What will change with the Pact Act in 2020?

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First of all…

What is the PACTE law?

The PACTE law (Action Plan for Business Growth and Transformation) was adopted in 2019.

Its objective? To simplify the life of small and medium-sized enterprises (especially micro-enterprises), from their creation to their liquidation, in order to boost their economic growth and thus create jobs in France.

According to the Treasury, the PACTE law could contribute to increasing French GDP by 0.4 points by 2025.


Flagship measures of the PACTE law

The 73 articles of the PACTE law, articulated around 10 measures, demonstrate a real willingness on the part of the public authorities to :

simplify the creation of companies;

boost innovation and job creation;

encourage French people to save;

promote access to employee savings to the greatest number of people.

Appointment of the statutory auditor

In line with European standards, Article 9 of the PACTE law on statutory auditors has raised the threshold for the obligation to

appointment of an auditor

Companies will now have to have their accounts certified by an auditor if they can prove a minimum balance sheet of €4 million, a turnover of at least €8 million (compared to €1 million and €2 million respectively before the law) and more than 50 employees.

The rules inherent in the

social thresholds

have also simplified: Article 11 reduces to 3 the number of thresholds applicable (11, 50 and 250 employees). Pursuant to Article 130-1 of the Social Security Code, the annual number of employees of a company must therefore correspond to the “average number of persons employed each month of the previous calendar year”.
In order to avoid abrupt changes when a threshold is exceeded, the PACTE law provides for the upward crossing of a threshold to be taken into account only if it is reached or exceeded for 5 consecutive years. A company must therefore have more than 11 employees in the years 2019, 2020, 2021, 2022 and 2023 to be subject to the tax and social security obligations inherent in the first threshold. (…)

On the other hand, a company will drop below a workforce threshold if the decline has continued over a full year. In order to generate the obligation, the company’s headcount must again be reached for 5 consecutive years.

Doubling of employee shareholding

The will of the government is clear:

to expand the employee savings scheme

to companies with less than 50 employees.

Within the framework of employee shareholding, the company offers to shares at a price that may be preferential, this discount has in fact been increased (from 20 to 30%). To finance their subscription in addition to voluntary payments, the company can offer its employees the possibility of using profit-sharing, incentive schemes or matching contributions.

Transformation of the company’s place in society

The PACTE Act provides for the addition of a paragraph to Article 1833 of the Civil Code, which states: “the company is managed in its corporate interest (…)”. While the case law of the Court of Cassation and a number of legal provisions already referred to the “interest” of the company, this concept is now becoming a “corporate interest”.

absolute imperative for the good management of any company

In addition to enshrining the social interest, the legislator also gives a real place to social and environmental issues. Thus, the paragraph that is added to the

provides that “The company shall be managed in its corporate interest

and by taking into consideration the social and environmental issues of its activity


Finally, companies can even give themselves a “raison d’être” in their articles of association.

Simplification of business creation

From creation to transfer, companies are subject to a multitude of procedures and obligations, which complicate the stages of their development. The PACTE law thus aims to remove certain obstacles in order to

simplifying the creation of a business

Business formalities are currently carried out at 7 networks of formalities centres, managed by the Chambers of Commerce and Industry (CCI), the Chambers of Trades and Crafts (CMA), the Chambers of , the Registries of the Commercial and Regional Courts, the URSSAF, the business tax services and the National Chamber of Craft Inland Navigation.

In order to simplify the setting of a company, a
web-based platform

will thus replace these formalities centres from 2021. It will therefore be the sole interface for business formalities. Businesses will thus see their administrative burden reduced thanks to the

full dematerialisation of formalities


general business register dematerialised

will also be set up by 2021 to centralise the information contained in the national commercial and company register, the national trade directory and the register of agricultural assets.

Approximation between the current registers will thus make it possible to

simplify procedures

shorten deadlines


reduce creative costs

Enlargement of the scope of simplified judicial winding-up and reorganisation proceedings

To date, the

simplified liquidation procedure

was open only to debtor companies which had employed only one employee in the six months preceding the opening of the procedure and whose turnover did not exceed €300 000. It was then left to the free discretion of the court, for companies employing a maximum of five employees and with a turnover of less than €750,000.

Article 57 of the PACTE law abolishes Article L. 641-2-1 of the Commercial Code, which sets the thresholds for application of the optional simplified judicial liquidation.

