In recent years, the limited partnership (SCS) has grown in popularity. What are the characteristics of this type of company? Is it true that there are less risks involved as a partner in an SCS?
In addition to the traditional company types such as SPRL, SCRL and SA, there are additional benefits which may be unknown or unjustly overlooked.
Therefore, a limited partnership (SCS) is a company formed by one or more jointly-liable shareholders (called partners) and one or more backers. For example, this type of company is suitable for those wishing to create a business (active shareholders or business managers) but who do not have sufficient capital.
What are the advantages?
The SCS offers numerous advantages:
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There is no minimum capital required. As a partner, a contribution of 1 Euro is sufficient.
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An SCS can be constituted without the intervention of a notary.
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No financial plan is required for incorporation.
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The SCS may use simplified accounting.
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The (favourable) corporation tax scheme is applicable.
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The shares are not transmittable without approval from the other shareholders.
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The obligation to publish is limited.
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The work of the shareholders can be deemed a "contribution".
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The responsibility of the partners is limited to their contribution.
What are the disadvantages?
An SCS also has the following disadvantages:
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The joint and unlimited liability of the partners.
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The bankruptcy of the company also leads to the bankruptcy of the shareholders.
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If one of the backers is also a partner and/or exercises management activities, they will then be considered a partner and be joint and indefinitely liable.
Is an SCS a type of company which is suitable for your needs?
An SCS has several interesting elements:
Given the unlimited liability of the partners, an SCS is recommended when the SCS' activities do not represent significant risks. Therefore, an SCS is perfect for use as a patrimonial company or for carrying out a complementary activity.
Incorporation costs are lower than for an SPRL or an SA because, in principle, no notarised document is required
A contribution in kind (in other words, not in money but in the form of an asset, for example) is much easier through an SCS than an SPRL or an SA. An auditor's report is required for the latter; in the case of a SCS, you can make a contribution without an auditor.
Limited partner accounts do not need to file annual accounts with the National Bank of Belgium. This is not just a cost saving but a particularly important point in terms of discretion. Just like for a sole trader, not everyone can see your turnover, the assets your SCS has and the amount of your debts, etc.
We also draw your attention to the fact that your company's investment need has little significance. If you have a significant amount to invest and you opt for an SPRL or an SA, it is common for the bank to ask for personal guarantees from the shareholders, thus endangering the limited liability.