MAIN CHARACTERISTICS OF A LIMITED LIABILITY COMPANY (SOCIETE A RESPONSABILITE LIMITEE)
The main characteristics of an SARL are the following :
A limited liability company is a "company formed by one or more persons who bear losses only to the extent of their contributions". It is formed by the subscription for the entire amount of the capital and the adoption of by-laws by a minimum of two and a maximum of fifty partners (associés).
The limited liability company comes into legal existence upon its registration in the Commercial Register.
2. Company name
Any name may be chosen that does not conflict with names of existing companies or with trademarks that are registered. This name must always be preceded or followed on the letterheads, invoices, announcements and all other documents emanating from the company by the mention of the form of the company as a "société à responsabilité limitée" or "S.A.R.L.".
The By-laws of an SARL must state the form of company chosen, the company name, the registered office, the corporate purpose, the amount of the corporate capital as well as the amount contributed by the respective partners, the valuation of any contributions in kind and the duration of the company. The duration may not exceed 99 years but may be extended by an extraordinary meeting of the partners.
i.e. FF. 50,000) Contributions may be either in cash or in kind. The capital is divided into shares (parts sociales) that are of equal value. At least 20% of the par value of each share issued for cash must be paid in at the time of the subscription. The remainder must be paid in within five years. Shares issued in return for a contribution in kind must be fully paid up at the time of issuance.
5. Taxation of an s.a.r.l.
SARLs profits are subject to the standard rates of corporate income tax : 33.33%. Furthermore, a 6% contribution calculated on the tax owed, will have to be paid by all corporations submitted to corporate tax (such 6% rate will be reduce to 3% as from January 1st 2002.
A limited liability company must have more than two but no more than fifty partners. Should it acquire more than fifty, the company may be transformed into a corporation within two years. Otherwise, unless the number of partners is reduced to fifty within this two year period, the company will be dissolved.
The shares of the partners may not be represented by negotiable certificates, nor may the company issue transferable securities.
Generally, the partners are free to transfer their shares to each other or to their spouses and heirs, although such transfer may be subject to special conditions stated in the by-laws. Shares may be transferred to third parties on approval of a majority of the partners representing at least three-fourths of the capital. If the company does not answer the request for approval within a certain time, or if it does not repurchase the shares within a certain time, the transfer may take place.
Shares are transferred by written agreement signed by the transferor and the transferee and served on the SARL or accepted by it in a notarial document. Any transfer of share triggers registration taxes at a rate of 4,80% on the price on actual value of the shares if higher.
An SARL is managed by one or more managers "gérants" who must be individuals but need not be partners. The manager may be designated in the by-laws or by the partners. Unless the by-laws provide otherwise, his term of office is the life of the company. A manager may be dismissed by partners representing more than one-half of the capital. This dismissal of a manager without good cause may give rise to a claim for damages.
The managers have full powers in dealings with third parties to represent the company within the scope of the company's purpose. Any limitations of these powers in the by-laws are not binding against third parties. The managers (or statutory auditors, if any) must draw a report to the partners concerning any agreements entered into directly or indirectly through a nominee between the company and one of its managers or partners (or any company in which one of the managers or partners is a partner, manager, member of the board of directors, directorate, or supervisory board, or a general manager).
8. Partners' meetings
Generally, all decisions of the partners must be taken at formal meeting; The by-laws may, however, provide that some or all decisions of the partners may be taken by written consultation. An annual formal meeting of the partners, during which the accounts and operations related to the previous year are approved, must be held within six months of the close of the fiscal year. At this meeting the partners also vote on the dividends, which must be set aside for distribution no later than nine months after the close of the fiscal year.
Ordinarily, meetings ...
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