In other words, the PACTE Act

compulsory, as a matter of principle, the use of simplified winding-up proceedings for undertakings with five employees


with a turnover of less than 750 000€.
The PACTE Act also changes the duration of the procedure by partitioning its deliberation within six months of the decision ordering or deciding on it. However, this period may be extended to one year if the number of employees and turnover exceed thresholds set by decree.

Professional reinstatement, a measure introduced in favour of debtors with assets of less than €5,000, could previously only be initiated at the request of the debtor in the absence of collective proceedings in progress in order to enable them to benefit from a write-off of their debts and thus facilitate their rebound.

Article 57 of the PACTE Act abolished this condition of no proceedings pending and requires the court to check whether the debtor’s situation does not allow him to benefit from professional recovery.

In other words, the law requires the court to consider whether the debtor should benefit from a professional recovery measure if he meets the conditions for it.

Reconciliation of the public search for the company


The Allègre programme, known as Allègre, was adopted in 1999 to encourage collaboration between public research and companies. However, the authors of the bill found that it did not have the desired effects.

Since 2000, only 231 research officials have been allowed to set up their own companies (out of 258 applications) and only 1,144 research officials have been allowed to carry out a scientific competition (out of 1,255 applications).

The procedures for authorising business start-ups, scientific competitions, shareholdings in company capital and participation in company governance boards, which are now considered unclear and rigid, have been streamlined in order to strengthen the dynamics of innovation as a source of competitiveness and growth for companies. Article 41 of the PACTE Act will thus facilitate the mobility of research personnel towards entrepreneurship and scientific consultancy and create more bridges between the world of research and the business world.

Facilitating the transfer of family businesses

A study by BPCE/L’Observatoire has revealed that transfers-transfers have fallen by 30% over the last three years. Several measures enshrined in the PACTE law thus aim to

Unlocking the brakes on the takeover of family businesses

The conditions for staggering the payment of tax and social security charges on capital gains from vendor credit have thus been lightened and extended to companies with fewer than 50 employees and less than 10 sales.

The staffing constraint of the tax credit, which relieves the tax burden on employees who buy their company, has been removed. The employees taking over must now, on the day of the takeover, have been present in the acquired company for at least 18 months. (…)

Simplifying the portability of retirement savings products

One of the other flagship measures of the PACTE law is to

simplifying and ensuring the portability of retirement savings products

Employees will now be able to keep their savings products throughout their working life. It will also make it easier for them to exit the company.

Supporting SMEs in export markets
In order to boost French exports, the PACTE law has introduced several measures.

To this end, a

national and regional single window


which brings together the international reference advisers of Business France and the CCIs, as well as an

digital platform compiling all the export support and financing offers

have been put in place.

The legislator has also made Bpifrance the sole interlocutor for the financing of international projects, strengthened the “prospecting insurance” system, which provides immediate cash flow support and insurance against the risk of failure of prospecting initiatives, and set up credit insurance in the form of an “Export Passport”.

Protection of strategic businesses

Where by the protection of the essential interests of the country in matters of public policy, public health, public security or national defence, a

action of the capital of a so-called strategic company

can then be transformed into a

special share

in order to benefit from special rights enabling the State to oppose the sale of the undertaking’s strategic assets to a third party and the acquisition of holdings in its capital above certain thresholds.

The prior authorisation procedure for foreign investment in France (IEF) is also extended to strategic and innovative sectors of activity (semiconductors, space, artificial intelligence, cyber security, robotics, data storage).


What the PACTE Act changed for the AEP

By changing the binding rules for PEAs and PEA-SMEs, the PACTE law aims to make these savings products more attractive and more flexible.

Relaxation of exit conditions

Prior to the PACTE law, any withdrawal made before 8 years resulted in the automatic closure of the plan. Similarly, between 5 and 8 years, the plan was not closed but it was no longer possible to make payments. Finally, after 8 years, any withdrawal prevented new payments from being made.
With the entry into force of the PACTE law, the distinction between plans of more than 5 years and those of less than 8 years and plans of more than 8 years disappears.

From now on, it is

Withdrawals can be made in the first 5 years of the AEP’s existence.

without it being fenced off. Additional payments will be possible after this partial withdrawal, within the limits of the ceilings.

Ceiling on PEA fees

From July 2020, the fees* of the PEA will be capped in order to encourage investment in equities, “which offers better prospects of return over the long term (…)” according to Bruno Le Maire.

