At the cabinet meeting held on June 18, 2018, the French government introduced a new bill to stimulate the growth of enterprises in France. Titled “the Action Plan for the Growth and Transformation of Enterprises(Loi Pacte in French), this bill is a major effort by Bruno Le Marie, the French Minister of Economy and Finance, to promote the transformation of French enterprises, enhance their innovative capabilities, and promote their international competitiveness.

During the preparation for the bill, many congressmen and entrepreneurs, entrusted by the government, proposed 980 recommendations for future development of enterprises. After integrating them, the government put forward 70 measures, among which some are directly related to entrepreneurship and innovation:

Promoting entrepreneurship by simplifying administrative procedures: 

A one-stop registration window will be open to replace the current procedure which requires going through seven government agencies (Commercial Court Registry, Trade or Agriculture Chamber, etc.); an online business registration platform will be open by 2021. In addition, some other changes will be made for registration after the new bill comes into effect. The compulsory pre-registration training class will be cancelled; the registration fund and time will be reduced from 1,000 euros and one month to 250 euros and one week respectively. Changes will also be made to the liquidation process for business owners who fail in their endeavor. The liquidation procedure will take a maximum of 6 to 9 months for companies with no more than one 10,000 employees and 300,000 euros of turnover；As for companies with no employees, the government will set up a special program to settle the debt so as to pave the way for the entrepreneurs to restart.

Encouraging innovation by simplifying the patent application process:

The government will introduce the “provisional patent” with one year’s limit and at very low cost. Currently, the patent application procedure in France is lengthy, expensive and lacking protection for enterprises, which delays the timely transformation of innovative technologies into actual productivity. Moreover, France’s efficiency in patent applications is far behind that of other European countries. This also limits the competitiveness of French enterprises in the international market. The “provisional patent” mechanism ushered in by the new bill has several merits:

• Firstly, patent applicants are only required to provide a general description of the patent and will be assured that relevant details will be kept confidential. After that, the patent applicants will have one year to submit the remaining documents.

• Secondly, enterprises applying for “provisional patent” are given priority in the competition for  other similar patent applications.

• Thirdly, the application fee for “provisional patent” has dropped significantly and thus greatly reduced the cost for the companies especially start-ups.

Encouraging development by simplifying enterprises obligations and audit procedures: 

• The current law commits the companies to 10 “thresholds” of workforce (number of employees), each requiring corresponding social and fiscal obligations. The new bill reduces the number to only 3 (11, 50 and 250 employees). Besides, it only binds those companies which have crossed the “threshold” for five consecutive years in their related responsibilities and regulations. The government estimated that this change will save the enterprises 500 million euros and free them from the concern about the burden resulting from business expansion.

• Regarding simplifying the audit procedures, the existing law stipulates that a joint stock company must pass an audit if it has any turnover, and so must a limited liability company with a turnover of 3.1 million euros and above. This will cost French SMEs 5,500 euros a year on average. The new bill will raise the threshold for corporate auditing to align with the EU practice. As a result, auditing will be mandatory only for enterprises with a minimum turnover of 8 million euros and 50 employees.

The draft bill is to be submitted to the French Parliament for approval in September 2018.