FRANCE Law and Practice Contributed by: David-James Sebag, Donald Davy and Marie-Sophie Chevreteau, Gide Loyrette Nouel
Disclosure and Reporting Obligations Companies must comply with ongoing disclo - sure and reporting obligations, particularly for sizeable transactions that could affect the finan - cial markets. Thresholds and Limits There are thresholds for the number of inves - tors (150 qualified investors) and investment amounts (no prospectus under EUR8 million) that, if exceeded, may trigger additional regula - The AMF provides regulations and guidelines on the offering of securities, including venture capital investments, to ensure investor protec - tion and market integrity. In practice, the complexity of these transactions often requires careful structuring to comply with the relevant legal provisions, especially when numerous employees or entitlement holders are involved. 7.2 Restrictions In France, the scope of the government’s scru - tiny over foreign investments has continuously increased over the past 12 months. Temporary protective measures adopted during the COV - ID-19 pandemic became permanent due to geo - political tensions and the energy crisis, whilst the scope of sensitive activities has been widened to protect French innovation. tory requirements. AMF Regulations This has led the FDI authorities, accustomed to focusing on defence matters and strategic infra - structure, to become particularly stringent on the technology sector, with increasingly tight control over innovative segments such as AI, biotech - nologies, cybersecurity, photonics, data storage or semi-conductors.
This has materially affected investments by for - eign VC investors (EU or non-EU) in French com - panies, as a very broad range of activities are now subject to the government’s investigations, regardless of the stages of development of the target entities (investments of 10% or 25% of a target’s voting rights may constitute eligible investments), the maturity of a project, or the amount of the investment. In addition, the French Government may condi - tion its approval of such investments to certain undertakings by the investor (eg, maintaining IP, R&D or industrial capabilities in France, imple - menting procedures to protect French sensitive data, etc.), which could hinder the integration of the target within the investor’s group or the abil - ity of the investors to exit. Regulated Industries Depending on the nature and size of the invest - ment, stake acquisitions in French companies may require regulatory reviews or approvals before they can be completed. This is especial - ly the case for investments in certain regulated industries, such as banking or insurance com - panies (eg, the acquisition or extension, directly or indirectly, of “qualifying holding” 10% or more of 20%, 1/3, 50% of the capital or votes, in a French bank is subject to prior assessment and a non-objection decision by the European and French regulatory authorities). In practice, these regulatory approvals are considered a condition for completion of the transaction and necessarily have an impact on its timetable. Currency exchange control is not generally an issue in France, as it is part of the Eurozone, but investors must comply with anti-money laun - dering regulations. Banking-related regulations require due diligence and reporting, which can affect transaction timelines and complexity.
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