Partnership limited by shares (SECA or SCA)

This page was last modified on 17-07-2017

A partnership limited by shares (société en commandite par actions - SECA or SCA) is a commercial company. It combines the characteristics of an SECS and an SA.

The primary distinction between a limited partnership company (SECS) and SECA: the interest shares of an SECS are not freely tradeable, unlike SECA shares;

the company is founded by at least 2 partners, namely one general partner and one limited partner. The main difference between the partners lies in their liabilities:

  • general partners have joint and several liability for the commitments of the company;
  • the limited partners are only liable up to the level of their contributions.

Who is concerned

A SECA can be used in practice for all types of business.

The distinction between 2 types of partners has 2 main advantages. It allows:

  • general partners to increase the capital of the company without diluting their powers;
  • limited partners to back a company without facing unlimited risks.

For these reasons, it is particularly interesting for young entrepreneurs with innovative ideas who need financing from other parties, as well as for entrepreneurs that wish to invest in a company whilst limiting their liability. It is also suitable for small and medium-sized family businesses (transfer to a minor heir is possible).

Prerequisites

Before forming an SECA, one must ensure that the general partners have the capacity to be merchants, which is not required for limited partners. For this reason, a civil company cannot be a general partner in a SECA.

How to proceed

Creation of the company

Memorandum of association

  • by notarised deed;
  • lodging with the Trade and Companies Register (Registre de commerce et des sociétés - RCS) for the purpose of publication in the electronic registry of companies and associations (Recueil électronique des sociétés et associations - RESA). This step is carried out by the notary.

Duration

  • limited or unlimited;
  • dissolved by the will, death, ruin, suspension or bankruptcy of one of the general partners, unless otherwise stipulated in the articles of association.

Capital

Conditions

  • minimum share capital: EUR 30,000;
  • of which at least 1/4 must be fully subscribed and paid on the date of founding;
  • contributions in cash or in kind;
  • contributions other than in cash must be covered by an assessment report drawn up by a statutory auditor (réviseur d’entreprises);
  • contributions in services do not form part of the share capital, but may be included in the articles of association and remunerated.

Securities representing the share capital

  • shares of equal value for general and limited partners, but frequently with priority rights for the general partners;
  • possibility of public issue of shares, bonds and transferable securities in general.

Transfer of shares

  • shares freely transferable for limited and general partners.

Partners

Conditions

  • general partner: capacity as a merchant;
  • limited partner: no conditions.

Numbers

  • at least 2 shareholders: minimum of one general partner and one limited partner;
  • no maximum number.

Liability

general partners: unlimited joint and several liability for all of the company commitments 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.

general partners: unlimited joint and several liability for all of the company commitments 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.

Operation of a SECA

Management

  • belongs to one or more managers, whether shareholders or not, appointed in accordance with the articles of association;
  • the manager may be a legal person;
  • responsibility of managers who do not have the status of general partner:
    • responsible to the company for misconduct in the course of their activity;
    • solidarily liable either to the company or to third parties for damages resulting from breaches of the law on companies or the articles of association.

General meeting

Unless otherwise noted in the articles of association, the general meeting of shareholders shall not make or ratify acts which concern the company with respect to third parties or which modify the articles of association except in agreement with the general shareholders.

Accounting aspects

Accounting and financial information

  • obligation to produce: balance sheet, profit and loss account, notes to the financial statements and a management report, which must be approved by the partners’ meeting;
  • the annual accounts, the management report and the report of the auditor (commissaire aux comptes) or of the statutory auditor (réviseur d’entreprises) must be lodged with the Trade and Companies Register (Registre de Commerce et des Sociétés - RCS) within the 7 months following the end of the fiscal year (6 months to hold the meeting plus 1 month as from the meeting);
  • SECAs 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) staff: 50;
  • SECAs can combine certain headings in the profit and loss accounts if, on the balance sheet date, they do not exceed the limits set in 2 out of 3 of the following criteria:
    • balance sheet total: EUR 20 million;
    • net turnover: EUR 40 million;
    • average number of (full-time) staff: 250;
  • the accounts must be drawn up according to the 'Lux Gaap' rules.

Controlled supervision of the company

  • a supervisory board, appointed by the general meeting, is responsible for controlling the company accounts, and also has permanent powers of control over the acts of the business managers;
  • the supervisory board is composed of at least 3 auditors, and cannot include general partners;
  • the legal audit of accounts by one or several approved statutory auditor(s) (réviseur d’entreprises agréé) is mandatory in each company which, on the balance sheet date after 2 consecutive financial years, exceed 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) staff: 50.
  • an audit by a statutory auditor replaces the role of the supervisory board.

Tax aspects

Who to contact

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Luxembourg
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Email info@houseofentrepreneurship.lu

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