Set up in France but learn the rules
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ANGLO-FRENCH trade already provides much work for British and French road hauliers and France is the obvious route to Spain. Italy and North Africa. Hence the growing interest of some British international hauliers in setting up a French company.
If the right steps are taken, there may be no special difficulties in setting up a company in .France, but the procedure and the necessary form-filling will be laborious and will almost certainly require considerable professional help.
There is the added difficulty that French company law and taxation are subject to quite frequent amendments. So much so that the Department of Trade and Industry find it necessary to up-date at least annually a most helpful memorandum they publish, Forming a Company in France.
Before any British haulier decides on the merits of setting up shop across the Channel, he will want to be assured that he can obtain the necessary operating licences and this demands onthe-spot inquiries, preferably made by a French national.
Although many British transport managers may speak passable — even fluent — French, close familiarity is desirable with the difficult jargon and terms used in transport regulations and in company law. Also, French law, based on Napoleonic and earlier codes, is very different from English law.
A basic requirement for a director or manager ("personne physique qui dirige'') of a French-registered company is what is termed an "attestation" obtained after an oral examination.
Preparatory classes are held covering the examination subjects in a number of French centres. It would make sense for any British candidate to live and work in France, if possible with a French road transport company, for some months before taking the oral examination. Today, if a Frenchman wanted to get into our road haulage industry, we would expect him to know through experience about conditions of operating, and the commercial side. in Britain.
The exam covers commercial, social and civil law; commercial and financial management; labour and social security regulations; road transport regulations; technical standards for vehicles and maintenance; safety; and international transport.
This list of headings sounds quite formidable but the exams — held three or four times every month — are said to be relatively simple. In 1977 the pass rate was 56 per cent, and many of the candidates were not in the category of academic exampassers. They included lorry drivers setting up business with one or two vehicles.
Once the "attestation" exam has been passed, the next step is to register with the local transport body responsible for issuing permits for local journeys which cover adjacent "departments". Permits for journeys covering the whole of France are restricted by quota, and the number has been fixed for some time. It is said that permits are occasionally sold, but the authorities would not look kindly on this sort of breach in view of the heat engendered by the substantial use of forged permits by British hauliers in France during the past year.
The general quota available to British hauliers for international work was increased by only six per cent, to 43,500 journeys, because of the anger over the forged permits issue. It is some consolation that the cooperation quota, providing extra permits to British hauliers supplying backloads to French vehicles, will be raised by over 25 per cent, from 9,500 to 13,000.
I talked to Bob Duffy, the RHA's international secretary, on the general problem of getting established with a Frenchregistered company. He stressed that it might prove difficult to get the appropriate licences. To set up a company, having passed the "attestation" exam, without any certainty about getting licences would be a hazardous gamble.
Fairly naturally, shortdistance licences are more readily obtained than the longdistance licences. Probably few British operators would want to incorporate a French company with merely the right to operate over a limited radius. An English-speaking French official of the Federation Nationale des Transport Routiers is Mr C. Farhi. The address of this transport organisation is 2 Avenue Velasquez, 75008, Paris.
Analagous to the RHA's International Group is the Association Francaise des Transporteurs Routiers Internationaux (AFTRI). This body has local associations (syndicates) who deal with passenger as well as freight transport. AFTRI is established as a separate organisation, but it has the same officials and office as the Federation, Membership of AFTRI is, I understand, mandatory for French international hauliers.
The equivalent of our Transport Manager's Licence in France is the Certificat d'Aptitude Professional de Transport. The normal procedure is an application in one area which will provide a basis of experience. If there are no objections, it may be possible to extend the licence coverage.
The appointment of a French transport manager, already in possession of the necessary certificates of competence, would make life a lot easier for a British road haulier starting up a company in France. It would be a considerable ordeal, in my view, for a qualified British transport manager to have to undergo a number of exams in France.
The actual company registration aspect requires many formalities to be completed. Full details of the investment proposed must be made to the Ministere de l'Economie, Bureau C3, 42 rue de Clichy, 75009 Paris and until approval is obtained, no investment should be made.
What is known as a "prior declaration" to the French Ministry of Economy is necessary not only for a non-resident wishing to invest in France but also by resident companies in France which are directly or indirectly controlled by non-residents. This is required, despite the Treaty of Rome rules on the right to establishment which give British citizens and companies the right to establish a business in the Common Market.
Exchange control regulations are enforced in France, so that prior declaration of investment is called for. An informal approach to the French Economy Ministry is said to be welcomed, and banks with French associates will often give helpful advice.
Projects creating new jobs in development areas are likely to be looked on more favourably than bids to acquire French firms, whether in whole or part. As in Britain, investment grants in various forms may be available, some administered by local authorities.
Unfortunately, road trans port operations, unlike manufacturing, do not provide large numbers of jobs. There is a lot of unemployment in France and this shapes the attitude of the French and provincial administrations to investment from abroad.
Banks and large firms of accountants with European associates can offer helpful advice on the ramifications of company taxation in France.
It should be noted that to set up the equivalent of a British private company in France, a Societe a Responsabilite Limitee (SARL) calls for a minimum capital of 20,000 Francs which must be fully subscribed and paid up on incorporation.
An SARL is managed by a Gerant (legal manager) who has extensive managerial powers, A Gerant can be removed from office by a decision of the associates (not less than 2 nor more than 50) but if removal is not justified the Gerant may sue for damages.
The formalities for the constitution of an SARL involve the compulsory deposit with a notary or bank of contributions in cash. The company will only attain legal status after completion of all formalities of publicity and registration on the French Commercial Register.
British company managers setting up a business in France would need to learn an entirely new framework of employment law. Labour relations are not always smooth. There is a compulsory profit-sharing plan. Social Security charges are heavy. Industrial injury wage charges can vary between 1.8 per cent for office workers to 20 per cent for dangerous trades. There are transport taxes — to subsidise public transport, vocational training taxes, apprenticeship taxes, and, of course, unemployment insurance taxes. VAT, payable at three different rates according to the type of transaction, is yet another factor to consider.
Taken all in all, the French economy seems to involve at least as many burdens foi employers as the British. Bu', David Kalfon, a Frenchman whe runs the highly successful Sea Route organisation, with a mixed fleet of over 140 vehicles based at Southampton, thinks that with a knowledge of the language, common sense, and a will to succeed, you can build a successful business in another country.
The difficulties have to be faced, one by one, but it is always possible to get professional help to provide necessary standards of service. Perhaps British operators should be as enterprising as David Kalfon, and not be put off by the commercial problems of launching a French company.
• by John Darker