FRANCE LAW AND PRACTICE Contributed by: Michael Doumet, François-Xavier Naime, Guillaume Nataf, Léna Sersiron, Eléonore d’Anthonay, Nella Picou, Pauline Celeyron and Magalie Dansac Le Clerc, Baker McKenzie Paris
ties at stake and the risk assessment made by the FDI authorities with regard to French national interests. • Phase I – the FDI authorities have 30 business days from the receipt of a filing to notify the foreign investor of any of the following: (a) the investment falls out of the scope of the FDI regulations; (b) the investment falls within the scope of the FDI regulations and is unconditionally authorised; and (c) the investment falls within the scope of the FDI regulations and requires further analysis to determine under what conditions it could be authorised (Phase II opening). • The FDI authorities can raise post-filing requests for information. The review period is suspended by the time taken by the investor to provide satisfac - tory answers. • Phase II – the FDI authorities can, during or more generally at the expiry of the Phase I review, open a Phase II review should they consider that the trans - action requires further analysis. The FDI authorities must render their decision within 45 business days from the opening of the Phase II review. During the Phase II review, the FDI authorities may grant or deny their clearance or may grant their clearance subject to commitments from the investor. These commitments must be proportionate to the neces - sary protection of French national interests. 7.2 Criteria for National Security Review As a general rule, French FDI authorities review and assess the transaction based on the nature and sen - sitivity of the French activities acquired by the foreign investor. The aim is to determine if such acquisition is likely to prejudice the French national interests with regard mainly to national defence, public authority, public order or public security in the sectors deemed sensitive by French FDI regulations. This is a fact-based analysis on a multi-criteria basis. The nature and scope of the French target activities, as well as the identity of the foreign investor, its size, industrial project for France, potential relationships with foreign states, etc will be reviewed in depth. French FDI regulations do not apply different analysis
criteria based on the nature of the investor or the stake acquired. 7.3 Remedies and Commitments The French FDI authorities may condition their approv - al of a transaction on specific commitments from the foreign investor. The scope of these commitments can vary significantly depending on the national interests at stake. Notable examples include the following: • maintaining the French target’s sensitive activi - ties and industrial capabilities on French territory and carried out by a company incorporated under French law; • ensuring that the French target company continues to operate the sensitive activities for the benefit of the sensitive clients on reasonable technical and commercial terms; and • adapting the internal organisation and governance of the entity, creating certain specific committees to oversee/deal with critical topics, and segregat - ing sensitive information. For the most critical activities, FDI authorities can ask for a golden share for the benefit of the French State or a French state body, etc. 7.4 National Security Review Enforcement The French FDI regime is “mandatory” – ie, any foreign investment made in breach of French FDI regulation would expose the foreign investor to a wide range of severe sanctions, including the following: • the nullity of the French investment; • injunctions to file for clearance; • the obligation to unwind the investment or to amend the investment terms; • the suspension of the French target’s voting rights; • a prohibition on distributing dividends by the French target; • payment of financial penalties; and • criminal penalties (imprisonment and fines). The decisions of the FDI authorities are subject to judi - cial claim ( recours de plein contentieux ) before French administrative courts. As such, a foreign investor may challenge a denied authorisation or overly stringent conditions before French administrative courts.
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