The characteristics of the ordinary limited company
Two partners minimum are required to create an ordinary limited partnership. The partners work together and set specific aspects of the collaboration in an ordinary limited partnership contract.
There is no minimum capital requirement and a financial plan is not required to create an ordinary limited company. Each of the partners brings something: it can be cash as well as work, know-how, assets or customers. What you contribute immediately becomes the joint property of all of the partners. The profits generated by the company can be allocated freely between the partners.
The ordinary limited partnership is a private company. This means that the people who create an ordinary limited partnership are more important than the capital they contribute. Therefore, the shares of an ordinary limited partnership cannot be transferred without formalities. The approval of the other partners is always required.
NO LEGAL PERSONALITY
In the new company law, the ordinary limited partnership is the only type of company without a legal personality (legal entity). From a technical standpoint, the ordinary limited partnership is therefore not a distinct person and owns no assets. Everything the company earns, spends, owns, makes, must make, etc. is directly allocated to all of the partners, which has both advantages and inconveniences.
Let’s assume that the ordinary limited partnership has a debt of €1,000. Each partner must pay an amount proportional to their participation in the ordinary limited partnership out of their pocket. However...this has to be agreed internally! The creditors don’t take this into consideration. They are, in fact, authorised to seize the personal assets of a single partner for the total €1,000 amount. Even if they only contributed a euro to the ordinary limited partnership.
Do you think that the risk is too great? Then consider creating an SRL, an SC or an SA.
When should you opt for an ordinary limited partnership?
The ordinary limited partnership is often used to manage inheritances and for succession planning. Parents often create an ordinary limited partnership to leave their assets to their children at a lower tax rate without losing control of the assets.
The ordinary limited company is also used by professionals to create a partnership.
How do you create an ordinary limited partnership?
To create an ordinary limited partnership, you can speak with your accountant, your notary or your lawyer. With their help you can establish the articles of incorporation suited to your ordinary limited partnership. Note, however, that this step is not mandatory: you can create an ordinary limited partnership using a private contract which doesn’t require involving a notary. You aren't required to file the articles of association for the ordinary limited partnership with the business court.
After creating your ordinary limited partnership, you will have to register it with the Crossroads Bank for Enterprises (BCE) via an accredited entreprise counter. The ordinary limited partnership will receive a company number and information about it will be made public. The capital and contributions remain private.
Tip: Need to be discreet? Appoint a manager to represent the ordinary limited partnership. Only their name will appear at the BCE and the partners will remain anonymous. However, you will also have to give a name to your company, otherwise it will consist of the names of all of the founders.
- There is no minimum capital requirement.
- The lack of legal personality means that there are few creation formalities and costs.
- The parties can agree to very flexible terms, notably with respect to the allocation of profits and control.
- The ordinary limited partnership is also easy to dissolve.
- The ordinary limited partnership does not have to pay social charges because it is fiscally transparent. Or in technical terms: it isn’t subject to corporate or non-resident taxes.
- You have to keep books (usually simplified) for the ordinary limited partnership.
- The founders are indefinitely and jointly liable.