When selecting the best legal formfor your business in France, it can be challenging to understand the various acronyms of the often similar company setups. This article explains the unique features of a partnership limited by shares (SCA, or “société en commandite par actions”), an often overlooked business form in France. It’s a complex, hybrid legal structure that combines features of a limited partnership (SCS, or “société en commandite simple”) and a public limited company (SA, or “société anonyme”). An SCA offers a flexible legal framework and helps narrow your risks.

What’s in this article?

• What is a partnership limited by shares?
  
• How does an SCA work?
  
• Why choose SCA status?
  
• Advantages of an SCA
  
• How to transfer an SCA
  
• What are the differences between an SCA, SCS, and SA?
  
• How do you set up an SCA?
  

What is a partnership limited by shares?

A partnership limited by shares, or SCA, is a company where the capital is divided into shares that can be freely traded while allowing some partners unlimited liability. An SCA features two types of partners: general partners, who actively manage the company, and limited partners, whose liability is capped.

An SCA allows entrepreneurs to maintain decision-making control by centralizing management power among a small group of partners while enjoying the flexibility of a joint-stock company.

How does an SCA work?

The share capital of an SCA must be at least €37,000, or €225,000 if the company lists itself publicly. The limited partners divide the share capital into shares based on their contributions, which can be either cash or in kind.

General partners can also become shareholders of an SCA in addition to their managerial roles, though it’s not required.

When creating an SCA, you must deposit at least half of the cash contribution into an account accessible to the company. You must pay the other half within five years of registration. If an in-kind contribution exceeds €30,000 and the assets make up more than half of its capital, an auditor must evaluate the worth of those assets.

Roles

To oversee an SCA, you can appoint one or more managing directors when you form the company. You can then reappoint them throughout its existence. Notably, you can select these managers from the general partners or outside the company.

The managing partners of an SCA have extensive authority, allowing them to perform all actions needed for the company’s daily operations. This can involve obtaining insurance, arranging shareholders’ meetings, or handling social security payments.

A supervisory board, made up of at least three limited partners, oversees the management of the SCA. The board must check the accounts for regularity and accuracy and deliver an annual report at a yearly general meeting, pointing out any irregularities.

Financial responsibilities

Creditors of an SCA, those to whom the SCA owes money, can seek payment from any general partner. They are, therefore, jointly and severally liable for the company’s debts.

However, limited partners’ contribution amounts determine their liability, unless they also hold the general partner status. In this situation, they have unlimited joint and several liabilities for all company debts.

Why choose SCA status?

An SCA is practical for startups and craft makers who want to blend the flexibility of a small-scale setup with the stability of a commercial company. It appeals not just to retailers, but also to a variety of professionals, including craft makers, industrialists, and self-employed individuals, except for certain fields such as legal and medical professions.

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Advantages of an SCA

An SCA offers a unique hybrid solution for small-scale companies seeking stability. It allows a company to raise funds from the public while a small group of associates maintain close control.

Unlike SA directors, SCA managers face fewer statutory constraints, granting them more company autonomy.

In addition, limited partners benefit from reduced risk. If the company goes bankrupt, being part of an SCA limits its liability to the amount it has contributed since its inception.

How to transfer an SCA

To sell shares in an SCA, a general partner typically requires the consent of all other partners. However, the articles of association might allow for more flexible arrangements, such as requiring the consent of only a majority of partners in specific situations.

In most cases, a limited partner in an SCA can sell their shares without restrictions. However, the company’s bylaws might impose an approval clause. This means that to sell their shares, the partner must get the approval of the other partners, either unanimously or by a majority. This clause can delay the sale process and reduce their liquidity. In cases of succession or liquidation of a matrimonial property scheme, the approval clause typically does not apply.

Regardless of the type of shares sold, the business must document the transfer in writing and register with the Trade and Companies Register (RCA, or “registre du commerce et des sociétés”). The business must also pay a registration tax on the transfer amount.

What are the differences between an SCA, SCS, and SA?

An SCA is a form of company that merges features of the SCS and the SA, providing a solution suited to particular circumstances.

Unlike an SCS, which can only issue corporate units, and an SA, which can only issue shares, an SCA can issue both shares (for limited partners) and corporate units (for general partners).

Additionally, forming an SCA requires at least four partners, unlike the SCS or SA, which need two. Like the SCA, the SA requires a capital of €37,000, with the founders paying half of the cash contribution on formation. These requirements are stricter than those for an SCS. There are many other differences between these types of companies, so you need to study each legal form in detail to choose the one best suited to your needs.

How do you set up an SCA?

Similar to other business structures, an SCA adheres to a defined and strict establishment procedure. Establishing one requires adhering to several legal requirements. While the process is similar to that of other commercial companies, this structure has various unique aspects due to its hybrid nature.

The key steps are as follows:

1. Draft the articles of association: a foundational document that outlines the company’s organization, particularly detailing the roles and responsibilities of each partner.
   
2. Provide the share capital: an SCA’s minimum required share capital is €37,000. The partners must pay this amount, with a percentage paid up in cash when the company is created.
   
3. Publish a legal notice: an announcement of the incorporation in a legal gazette is required to inform the public about the creation of your SCA.
   
4. File the registration: submit the completed file, including the articles of association, proof of legal publication, and other supporting documents, to the commercial court clerk’s office. You can now complete these formalities online via the business formalities portal.
   
5. Registration: after the clerk’s office approves your application, an SCA receives a SIREN number and is officially registered with the RCS.
   

For more information on creating an SCA, visit the official French government website.