Loi Pacte: the government's plan to boost businesses

Pact Law

"Renewing the spirit of economic conquest" by "adapting the French business model to the realities of the 21st century": this is the government's ambition with the Action Plan for Business Growth and Transformation (Pact). The text, a bit of a mishmash, aims to boost French companies and make their lives easier. Containing 70 articles, it will be presented in May to the Council of Ministers. According to a first draft of the bill, to which Europe 1 had access, Bercy is betting on three axes: "freeing companies", making them "more innovative" and "fairer". Presentation of the four main ideas to make companies more attractive.

Facilitating the creation of a company

The central objective of the Pacte law, the result of a large public consultation with entrepreneurs, is to simplify business creation in France. Today, anyone wishing to create a company must go through a one-stop shop: the Centres de formalité des entreprises (CFE). Problem: there are more than 1,400 of them in France and each network refers to different computer platforms. A "source of complexity" for the government, which plans to "replace the various CFE networks with a single electronic window". Creating a company will be done online from A to Z from January 1st 2021.

In addition, the text intends to facilitate the installation of new artisans by removing the obligation to complete a preparatory course, supervised by the Chamber of Crafts. The government highlights the "prohibitive" cost of the training as well as the one-month delay in starting the activity.

Going beyond the profit motive

Today, the stated objective of companies is profit, with "the common interest of the partners" being the only goal enshrined in the civil code. Tomorrow, financial results will no longer count as much in the balance sheet of companies. The Pacte law aims to amend article 1833 of the civil code to add to this restrictive definition of a company the consideration of "social and environmental issues". This proposal was made by Jean-Dominique Sénard (CEO of Michelin) and Nicole Notat (former CFDT leader) in a report on the role of companies submitted to Bruno Le Maire in early March. The bill envisages an "obligation to manage companies 'in the social interest'", acknowledging that companies "are not managed in the interest of particular persons(shareholders, editor's note) but in their autonomous interest".

In addition to the social interest, the text incorporates the principle of "consideration of social and environmental issues". "All managers should ask themselves about these issues and consider them carefully," it states. In concrete terms, once the law has been passed and applied, companies will be able to choose to modify their corporate purpose in order to "specify one or more social or environmental objectives". A redefinition that would be accompanied, as for profits today, by accountability in case of failure. However, the raison d'être of companies proposed by the Sénard-Notat duo, a principle that went further than the corporate purpose, was not retained as is by Bercy.

Modernizing the patent system

Among the ways to improve the competitiveness of French companies, Bercy wants to review the patent system. The public consultation highlighted one observation: "The patent filing system, because of its formalism, often appears restrictive and costly to the creators of innovative companies. To encourage companies to protect their innovations and industrial processes, Bercy was inspired by what is done in Germany and the United States, with more flexible administrative formalities. Objective: boost investment in research and development.

The Pact law will therefore propose to create a "provisional patent application". This will involve a minimum of formalities and a lower cost when filing a patent at the National Institute of Industrial Property (INPI). The advance application will allow companies to protect their innovations immediately and then have one year to set their "claims" in terms of use. In addition, the government wants to extend the use of the utility certificate, an industrial property title for short-lived inventions that is not very popular with companies. The protection it offers will be strengthened and it can be transformed into a patent.

Optimizing staffing thresholds

It's a more technical but no less important package of measures for business leaders. The draft of the Pact law emphasizes that thresholds can be a hindrance to the growth of companies. In concrete terms, when a company crosses a certain number of employees (11, 20, 50 or 250), it faces new administrative and tax obligations. This creates a threshold effect: recruiting an 11th person can paradoxically be of little benefit.

To remedy this, Bercy intends to "introduce a rule according to which a workforce threshold is crossed only when it has been reached during five consecutive calendar years". In concrete terms, crossing a threshold will not immediately imply meeting the legal obligations associated with it. "This system will protect companies with fluctuating staffing levels, facilitate the growth of others and remove obstacles to hiring," the text states.

In addition, in order to encourage the emergence of mid-sized companies, which are sorely lacking in France compared to Germany, the executive wishes to reduce the impact of the 20-employee threshold "substantially" by raising certain criteria to 50 employees (in particular, increases in charges or the establishment of internal regulations).

Going further:

Europe 1 article: http://www.europe1.fr/economie/information-europe-1-loi-pacte-le-plan-du-gouvernement-pour-booster-les-entreprises-3618809

Article economie.gouv : https://www.economie.gouv.fr/loi-pacte-croissance-transformation-entreprises

PACTE Act (January 2019): https://www.economie.gouv.fr/files/files/2019/DP_PACTE_janvier_2019.pdf

Our services : https://legalcity.fr/creez-votre-entreprise/

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