The French Decree extending by one year the application of the provisions adapting the French scheme for the control of foreign investments to the crisis resulting from the COVID-19 pandemic, as released by the French Minister of the Economic Affairs, Finance and Recovery, Mr. Bruno Lemaire.
1. French Decree No. 2020-1729 of 28 December 2020, published in the French Republic Official Journal on the following 30 December, extended by one year the period of application of the provisions adapting the French control of foreign investments to the crisis resulting from the current COVID-19 pandemic. This application period will end on 31 December 2021.
2. Under this control of foreign investments, operations meeting the following three cumulative conditions must be notified to the Minister in charge of economy affairs (minister chargé de l’économie) for his/her authorization prior to their completion:
(i) the direct or indirect acquisition of
(a) the control of a business having its registered office in France,
(b) all or part of a branch of activity of a business having its registered office in France, or
(c) a share of the capital or voting rights in a business having its registered office in France when this acquisition results in meeting a threshold of 25% of the capital or voting rights of this business;
(ii) by an investor from another State, whether it is a Member State of the European Union or the European Economic Area or not, except in the case of an acquisition mentioned in 2.(i)(c) above for which only an investor from a third-party State to the European Union or the European Economic Area falls within the scope of the control mechanism; and
(iii) insofar as the target exercises a so-called “sensitive” activity, the activities qualified as “sensitive” being listed in Articles L.151-3 and R. 151-3 of the French Monetary and Financial Code and including e.g. the manufacture and trade of war materials and dual-use goods, computer security, cryptology, gambling (excluding casinos), data storage, water or energy supply networks, transport or electronic communications networks and services, agricultural business, the press or the research and development on critical technologies.
3. Considering the current crisis resulting from the COVID-19 pandemic, French Decree No. 2020-892 of 22 July 2020 was adopted. This regulation lowered the 25% threshold mentioned in 2.(i)(c) above to 10% of the capital or voting rights of an undertaking having its registered office in France and which shares are admitted to trading on a regulated market. This reduction was deemed temporary and supposed to cease automatically to apply on 31 December 2020 at midnight (see our articles of 29 July 2020).
4. In a press release dated 18 December 2020, the French Minister of Economic Affairs, Finance and Recovery (ministre de l’Economie, des Finances et de la Relance), Mr. Bruno Lemaire, had released that the application of the lowered threshold would be extended for one year from 31 December 2020 to 31 December 2021 (see our article of 21 December 2020). This is now done through French Decree No. 2020-1729 of 28 December 2020.
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