Two government bills to shield French businesses emerged from
parliamentary debates: a preemptive right of purchase for employees when their
business is to be sold and the standardisation of double voting rights. Though
intention is commendable, both measures show how much, in France,
simple-looking policies are preferred no matter if they miss the target.
We all know that preemption for employees in case of buyout is
utopian for, ultimately, it will be used rarely, given the lack of long-term
capital in France (as both left and right political players have consistently
refused to undertake policies that would enable a long-term saving invested in
shares). Worse yet, such a measure will make the company law more complex and
is likely to lead plenty of foreign companies to favour, as for their
investments, European countries with no such constraints...
Similarlly, the standardisation of double voting rights will
give those who are not ready to pay the price for a company an opportunity to
control it with a small equity percentage as it happened with Saint-Gobain,
Accor, Carrefour, Vivendi... to quote only some of the cases that have been hitting
the headlines in recent years. In vain we have for many years spelled out to
French biggest companies' CEOs, that a small minority shareholder would not
feel like staying in a company for double voting rights... unless these enable
to control the business... Offering premium dividends to long-term ownership
would be better, for this is the only instrument likely to motivate a more
lasting ownership of every shareholder.
For once that political players and CEOs agree on promoting
together a reform to shield the capital of our businesses, they favour
simple-looking measures though without any actual scope; and this was done in
spite of two obvious measures which could be set out in order that numerous
French become shareholders of our businesses again: it is absurd that shares
directly hold be subject to wealth tax (ISF), income tax (IR), added-value tax,
and to social security contribution (CSG), while the ownership of artworks or
old cars be entirely exempt from it ! What would you opt for if you had
cash assets to invest ?
It is absurd that civil servants should deduct from their
taxable income the contributions to PREFON (a pension fund reserved for civil
servants or related ones) while private sector employees have no similar
opportunities of deduction, since they are not allowed to use funded pension
schemes...
To exempt from IR, ISF and CSG every investor or employee
directly holding French shares over more than 8 or 10 years would allow to lead
an important mass of private capitals towards businesses and to gradually
recreate a mass shareholding we are today sorely short of.
Allowing businesses employees to contribute to funded pensions
and to deduct the same amounts from their IR just as civil servants – if those
are invested in shares – would encourage plenty of employees to increase the
stake they have in their businesses and thus create a genuine employed
shareholding, which have hardly been developed for lack of a political will to
promote this type of shareholding.
Both measures would in the long run have a much more significant
scope than the trivial measures being discussed today in Parliament and be a
true political signal for a will to reconstitute a base of private shareholders
in France, i.e. one of the best ways to protect our businesses whilst
reinforcing their equity capital so that they invest in France and recreate as
a result a positive job-creating dynamic.
But this implies to accept equally that the state, the
institutions and the unions alone can not be a sufficient shield to protect our
businesses and that the demonisation of shareholders together with
discriminating tax schemes are much more effective in weakening our businesses,
which would on the contrary love to develop in a stable legal and tax
background. Gentlemen – politicians – let us not fight the wrong battle !
Olivier de Guerre
Chairman of PhiTrust Active Investors
Chairman of PhiTrust Active Investors
