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You have decided to set up a business and have chosen the legal status of your future company. However, you still need to select the most fitting form for your project. This choice is essential for the future of your business. Do not hesitate to seek assistance from experts such as notaries, lawyers, accountants, tax advisors, auditors, etc. to guide you through the business setup project.
What Are the Most Common Forms of Companies?
Limited Liability Company (Société à responsabilité limitée or SRL in French)
The limited liability company (SRL) is generally considered the most suitable legal structure for small or medium-sized enterprises.
- A SRL may be established by one or more individuals.
- The SRL has its own legal personality which is distinct from that of the shareholders or the sole shareholder. It also has its own assets.
- In principle it is a private company: the shares are in registered form (the owner is named, so it is possible to identify him or her) and the possibilities of transferring these shares are limited unless otherwise provided for in the articles of association.
- It is a limited liability company: the shareholders are only liable up to the amount of their contribution. In the event of the company's bankruptcy, creditors have no claim on the shareholders' assets. There are, however, exceptions to this principle for the founders.
- The articles of association must be drawn up by notarial deed.
- There is no minimum initial capital requirement, even though it must be deemed sufficient for the intended business activities.
Public Company (Société anonyme or SA in French)
The public company (SA) is a form of company primarily chosen by large corporations, although it is also used by SMEs when substantial capital is required, or when they intend to attract external investment or go public. It, therefore, allows the company to grow rapidly.
- The SA is a form of company that is mainly based on the contribution of capital by shareholders.
- This form of commercial company has the advantage of offering a complete separation between the company and its shareholders. Their liability is therefore limited to their contribution. As a general rule, shares are easily transferable without restriction. It thus is a form of company that has less of a family business character.
- This form of company must be incorporated by notarial deed. It requires a minimum capital of EUR 61,500. However, few entrepreneurs have such a sum at their disposal when they launch their business. Moreover, the administrative management of such a company is relatively cumbersome for small structures.
Cooperative Society (Société coopérative or SC in French)
A SC is a form of company that is formed by a minimum of three founders. The SC offers limited liability, where shareholders are liable only up to the amount of their contribution. In addition, if the planned entrepreneurial project lies within the social economy sector, the cooperative form is the only one that authorises the application for an accreditation as a "social enterprise", provided certain conditions are met.
Cooperative societies can also be specifically accredited as cooperative societies, provided certain conditions are met. Dual accreditation, both as a cooperative society and as a social enterprise is also possible.
A partnership is a company of partners.
- The law does not set a minimum capital requirement for a partnership.
- Its existence depends entirely on the partners.
- This form of company requires few formalities.
- The partners remain jointly and severally liable for the company's commitments.
A limited partnership is composed of both general and limited partners.
- The general partners take care of the management.
- The limited partners are financial backers but cannot intervene in the management.
- The law does not set a minimum capital amount.
- Only the general partner is indefinitely and jointly and severally liable for the debts and losses of the company out of their assets. The limited partner is liable only up to the amounts they promised to contribute unless they are involved in the management of the partnership.
- A simple partnership is a company that has no legal personality.
- In order to exist, it requires that two or more individuals called associates agree, either orally or in writing, to pool their contributions with a view to sharing the direct or indirect financial benefit that may result.
- The associates of a simple partnership are unlimitedly bound by the commitments of the company regarding third parties.
It should be noted that while a simple partnership alleviates many of the legal formalities that may be required of companies with legal personality, as of 1 November 2018, a simple partnership must register with the CBE as a company subject to registration before it can start its activities. This registration process is to be completed via a business counter.
Royal Federation of Belgian Notaries
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