Société en Nom Collectif (SENC)

A General Partnership is formed by doing a partnership agreement between at least two natural and/or legal persons. This can be done via a notary act or a private deed. After this, the company must be registered with Luxembourg’s Trade and Companies Register. A trading license must also be obtained from the Ministry of Small and Medium-sized Businesses. Upon registration, the company name can only include the names of the shareholders, as described below.

As mentioned, the shareholders are two or more natural and/or legal persons. There is no maximum number of shareholders. The liability of the shareholders is joint, several and unlimited. This means that the shareholders’ personal assets are liable to the partnership. It should be noted that all partners are required to be qualified as a trader.

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

Shares in a SENC are registered shares only. They are generally non-transferable unless by unanimous decision by all partners and if the transfer follows the rules set out in the articles of association.

A SARL-S is managed by one or multiple business managers as appointed by shareholders during a general meeting. These business managers are not required to be shareholders or residents. The managers can be appointed for a limited or unlimited time. Where there is no appointed business manager, the partners are all considered as such.

This meeting is attended by all shareholders and is chaired by the business managers of the company. They can be ordinary or extraordinary and should follow procedures set out in the articles of association.

There is no appointed board of directors in a General Partnership but if the purpose of the company will be a commercial/consultancy activities at least one of the shareholders has to fill the requirements in order to obtain business permit.

There are no internal auditors in a General Partnership.

An independent auditor is required to inspect the company’s books if an LLC exceeds two of the following for two consecutive financial 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)
Additionally, a registered auditor is required if all the partners are SAs, SARLs or SECAs or international companies comparable to such.

The company can be dissolved by the will, death, ruin, suspension or bankruptcy of one of the partners. An exception exists if the articles of association state otherwise. 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.

A General 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.