Modernisation of company law: Bill No. 1094 consolidated

Bill no. 1094 on the modernisation of company law (2024-5, 19 June 2024), comprising 88 articles, was received by the Parliament (Conseil National) on 21 June 2024 and referred to the Legislation Committee during the Public Session of the same day. The consolidated text (101 articles) was published at the end of March 2025.

It is part of the reform of economic law that has already begun, with, for example, the creation of office leases and multi-family office activities, as well as developments in the field of financial activities and the law on securities and credit.

The major changes envisaged by Bill no. 1054 to improve and modernise Monegasque company law are built "around the fundamental principles that permeate the field, such as the flexibility of systems, the protection of operators and investors and the effectiveness of governance models in order to ensure the credibility of projects likely to be based on this legal framework". (Explanatory memorandum to Bill 1094, p. 2)

Bill no. 1094 aims to "strike the right balance between preserving mechanisms which, despite their age, have demonstrated their relevance, and proposing a secure and attractive legal framework capable of providing efficient reception conditions for the economic projects of investors wishing to develop their projects in the Principality". (Explanatory memorandum to Bill no. 1094, p. 4)

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Purpose of the reform

• Amendment of the provisions of the Civil Code ("CCiv") common to companies,
• Amendment of the provisions of the Commercial Code ("CCom") applicable to limited liability companies (sociétés à responsabilité limitée) with the establishment of the single-member limited liability company (société unipersonnelle à responsabilité limitée - SURL),
• Recasting within Title III of the future Law the entire regime governing Monegasque public limited companies (sociétés anonymes monégasques) and limited partnerships with shares (sociétés en commandite par actions). As a result, the Sovereign Order of 5 March 1895 on public limited companies and limited partnerships with shares would be repealed, as would the related provisions of the Commercial Code, which would be brought together in the future Law.
• Creation of a conciliation procedure designed to avoid the cessation of payments and the opening of collective proceedings through an amicable settlement mechanism, inspired by French law.

Objectives of the reform

• Responding to the wishes of professionals to simplify the operating rules of company law, and to recognise new types of company such as the non-trading company of means ("société civile de moyens") and the single-member private limited company ("société unipersonnelle à responsabilité limitée"-SURL);
• Guaranteeing legal certainty, for example with regard to the date and method of acquiring legal personality for companies and the rules of governance for public limited companies;
• Strengthen competitiveness and attractiveness by enhancing the legal conditions for welcoming project initiators and developing their businesses in Monaco.

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Detailed content of Bill no. 1094 consolidated

¤ PROVISIONS COMMON TO COMPANIES (applicable in the absence of specific provisions according to their form or purpose)

