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1.1.2.3. SCA

An SCA generally offers the following advantages:

  • it has two categories of shareholders: the "commandités" (general partners), whose responsibility is unlimited, and the "commanditaires" (limited partners), whose responsibility is limited to the amount of their capital contributions. This enables the SCA to resort to public offerings of shares (as the SAs), but also to limit the control of the company to a restricted number of persons as the shares of the "commandités" shareholders are not freely transferable. This may reduce the risk of hostile takeover bids or the loss of control. In addition, the unlimited responsibility of the "commandités" shareholders may enable the SCA to obtain bank loans more easily;
  • the articles of association may freely determine the regime applicable to managers, in particular with respect to their appointment, dismissal and compensation. The managers may, accordingly, be better protected than in an SAs, e.g. the articles of association may provide that they cannot be dismissed or that their appointment is hereditary; and
  • it may be set up with variable capital.

An SCA generally presents the following drawbacks:

  • the functioning is rather complex insofar as the rights and obligations of its two categories of shareholders are different; and
  • certain shareholders may be reluctant to be "commandités" with an unlimited liability.

An SCA has two categories of shareholders:

  • the "commandités" (general partners), who are merchants, who are jointly and severally liable for the company's debts, and whose shares cannot be freely transferred; and
  • the "commanditaires" (limited partners), who have the same rights and obligations as SA shareholders, and whose responsibility is, accordingly, limited to the amount of their capital contributions.

Both "commandités" and "commanditaires" shareholders may be either individuals or legal entities. Unless they are EU citizens or holders of a residence permit, foreign individuals have to file a specific administrative form ("declaration à la prefecture", Art. L. 122-1 of the French Commercial Code). They may become "commanditaires" shareholders without restrictions.

An SCA may have a single "commandité" shareholder and at least three "commanditaires" shareholders. The minimum number of shareholders is, therefore, four. There is no maximum number of shareholders.

The share capital cannot not be less than EUR 37.000. An SCA may have a variable share capital. As for SAs, the shares should be entirely subscribed upon formation. Only half of the capital corresponding to cash contributions needs to be paid up upon formation. The remainder must be paid up within 5 years. The capital corresponding to in-kind contributions should be entirely paid up upon formation.