What is a Société en Nom Collectif (SNC)?

The société en nom collectif (SNC) must carry out commercial activities.

The professions and non-trading activities may not be performed within an SNC.

The SNC is a company in which the shareholders are all considered as traders and are indefinitely and jointly and severally liable for all company debts.

Each shareholder must have capacity to trade or must not carry out a profession the exercising of which is incompatible with the status of trader (civil servants for example).

The following cannot be shareholders:

• Minors, even those who have been emancipated
• Certain protected adults (adults under guardianship or curatorship)
• Any person sentenced by the Court for personal bankruptcy, bankruptcy or similar offences, or who have been prohibited from directing, managing, running or controlling either a privately-held commercial undertaking, or a company, except where rehabilitated

The SNC has at least two shareholders. There is no maximum number of shareholders. Shareholders may be natural or legal persons.

The SNC is chosen by entrepreneurs wishing to manage a company jointly. Such companies are generally family firms.

This legal form is compulsory for certain professions: pharmacists for example.

The Memorandum and Articles of Association

The Memorandum and Articles of Association are drawn up as a privately-signed deed or as an official deed (notarized instrument).

However, when the share capital is formed, in whole or in part, of property assets subject to land registration at the Mortgage Registry Office, the notarised form must be used.

Mandatory inclusions

The Articles of Association must include:

• The company form
• The number of shareholders
• The duration: the duration of a firm cannot exceed 99 years. The date of effect of the company must be stated: the date of signature of the Memorandum and Articles of Association, date of registration or fulfilment of the condition precedent of obtaining official permit to carry out a business activity
• The company name: names of shareholders only may form the company name
• The registered office
• The company objects
• The amount of the share capital and a valuation of each contribution in kind
• Allocation among shareholders, and shares paid up
• The date of the fiscal year-end
• The conditions under which the company is to be managed
• Appointment of Managing Director(s) if the partners decide to entrust Management to one of their number
• Resolutions to be taken by the shareholders at General Meetings
• Procedures for calling and holding meetings, and majorities required when passing resolutions

Optional items

The Memorandum and Articles of Association may include other items, for example:

• How shares may be transferred
• How the firm may be liquidated

Documents to be appended to the Memorandum and Articles of Association

The following must be appended to the Memorandum and Articles of Association:

• The auditors' report; if applicable
• A special power of attorney granted to a proxy, if applicable

Number of copies

You must provide:

• 1 original copy of the Memorandum and Articles of Association for each shareholder
• 2 original copies for the registration formalities
• 2 original copies for the Business Development Agency
• 1 original copy to be deposited at the registered office
• Several copies certified as true copies by the legal representative to be deposited with various entities such as the bank

Registration

The Memorandum and Articles of Association must be registered with the Registration Office at the Department of Tax Services.

No required period has been laid down for registering the Memorandum and Articles of Association as a privately-signed deed.

However, if goodwill is contributed, registration must take place within three months (article 3 of ordonnance loi n°155 du 17 juin 1931).

Nevertheless, registration of the Memorandum and Articles of Association is a pre-requisite in order to process the "declaration of business activity" or "application for permit to carry out a business activity".

Contributions

Contributions may be in cash, in kind and in skills or services.

Share capital

The law does not lay down a minimum amount for the share capital of an SNC. It can therefore be defined freely by the shareholders in the Articles of Association.

The law makes no provision concerning payment of the share capital.

The shareholders thus need to provide for payment procedures in the Articles of Association.

Allocation of shares

In return for their contribution to the share capital of the SNC, shareholders receive a number of shares. The latter bestow upon them a right to participate actively in the life of the firm and to receive dividends.

The company name

The company must include the name(s) of the shareholders.

The registered office

In principle, the registered office of an SNC is established on commercial premises (commercial lease, short-term lease or temporary tenancy agreement).

However, it is possible to domicile the firm at the Managing Director's personal address in Monaco for a period of one year, that may be renewed once, as from publication in the Journal de Monaco of the transcript of the Memorandum of Association if:

• No legislative, regulatory or contractual provision is opposed thereto
• The firm's activities do not involve reception of clients or the storage or display of goods
• The firm employs no staff

It is also possible, under certain conditions, to domicile the firm:

• Either with a domiciliation company for a duration limited to one year (may be renewed once)
• Or on premises occupied by another firm

See the factsheet: "Domiciling a business activity or establishing a company's registered office"

In a société en nom collectif, all shareholders are Managing Directors except where stipulated to the contrary in the Articles of Association.

The law allows shareholders to provide, in the Articles of Association, that one or more of them may sign under the company name.

The signature of any of the shareholders binds the firm in that case (article 29 of the Code de Commerce).

Shareholders cannot decide to entrust Management to a third party.

Liability of Managing Director(s)

All shareholders are indefinitely, jointly and severally liable in respect of all their personal assets for all company debts.

The Managing Directors, whether all shareholders in the absence of provisions in the Articles of Association, or Managing Directors appointed in accordance with the Articles of Association, may incur their civil and criminal liability.

Civil liability of Managing Director(s)

Negligence that may incur the Managing Directors' civil liability consists of:

• Breaches of legal and regulatory provisions applying to companies
• A breach of the Articles of Association
• Mismanagement

With regard to the tax administration and social security administration, they may incur their personal liability if it is proved that, through fraudulent manoeuvres or through serious and repeated non-compliance with their tax and/or social security obligations, they have made the recovery of sums due by the company to said administrations impossible.

Criminal liability of Managing Director(s)

The Managing Directors may incur their liability, pursuant to article 51-12 of the Code de Commerce in the following cases:

• If they have not instigated the appointment of one or more auditor(s) or if they have refused to communicate to the auditors the documents required in order for them to fulfil their duties

• If they have not had the certificate relating to the annual accounts described in article 51-7 of the Code de Commerce signed by a member of the Ordre des experts comptables et comptables agréés or if they have refused to communicate to the latter the documents necessary to obtain their signature

They may incur their liability, pursuant to article 51-13 of the Code de Commerce in the following cases:

• If they have not drawn up accounting documents or if they have not submitted these documents for approval by the shareholders' meeting in breach of the provisions of article 51-6
• If they have not sent these documents to the Trade and Industry Registry in breach of the provisions of article 51-7 of the Code de Commerce

They may incur their liability if they commit the criminal offences laid down by loi n° 1144 of 26 juillet 1991, such as, for example carrying out activities outside the limitations of the company objects.