France strengthens scrutiny of foreign investment as geopolitical tensions rise

France has tightened controls on foreign investment in strategic companies, lowering the ownership threshold that triggers government scrutiny from 25% to 10%, local media reported Monday.

Prime Minister Sebastien Lecornu signed a decree published Sunday aimed at strengthening state oversight of acquisitions by foreign investors in sectors considered sensitive, according to broadcaster BFMTV.

Under the new rules, a non-European investor seeking to acquire at least 10% of the voting rights in a publicly listed French company operating in a strategic sector will face review by the Economy Ministry.

Previously, government scrutiny was triggered when such an investor acquired a stake of 25% or more.

The measure seeks to “continue to protect key businesses and technologies for (the) security” of France, the Prime Minister’s Office said.

“In a geopolitical context marked by strong tensions,” the government wants to protect France against “opportunistic non-European stakes” in listed companies that could pose threats to national security, it added.

The enhanced oversight will be conducted through an expedited procedure to avoid unnecessarily limiting companies’ ability to raise capital on financial markets.

Foreign investors will be required to notify the Directorate General of the Treasury. Once a complete application is received, the economy minister will have 10 days to decide whether the proposed transaction requires further examination.

The decree follows a parliamentary report submitted to Lecornu on July 20 that called for a “radical change of approach” to bolster France’s economic security amid mounting geopolitical risks.