Partnership limited by shares (SCA)
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.
In practice, SCAs may be used in all types of business. The benefit of an SCA is that its management is stable.
The SCA is a useful legal form for bringing together investors and entrepreneurs. In addition, it is set up to enable the company to resist hostile takeovers. It is also suitable for small and medium-sized family businesses (ownership may be transferred to a minor heir).
Who is concerned
The SCA is founded by at least 2 partners: one general partner and one limited partner.
The main difference between general partners and limited partners is their respective liability.
Prerequisites
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.
Costs
Setting up an SCA entails certain costs, including:
- notary fees;
- the cost of publication in the trade and companies register (registre de commerce et des sociétés - RCS);
- a share capital contribution of at least EUR 30,000;
- any costs related to the issuance of administrative permits;
- fees owing to the statutory auditor if one is required.
How to proceed
Deed of incorporation
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 identity of the signatories to the deed of incorporation;
- the form of the SCA;
- the SCA's company name;
- the SCA's corporate purpose and registered office;
- information on the shares and contributions.
The deed of incorporation is to be published in full in the trade and companies register (RCS).
Company name
The SCA must have a company name that is established in its deed of incorporation.
The name must be different from that of any other existing company.
To find out if the company name is available, contact the RCS.
Duration
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.
Conversion
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.
Dissolution
The company is automatically dissolved at the end of the duration specified in the deed of incorporation.
It may be dissolved by the shareholders, for example, if the share capital is lost.
It will be dissolved in the event of the death, ruin, suspension of civil rights or bankruptcy of the general partner, unless the articles of association stipulate that the general partner may be replaced.
In the event of voluntary dissolution, the following administrative certificates must be filed:
- a certificate issued by the Data-Processing, Membership and Contributions Centre of the Joint Social Security Centre (Centre commun de la sécurité sociale - CCSS);
- a certificate issued by the Luxembourg Inland Revenue (Administration des contributions directes);
- a certificate issued by the Registration Duties, Estates and VAT Authority (Administration de l’enregistrement, des domaines et de la TVA).
The company may also be dissolved through a legal ruling for legitimate reasons or due to unlawful activities.
A company that is in the process of being dissolved retains its legal personality for the purposes of its liquidation.
Capital
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.
Cash contributions or contributions in kind are permitted.
Contributions in kind are subject to an assessment report drawn up by a statutory auditor (réviseur d’entreprises).
Contributions in industry do not form part of the share capital, but may be included in the articles of association and remunerated.
Form of shares
Fully paid up shares are bearer shares, registered or dematerialised shares.
Bearer shares are signed by the managers.
General partners' shares may have priority rights.
Shares may be issued to the public.
Transfer of shares
Shares are freely transferable for limited and general partners.
Managerial structure
Shareholders' meeting
Unless otherwise specified in the articles of association, the general meeting of shareholders draws up and ratifies deeds that concern the company with respect to third parties.
The general meeting may only amend the articles of association by mutual agreement with the general shareholders.
The general meeting is convened by the manager.
Limited partners representing 10 % of the capital may request that a meeting be convened.
They approve the management report.
They may act as representatives of the company, provided that the capacity in which they are acting is specified.
Supervisory board
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.
Managers
The company is managed by one or more managers, who may or may not be general shareholders 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.
Liability
The general partners have joint and several liability for the commitments of the company.
The limited partners are liable to the extent of the amount of their contribution 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 restrictions on the managers' powers are not binding on third parties, even if they have been made public. Nonetheless, it is possible, through the partnership agreement, 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 binding on third parties, subject to publication in the RCS.
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.
Obligations
Oversight by a statutory auditor
The legal audit of financial statements must be delegated to one or more approved statutory auditor(s) (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:
- balance sheet total: EUR 4.4 million;
- net turnover: EUR 8.8 million;
- average number of full-time employees: 50.
An audit by a statutory auditor supersedes the responsibility of the internal auditors and carries a broader mandate than the one granted to them.
Legal publications
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:
- the complete deed of incorporation, along with any subsequent amendments;
- information on appointments and assignments of duties of the various management bodies and on liquidators, where applicable;
- information on the custodians of the bearer shares;
- certain legal decisions;
- where applicable, information on the dissolution of the company;
- annually, the status of the share capital, following the balance sheet;
- the annual financial statements;
- the management report;
- the internal auditors' report or statutory auditors' report;
- any change in the registered office.
Any subsequent changes must be filed with the RCS.
Any deeds, invoices, advertisements, disclosures, letters, order forms or other documents originating from a partnership limited by shares must contain:
- the corporate name;
- the notation 'partnership limited by shares' written legibly and spelled out;
- the exact address of the registered office;
- the words "R.C.S. Luxembourg" followed by the registration number.
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.
Accounting aspects
The SCA is required to submit the following documents, which must be approved by the general meeting:
- the balance sheet;
- the profit and loss accounts;
- the annexes and management report.
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:
- balance sheet total: EUR 4.4 million;
- net turnover: EUR 8.8 million;
- average number of full-time employees: 50.
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:
- balance sheet total: EUR 20 million;
- net turnover: EUR 40 million;
- average number of full-time employees: 250.
Tax aspects
Partnerships limited by shares are subject to the following fees and taxes:
- fixed registration fee;
- property tax;
- business tax;
- net wealth tax;
- corporate income tax;
- VAT, based on the following criteria:
- if its annual turnover excluding taxes is less than EUR 112,000: VAT returns must be filed annually;
- if its annual turnover excluding taxes is between EUR 112,000 and EUR 620,000: VAT returns must be filed quarterly;
- if its annual turnover excluding taxes exceeds EUR 620,000: VAT returns must be filed monthly.
Who to contact
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House of Entrepreneurship14, rue Erasme
L-1468 Luxembourg
Luxembourg
Opening hours : from 8.30 to 17.00Phone : (+352) 42 39 39 - 330
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Chamber of Skilled Trades and Crafts
'Contact Entreprise' at the Chamber of Skilled Trades and Crafts - Luxembourg2, Circuit de la foire internationale
L-1347 Luxembourg-Kirchberg
Luxembourg
Postal address :
B.P. 1604 / L-1016
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Luxembourg Business Registers
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Luxembourg Business Registers - Luxembourg Office14, rue Erasme
L-1468 Luxembourg-Kirchberg
Luxembourg
Postal address :
L-2961 Luxembourg
Phone : (+352) 26 428-1Fax : (+352) 26 42 85 55Monday to Friday from 09.00 - 12.00 and 13.30 - 16.00
Registration helpdesk: Monday to Friday by appointment only -
Luxembourg Business Registers - Diekirch OfficePlace Joseph Bech
L-9211 Diekirch
Luxembourg
Phone : (+352) 26 428-1Fax : (+352) 26 42 85 55Mondays, by appointment only