The General Rule: Open Access for Foreign Shareholders
France does not restrict foreign ownership of shares in a SAS as a matter of general company law. A foreign individual — whatever their nationality, wherever they are domiciled — can subscribe shares in a French SAS, hold them, vote them, receive dividends, and transfer them, without any prior authorisation, prior declaration, or special registration. The same applies to foreign companies: a company incorporated under the laws of any country can be a shareholder or even the sole shareholder of a French SAS.
This openness is structural to the SAS form. The law imposes no nationality condition on shareholders — the articles can impose one if the founders choose, but the law does not. A SAS can be owned entirely by non-French shareholders, managed by a non-French president, and operated from abroad, all without any legal problem at the company law level. The relevant restrictions come from two separate regimes: the foreign investment control system (IEF — investissements étrangers en France) and the rules governing the professional status of non-EU directors who are resident in France.
Being a shareholder and being a director are legally separate questions. A foreign person can hold any level of shares without restriction. The complications arise when (a) the investment reaches a threshold or concerns a sensitive sector, triggering the IEF authorisation regime, or (b) the foreign person will also act as president or directeur général and is resident in France without EU/EEA status. Both must be analysed independently.
Who Is a "Foreign Investor" for IEF Purposes?
The foreign investment control regime applies to "investors" as defined by French monetary and financial law. The definition is deliberately broad: any individual of foreign nationality (or a French national without French tax domicile), any entity incorporated under foreign law, and any entity incorporated under French law that is itself controlled — within the meaning of Article L 233-3 of the Commercial Code — by one or more foreign persons or entities. A French company is treated as a foreign investor if it is controlled by a foreign group. A US holding company that acquires shares in a French SAS through a newly created French subsidiary is not thereby exempted — the chain of control is examined, and the French subsidiary is itself classified as a foreign investor because of its parent's foreign status.
The EU/EEA Carve-Out
The threshold-based authorisation obligations (25% / 10% voting rights) do not apply where the investor is an EU or EEA national or entity domiciled in an EU/EEA state with a French tax assistance convention, provided the entire chain of control consists of EU/EEA persons or entities. Within-EU acquisitions generally fall outside the threshold-triggered authorisation obligation, even in otherwise sensitive sectors. However, this carve-out does not apply to control acquisitions involving public authority or defence activities — those require authorisation regardless of nationality.
When Is Prior Authorisation Required?
Prior authorisation from the Minister of Economy is required when a foreign investor makes an "investment" in France as defined by the monetary and financial code, and that investment involves activities in a sensitive sector. Four types of operation qualify as investments: acquiring control of a French entity (Art. L 233-3); acquiring all or part of a branch of activity; crossing the 25% voting rights threshold in a non-listed French entity; or crossing the 10% threshold in a listed French company.
What Are the Sensitive Sectors?
The activities that trigger the authorisation requirement fall into two broad categories under Article L 151-3 of the monetary and financial code: activities involving the exercise of public authority (even incidentally), and activities that could threaten ordre public, public safety, or national defence interests — including research, production, or commercialisation of weapons, munitions, powders, and explosive substances. The full operative list is in Article R 151-3 of the same code, which is subject to amendment by decree and must always be consulted directly. The obligation is activity-based, not size-based: a small SAS whose activities touch any category within that list is within scope just as readily as a large group entity.
The IEF authorisation obligation applies to the activities of the target SAS, not to its size, turnover, or market position. For any acquisition of a SAS whose activities have any connection to areas covered by Article R 151-3, a formal sector analysis is essential before any binding commitment is made. Do not rely on sector summaries alone — the regulatory list at R 151-3 is the authoritative reference.
The Authorisation Procedure Step by Step
The target French entity (or investor jointly with the target) can request a preliminary opinion from the Minister of Economy as to whether its activities fall within the authorisation framework. The Minister responds within 2 months. This optional step can save significant time and cost if the answer is negative — and is strongly advisable for any borderline case.
The standard file contains: investor identity and chain of control; beneficial owner information; target activities, customers, technology, and infrastructure; transaction structure, price, and proposed post-acquisition governance. Where multiple investors are involved in the same transaction, one can file on behalf of all.
