France is tightening its review procedures for foreign investment proposals in the defense, artificial intelligence, and telecommunications sectors while expanding the scope of its investment screening rules and lowering certain ownership thresholds.
The country is broadening its oversight of foreign investments in the defense, energy, telecommunications, and artificial intelligence sectors, bringing a greater number of cross-border transactions under national security review.
France’s investment screening regime already covers sectors related to public health, water resources, media, data processing, and cybersecurity technologies. As a result, regulatory authorities are being granted broader discretion to determine which sectors qualify as “strategic.”
According to the U.S. Department of State’s 2024 and 2025 Investment Climate Statements, France requires prior government authorization for foreign investments in sensitive sectors. The United Nations Conference on Trade and Development (UNCTAD) later reported that France lowered the ownership threshold triggering mandatory investment screening from 33.33% to 25%, while also expanding the range of sectors subject to review. Furthermore, a decree and ministerial regulation issued on December 28, 2023, further broadened the scope of the screening regime.
Voting Rights Threshold Lowered to 10%
According to a report by the U.S.-based The Sheffield Press, under the new measures, the voting rights threshold for investors from outside the European Union (EU) and the European Economic Area (EEA) in publicly listed companies has, in certain cases, been reduced to 10%.
The report noted that the tighter rules are part of a broader economic security strategy that has become increasingly prominent across Western countries.
What Does This Mean in Practice?
In practical terms, the changes mean that standard merger and acquisition negotiations, as well as partnership agreements, are likely to face additional conditions, longer approval processes, and closer government scrutiny whenever transactions involve assets considered strategically sensitive.
For investors, the economic implications are as significant as the national security considerations. Stricter oversight may discourage some investment proposals, encourage French companies to rely more heavily on domestic sources of financing, and require foreign investors—particularly in sectors linked to national resilience—to restructure their shareholding arrangements.