According to Bercy, “a person who has invested €1,000 in shares of a listed company will pay a maximum of €9 in annual fees, compared to the current average of €20”.

If this decree does not change anything for the customers of online brokers, whose rates are already below these ceilings, it is, on the other hand, a real godsend for individuals holding PEAs in traditional banks.


Thanks to the PACTE law, young people aged between 18 and 25 and emancipated minors attached to their parents’ tax home will be able to open their own PEA. Apart from the €20,000 ceiling, this youth PEA offers the same advantages as the “classic” PEA. As soon as the young person is no longer attached to his or her parents, the ceiling rises to €150,000.

New ceiling for the PEA-SME

The PACTE law also establishes a

New payment ceiling for the SME AEP

. It is now €225,000, compared to €75,000 previously. However, holders of a PEA and a PEA-SME will not be able to pay more than €225,000 in both plans. They must therefore distribute the sums in accordance with the PEA ceiling (€150,000).

Opening of the PEA-SME to the participative market

The law now provides for the possibility of including securities from equity financing in a PEA-SME :

equity securities;

fixed-rate bonds;


What does the PACTE law on retirement savings change?
A new retirement savings scheme: the retirement savings plan (PER)

All the traditional retirement schemes (Perp, Madelin, PERE, Perco) are replaced by a single product: the Retirement Savings Plan (

), available in 3 versions:

Individual PER

is open to all. It can be purchased from a financial institution or insurance organization. This new plan succeeds the PERP and the Madelin contract.

Group enterprise PERP

is a plan open to all employees of a company, with no obligation to subscribe. This new product is the successor to the current Perco.


Mandatory corporate PER

is a plan open to all employees of a company or reserved for certain categories of employees. The employees concerned are obliged to subscribe. This plan succeeds the Article 83 contracts.


In addition, the PACTE law offers savers more flexibility. It will now be possible for them to transfer their savings from one PER to another (at no cost and without proof for PERs subscribed for at least 5 years).

A capital outflow made easier with the PACTE law

Under the PACTE law, the capital constituted in compartments 1 and 2 may be recovered in the form of capital or an annuity when the taxpayer retires. The capital acquired in the last sub-fund will be paid out at the time of retirement, but only in the form of an annuity.

There are six cases in which the PER can be released early:

The death of the spouse (or partner of the Pacs) ;

The 2nd and 3rd category disability of the holder, his children or his spouse or partner in Pacs;

The over-indebtedness of the holder;

The expiration of the holder’s insurance rights;

The termination of the holder’s self-employed activity following a judicial liquidation judgment;
The acquisition of the principal residence (except for sums from sub-fund 3).


The PACTE law and life insurance

Approximately 80% of the

is invested on euro funds. In order to encourage the financing of companies, the government wants to develop unit-linked funds, invested mainly in financial instruments (shares, bonds, etc.).

Transfer of life insurance contracts

Any holder of a life insurance policy will be able to transfer it

to a new contract from the same insurer

and thus

retain tax seniority

. However, the sums invested in the new contract must be invested in whole or in part in units of account or Euro-growth funds.

Until December 31, 2022, it will be possible to transfer the sums from one’s life insurance contract of more than 8 years to a new PER. Each year, the saver will benefit from a double allowance (€9,200 for a single person and €18,400 for a couple).

Payments on the PER are also deductible from income tax (up to 10% of professional income with a ceiling of €31,786).

However, the purchase of the contract must be made at least 5 years before retirement (i.e. an average age limit of 57 years).

Simplification of Euro-growth funds

The PACTE law creates a new regime for Euro-growth contracts in order to make them more readable and attractive to savers.

The rate of return will also be unified. For contracts of less than 8 years, the capital will be expressed only in diversification units. After 8 years, the guaranteed capital will be expressed in euros.

Development of solidarity investments

Professionals are obliged to offer at least one support invested in the

SRI-labelled solidarity investments
(Socially Responsible Investment) or Greenfin, dedicated to the

green finance


Improving information


transparency obligations for insurers have been strengthened

. They must now report, for each unit of account, on gross fee performance, net fee performance and fees collected.

Similarly, in the first quarter of each year, insurers must publish the average guaranteed return and the average profit-sharing rate for each of their life insurance or capitalisation contracts.

Finally, once a quarter, the insurer must provide savers with information on the portion of their savings dedicated to the ecological transition or the solidarity sector.