Update of the foreign direct investment screening procedure in France

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Bruno Le Maire announced on April 29 an update of the foreign direct investment (FDI) screening procedure in France, in the context of the current health and economic crisis

The minister for the Economy and Finance Bruno Le Maire announced on April 29 an update of the foreign direct investment (FDI) screening procedure in France, in the context of the current health crisis. This evolution is twofold: the long-term inclusion of biotechnologies in the list of critical technologies likely to be subject to FDI screening and the lowering from 25 to 10% of the threshold of voting rights acquired in company which triggers the procedure. This new rule will apply for a limited period of time, only for listed companies, and for investors from third countries (European Union and European Economic Area investors are exempted).

Inclusion of biotechnology in the list of critical technologies subject to the foreign investment screening procedure

Bruno Le Maire signed a decree including biotechnologies in the list of critical technologies likely to be subject to specific screening.

As a reminder, the French FDI legal framework already protects activities which are “essential to the protection of public health” . However, with regard to biotechnologies, the challenge of protecting public health is sometimes more distant and prospective. The addition of biotechnologies to this list will give the French authorities wider margins to assess operations in this sector.

Lowering of the shareholding threshold to 10% until the end of 2020

The Minister also announced the temporary lowering of the voting rights threshold in sensitive companies requiring authorisation.

Under the usual procedure, the takeover by a foreign investor of any sensitive French company must be authorised. This also applies whenever a foreign investor, outside the EU and the EEA, crosses the threshold of 25% of voting rights within the company. This 25% threshold will be lowered to 10% only for listed companies, which have sometimes dispersed ownership and for which minority shareholding can be destabilising if unfriendly.

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Source/Image Credit: Ministère de l’Economie et des Finances de la République Française