• The definition of the partnership contract ("contrat de société") has been updated, with the new reference to ‘the carrying on of one or more specific activities’ among the characteristic elements (instead of ‘putting something in common’), and the addition of ‘profiting from the economy’ (in addition to ‘sharing profits’) as regards the object of the partnership, in order to capture the non-trading company of means ("société civile de moyens"), for the benefit of the liberal professions (art. 1670 CCiv) ;
• The reference to the fact that the company ‘may also be formed (...) by an act of the will of a single person’ enshrines the single-member private limited company ("société unipersonnelle à responsabilité limitée"-SURL), already envisaged by draft law no. 256, as an alternative to the personal company ("Entreprise en Nom Personnel"), which does not protect the entrepreneur's personal assets in the event of failure (art. 1670 CCiv; art. 35-2 to 35-9 CCom);
• Contributions in industry ("apports en industrie": technical or professional knowledge or services) are permitted in Monegasque public limited companies and limited liability companies. It is specified that they ‘do not contribute to the formation of the share capital’, in order to resolve the difficulty of their valuation at the time of the contributor's commitment, and so as not to prejudice the pledge of creditors of limited liability companies (art. 1671 CCiv); reinforcement of the legal certainty of contributions in kind by expressly imposing on the contributor an obligation not to compete with the company, subject to a clause or agreement to the contrary (inspired by Belgian law), in order to reassure potential investors who would join forces with a contributor in kind (art. 1685 CCiv);
• Obligation to draw up articles of association in writing (art. 1672 CCiv);
• Unification of the date of acquisition of legal personality for all forms of company, set at the date of registration, with specification by sovereign ordinance of the procedures for taking over commitments made by persons having acted on behalf of the company being formed (art. 1672-5 CCiv) - As things stand, legal personality arises on: the date of signature of the articles of association for civil companies that do not take the form of a public limited company and whose object is not the exercise of a professional activity, the date of receipt of prior administrative authorisation for commercial companies, and at the close of the first general meeting for public limited companies; as a result of this unification, the date of incorporation of the company is no longer one of the mandatory particulars to be included in the articles of association (art. 1672-1 CCiv); obligation to update the Articles of Association if any of the compulsory information is changed (art. 1672-1 CCiv);
• Insertion of the principle that ‘The civil or commercial nature of the company is determined in consideration of its object, subject to legal provisions to the contrary’ (art. 1672-3 CCiv);
• Insertion of the application of Monegasque law to companies having their "siège social" (registered office) on Monegasque territory where they are deemed to be domiciled (art. 1672-4 CCiv; see also art. 2 Code DIP);
• Introduction of the possibility of applying to the Court of First Instance for the appointment of a provisional administrator (by way of summary proceedings) in order to bring a company out of a deadlock caused by its directors or partners, in the event of imminent danger to its interests or existence. The terms and conditions of the mandate of management and administration of the company are a matter for the judge to decide, who will specify the limits. The extension of the mandate, which may not exceed six months, is renewable (art. 1672-6 CCiv);
• With regard to a shareholder's right to take part in collective decisions and to vote, determination of the rules applicable in the event of joint ownership of a share (representation of the joint owners) and dismemberment of a share (division of voting rights between the bare owner and the usufructuary) (art. 1699-1 CCiv);
• In situations where the transfer of a shareholder's corporate rights, or their purchase by the company, is required, insertion of procedures for determining the value of the rights in the event of a dispute, where this value is neither determined nor determinable (art. 1699-2 CCiv);
  Introduction of a procedure for regularising the extension of a company whose term has expired, in order to remedy the automatic dissolution of the company if the partners decide too late (art. 1704 CCiv).

¤ COMMERCIAL COMPANIES

• Reformulation of the rules applicable to commercial companies, taking into account the establishment of the single-member limited liability company (SURL), namely: the provisions of the Civil Code, the laws specific to commerce, the agreements of the parties and, in the cases provided for by law, the act of will of a single person in the presence of a single shareholder (art. 25 CCom).

¤ JOINT STOCK COMPANIES ("SOCIÉTÉS PAR ACTIONS")

Title III of the future law (‘L.’) would contain the special provisions applicable to Monegasque public limited companies ("sociétés anonymes monégasques" SAM) and partnerships limited by shares ("sociétés en commandite par actions"), replacing the corresponding provisions of the Commercial Code and the Sovereign Order of 5 March 1895 on sociétés anonymes and sociétés en commandite par actions, which would be repealed.

The main thrust of Bill 1094 is to structure, fill legal gaps and modernise the applicable regimes ‘with a view to enhancing the attractiveness of Monaco as a business location and, moreover, facilitating access to Monegasque law’. With regard to the SAM in particular, certain gaps in the text as it stands may ‘give domestic and foreign investors an unsafe image of the SAM’ (Explanatory Memorandum, p. 16).

Bill 1094 proposes to :

• maintain a particular feature of Monegasque law which distinguishes between public limited companies with a commercial object and public limited companies with a civil object (absence of commerciality through form);
• incorporating the provisions of the Sovereign Ordinance of 5 March 1895 which have proved their effectiveness, and removing those which have become unsuitable;
• update the SAM regime with new rules inspired by those contained in the articles of association of many SAMs.

Monegasque public limited companies ("Sociétés anonymes" SAM)

→ Definition and designation of SAMs for third parties (art. 10 L.)

