Less well known than the traditional bank loan or share issue, the savings bond is nevertheless a financial instrument that can be relevant both for companies seeking to diversify their sources of financing and for savers looking for investments. This instrument, which is governed by specific rules, deserves particular attention.
But what exactly is a "bon de caisse"? Since a reform in 2016, it has been a compulsory voucher. nominative (issued in the name of a named person) and non-negotiable on a market. In concrete terms, it represents an undertaking by a trader (the issuer) to repay a sum of money on a specific date, the sum having been lent to him by the subscriber of the bond.. It is therefore the consideration for a loan transaction.
To fully understand how it works and what it is used for, we need to explore its sometimes controversial legal nature, the conditions under which it is issued and circulated, and the rules governing its payment and taxation.
What is the legal nature of a sales slip?
The legal status of savings bonds has given rise to debate in the past, particularly before they became exclusively registered. However, it is now accepted that they do not constitute not securities. Unlike bonds, for example, savings bonds are not fungible: they do not represent equal fractions of a global issue and are not intended to be traded on a stock market.. Each bond is issued individually, often on an ad hoc basis, depending on the issuer's cash flow requirements or subscribers' investment requests.. The interest rate may also vary from one bond to another.
Similarly, equating the sales slip with a paper instrument such as a bill of exchange or a promissory note, is not relevant.. Even if a certain body of case law has been able to see similarities between themHowever, the specific characteristics of these instruments distinguish them from other instruments, in particular when they were "promissory notes". For example, a savings bond always represents a loan of money.The claim underlying a commercial paper may have various origins. In addition, the specific legal regime for bills of exchange does not apply as such to savings bonds..
Finally, the most accurate classification, confirmed by case law, is that of acknowledgement of debt. A savings bond is first and foremost a security that evidences the existence of a debt owed by the issuer to the subscriber, arising from the loan granted. This classification is not without importance. Historically, it has made it possible to clarify the situation of limited liability companies (SARLs), which, although prohibited from issuing securities (except for registered bonds under certain conditions since 2004), are not allowed to issue bonds. ), could issue registered savings bonds because they were not considered to be transferable securities.. The distinction also remains relevant from a tax point of view.
Who can issue savings bonds and under what conditions?
Not everyone can issue savings bonds. The French Monetary and Financial Code strictly regulates potential issuers and the conditions of issue.
Authorised issuers are listed exhaustively in the law. These are mainly :
- From lending institutions.
- From natural persons or companies with merchant status and can prove that they have drawn up the balance sheet for their third financial year.
It is important to note that finance companies are explicitly excluded.. The issue of savings bonds by commercial enterprises is an exception to the banking monopoly on the receipt of funds from the public..
Terms and interest rates : The term of savings bonds is regulated. The French Monetary and Financial Code (article L. 223-3) stipulates that they may not be issued for a term of less than one month and more than five years. A 2019 ordinance may have paved the way for a deadline of up to seven years in certain contexts linked to the PACTE Act.However, the current legal reference appears to maintain the five-year ceiling. Failure to comply with these time limits may result in sanctions.
As for the interest rateIn principle, it is freely determined by the parties at the time of subscription.. Naturally, this rate must not be usurious. However, a restriction applies to issuing credit institutions, which are subject to the general regulations on the remuneration of term deposits..
Information and transparency : Since the 2016 reform, the anonymity that could surround certain savings bonds has disappeared. The law now imposes transparency obligations to protect subscribers:
- Savings certificates must be entered in the owner's name in a register held by the issuer.
- The issuer must provide the owner with a certificate of registration in this register. The compulsory details of this certificate are specified by decree.
- When the issuer is a merchant (not a credit institution), it must provide the policyholder with its most recent certified annual accounts.
Failure to comply with these conditions, particularly in the event of a public offering (although this concept is less relevant now that the warrants are registered), may result in the nullity of bonds issued and penal sanctionsFor example, if an inaccurate balance sheet is provided.
How do sales slips circulate?
As they are now exclusively registered and cannot be traded on a marketAs a result, bons de caisse no longer circulate simply by physical delivery (tradition) or endorsement like the old bearer securities or promissory notes..
Their transmission obeys the rules of assignment of receivables provided for in the Civil Code (articles 1321 et seq., which have modernised the former article 1690). In practical terms, a cash voucher is transferred by a writes between the transferor (current owner) and the transferee (new owner). This assignment takes effect between the parties from the date of the deed, but in order to be enforceable against the issuer (the debtor), it must be notifiedor he must have some noted.
In addition to traditional sales, savings bonds can be involved in other transactions:
- Manual donation : A cash voucher can be donated. However, as with any manual gift, proof of the gift must be provided by the donor.liberal intent (the willingness to give freely) can be tricky to establish in the event of a dispute, as simple possession is not always sufficient. Case law is often demanding on this point.
- Collateral : A savings bond, representing a debt, can be pledged as security for another debt by means of a pledge of receivables. This security must be the subject of a writes in order to be valid, and its enforceability against third parties (in particular the issuer) depends on the rules specific to the pledge. Specific questions may arise, for example concerning the fate of interest generated by the pledged bond or when the pledge relates to the joint property of spouses.
