decree and a ministerial Order both dated July 22, 2020, this 25% threshold is temporarily lowered to 10% for companies listed on a regulated market until December 31, 2020 (no matter where the companies are listed, provided they have been incorporated under French law). In a COVID-19 context, the government stated that listed companies sometimes reflect "dispersed ownership," and "minority shareholdings can be destabilizing if unfriendly."
This lowered threshold applies to non-EU and non-EEA investors or to any investor fiscally domiciled outside the European Union and European Economic Area. Investors are either a natural person or any legal entity of the dedicated holding chain.
Transactions falling over this lowered threshold (but remaining under the 25% threshold) are subject to a lighter filing (notification) and to an accelerated review procedure. As part of this procedure, the Minister of Economy has 10 working days after notification to decide whether the transaction is authorized or must be subject to the common request process for an authorization. Silence after the 10-working-day period is deemed to signal authorization.
The notification must include:
- The total number of voting rights owned by the investor before and after the investment (or an estimate, where this number is not precisely predictable).
- The number of shares that the investor owns that give deferred rights to newly issued shares and the corresponding voting rights.
- The shares already issued and the voting rights attached to them that this person may acquire, by virtue of an agreement or of certain financial instruments.
- Common information requested by the French Commercial Code for transactions related to shares admitted to trading on a regulated market.
- Status and identity of the persons in capacity to represent the investor or the target.
The notification filing must be drafted in French, and the French Minister of Economy may ask for a certified translation of any attached document or information.
This new regulation applies to investments made as from August 3, 2020.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.