• Clarification of the distinction between SAMs with a commercial object and SAMs with a civil object: ‘a company whose capital is divided into shares or share coupons of equal value, and which is formed between members whose commitment is determined by the civil or commercial nature of the company's object’.
• Repeal of art. 36 CCom, with extension to SAMs with a civil object of the rules relating to designation: ‘company name to which the name of one or more partners may be incorporated, which must be preceded or followed by the words “société anonyme monégasque” or the acronym “S.A.M.”, and the amount of the share capital’.

→ Formation of the SAM

AUTHORISATION TO SET UP a SAM:

• The principle of prior administrative authorisation by the Minister of State (the procedures for which are specified by ministerial decree) is maintained, and supervision by a Government Commissioner ("commissaire de Gouvernement") is required for SAMs benefiting from a monopoly or privilege or a public service concession (art. 11 L.).
• Modernisation and simplification of incorporation formalities: formation by notarial deed maintained, with the possibility of forming a SAM by private deed enshrined in law; the mandatory provisions of the Articles of Association are provided for by law, including those relating to SAMs that have opted to apply special rules (allocation of industrial shares, appointment of a managing director, creation of preference shares, etc.) (art. 12 L.).
• Halving processing times: the administrative authorisation is issued by the Minister of State within 45 days of notification that the application is admissible. By way of exception, this period may be extended for a maximum of 45 days when the application for authorisation requires special diligence in complex cases (e.g. shareholding chain). A reason for suspending the time limit is added: when the examining department requires a foreign body to provide information necessary for examining the application; notification of the admissibility or inadmissibility of the application at the office of the notary who drafted it or, if the company is formed by private deed, at the address indicated for this purpose in the application for authorisation (art. 13 L.).
• Notification of the administrative authorisation by the Director of Economic Development, at the office of the notary who drafted it or, if the company is formed by private deed, at the address indicated for this purpose in the authorisation application, together with the articles of association bearing the authorisation notice and an ampliation of the authorisation order (art. 14 L.).
• Simplification of publicity measures with the abolition of full publication of the articles of association in the Journal de Monaco after issue of the authorisation to incorporate the company provided for in article 2 of the Sovereign Ordinance of 5 March 1895, which ‘at this stage of the procedure (...) constitutes a burdensome formality that is not essential’. (Explanatory memorandum, p. 19)
• The Law sets the minimum share capital of SAMs, maintained at 150,000 euros (art. 15 L.).

CONSTITUTION of the SAM:

• Essentially taken from articles 3 and 4 of the Sovereign Order of 5 March 1895, with the inclusion of the possibility of forming a SAM by private deed.
• SAMs may not be incorporated until the entire share capital has been subscribed and each shareholder has paid up at least one quarter of the shares subscribed for in cash. The remaining share capital may not be paid up more than 18 days after the first incorporation meeting. Contributions in kind must be fully paid up when the company is incorporated. Where applicable, the Articles of Association determine the terms and conditions under which shares in industry may be subscribed - shares allocated in consideration for contributions in industry are inalienable (because they are linked to the personal activity, knowledge or qualities of the contributor) (art. 16 L.)
• Incorporation of the provisions relating to the declaration by founders of the subscription and payment of the share capital. Competence of the constituent general meeting to decide on the adoption of the articles of association, subject to contributions in kind or the stipulation of special advantages, to decide on the approval of contributions in kind, if applicable, and to appoint the first directors and the statutory auditors (art. 17 L.)
• Obligation to state in the Articles of Association the valuation of contributions in kind or special advantages in accordance with the report of the contributions auditor appended to the Articles of Association (art. 18 L.)
• The second constituent general meeting is required to deliberate, where applicable, on the approval of contributions in kind or special benefits for shareholders. The report on the valuation of the contributions or benefits may be made available to the shareholders on a durable and secure electronic medium. The reduction of the valuation of the contributions and benefits resulting from the report may only be made unanimously by all the contributors or beneficiaries. Increases are prohibited. This does not prevent the contributors and beneficiaries from calling upon another contributions auditor in the event of new circumstances requiring it, so that a new report can then be approved. (art. 19 L.)

