Société en Commandite Simple (SECS, LP)

A Limited Partnership is formed by doing a partnership agreement between at least two persons. After this, the company must be registered with Luxembourg’s Trade and Companies Register. Upon registration, the company name must include the surname of at least one of the general partners, as described below.

A Limited Partnership requires at least two shareholders, one with unlimited liability, referred to as the general partner, and one with limited liability. For a company with multiple general partners, all liability is joint and unlimited. The limited liability shareholder is only liable for liabilities of the Limited Partnership up to a sum matching his own contribution.

There is no minimum capital required in order to register a SECS.

Shares in a SECS are registered shares only. They can be both transferable or non-transferable. Limited partners interest shares are transferable after consent of all partners.

The general partners in a Limited Partnership are responsible for the management and representation of it. Contrastingly, limited liability shareholders do not have any management responsibilities or controlling rights. Alternatively, the general partners can appoint a manager.

Unlike a PLC or an LLC, a general meeting for a Limited Partnership does not carry the same weight. They do not deal with acts that modify the partnership agreement or affect the interaction of the company with third parties. Decisions are only made by consent of all general partners.

A Limited Partnership may or may not have a board of directors. This board, if present, will comprise of the general partners of the business. Therefore, the board is not elected or replaced by votes. As mentioned, they are responsible for the management of the Limited Partnership. if its business activities include commercial activities at least one of the directors/shareholders has to fill the requirements in order to obtain business permit.

There are no internal auditors in a Limited Partnership.

An independent auditor is required to inspect the company’s books if a Limited Partnership exceeds two of the following for two consecutive years:
-a balance sheet sum of 4,4 million EUR
-a net turnover of 8,8 million EUR
-50 full-time employees (average of the year)
An independent auditor is also required if the partners are SAs, SARLs, SECAs or other legally comparable companies.

Liquidation requires procedures from the partnership agreement to be followed strictly. A liquidator and a liquidation auditor are usually required in order to provide appropriate reports. After all creditors are paid, the remaining assets are distributed to the shareholders proportionally to their contributions.

A Limited Partnership is not subjected to taxation as a business. The shareholders of the partnership are taxed based on their share of the income and assets, along with their other personal income and assets.