Revision of the EU FDI regulation: What to expect

A revised EU FDI Regulation is expected to be adopted in the first half of 2026, with entry into force at the end of 2027. The main anticipated changes include:

Procedural changes

• Phase 1 review standardized at 45 calendar days, aligning with the current 30 working-day period
• Multi-country transactions will require same-day filings in all relevant Member States, with simultaneous notification to the EU cooperation mechanism
• Extended cooperation mechanism deadlines (approximately 10 additional calendar days)
• As a consequence, Phase 2 reviews in France are expected to lengthen, with near-systematic use of the 45-business-day deadline. Where French authorities must wait for feedback from other Member States, the transmission of proposed conditions may be delayed.

Expanded scope of mandatory screening

The revised regulation will significantly broaden the scope of FDI review to include:

• All dual-use goods and technologies listed in Annex I of EU Regulation 428/2009 (beyond the current Annex IV), covering research, marketing, and production activities
• Electoral infrastructure
• Financial services, including payment systems; and
• Critical technologies, notably artificial intelligence, semiconductors, and quantum technologies (to be precisely defined). Both R&D and production activities will be subject to screening (R&D only under current rules).

Practical lessons from 2025 reviews

Preparing FDI applications

The FDI Bureau noted a marked improvement in the completeness of filings, but stressed that processing times depend primarily on the quality and precision of activity descriptions. Investors should:

• Describe activities in detail, by subsidiary, product, and service, including R&D from the outset
• Avoid promotional materials and focus on clear, accessible, and technically accurate information.

For investment funds:

• The identity of fund subscribers is not required initially
• The fund manager and controlling natural persons must be disclosed
• Subscriber identities may be requested later if deemed necessary.

The Bureau also recommends including:

• A clear description of the rights acquired, particularly for minority investments
• A step plan detailing when covered investments will occur; and
• A concrete description of the investor’s strategy, including existing sector investments, presence in France, and intended investment horizon.

Examination of applications

FDI reviews are governed by Article L.110-1 of the Code of Administrative Justice, including for requests to amend existing authorizations.

The Bureau expressed concern about transactions with closing timelines incompatible with statutory review periods. While accelerated handling may be considered in objectively substantiated emergency situations affecting the target, commercial penalties alone do not justify urgency.

Notably:

• There is no specific FDI procedure for safeguard proceedings. Early engagement with the administration is strongly recommended
• While public affairs advisors may be involved, lawyers remain the primary and preferred channel for FDI communications.

Clarifying the scope of FDI authorization

The Bureau addressed several areas where scope remains frequently misunderstood:

Renewable energy

Most photovoltaic and wind projects fall outside the FDI regime, except where:

• The assets are operational at closing (projects or permits alone are not sensitive); and
• Installed capacity exceeds 50 MW, and the activity is the target’s main business.

Where energy activities are ancillary, authorization depends on whether the activity is essential to France’s energy supply under Article R.151-3 of the Monetary and Financial Code.

Agriculture and food

FDI screening applies only to infrastructure and production essential to national food security.

• Excluded: substitutable cereal trading with limited market share, and non-specialized food packaging
• Included: large-scale industrial activities involving chemical inputs for agriculture, where market share is significant and competition limited.

Critical raw materials

The definition set out in July 2025 guidelines remains unchanged.

Software and digital activities

FDI rules apply only to activities carried out in France by French-law entities. Generally excluded:

• Intra-group after-sales or marketing activities not targeting third parties in France (unless involving cryptology or interception technologies)
• Standard HR functions without proprietary hosting or storage. Data-center colocation is typically outside scope unless customers present specific national-security sensitivities.

Post-authorization obligations

Investors must:

• Notify the administration within two months of completing the authorized transaction
• Submit annual compliance reports, which must detail adherence to conditions and changes in the sensitive customer base. The Bureau indicated that a mandatory reporting template may be introduced.

Any difficulties in complying with authorization conditions should be reported as early as possible to facilitate dialogue.

Key Q&A highlights

• Change in fund nationality: No new authorization is required if sensitive activities are unaffected; notification suffices. If control becomes entirely French, the authorization lapses
• Cultural products: Media freedom and pluralism remain relevant, but the scope under the revised EU regulation is still under discussion
• Foreign lenders and security interests: No notification is required unless the lender actually acquires control
• Continuation funds: No specific intra-group exemption applies beyond those already provided by law.