PUBLICITY (following incorporation of the SAM):

• A period of 3 months following the filing of the patent deed of the articles of association with the registrar of the notary drafting the deed in order to carry out the incorporation and publicity formalities, which are simplified, with the publication in the Journal de Monaco of an extract from the articles of association (the content of which is specified by Sovereign Order) in addition to the date of filing at the general registry of the copy of the deed of incorporation of the SAM and its annexes (art. 20 L.)
• Any person is entitled to have access to the deed of incorporation of the company and to be issued with a copy or extract by the chief clerk, and with a certified copy of the updated articles of association at the registered office of the SAM. The provisions of article 6 of the Sovereign Ordinance of 5 March 1895 are thus essentially reproduced, but with the deletion of the requirement for these documents to be issued by the notary (art. 21 L.).

→ Management and administration of the SAM

BOARD OF DIRECTORS ("CONSEIL D'ADMINISTRATION") of the SAM (art. 22 L.)

• Confirmation of practice, by establishing the Board of Directors as the body responsible for the administration of the SAM, composed of at least two directors ("administrateurs"), remunerated or not, with one change: the directors no longer have to be chosen (by the Ordinary General Meeting) from among the shareholders, although the Articles of Association may require each director to own a specified number of shares. In its report, the Commission stresses that directors who are natural persons or legal entities without shares may validly be considered as beneficial owners (BO) within the meaning of Article 21 of Law no. 1.362 and Article 14 of Sovereign Order no. 2.318, and subject in any event to the same AML/CFT/C requirements as ‘traditional’ shareholders and directors chosen from among the shareholders (in particular checks on the good repute and identification of BO).
• The new provisions set out the areas of action of the Board (determining the direction of the company's business, overseeing its implementation, issues relating to the smooth running of the company) to prevent any confusion in the allocation of roles and responsibilities with the shareholders as a whole and the company's general management.
• In its dealings with third parties, the SAM is bound even by acts of the Board of Directors that do not fall within the company's objects, unless it can be proved that the third party knew or could not have been unaware, given the circumstances, that the act exceeded those objects (publication of the Articles of Association alone is not sufficient to constitute such proof).
• Provisions designed to avoid paralysis of the Board of Directors in the event of a vacancy arising from death or resignation, or if the number of directors falls below the legal minimum.

MANAGEMENT of the SAM (art. 23 L.)

• In order to maintain flexibility, there are two ways in which the management of the SAM can be exercised: either by the Chairman of the Board of Directors ("président-directeur général" PDG), or by another person appointed by the Board of Directors (Chief Executive Officer ‘CEO’ : "directeur général" DG). Shareholders may appoint a CEO from outside the Board of Directors.
• The person in charge of management (DG or PDG) is vested with the broadest powers to act in all circumstances on behalf of the SAM and is its legal representative in its dealings with third parties. The SAM is bound even by acts that do not fall within its corporate purpose, unless it can be proved that the third party knew or could not have been unaware, given the circumstances, that the act exceeded that purpose (publication of the articles of association alone is not sufficient to constitute such proof).
• Provisions designed to avoid a deadlock in the event of the temporary impediment or death of the Chairman of the Board of Directors, and in the event of the impediment or cessation of the duties of the Chief Executive Officer.
• Taking into account the practice of SAMs, the Board of Directors may, in accordance with the conditions set out in the Articles of Association, appoint one or more of its members as executive director ("administrateurs-délégués"), to entrust them with a specific mission, possibly within the framework of an ad hoc committee. They may not act beyond the powers expressly conferred upon them.
• The Chairman of the Board of Directors (PDG), the Chief Executive Officer (DG or PDG) and the Managing Directors are appointed for a term which may not exceed their term of office as directors, and may be re-elected.

MEETINGS, DELIBERATIONS OF THE BOARD OF DIRECTORS (art. 24 L.)

