Proposition 50K2349

Projet de loi modifiant la loi du 4 décembre 1990 relative aux opérations financières et aux marchés financiers visant à créer une nouvelle catégorie d'organismes de placement collectif, dénommée pricaf privée, et portant des dispositions fiscales diverses.

General information ¶

Authors

CD&V Trees Pieters
LE Jean-Jacques Viseur
MR Eric van Weddingen
Open Vld Georges Lenssen
Vooruit Dirk Pieters

Submission date

March 11, 2003

Official page

Visit

Status

Adopted

Requirement

Simple

Subjects

investment company venture capital financial instrument investment transaction

Voting ¶

Voted to adopt

CD&V LE Open Vld N-VA MR FN VB

Voted to reject

Groen Ecolo PS | SP

Party dissidents ¶

• Ferdy Willems (N-VA) voted to reject.

Contact form ¶

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Discussion ¶

April 1, 2003 | Plenary session (Chamber of representatives)

Full source

by Mr. Olivier Maingain, rapporteur, returns to his report.

I will not abuse my speech time, I will never do it.

Mr. Minister, dear colleagues, the government agreement rightly provided for a number of measures in favour of small and medium-sized enterprises, including easier access to financing. The reform of the ISOC is a first step in this direction with the establishment of a tax-immunized investment reserve. This proposal constitutes a second step, a step as important as it is budgetally neutral.

The initial finding is the difficulty of financing small and medium-sized enterprises, especially those that do not have access to the stock exchange. The proposed solution is the creation of a vehicle capable of draining venture capital for these companies, a vehicle transparent, i.e. taxally neutral for both the investor and the public treasury. This vehicle is called “private pricaf”. Neutrality means that the tax treatment will be neither less favourable nor more favourable to the investor than if he took a direct participation in the company. On the other hand, the risk assumed by the investor will be significantly lower.

Let us very briefly recall the importance of risk capital in the bilateral structure of an enterprise because, even if the enterprise found — this is not always the case — from the banks the necessary credits, these constitute a considerable fixed burden, likely to put the enterprise in difficulty at the slightest turn of the economy. This was also the case 20 years ago with the companies that were listed on the stock market and that had poorly balanced bilateral structures, with too much capital borrowed compared to the venture capital; it was then that we imagined and voted, all parties confused at the time, the "Monory/De Clerck", the "Cooreman/De Clerck" called "Monory" which met a huge success and which allowed to re-balance the bilateral structure of the companies listed on the stock market.

The situation is even worse for SMEs, which, in the vast majority, do not have access to the stock exchange. The risk capital allocated to these companies is, compared to the Anglo-Saxon countries, dramatically low in Belgium; which is even more alarming as the economic fabric in our country is mostly made up of small and medium-sized enterprises, while our large enterprises are increasingly owned by foreign groups.

In this regard, for our SMEs too, it would be useful to appeal to foreign investors, but investing — this is the vehicle that is offered to them today — through a pricaf of Belgian law. Hence the choice of a form of society somewhat outdated, the simple commandite society, which offers the advantage, in addition to the simplicity in the level of formalities and its low cost, to be more compatible with the forms of societies encountered, in particular, in the Anglo-Saxon countries.

The private law pricaf has been designed to simplify as much as possible its constitution, dissolution and management. Provided for a maximum period of 12 years, it allows investors to exit capital without the risk of loss of price due to lack of market liquidity, as would be the case if they were constituted for an unlimited duration and should therefore be traded on the Stock Exchange or on a parallel market.

The explanation of reasons and the report are sufficiently detailed to allow me not to extend further on the characteristics and the many advantages of the private law pricaf.

I would like to thank the Minister of Finance for setting up and framing the working group that helped to bring about the text of this proposal. I associate with my thanks fire Aimé Desimpel as well as Eric André and Georges Lenssens who co-chaired this working group. I strongly hope that, despite the late date, this proposal can still be adopted by both Chambers and that its entry into force will meet the success we expect.

Mr. Speaker, Mr. Minister, Mr. Colleagues, in the essence, this proposal is not lacking in interest because it proposes the creation of a new financial vehicle for the investment of venture capital.

If I resume the document textually, it is therefore about setting up the legal framework of a private unlisted company that encourages private investors to invest in unlisted venture capital without being forced to constitute themselves a company.

In the development, the authors of the proposal talk to us about the advantages. There are therefore advantages, on the one hand, for investors who can diversify risk and get rid of management concerns, on the other hand, for the community since it is about attracting capital at the level of SMEs in particular, SMEs whose merits are generally boasted.

In addition, the principle of tax neutrality will be respected. However, I note that we have just talked about tax-immunized investments, I will come back to them later.

and tax neutrality. Indeed, the investor who borrows the financial vehicle, since this is the term that is used, is treated as if he had invested directly, without an intermediary, assuming the entire responsibility of management. This is a matter of neutrality.

