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Pacte Law Presented to the Cabinet of Ministers

June 18, 2018

Today, the Minister of Economy and Finance, Bruno Le Maire, presented the bill known as PACTE to the Cabinet. These wide ranging measures aim to make companies more competitive by simplifying and and modernizing the way business is done in France.

Below is an English summary of the law’s main measures. AmCham France will provide a more extensive briefing in French and English in the days to come. 

KEY MEASURES

Granting companies more freedom

  • Making entrepreneurship easier
    Creation of an electronic one-stop-shop to streamline the steps entrepreneurs take when they start their business (coming into effect in 2021).  
  • Simplifying growth
    Giving companies more time to fulfill obligations after they have exceeded the thresholds of 11, 50, or 250 employees for 5 consecutive years, after which taxes and obligations related to these thresholds would kick in. Additionally, the existing threshold at 20 employees would be removed. 
  • Rebound measures for companies facing difficulty
    Implementing professional reinstatement, making it easier to clear debtor’s liabilities for entrepreneurs without employees whose assets do not exceed 5,000 euros. A simplified judicial liquidation would be implemented for companies with less than 5 employees and less than 750,000 euros in turnover (extended from the current 300,000).

More innovative companies

  • Improved and diversified funding
    Reforming retirement saving would allow greater flexibility to manage savings. To allow profressionals fludity in their careers, retirement investment products would be more portable. 
  • Protecting innovation and experimentation
    Creating the possibility to make a provisional patent application at a lower cost, for a period of one year (before transformation into an invention patent). A shorter processing time for the utility certificate and the IP title. Better involving university researchers within the business world. With a possibility to granting allowance to spend 50% of their time within a company and to hold 20% of the capital. 
  • Privatization of State held companies
    Proposed asset sales from ADP, Engie, and la Française des Jeux are reported to represent around €15 billion. The government plans to use this money to create a fund for innovation and industry. 
  • Extension of the scope of the control of foreign investments
    Reinforcing the prerogatives given to the Ministry of Finance to block or better control certain foreign investments. In addition to energy, water, transport, electronic communications and public health, and sectors related to national defense, the scope would extend to artificial intelligence, data, nanotechnologies, space and financial infrastructures.
Fairer companies
  • Lowering social security charges on mandatory and option profit sharing packages
    In France, companies are required to redistribute a portion of their profits to employees into a savings account. Additonally, some companies choose to pay their employees a profit-sharing supplement. Under PACTE, the social security charges on mandatory profit redistributions would be eliminated in companies with under 50 employees. Additonally, these charges would be removed on optional profit sharing supplements for those with fewer than 250 employees. For companies with more than 250 employees, it continues to apply at 20%.  
  • Corporate purpose
    Changing the Civil Code to give companies the opportunity to better integrate social and environmental objectives into their legal status. The government has stated they wish to be careful to not introduce legal instabilities with this measure.
Do you have information, topics, or insights that your company would like to be hear about in the next edition? Please contact Pearson Croney-Clark