Private limited liability company
What is a limited liability company?
A limited liability company (SRL) is a legal form of company, often deemed to be the most suitable for a small or medium-sized enterprise. It is the former SPRL. A single shareholder is sufficient to found an SRL. This can be a natural person or a legal entity (e.g. a company).
Characteristics
Founders
A single shareholder is sufficient to found an SRL. This can be a natural person or a legal entity (e.g. a company).
MINIMUM CAPITAL
The incorporation of an SRL no longer requires a minimum capital, but the founders must provide sufficient initial assets for the business the company intends to develop.
The removal of the minimum capital requirement is also offset by the tightening of rules concerning the financial plan at incorporation and the founder's liability. Each dividend distribution to shareholders is subject to a "double distribution test" consisting of a balance sheet or solvency test and a liquidity test.
Contribution in kind
Before the company is incorporated, the founders must ask an auditor to describe in detail each asset that will be given as a contribution in kind, and to draw up a report on how the asset will be valued. They auditor must also specify the consideration to be given to the founder in exchange for the asset the founder has contributed.
A contribution in industry or expertise is treated in the same way as a contribution in kind (same valuation rules) and is also reviewed by the auditor.
Financial plan
The founders of an SRL must draw up a financial plan and, after signing it, submit it to a notary on the day of the deed of incorporation. This is a forecast of the company's needs and resources for the first two tax years.
Securities
The SRL may issue any type of security, unless prohibited by law. However, an SRL may only issue shares in exchange for a contribution, and may only grant voting rights to shares.
Share register
As soon as a company whose capital is represented by registered shares is incorporated, shareholders must complete a share register, which they must then update regularly.