From incidents may also affect the circulation or holding of warrants:
- Insolvency proceedings : If the issuer or subscriber is the subject of insolvency proceedings (receivership or liquidation), the fate of the savings bonds may be affected. For example, a creditor holding a savings bond as collateral has a powerful right of retention, which limits the powers of the official receiver over the bond. The reclamation of savings bonds by their rightful owner can also raise complex issues if the issuer is in difficulty.
- Loss or theft : Being registered simplifies the situation compared with the old bearer shares. The registered owner retains his rights even if he loses the certificate of registration, although it may take some time to reconstitute it.
How are cash vouchers paid for?
Payment marks the extinction of the issuer's debt. There are several aspects to consider.
Who pays (solvens)? Logically, it is thetransmitter the savings bond holder who is obliged to repay the loan on the agreed due date. However, you need to be careful about fraud committed by agents (employees) of credit institutions who may issue false vouchers or misappropriate funds. The institution may be held liable if the customer legitimately believed that he was dealing with the bank and if the bank failed to exercise due care, but it may not be held liable if the irregularities were obvious or if the employee clearly acted outside the scope of his duties..
Who receives the payment (accipiens)? Payment must be made to rightful owner of the voucher, i.e. the person whose name appears on the issuer's register. The complexity that existed with the old anonymous "certificates of deposit", which did not necessarily prove ownership, was eliminated.This problem is largely resolved by the registered nature of current warrants. The issuer is validly discharged by paying the registered creditor.
Terms of payment: Refunds are made in the normal way in cash at maturity. A advance payment is possible if the issue contract so provides. Reimbursement by exchange against other securities could also be envisaged contractually.
Proof of payment : Although the delivery of the original instrument to the debtor presumes the latter's release (in accordance with Article 1342-8 of the Civil Code)commercial law recognises the freedom of proof (article L. 110-3 of the French Commercial Code). Payment can therefore be proven by any means (accounting records, witness statements, etc.), which was particularly useful in the days of anonymous vouchers..
Limitation of action for payment : The subscriber's action to obtain repayment of the cash voucher shall be time-barred in accordance with the following procedure common law deadline applicable to obligations between traders or between traders and non-traders. This period is currently five years (article L. 110-4 of the French Commercial Code)This is not to be confused with the three-year limitation period specific to bills of exchange (known as the "prescription cambiaire"), which is not applicable here. This should not be confused with the three-year prescription period specific to bills of exchange (known as the "cambiaire prescription"), which is not applicable here.. The Court of Cassation confirmed this approach, considering the sales voucher to be an acknowledgement of debt governed by ordinary law.. It is possible for parties to agree a shorter limitation period in the contract of issue, provided that this clause is clear and brought to the attention of the subscriber. On the other hand, events such as a court summons can interrupt the statute of limitations.whereas only an absolute impossibility to act could suspend it.
What tax treatment applies to savings bonds?
Savings bonds are mainly taxed on the interest they earn and any capital gains they generate. The regime may vary slightly depending on the nature of the issuer (bank or other company) and especially that of the beneficiary.
Interest (income) :
- For the individuals French tax residents: interest is subject to French withholding tax.income tax and social security contributions. Taxpayers generally have a choice between applying the single-rate withholding tax (PFU, or "flat tax") or opting to have this income included in the progressive scale of income tax, if this is more advantageous for them. To avoid automatic taxation on income considered as undeclared, it is essential that the identity of the beneficiary is known to the tax authorities.
- For the legal entities subject to corporation tax: the interest received is included in their taxable income. taxable profit and taxed under ordinary law.
- For some non-profit organisations a specific scheme with a reduced rate of withholding tax (the source document mentions 10%) may apply.
Capital gains tax : If an individual sells their savings certificate before maturity and realises a capital gain (the difference between the sale price and the purchase price), this capital gain is taxable under the same conditions as interest (income tax + social security withholdings, with option PFU/barème). Any capital losses can be offset against gains of the same type for the year and subsequent years, subject to certain conditions. Specific reporting obligations apply.
Redemption premiums : Any premiums paid when the voucher is redeemed (the difference between the amount redeemed and the amount lent, excluding interest) are also included. taxable.
Combating money laundering : Finally, it should be remembered that financial institutions issuing savings bonds are subject to due diligence obligations to combat money laundering and the financing of terrorism. In particular, they must check the identity of their customers. In addition, cross-border transfers of savings bonds (even if in the name of the bearer) in an amount equal to or greater than €10,000 must be declared..
Savings bonds can be a useful financial management tool in certain situations. If you are considering issuing or subscribing to savings bonds, or if you are experiencing difficulties with these securities, our firm can provide you with legal advice tailored to your needs. Contact us for an analysis of your situation.
Sources
- Monetary and Financial Code (in particular art. L. 223-1 et seq., L. 152-1 et seq., L. 511-6, L. 511-7, L. 621-15)
- Civil Code (in particular art. 1321 et seq., 1342-3, 1342-8, 1415)
- French Commercial Code (in particular art. L. 110-3, L. 110-4)
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