France Tightens Foreign Investment, Non-European Investors Now Monitored from 10 Percent

France is tightening its oversight of foreign investment in strategic companies. Non-European investors can now be supervised by the government if they want to control at least 10 percent of the voting rights in French companies listed on the exchange.

Anadolu Agency, quoted on Monday, August 3, reported that the new rules lowered the surveillance threshold from the previous 25 percent to 10 percent. This policy comes as the French government assesses that geopolitical tensions could open the door to the entry of non-European ownership that threatens national security.

French Prime Minister Sebastien Lecornu signed a decree published on Sunday. According to the BFMTV broadcaster, the rule aims to strengthen the state's supervision of acquisitions by foreign investors in sectors considered sensitive.

Acquisition is the acquisition of ownership or control of a company. In this new rule, the French government's focus is on non-European investors entering strategic companies.

Voting rights give investors a space to participate in determining company decisions. Therefore, a 10 percent stake in a strategic company can now enter the radar of the French Ministry of the Economy.

Strategic sectors refer to business areas deemed important for national security, including major businesses and technologies.

The French Prime Minister's Office said the move was aimed at continuing to protect businesses and technologies that are key to national security.

The French government also said the rules were taken in a geopolitical context marked by strong tensions. Paris wants to protect itself from opportunistic non-European ownership of listed companies that could pose a threat to national security.

Although supervision has been tightened, the French government said the examination process will be carried out through a fast procedure. The goal is for companies to be able to raise capital in the financial market without unnecessary obstacles.

Anadolu Agency said that foreign investors are required to inform the Directorate General of the Treasury. After the complete application is received, the Minister of Economy has 10 days to decide whether the transaction plan needs to be further examined.

The decree was issued after a parliamentary report was submitted to Lecornu on July 20. The report called for a radical change in approach to strengthen the economic security of France amid rising geopolitical risks.