For Foreign Companies looking to establish a presence in the French market, it is important to note that the French Government is putting a great deal of focus on making business set up and growth an attractive option for Foreign Business.
For example, The Action Plan For Business Growth and Transformation bill (PACTE) is a new step in France’s economic transformation. The PACTE has two objectives:
- To grow businesses in order to create more jobs
- To redefine the role of companies in society to increase employee involvement.
The bill’s aim is to focus on liberating companies, making them better funded, more innovative and fairer.
Prior to this, companies have been overburdened with obligations that complicate each step in their development. However, the PACTE will remove such obstacles, simplifying business creation and easing obligations concerning workforce thresholds. This action plan will, therefore, enable SMEs to grow, prevail external markets and create jobs.
The PACTE will also facilitate access to diversified funding and provide companies with the resources they need in order to innovate.
The PACTE will be encouraging fairer companies to do more than simply seek to make a profit. The PACTE will modify the Civil Code in order to assert a company’s social and environmental role and provide them with a true raison d’être.
Some of the bill’s key measures are as follows:
- Simplified business set-up – an electronic one-stop shop will be gradually introduced to replace the seven current points of contact for dealing with the formalities (Commercial Court Registry, Trade or Agriculture Chamber, etc.). In addition, a general online companies register will be gradually set up by 2021. The cost will be reduced from 1,000 to 250 euros and the period from one month to one week.
- Cost reduction for SMEs – taking a special training course [“stage”] prior to setting up a business, at a cost of 250 euros, will no longer be compulsory (although “CAP” qualification will remain so) and certification of accounts by an auditor will be mandatory only for turnovers of 8 million euros upwards (compared with the current figure of 2 million euros, which represents an annual cost of 5,500 euros per year for an SME). There will be three company “thresholds” instead of ten (11, 50 and 250 employees) and the requirements will only take effect when the threshold has been passed for five consecutive years.
- Shortening of the liquidation procedure – the liquidation procedure will take a maximum of 6 to 9 months for companies with no more than one employee and 300,000 euros of turnover. The professional recovery procedure will erase the debts of companies without employees and give entrepreneurs a second chance.
- Simpler business takeovers – the “Dutreil” scheme for the free transfer of family businesses will be renewed. Employee buy-outs will attract a tax credit without the need for a minimum number of staff to be involved (the current requirement is at least 15 people or 30% of the employees).
- Improved business financing – the “PEA PME” (a share savings plan for SMEs) will be extended to shares issued through crowdfunding and the “Euro-croissance” life insurance fund will be modernised. The issue of virtual tokens (ICOs), a new way of financing young companies, will now be supervised by the Autorité des marchés financiers (AMF).
- Boost for retirement savings Schemes: such as the Pep, the Perco and the Madelin will be simplified and become totally portable during one’s career. It will be possible to take a capital lump sum on retirement and there will be tax benefits for annuities.
- Doubling employee ownership: the law will abolish the employer’s contribution on profit-sharing plans for businesses with fewer than 250 employees. Simplified templates for incentive and participation agreements will be available online. “Only 16% of employees in businesses with fewer than 50 employees are part of a save-as-you-earn scheme. Our goal is to double this proportion to 32%,“ said Bruno Le Maire.
- Creating a new corporate purpose: two articles of the Civil Code will be amended to take into account corporate responsibility and the “raison d’être“ that a company wishes to adopt, in line with the recommendations of the Notat-Sénard report. The procedure for prior authorisation of foreign investment in France will be strengthened and extended to the semi-conductor, space, drones, artificial intelligence, cybersecurity, robotics and mass data storage sectors.
If you need advice on a ‘Setting Up Business In France’, please contact our legal specialists at Delcade on +33 (0)1 75 43 18 56 or e: email@example.com