A partnership (société en nom collectif - SENC) is a commercial company characterised mainly by the unlimited joint and several liability of the partners for all the commitments of the company. In order to demonstrate this liability, the company name must include the name of one or more partners.
A SENC must have a minimum of 2 partners, which may be natural or legal persons (only commercial companies).
The partners of a SENC are deemed to be trading in their own name.
A SENC is a particularly interesting form of company for small and medium-sized 'family-run' businesses in the commercial or crafts sector that wish to benefit from:
- simple and inexpensive rules;
- no minimum capital requirements;
- the freedom to draft the articles of association as it sees fit.
Given the requirement for unanimous agreement on the transfer of shares, this type of company is however not suitable for organisations with a large number of partners.
Creation of the company
- notarised or private deed;
- lodging with the Trade and Companies Register (registre de commerce et des sociétés - RCS) for the purpose of publication in the electronic compendium of companies and associations (Recueil électronique des sociétés et associations - RESA).
- company name mandatory, demonstrating to third parties the personal commitment of the partners;
- indication of the name of one or more partners;
- the company name must be changed if one of the partners mentioned in it leaves the company.
- unlimited, unless otherwise specified in the articles of association;
- dissolved by the will, death, ruin, suspension or bankruptcy of one of the partners, unless otherwise stipulated in the articles of association.
- no minimum share capital;
- indication in the articles of association of the amount of the share capital and the assets contributed or to be contributed to the partnership by the partners;
- share capital indicated in the articles of association must be validly and fully subscribed;
- share capital: contributions in cash or in kind (no auditor’s report required);
- contributions in industry are possible, but do not form part of the share capital.
Form of company shares
- registered shares only.
Transfer of company shares
company shares non-transferable and non-assignable unless:
- by unanimous decision;
- provisions contrary to the articles of association;
- notification and acceptance of the transfer by the company and publication in the Trade and Companies Register (Registre de Commerce et des Sociétés - RCS);
- subject to registration fees if the company owns immovable assets.
- natural or legal persons;
- qualification as a trader.
- at least 2 partners;
- no maximum number.
The partners have unlimited joint and several liability for all the commitments of the company on their personal assets towards:
- company creditors up to the company assets, plus the personal assets of the partners;
- the tax administration, if the liabilities result from the activities of the business (VAT, communal business tax);
- the other partners, as joint and several co-debtors, unless otherwise stipulated in the articles of association.
- ordinary (simple majority) and extraordinary (unanimity) general meetings, called by the business managers;
- no predefined legal formalities concerning the form or deadline for calls to meetings;
- the forms and rules for calling meetings are defined in the articles of association.
Operation of a SENC
- usually delegated to one or more business managers, partners or otherwise, appointed in the articles of association from the outset or by modification or by unanimous decision of the partners, for a limited or unlimited term;
- in the absence of any appointment, all the partners are business managers.
- the business manager has the status of an agent in terms of liability, but is in fact an organ of the company;
- there is no restriction on the nationality of business managers;
- limitation of the management powers of the business manager by the company objective and the articles of association;
- dismissal of managers:
- statutory business managers: by unanimous decision unless otherwise stipulated or for legitimate reasons (manifest incapacity, unfair competition in relation to the company or embezzlement of funds);
- non-statutory managers: revocable (simple mandate);
Accounting and financial information
- an SENC must comply with the standard chart of accounts (plan comptable normalisé) and keep its accounts at the registered office for inspection by interested parties if the annual turnover exceeds EUR 100,000 (excluding VAT). It is also required to file the accounts with the the Trade and Companies Register.
In addition, an SENC must follow the chart of accounts where:
- all of the partners with unlimited liability are legal persons in the form of an SA (public limited company), SARL (limited liability company) or SECA (partnership limited by shares);
- all of the partners with unlimited liability are themselves organised as a SENC/SECS or SA, SARL or SECA;
- the partners are non-European companies, but with a comparable form.
Controlled supervision of the company
- no auditors (commissaire aux comptes) or general meeting;
- supervision by a registered auditor is mandatory for all SENCs:
- if all of the partners are SAs, SARLs or SECAs;
- if the partners are non-European companies, but with a comparable form;
- if, on the balance sheet closing date after 2 consecutive financial years, 2 of the 3 following criteria are exceeded:
- balance sheet total: EUR 4.4 million;
- net turnover: EUR 8.8 million;
- average number of staff employed: 50.
- fixed registration fee;
- property tax;
- business tax;
- net wealth tax (if the shareholder is an opaque company);
- personal income tax;
- as a fiscally "transparent" company, an SENC is not taxable as such;
- VAT returnaccording to the following criteria:
- annual turnover excluding tax of less than EUR 112,000 -> annual declaration;
- annual turnover excluding tax between EUR 112,000 and EUR 620,000 -> quarterly declaration;
- annual turnover excluding tax greater than EUR 620,000 -> monthly.
L-1468 - Luxembourg
from 8.30 to 17.30
L-1347 - Luxembourg-Kirchberg
Postal box B.P. 1604 / L-1016