The Minister has 30 working days to: (1) confirm the transaction does not fall within the authorisation regime; (2) grant unconditional authorisation; or (3) indicate further examination is needed. Silence after 30 working days means the request is deemed rejected — not approved.
If a Phase 2 examination is opened, the Minister has 45 days from the investor's receipt of that notice to issue a decision: unconditional authorisation, conditional authorisation, or refusal. The refusal must be reasoned. Silence after 45 days again means deemed rejection. Plan for the full 75+ working days in any transaction timetable.
Conditional authorisations impose post-closing obligations: maintaining sensitive activities on French soil, preserving know-how, maintaining governance limiting foreign influence. Proceeding without required authorisation exposes the investor to injunctions (including restoration of the pre-transaction situation at their own expense), suspension of voting rights, dividend restrictions, and criminal sanctions. Transactions are not automatically void but their legal status is precarious until regularised.
Special Cases: Specific Investor Profiles
Foreign Nationals as Directors: The Residence Dimension
The rules on foreign shareholders say nothing about professional status or residence. But the rules on foreign directors are different. When the president, directeur général, or directeur général délégué of a SAS is a non-EU, non-EEA foreign national who resides in France, they must comply with French rules on professional activity by foreigners. Whether the activity is remunerated or not, the foreign director must hold a valid residence permit that authorises them to carry out management or director activities in France.
A non-EU foreign national who serves as president of a SAS without residing in France — managing the company from abroad, attending meetings remotely or on short visits — does not trigger the French professional activity authorisation requirements in the same way. But the line between remote management and activity exercised in France is not always clear, and specific advice is recommended for any non-EU president managing a French SAS from outside the EU.
The distinction between shareholder and director is critical here. A US company can hold 100% of a French SAS without any residence permit issue. If a US national resident in France is appointed as president, they must hold an appropriate residence permit. One practical solution for groups where the intended individual director does not hold the required residence status: appoint a legal entity as president. Legal entities can be presidents of a SAS — they do not need a residence permit — and a French intermediate holding SAS can serve as president of all its subsidiaries, simplifying group governance.
Structuring Options for Foreign Groups Investing in France
Foreign groups investing in France through a SAS commonly face a structural question: hold directly from the non-EU parent, or through a French or EU intermediate holding company? Holding through a French intermediate SAS does not provide an IEF safe harbour (the French entity is still a foreign investor because it is controlled by the foreign parent), but may provide governance, tax, and liability advantages. One practical advantage: the intermediate French SAS can be the president of its French subsidiaries, allowing group governance to be managed at the intermediate level without appointing individual foreign directors in each subsidiary.
- IEF investor classification: identify whether the investor qualifies as a "foreign investor" under the IEF definition — including the control chain analysis for apparently French entities owned by foreign groups. A French subsidiary of a non-EU group is itself a foreign investor.
- Operation type: does the proposed operation constitute an "investment"? Control acquisition; branch acquisition; or crossing the 25% (unlisted) / 10% (listed) voting rights threshold. Apply the EU/EEA carve-out where applicable — but remember it does not apply to control acquisitions in public authority or defence activities.
- Sector screening (Art. R 151-3): run a sector screening against the full list of regulated activities — public order, public safety, national defence, weapons, munitions, explosives. The regulatory list is the definitive reference; do not rely on sector summaries alone. For borderline cases, request a preliminary opinion from the Ministry of Economy before signing any binding documentation.
- Authorisation timing: where prior authorisation is required, file before signing or completing any transaction that transfers control or voting rights. Build IEF timelines into transaction timetables — Phase 1: 30 working days; Phase 2 (if opened): 45 working days. Plan for 75+ working days total. Silence = rejection.
- Director qualification: where the intended director is a non-EU individual resident in France, verify residence permit status and authorisation to exercise management activity before appointment. Consider using a legal entity as president where individual director residence authorisation issues arise — the SAS uniquely permits this structure.
The interface between foreign investment controls, company law, and director qualification rules creates a compliance framework that requires precise analysis before any transaction proceeds. Our firm advises foreign investors, groups, and in-house counsel on IEF screening, authorisation procedures, and structuring options for investments in French companies.
Get Legal AdviceThis article is for general information only. It does not constitute legal advice. The foreign investment control framework is complex, sector-specific, and subject to change. Always seek qualified legal advice before proceeding with any foreign investment in a French company.