• The Articles of Association determine the procedures for convening meetings and deliberations (failing which, decisions are taken by a majority of the members present or represented).
• Unless otherwise provided by the Articles of Association, directors may take part in Board meetings by videoconference or telecommunication means enabling them to be identified and guaranteeing their effective participation (conditions determined by sovereign ordinance).
• Quorum rule: the Board of Directors may only validly deliberate if at least half of its members are present (directors participating in the meeting by videoconference or telecommunication are deemed to be present).

DIRECTORS ("ADMINISTRATEURS") (art. 25 to 27 L.)

• Director who is a legal entity: obligation to appoint a permanent representative, who is a natural person, subject to the same conditions and obligations, incurring the same civil and criminal liability (his criminal liability may be incurred in accordance with article 4-4 of the Criminal Code) as if he were a director in his own name, without prejudice to the joint and several liability of the legal entity that he represents.
• Limitation on the number of directorships ("mandats d'administration") held by public limited companies having their registered office in Monaco: 12 for directors, 8 for the chairman, the managing director or the chief executive officer, subject to a civil fine of between 1,000 and 10,000 euros.
• As the appointment of a director is no longer subject to his or her status as a shareholder, the articles of association may require each director to own a specific number of shares (known as ‘guarantee shares’ : "actions de garantie").

→ SAM shareholders' meetings ("Assemblées d'actionnaires") of the SAM

• Enshrinement of the provisions already implemented in practice regarding the convening of meetings, the allocation of voting rights and the recording of meeting decisions, with broad reference to the articles of association to determine the applicable rules (art. 28 L.).
• Increased shareholder participation in the corporate life of the SAM: obligation on the Board of Directors ("conseil d'administration") to convene an ordinary general meeting at the request of shareholders representing at least 10% of the share capital (art. 29 L.).
• Reinforcement of the right to information: minority shareholders may request, in writing, that items they consider important be included on the agenda of any meeting (art. 30 L.).
• Reduction (from 6) to 3 months of the period during which the principal may invoke the nullity of the vote cast by the representative (accountability and legal certainty of general meeting decisions) (art. 31 L.).
• General meetings to be held in Monaco, with the possibility, if provided for in the articles of association, of using videoconferencing or telecommunication facilities enabling shareholders to be identified and guaranteeing their effective participation (conditions to be determined by sovereign ordinance) (art. 32 L.).
• Establishment of a general right of information for shareholders, who may, prior to General Meetings, put questions in writing to the Chairman of the Board of Directors, who is required to answer them at the meeting (not obliged to breach any secrecy or confidentiality agreements binding on shareholders, or to reveal information that would harm the company's interests) (art. 33 L.)
• Shareholders' right to alert on any fact likely to jeopardise the company's ability to continue as a going concern (art. 34 L.).
• Shareholders' right to information is strengthened, with the enshrinement of the right to obtain, at any time, the minutes and attendance sheets of meetings held during the last 3 financial years (art. 35 L.).
• Quorums for ordinary general meetings, ordinary annual general meetings, constituent general meetings, extraordinary general meetings and special meetings of holders of a given class of shares, with retention of existing rules and some clarification. Thus, there is no quorum requirement for a second general meeting called because shareholders were unable to reach a quorum at the first general meeting. In this case, however, the convening of the second meeting must be the subject of extensive publicity measures (art. 36 to 40 L.).
• Changes to the articles of association of a SAM are less formalised: from now on, only those relating to the corporate object ("objet social") and legal form require the prior authorisation of the Minister of State; other changes may be recorded by notarial deed or private agreement. They must then be published in the Journal de Monaco. They may not be relied upon as against third parties until they have been entered in the trade and industry register (RCI) (art. 41 L.).
  
