A partnership limited by shares (société en commandite par actions - SCA) is a commercial company. It combines features of a limited partnership (société en commandite simple - SCS) with those of a public limited company (société anonyme - SA).
The main difference between an SCA and an SCS is that the ownership shares of an SCA are freely transferable, while those of an SCS are not.
The benefit of an SCA is that its management is stable.
An SCA is formed with at least 2 shareholders, namely a general partner and a limited partner.
The main difference between general partners and limited partners is their respective liability.
An SCA may be formed for any business purpose.
Any person wishing to set up a company to do business in Luxembourg must have the authorisations/approvals required to carry out the activity.
General partners must be authorised to do business as traders.
This is not a requirement for limited partners.
Setting up an SCA entails certain costs, including:
The SCA's deed of incorporation is drafted by a notary.
A report by a statutory auditor is required if a contribution in kind is made to the SCA.
The law specifies a list of mandatory information that must be included in the articles of association:
The deed of incorporation is to be published in full in the Trade and Companies Register (RCS).
The name of the SCA is established in its deed of incorporation.
The name must be different from that of any other existing company.
To find out whether the company name is available, the RCS should be contacted.
The duration of the SCA is established in the articles of association.
The company may be established for a limited duration or an unlimited duration.
The minimum amount of capital needed to form an SCA is EUR 30,000.
The capital is made up of shares. It must be fully subscribed and paid up to at least 25 % on the date on which the SCA is formed.
Contributions in cash or in kind are possible, but must be paid up within 5 years of subscription.
Contributions in kind are subject to an assessment report drawn up by a statutory auditor (réviseur d’entreprises).
Contributions in industry are not part of the share capital, but can be included in the articles of association and remunerated by profit shares.
Shares are registered shares until they are fully paid up. Fully paid up shares then become:
Bearer shares are signed by the managers.
General partners' shares may have priority rights.
Shares may be issued to the public.
It is possible to create shares which are not representative of the share capital called 'profit shares'. The SCA's articles of association determine the rights attached to such shares.
An SCA may issue shares without voting rights:
A register of registered shares that establishes their ownership must be kept at the registered office. Owners can request a certificate.
The general meeting of shareholders may, by way of a statement in the articles of association of the company, authorise the manager(s), where appropriate, to increase the share capital on one or more occasions, up to a specified amount.
Shares are freely transferable for limited and general partners.
Unless otherwise specified in the articles of association, the general meeting of shareholders (which includes the general and limited partners) draws up and ratifies deeds that concern the company with respect to third parties.
The general meeting decides on:
The general meeting is convened by:
The general meeting shall decide annually on the annual accounts and the management report at the latest within 6 months after the end of the financial year.
The company is managed by one or more managers, who may or may not be general partners and are appointed in accordance with the articles of association. In practice, a manager may be appointed either in the articles of association or at a later date by a shareholder decision.
The managers do not form a board, and their powers are concurrent unless stipulated otherwise in the articles of association.
A manager can be a legal person. In such cases, there is no need to appoint a natural person to carry out their mandate.
The restrictions on the managers' powers are not binding on third parties, even if they have been made public. Nonetheless, it is possible, through the articles of association, to assign responsibility to one or more managers to represent the company, either alone or jointly, in acts or in court. This clause is then enforceable against third parties provided that it has been published in the RCS.
The company is overseen by at least 3 internal auditors.
The supervisory board also issues recommendations on questions submitted by the manager, and authorises actions that surpass the manager's remit.
It performs its duties on behalf of the shareholders.
The general partners have joint and several liability for the commitments of the company.
Limited partners are liable up to the level of their contributions to the share capital. They are not authorised to take part in the day-to-day management of the company; by doing so, they would forfeit their benefit of limited liability.
The company is bound by the actions undertaken by the manager(s), even when they surpass the corporate purpose, unless it can be proven that the third party involved knew, or could not have been unaware of the fact that the action surpassed the corporate purpose given the circumstances.
The managers are liable to the company for their misconduct in carrying out the mandate entrusted to them.
The members of the supervisory board are accountable for misconduct in carrying out their mandate.
The legislation stipulates a variety of criminal penalties for violating corporate law.
The SCA must keep a register of registered shares which contains :
The legal audit of accounts must be delegated to one or more approved statutory auditors (réviseur d’entreprises agréé) in any company which, on the balance sheet date after 2 consecutive financial years, exceeds 2 out of the following 3 criteria:
An audit by an approved statutory auditor supersedes the responsibility of the internal auditors and they also carry a broader mandate than the one granted to the latter.
In order to register the company with the RCS, certain information about the company must be disclosed:
In addition, the SCA must file the following with the RCS:
Any subsequent changes must be filed with the RCS for publication.
All deeds, invoices, advertisements, publications, letters, order forms and other documents issued by partnerships limited by shares must contain:
The corporate financial statements must be filed with the RCS within one month of their approval and no later than 7 months after the close of the financial year.
The SCA is required to submit the following documents, which must be approved by the general meeting:
SCAs can draw up an abbreviated balance sheet if, on the balance sheet date, they do not exceed 2 out of 3 of the following criteria:
SCAs can draw up an abbreviated profit and loss account if, on the balance sheet date, they do not exceed 2 out of 3 of the following criteria:
Partnerships limited by shares are subject to the following fees and taxes:
The SCA may change its corporate form in the course of its lifetime through a decision by the shareholders.
The rules on mergers and demergers, which are likely to bring about a change in legal form, apply to SCAs.
An SCA may be dissolved for the following reasons:
It will also be dissolved by the death, insolvency (financial ruin), interdiction or bankruptcy of the general partner. The articles of association may provide for the possibility to replace the general partner in one of these situations, which will avoid the dissolution of the SCA.
Dissolution with liquidation happens in 3 distinct stages:
A company that is in the process of being dissolved retains its legal personality for the purposes of its liquidation.