Regarding the state, it is still more nuanced. On the financial level, there is some sort of loss. The investor uses a collective investment agency but, in the context of private pricaf, the taxation mechanisms are significantly more advantageous. For example, the comparison with a family holding would be in the advantage of the private pricaf in question.

Of course, in development, we refer to the European Council of Lisbon, we take back the naive expression that we must become the most powerful economy in the world, which is a somewhat naive language, but in addition a long-standing goal. It must be known that the European Union has long been the world’s largest power in economic and social terms, and ⁇ thanks to the model of Rhine capitalism, which we unfortunately have a little tendency to forget.

The mechanism itself, private pricaf, evokes the air of time. I will detail three elements.

First, private investors agree on the objectives and terms that the fund will have to comply with and then they become passive. They are passive investors. It is a specialized company that manages the whole. At the limit, we would ask for a small dose of family capitalism, it would not be wrong!

Second, all types of investors are welcome, individuals, companies, legal entities, associations, various funds, pension funds probably, which means investments that require the famous two-digit return, return at 15%, exactly the mechanism that kills ⁇ . Whenever big industry bosses come here, and I’ve seen a good twenty walk around, I asked them how to pay a 15% return, all answered that it was impossible. It is impossible to pay for this in the long term, they say, we are going to catastrophe. Experts have told us, they want to rattle at the level of the global financial market.

Mr. Depreter, you just talked about the various investors in the pricaf. In reality, we all accept the sicav system, which is the same for listed companies. The problem is that SMEs, like listed companies, do not have access to significant institutional investors. By doing this, they are given a more “liquid” market to do exactly the same thing.

I prefer that institutional investors share their risks between sicavs, which are listed companies, and SMEs that need financial support. There is a problem of understanding the vehicle. There is not, for SMEs, the vehicle that exists for listed companies.

But not . What should SMEs do? They must go into the capital market by borrowing at higher rates.

The Minister finds something funny, I do not know if it is your intervention or my response.

I suppose that, like me, you want SMEs to have significant capital and not just the capital of the economic actor that makes the SME. If it is through the loan, it pays significant interest rates, if it is through the pricaf, it has the same advantages as the company that appeals, because it is listed, to the capital market.

I understand your argument very well. That’s why, in the form of a somewhat outdated parenthesis, I said that a little bit of family capital might do good. Indeed, whether for small or large companies, when you resort to the financial market as it is, it is a scam. I return to the returns that are demanded by the financial world, they stifle companies. It is not the workers who suffocate them, it is the financial system.

I will not go back to the stock market phenomena because there is, too, an ambiguity because one evokes — and I must admit that I have not understood everything — how one elaborates a system leaving a relative uncertainty about whether it will eventually end up in the stock market. In any case, if this must end up in the stock market in one way or another, given recent stock market events, it can become a wreck for our SMEs. It is not as a left-wing extremist that I will denounce the stock market phenomena. The capitalist system experts themselves denounce this, so I agree with them.

Then, the management would be partially remunerated based on a fee on possible profits. We are talking about options on shares. This is a bit of the kind of stock options, if I am not mistaken? Even the politically correct financial experts of the defenders of the liberal system tell us that it is relatively dangerous and that it has been, in the United States, a fundamental element accelerating the crisis. Of course, this form of remuneration would benefit from tax advantages. In fact, this is a system that fiscalises quite widely. There is a special regime for corporate tax, an exemption from the surplus value achieved on shares, a waiver from the collection of the mobile pre-count for the corresponding part of the income, an exclusion from the collection of the mobile pre-count on the liquidation bonuses, an exemption from the value added tax for the services of the pricaf, etc.

There are a number of exceptions. The comments made in the committee were very clear in this regard. There is no ambiguity. This is based on the good intention mentioned by Mr. Visionary to bring money inside small and medium-sized enterprises, but in the international conditions that are those I just recalled and with a desire to be attractive in fiscal terms, therefore to offer tax advantages.

The commentary on the articles evokes adequate tax treatment, appropriate tax status and an attractive tool. But, in fact, I am afraid that there is a wrong path in this matter. We must, of course, alleviate the taxation that weighs on the income of labour, but if, at the same time, we reduce the taxation that concerns the income of capital, we go right into the wall! This famous active social state will never be realized.

The last paragraph of the development we find in the document is significant in this regard. It is said that this measure will create jobs, generate momentum, that it will do good socially and lead to technological development and research. For me, this is a hope, ⁇ a bit utopian.

With a financial instrument, private pricaf, which runs on the international market combined with the stock exchange I talked about a few minutes ago, and given this famous two-digit return, the device is not safe. It can threaten the SME network and, as a result, instead of enabling employment development, lead to social difficulties.