• Action for the repayment of dividends ("répétition de dividendes"): essentially the same as art. 22 of the Sovereign Ordinance of 5 March 1895 as amended (art. 40).
• Adaptation of the procedure for supervising agreements entered into between the company's directors ("administrateurs"): the Chairman of the Board of Directors ("président du conseil d'administration"), the DG (or PDG), the Managing Director ("administrateur-délégué") and the directors ("administrateurs") are prohibited from taking or retaining a direct or indirect interest in any transaction or contract entered into with the company or on its behalf unless they have been authorised to do so by the Board of Directors. The usual (day-to-day) transactions relating to the company's statutory activity (e.g. sale of products manufactured by the company) are included in this control procedure (art. 44 L.).
• Prohibited agreements: nullity of a contract to obtain loans from the company, to obtain an overdraft from it, whether on a current account or otherwise, or to have it guarantee or endorse commitments to third parties (art. 45 L.)
• Civil liability of statutory auditors ("commissaires aux comptes") as referred to in art. 3 of the Sovereign Order of 5 March 1895 as amended (art. 46 L.)

→ Reduction and increase of the SAM's capital ("capital social")

• Obligation on SAMs to bring their share capital into compliance within 3 years if it is less than the minimum required amount (150,000 euros). Essentially restatement of art. 32 of the Sovereign Order of 5 March 1895 as amended, and reference to Law no. 767 of 8 July 1964 as amended (art. 47 L.).
• New rules and procedure to be followed in the event that, as a result of losses, the company's shareholders' equity falls below half of its share capital (art. 48, 49 L.).
• Establishment of a legal framework for capital increases: decision to proceed with the increase; implementation by issuing ordinary or preference shares or by increasing the minimum amount of existing shares; pre-emptive right of subscription, to safeguard the rights of existing shareholders in the company, which may be waived; increase in share capital by contribution in kind for the purpose of assessing their value (art. 50 to 53 L.).

→ Shares ("Actions")

• Resumption of the abolition of bearer shares ("actions au porteur"), and adaptation of art. 8 of the Sovereign Order of 5 March 1895 as amended: holders of capital shares or their coupons may only trade in them 1 year (instead of 2 years) after the company is incorporated (compromise solution - different from French law - to guarantee a degree of flexibility while protecting third parties with regard to the valuation of the company) (art. 54, 55 L.).
• Legal enshrinement of preference shares ("actions de préférence"), which originated in the practice of SAMs and were inspired by the ‘preferred shares’ of American law. While promoting them, the aim is to reassure economic players by clarifying their regime (art. 56 to 58 L.).
  The articles of association may provide for: the inalienability of some or all shares (art. 59 L.), the establishment of rules for the transfer ("cession") of shares, which may be subject to the prior approval of the company (whose shares are not admitted to trading on a regulated market), with provisions governing approval if the Articles of Association are silent (art. 60, 61 L.), an exclusion clause (subject to the shareholder concerned) (art. 62 L.), clauses capping shareholdings and clauses requiring equal shareholdings (art. 63 L.).
• Economic control measures for SAMs (prior authorisation by the Minister of State) when they wish to open up their capital (public offering of financial securities or admission of financial securities to trading) to a foreign financial market (art. 64, 65 L.)

→ Provisions applicable to SAM with a commercial object

• Reminder that public limited companies which carry on a commercial activity are subject, in addition to the provisions set out in art.10 to 65 of the Law (presented above), to the provisions of art. 40 to 43-1 CCom and those of the CCiv which are not contrary thereto. (art. 66 L.)
  

→ Provisions applicable to SAM with civil object

• Without prejudice to the provisions of articles 10 to 63 of the Law (set out above), sociétés anonymes whose activity or object is exclusively civil are subject to the provisions of the CCiv which govern them and to those of Law no. 797 of 18 February 1966, as amended (art. 67 L.). In accordance with Monegasque case law, the liability of the members of a SAM with a civil object is that of the members of a non-trading company ("société civile"") (art. 1700 to 1702 of the CCiv): they are liable to third parties without limit, including possibly out of their personal assets but within the limit of their share in the share capital, if the assets of the company prove insufficient to pay the pursuing creditors.

