Sale or transfer of business goodwill

The sale or transfer of business goodwill in any form whatsoever (contribution to company assets, donation, or allocation following inheritance) gives rise to publication in the Journal de Monaco in order to protect a vendor's creditors' rights.

It is subject to a proportional registration tax of 7.5%. (see article 14 of the

The purchaser or appointee must perform the publication formalities for a sale or transfer of business goodwill (see article 1 of the

If the business goodwill is the subject of a lien or encumbrance, the latter is entitled to avail themselves of the discharge procedure.

Publication formalities

Two entries must be made in the Journal de Monaco, eight days apart.

The entry must list:

• The first name(s) and surname(s) (or company name) of the vendor and the purchaser
• The purchaser's domicile (or registered office) or, if they are resident abroad, an address for service for them in the Principality
• The nature of the business goodwill and the registered office
• Notice to the vendor's creditors to the effect that they must lodge an objection to the price within ten days at most after the second entry, subject to not being able to take action against the payment made outside their control

If entries are not published or if the price is paid prior to expiry of the period allowed for objections, a purchaser who pays the price is not discharged in respect of third parties.

The purchaser's rights - the discharge procedure

If pledges have been registered in respect of the business goodwill, purchasers may avail themselves of the discharge procedure to enable them to pay the price directly, in full or in part, to the creditors listed for said goodwill.

In return, creditors whose claims have been satisfied must apply for the registration of the lien to be cancelled.

Purchasers wishing to discharge pledges registered in respect of business goodwilll must perform the formalities laid down for this purpose in the Ordinance on the pledging of business goodwill. (see the

Publication of the sale or transfer of business goodwill enables creditors to benefit from twofold protection by means of objection procedures and outbidding.

The objection procedure

Lodging an objection is a way for the vendor's creditors to obtain payment of their claims.

Conditions

The claim must be certain but may or may not be payable or conditional.

Furthermore, objections must be lodged by all creditors, whether holding collateral or not.

Deadline for lodging objections

The vendor's creditors must lodge objections within ten days from the last publication in the Journal de Monaco to be made by the purchaser.

The period is calculated as follows: the day on which the notice is published is not counted. The period expires on the tenth day unless it falls on a Sunday or a public holiday, in which case it is extended until the next day.

After that date, the creditor may only avail themselves of enforcement procedures under ordinary law (attachment or precautionary attachment).

Formalities

The objection must be served as a bailiff's writ at the purchaser's domicile or the address for service or by registered letter with acknowledgement of receipt requested.

It must indicate, subject to being considered invalid:

• The amount and grounds of the claim
• The creditor's address for service if they reside abroad

The effects of objections

Objections have the effect of making the sale price unavailable - it is blocked and held by the purchaser or the person acting as escrow.

Since this is a precautionary measure, it also has the effect of blocking the sale price of the business goodwill or enabling the objecting creditor to make a higher bid.

The vendor, may, however, upon expiry of the deadline for objections to be lodged, apply for a summary order to the Presiding Judge of the Civil Court, so as to be able to receive the price, as long as they pay either to the Caisse des dépôts et consignations or a third-party escrow appointed for this purpose a sum that is sufficient to cover the grounds for the objection.

The amount of said sum is established by the Presiding Judge of the Court. (see articles 3 bis and 3 ter of the

If the objection has been lodged without legal title and/or without grounds, or if the formalities have not been observed, the vendor may request that the Presiding Judge of the Court of First Instance release the objection.

Release may be authorised if no primary legal proceedings have been initiated.

Creditors holding pledges in respect of business goodwill may demand that it be resold at public auction following expiry of the period allowed for objections to be lodged.

Within the eight days following adjudication, any person may make a higher bid, as long as it exceeds the main sale price by at least one tenth.

Bids are to be submitted to the Court Registry with the assistance of or through a defence attorney. They cannot be retracted. (See articles 622 to 628 of the Code de Procédure Civile).