PACTE law

Corporate law

On April 23, 2019 By Benoît LAFOURCADE

On April 11th 2019, the French Parliament adopted the PACTE law (Action Plan for Business Growth and Transformation) which is a new step in France’s economic transformation.
From creation to transfer, companies are overburdened with obligations that complicate every step of their development. The PACTE’s objective is to remove such obstacles and simplify business creation.
More precisely, the PACTE law has two objectives:

The following development presents an overview of the new provisions implemented by the PACTE law and interesting SMEs.

Increase of the thresholds for legal certification of accounts

The thresholds for legal certification of accounts is raised and harmonized by the PACTE Law. From now on, only companies fulfilling 2 of the following 3 conditions will be required to have their accounts certified by an auditor [“commissaire aux comptes”]:

simplification of the process with the creation of a single online platform

The PACTE law provides the replacement of the different networks of formalities centers (Centres de formalité des enterprises CFE) with an electronic one-stop shop which will be the only interface between the organizations currently receiving the information collected by the CFE and the companies, regardless of the activity, location or the legal form of the company.

This measure is accompanied by a generalization of the dematerialized way as modality of completion of the formalities.

The creation – as well as the other formalities related to the life of the company – will therefore necessarily be done in dematerialized form.

To allow the adaptation of the different management bodies of companies formalities centers to this new device, as well as the full deployment of single teleservice, a gradual implementation by 2021 is planned and is subject to the publication of a decree in Council of State (“Conseil d’Etat”).

Assistance in completing formalities to assist remote digital entrepreneurs will be maintained in the current formalities centers.

streamlining and simplification of membership threshold requirements

Increase of public procurement payments to SMEs and improvement of payment extension

Reduction of time and costs of judicial liquidation

The simplified judicial liquidation is shorter than usual procedures. It allows to close a procedure within a maximum period of 6 to 9 months for companies that do not employ more than one employee and that achieve a turnover of less than 300 000 € and 12 to 15 months for those realizing a turnover of less than 750 000 €.

With the PACTE law, the simplified judicial liquidation becomes the norm for SME with less than 5 employees.

Industrial property

The PACTE law creates a provisional patent application for a limited period of 12 months.

This will be a “first step” for patenting that is both simplified and cost-effective for SMEs. The patent application can be completed later, as the company advances in the patent investigation, while preserving the benefit of prior art.

A new opposition procedure to patents issued before the INPI is created.

It is a simpler alternative to the only legal remedy in place today and will allow lower-cost patents to be cheaply attacked, especially without inventiveness.

The French Patent Examination System developed by INPI will study from the outset the degree of inventiveness of the patent. Patents that are not inventive will thus be blocked as early as the investigation stage, where a court was needed before the PACTE law.

The utility certificate is extended from 6 to 10 years. It can be transformed into a patent application if the invention of the company requires stronger protection.

The company will be able to choose the title that best fits its strategy, in terms of scope of protection, duration of production and cost.

Social and environmental responsibilities

The PACTE law amends the Civil Code and the Commercial Code with the addition of “social and environmental issues” and “self-interest” of company in the Civil Code and the addition of the concept of “raison d’être” in the Commercial code.

Companies will then be able to set social and environmental goals in their by-laws.

Benoît Lafourcade
Benoît LAFOURCADE Co-founder & partner

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