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1.1.2.2. SARL

An SARL generally offers the following advantages:

  • its organization and functioning are less complex than those of an SA. In particular, its management consists of only one or more managers, whereas the management of an SA consists of a board of directors and a chairman, or of a management board and a supervisory board. An SARL is therefore more suitable for small family-owned companies;
  • it may have a single shareholder, in which case it is known as an Entreprise Unipersonnelle à ResponsabilitéLimitée (EURL);
  • there is no minimum share capital requirement (as opposed to EUR 37,000 of minimum share capital for an SA);
  • managers holding less than 50% of the share capital may be employees of the SARL, with no restrictions. The same individual may be the manager of an unlimited number of SARLs;
  • if the shareholders of the SARL belong to the same family, it is possible to opt for transparent tax treatment as a partnership; and
  • upon the creation of the company, only one fifth of the share capital corresponding to cash contributions needs to be paid up immediately. The remaining part must be paid up within the 5 years following the registration date of the SARL.

An SARL generally presents the following drawbacks:

  • Its shares are not freely transferable and may not be quoted on the stock exchange. The transfer of shares, whether or not by deed, is subject to a registration duty of 3% after the application of an allowance of EUR 23.000. The amount of EUR 23.000 is applicable when 100% of the share capital is sold. If only a portion of the share capital is sold, this allowance will be reduced proportionately.
  • managers who hold more than 50% of the share capital may not benefit from the employees’ social security regime;
  • an individual shareholder may not obtain a loan or a guarantee from an SARL. Moreover, any agreement between a shareholder and an SARL is subject to specific regulations (in SAs, this only applies to managers and shareholders holding more than 10% of the voting rights); and
  • the number of shareholders is limited to 100.

There is no minimum share capital requirement for an SARL. An SARL may have a variable share capital. The contributions may be either in cash, in kind or in industry. They must be entirely subscribed by the shareholders. Upon the formation of the company, only one fifth of the share capital corresponding to cash contributions needs to be paid up immediately. The remaining part may be paid up within the 5 years following the registration date of the SARL. The nominal value of the shares is freely determined by the articles of association