jurisdiction

1. Are members of the armed forces permitted to hold shareholdings in private companies, including startups, provided that they do not participate in management?

Yes. Members of the armed forces may hold shares or other securities in private companies, including startups, provided they remain passive investors. This means they must not hold a management position, corporate office or board role, provide services to the company, or otherwise participate in its operations.

However, any investment must be assessed against French rules on conflicts of interest and the duty of independence applicable to military personnel.

2. Is notification or approval required before acquiring a shareholding or establishing a company?

The position depends on the nature of the activity:

  • Passive shareholding: No prior authorisation is generally required where the individual only holds shares and does not participate in the management or operation of the company.
  • Secondary activities: Any secondary activity, whether paid or unpaid, carried out for a public or private entity generally requires prior authorisation.
  • Establishing or acquiring a business: Creating, acquiring or actively participating in a business goes beyond passive investment and is generally subject to a prior authorisation and ethics review process.

3. Are there any notable limitations, thresholds or conflict-of-interest rules?

French law does not impose a specific shareholding threshold or turnover test. The assessment is qualitative and focuses on whether the investment could compromise the individual's independence, impartiality or objectivity, or create a conflict with their military duties.

Restrictions are particularly strict where the military personnel is involved in supervising private companies, negotiating or managing contracts with them, providing opinions on such contracts or participating in decisions affecting those companies.

In these situations, holding interests in the relevant company may be prohibited during active service and, in certain circumstances, for a period after leaving service.

Summary

A member of the armed forces may generally act as a passive investor in a private company or startup, provided that they:

  • do not participate in management or operations;
  • do not provide services to the company;
  • do not hold interests that compromise their independence; and
  • do not create a conflict of interest with their military duties.

By contrast, establishing a business, taking an active role in a company, holding a corporate office or providing services will typically be subject to authorisation and ethics oversight requirements.