LA TRIBUNE – What are the main lessons of this second report on the Pacte law?
GILLES de MARGERIE– The Pacte law contains a lot of different provisions. The lessons are very varied. It is still too early to draw a final assessment of the Pacte law. The first lesson is that the Pacte law provided for many additional texts. The ordinances and decrees were published in the respect of deadlines, except for some delays. The implementation of the legislative and regulatory work of the 221 articles has been completede on September 15, more than two years after the law was passed. On the whole, this corresponded to the expected timeframe.
The second lesson is that its implementation took place in a completely unexpected context with the health crisis, and the greatest economic crisis since World War II. These circumstances did not have a direct impact major on the implementation of the law, but they have had an impact on the ability to interpret things that we observe, like savings for example. In the context of increased savings observed since March 2020, it is difficult to interpret what is happening on the various savings vehicles. More hindsight is needed to properly assess the effects of the implementation of the various texts.
In terms of financing the economy and saving, has the Pacte law succeeded in meeting these objectives?
In terms of retirement savings, the quantitative target has been reached in terms of the number of holders. We can assume that the target of outstanding amounts will also be reached. Investors and individuals alike understood that rates were low and that it was going to last. The allocation of assets to equities and units of account despite the volatility of the equity markets, remained high. The objective of increasing the share of units of account and equity financing of companies is on the way to being achieved. However, we remain cautious in interpreting the results. Life insurance has not generally benefited from this situation. A lot of money remains in liquidity or treasury carriers. We do not yet know whether this money will go towards consumption or to savings vehicles. If a significant portion goes to consumption, this will strongly support growth.
Have the devices to facilitate token fundraising (ICO) kept their promise in terms of business financing?
Token fund issuances have not been very successful, neither in France, nor in the world. There was a fad a few years ago. Many of the difficulties are related to security in operations. Several recent texts have aimed to strengthen security around ICOs and service providers. These texts have not reassured banking institutions. Regulation came to guarantee the security of a market but it was not enough.
Regarding the legal and administrative environment for businesses, have the simplification objectives been achieved?
The objectives enshrined in the law have been achieved, but it is still early to assess the effects. The one-stop shop was a few months late but should be implemented soon. It must be operational from January 1. The simplification of the thresholds and the relaxation of their regime have been implemented. The Pacte law established three thresholds of 11.50 and 250 employees. There is still a lack of perspective but it seems that the abolition of the threshold of 20 employees had already a significant effect. It appears that the deletion made it possible to smooth the number of companies below and above the threshold. We will have to wait a few more years to see whether the propensity of companies to overtake them asserts itself or not.
Regarding corporate governance and value sharing, the creation of mission-oriented companies was lower than expected. Why are they still so few?
There are around 300 companies with a mission in France when one relies on the data of the national council of clerks of commercial courts and those of thea community of mission-oriented businesses. This is still a very low number. From several surveys, it appears that the main difficulty for business leaders is the low level of knowledge of existing systems., but also, for some, the hesitation in front of the constraints that the adoption of this quality could impose on them.
The return for the fund for innovation and industry (FII) which was to be endowed with 10 billion euros initially seems less important than expected. How do you explain it?
The objective of this fund was to sustain resources for breakthrough innovations with a very decentralized approach. The inclusion in this fund of the battery plan was not planned. The maintenance of very low interest rates and the restrictive dividend policy adopted during the crisis led to a situation where the 10 billion euros of the initial endowment could not bring back the 250 million euros expected annual return. The solution adopted is to make the lack of revenue support the Future Investment Plan 4.
The Pacte law is particularly concerned with the protection of France’s strategic interests with a modernization of the legal framework for protection. What conclusions do you draw from this theme?
Many countries have evolving regulations. France has widened the field of protection both in terms of sectors and sizes of operation. In 2020, the drop in foreign direct investment stood at -17% in France versus -33% worldwide. On the other hand, the number of checks was greater. Of the 1,215 foreign direct investments recorded in France in 2020, 23% were controlled against 15% in 2019. In this crisis, we avoided the specter of 1929 of generalized protectionism. It is a great victory. But bMany member states of the European Union or the OECD have considered that the issue of the acquisition of companies in the country by foreign investors was even more sensitive than usual.
One of the criticisms regularly expressed of this law is that it contains a very large number of articles. It is sometimes referred to as a “catch-all law”. Isn’t this profusion of articles a brake on its appropriation by companies?
The law provides for its assessment and requires it to deal with 23 themes, cwho is unusual. In each of the themes, the texts have been applied. Many business leaders lack knowledges on certain aspects of the law, like the subject of companies with a mission, for example. What should be emphasized is that some articles are aimed at a specific field of companies such as the opposition procedure tox patents. This device is known to intellectual property specialists or large groups. There were no implementation problems but some subjects remain extremely specific.