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Bar News - August 13, 2004 France Repeals Age-old Foreign Merchant's Card Law By: Haywood M. Wise International Corporate Law NOTWITHSTANDING THEIR (often unjustified) poor reputation for intolerance of foreigners, the French have just made it a lot easier for a non-European citizen to start a business or act as a corporate decision-maker in France. By comparison with the stringent requirements of an E-2 investment visa in the U.S., which generally requires the presentation of a detailed business plan and forecasted financial statements, the resulting new French short-term visa regime is very foreign investment-friendly, requiring a minimal showing of economic viability. The recent Ordinance of March 25, 2004 eliminated the century-old requirement that in order for a foreign person to perform a commercial, artisanal or industrial activity in France, or act as a corporate director of a commercial company established under French law, he/she must obtain a foreign merchant card (carte de commerçant étranger). This card was given by the municipality (préfecture) where the individual would perform his/her activity or at the French business address of the company, and was subject to a review of competency, family situation, and economic criteria. The application for the foreign merchant card often required months of waiting and the appointment of temporary officers of the commercial company, making foreign investment rather burdensome. The foreign merchant card requirement had already been waived for European citizens and those countries belonging to the European Economic Area and foreigners already having a French residency card. The foreign merchant card regime had also already been relaxed for U.S. citizens and other foreigners from countries having a bilateral agreement with France, but remained nonetheless an administrative hurdle, especially for independent professionals who were relying on the foreign merchant card for justification of a work visa. For nationals of countries who could not claim a treaty right, these persons were required to present a detailed business plan, a forecasted budget covering a period of two years or written third-party guarantee. However, the new ordinance appears to make consular and municipal review even less cumbersome. The famous carte de commerçant étranger has seen its last days. Henceforth, a mere "municipal authorization" (autorisation préfectorale) is required, and is requested along with the short-term visa. Moreover, in addition to European citizens and citizens of the European Economic Area, the OECD countries, which include the United States, are exempted from this municipal authorization. This measure is of immediate effect for the OECD countries, as well as new members of the European Union as of May 1, 2004. This seems to imply that no municipal authorization at all is required of foreigners, such as Americans, subject to waiver, and that a short-term visa will be granted upon limited consular review of the viability of the U.S. citizen’s commercial endeavour in France. A decree should be issued in the near future to set forth the conditions for issuance of the municipal authorization and what is required for foreigners who are exempt. In the meantime, the municipal authorities shall depend upon their consulates for guidance as to how the ordinance shall be applied. But, it is clear that France is trying to encourage foreign investment and ease in corporate administration by this measure and therefore things should only become easier for those subject to waiver. It would appear that the French Consulates in waiver countries shall be responsible for making a limited review of a right to practice the planned commercial activity, but that detailed business plans, for example, would not be required. Henceforth, municipal review should be a mere formality. No doubt, municipal authorities will still require presentation of certain professional documents, i.e. proof of registration/declarations of existence of the foreigner’s activity with the Commercial Registry, URSSAF (French social security) and INSEE (the French Statistics Office) and other documents related to performance of the commercial activity. No doubt the consulate and/or municipal authority shall continue to require a commercial lease or domiciliation agreement, articles of association and supporting documents in the case of a company creation, and other documents that are relevant to the specific case, but little substantive review shall be made. Each préfecture shall nonetheless continue to act to some degree at its own discretion in regard to each file presented to it until the expected decree is promulgated. Furthermore, with the foreign merchant card, the municipal authority had three months to give its final decision after receipt of a complete file, it is to be expected that this period should be significantly reduced. As a result of these recent changes, properly presented application to the French Consulate of the U.S. citizen’s residence should be approved rather quickly, allowing the U.S. citizen to establish himself as an independent professional or company officer in France without incurring undue expense or delay. Of course, corporate counsel working with a French lawyer, who is familiar with what forms and documents are required, is highly recommended. Thus, a French professional experience has become all the more possible for American entrepreneurs. Haywood M. Wise, Esq., of counsel to Goff and Wilson, of Concord, in its Paris Office. He is a dual citizen of the United States and France, and brings expertise in international corporate law and US/ French immigration law.
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