The SNC or Société en Nom Commun is a legal form composed of at least two partners who are merchants. Concerning the starting capital, no minimum amount is fixed by the law. The partners may be natural or legal persons and may be French or foreign.
The partners of an SNC are all jointly and severally liable for the debts of the company. This basically means that they are responsible for all their personal assets. A creditor can sue the partner he likes since they have the same legal value. Thus, a civil partnership cannot be a partner in an SNC since it cannot be considered a merchant. Each of the partners will be declared beforehand to the RCS. Concerning the share capital, since no minimum capital is required to constitute an SNC, the determination of the amount to be paid up at the constitution is up to the partners. The latter cannot make a public offering, however the variability of the capital is possible. Therefore, only the irreducible capital will be declared to the RCS. The distribution of the shares among the partners will be mentioned in the contract of enterprise and in the statutes. These shares can only be transferred if all the associates give their consent.
Each partner of a general partnership or SNC must make a contribution to the company, whether in industry, in cash or in kind. For the formation of the share capital, only the contributions in cash and in kind will count. In the case of a contribution in kind, the partners will not be obliged to appoint an auditor to carry out the valuation of the contributions. Apart from that, as in any self-respecting company, each partner in name has rights and obligations towards the company. This includes participation in decision making, voting rights at meetings, and profit sharing. As for the life of the legal entity, it may not exceed 99 years from the date of registration of the company in the RCS. However, it may be extended by a unanimous decision of the partners.
The SNC is not obliged to file its annual and consolidated accounts, unless all partners are corporations or SARLs. As far as management is concerned, all partners are normally responsible, unless otherwise specified in the articles of association. A separate act of the articles of association may expressly designate one or more managers from among the partners. It is also possible that a non-partner is designated and this can be a natural person or a legal entity. If the manager is a legal entity not registered with the RCS or if it is a foreign company, it is important to inform the legal representatives of the trade and companies register. Being the manager of an SNC means representing it legally with respect to third parties.
It is not mandatory to appoint statutory and alternate auditors in the case of an SNC. Concerning collective decisions, as their name indicates, they are taken in a meeting. When one of the partners does not request a meeting, decisions may be made by written consultation. When the decisions do not exceed the powers attributed to the manager, he can dispense with the vote of the partners. With respect to voting, the bylaws will determine whether decisions must be unanimous or only by majority. Regarding taxation, the SNC is subject to the income tax system or IR. However, the company may opt for the corporate tax system.
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