Mr Viser, it is true that we have had a relatively long discussion recently. After the technical comments you gave me, I went to review exactly, pointing out the main paragraphs in the document, which means the famous tax neutrality in question. On page 4, we define very well what tax neutrality represents for the investor. On page 14, it is clearly explained that this collective investment agency is accompanied by numerous tax benefits.

It is also said that we must be careful and not turn holdings into private pricafs simply because we want to do so. In order to do so, certain conditions must be met.

Moreover, we could have had more technical hearings.

I think this project comes from a good intention. We need to focus more on small and medium-sized ⁇ . But as it is proposed at the moment and given the international context that we know, the company seems to us largely risky.

Mr. Speaker, I would like to respond briefly to what is said in connection with the conversion of ordinary holdings into private. In an ordinary holding company there is no distinction between management and ownership. There is a distinction between the people who invest and the people who manage. The management may hold up to 20% of the number of shares in possession. There will therefore be a clear separation between management and owners. This does not exist in a holding.

No, I’m not talking about managers at all. I talked about the managers of the private company that accompanies PRICAF. What I said about them is that they are planned to be remunerated in a somewhat special way. That said, the passage to which I referred, on page 14, specifies that private PRICAF has a number of advantages. For comparison, the term holding is cited at that time. But I didn’t talk about managers at the time.

Mr. Chairman, Mr. Dirk Pieters and I have signed the bill of Mr. van Weddingen for the CD&V group,

We give our active support to this bill, both by co-signing it and by our cooperation in the committee. We are pleased with this proposal because we think it is an efficient means. As already stated, private private is a listed collective investment institution whose purpose is to attract and provide capital to non-listed undertakings under the professional management of a management company. Their

I would also like to recall that the Minister provided Mr. Depreter with explanations regarding the difference between the holding company and the private private.

Most important, however, is that private private sector is an additional means of providing resources to SMEs who generally find it ⁇ difficult to externally finance their growth. Given the economic downturn, it is currently necessary to actively support entrepreneurship, and in particular SMEs, in order to create new employment in the function of the active welfare state, as recently called by Mr Depreter.

We believe that this vehicle can create new employment and that is positive. We have actively supported the bill.

I would like to intervene in the same way. This is an investment company that clearly intends to invest private capital in SMEs. It also clearly refers to non-listed, private companies that should encourage individuals to invest venture capital in SMEs. This system clearly chooses a risk spread and a professional management. I cited it later. Unlike a regular holding company, there is a clear distinction between the management and ownership of the shares. Therefore, one gets a guarantee that one will manage this private in a professional way.

There are many features that had to be developed to guarantee this flexibility. It must be a closed, unlisted company with a maximum duration of twelve years. Why is there a time limit here? One wants to make a clear distinction with a traditional investment company today, which very often does quite ambiguous about whether or not to buy out. It should be made clear that these shares should not be present in the private sector for too long. Fiscal neutrality must also be guaranteed. It is intended that the commitments could be handled in a flexible way with regard to concrete investments. They also do not want an obligation to re-invest the profits here. It should be accessible to individuals, companies, associations and even funds, whether or not of an institutional nature. The management should be taxed on a Belgian basis. We also request that there be sufficient Belgian representation so that the files submitted by the Belgian SMEs will also be properly examined. They also demand a minimum contribution of 250,000 euros in order not to comply with the control of the Public Savings Service. It is intended to work here with very low management costs. It is therefore possible to choose a company form that is suitable for this type of investment company. For foreign investors, it appears, the commissary company would be one of the most appropriate forms of company.

We believe that this can mean a solid alternative financing for SMEs. Until now, most of the funding came from family heritage or loans.

Well, through this form we hope that funds will be invested in SMEs in a different way, which will benefit their start-up and growth. In this way we want to promote the Belgian SMEs abroad. I am confident that this will boost the Belgian economy again. We will therefore fully support this proposal from the VLD.

Mr. Speaker, I would like to speak very briefly to thank, as have done several speakers, all those who have participated in the preparatory work of this proposal through the working groups that have been set up. I also thank the speakers, both in the majority and in the opposition, who have wished to go in the same direction as what has been done for several years. We started a reduction of the tax pressure on work, then a revision of the Corporate Tax Act but mainly focused on a reduction of taxes for SMEs. I will tell Mr. To assert that the program law that has been voted in the House and will be voted in the Senate contains the first two capital tax reductions. They appear in this law that has just been voted by all groups — the majority in any case — and they concern the aid either to social economy companies or to start-ups, start-ups. by

It is important to find funding systems for SMEs. I would just like to reassure you on one point: all the actors in the business world and in particular SMEs have been associated with the preparation of this text and all are demanders, of course. They want to be able to move towards strengthening their own funds. This has been said several times in the past, especially in the face of the evolution of credit to them. In a rather painful period in terms of employment, with a certain decline in employment in recent months, encouraging SMEs that are the first jobs-creating enterprises is a major element of what we need to do. I am pleased that a number of groups want to go this way.