→ Criminal provisions

• Precision and clarity in the definition of offences relating to the unlawful issue and trading of shares or share coupons. Repeal of the substance of article 29 of the Sovereign Ordinance of 5 March 1895 as amended, with a more intelligible restructuring concerning the penalty for the unlawful issue and trading of shares or share coupons in a SAM formed in breach of legal provisions, or on the occasion of an increase in share capital in breach of legal provisions. Penalties are incurred by the founders, the legal representative, the directors, the holders of shares who negotiate shares or share coupons or anyone who participates in such negotiations and in any publication of the value of the said shares or share coupons (art. 68 L.).
• Repeal of the substance of article 31 of the Sovereign Ordinance of 5 March 1895, as amended, with details of the penalties incurred by those who commit the offences of overvaluing contributions in kind, distributing fictitious dividends, or falsely publishing or presenting accounts; aggravation of the penalty (art. 69 L.)

Partnership limited by shares ("Sociétés en commandite par actions" SCA)

→ Definition: ‘a company whose capital is divided into shares and which is formed between one or more general partners, who are jointly and severally liable partners, and one or more limited partners who have the status of shareholders and may not perform any acts of management.’ Designation (information for third parties) by corporate name, which may include the name of one or more general partners, which must be preceded or followed by the words ‘société en commandite par actions’ or the acronym ‘S.C.A.’, and the amount of the share capital. (art. 70 L.)

→ Rules applicable to SCAs: insofar as they are compatible with the specific provisions concerning SCAs, the rules concerning SAMs set out in Title III of the Act (presented above) are applicable to them, with the exception of art. 22 to 27 relating to the management and administration of SAMs, as well as the provisions of articles 31 to 35 of the Commercial Code. To this end, it is the responsibility of the SCA's manager ("gérant") to fulfil the obligations imposed on the founders of the SAM with regard to incorporation formalities. (art. 71 L.)

¤ LIMITED LIABILITY COMPANIES ("SOCIÉTÉS À RESPONSABILITÉ LIMITÉE" SARL), including the (new) ONE-PERSON LIMITED LIABILITY COMPANY ("SOCIÉTÉ UNIPERSONNELLE À RESPONSABILITÉ LIMITÉE" SURL)

Title IV of the future law (‘L.’) on the special provisions applicable to SARLs and SURLs amends and creates several provisions of the Commercial Code (Book I, Title IV, Chapter III)

→ Establishment of the SURL. The powers vested in the shareholders' meeting are exercised by the sole shareholder (art. 35-1 CCom).

→ Designation of the SURL (information for third parties) by its company name, which must be preceded or followed by the words ‘société unipersonnelle à responsabilité limitée’ or the initials ‘S.U.R.L.’. (art. 35-2 CCom) and the amount of its share capital (art. 35-2 CCom).

→ Removal of the prohibition on making contributions in industry ("apports en industrie") (as in France, Luxembourg and Belgium, for example), which do not contribute to the formation of share capital under proposed article 1671 CCiv (presented above); the minimum capital for limited liability companies is set at 15,000 euros, reduced to 8,000 euros if there is only one natural person as shareholder; the maximum period within which the capital must be paid up in full is reduced (from 3 years) to 18 months (harmonisation with the SAM regime) (art. 35-3 CCom).

→ Clarification that the articles of association determine, where applicable, the terms and conditions for subscribing shares in industry ("parts en industrie"), with the shares allocated in consideration being inalienable (new art. 35-3-1 CCom).

→ Limit to 8 the number of directorships of limited liability companies in Monaco (art. 35-4 CCom).

→ The decisions of the sole shareholder of the SURL, who may not delegate his powers, are taken in place of the general meeting and are recorded in a register kept by the manager. Failing this, they may be cancelled at the request of any interested party (new art. 35-6 CCom).

→ Supplementation of the regime for limited liability companies in order to subject to a prior control procedure the acts of the non-partner manager ("gérant non associé") which do not concern transactions and contracts relating to current operations and which would be dangerous for the company, with prohibitions where there is no statutory auditor and sanctions, an annual review (special report drawn up by a chartered accountant or statutory auditor, submitted to the ordinary general meeting for approval of the accounts). This procedure is inapplicable when the company has only one partner and the agreement is concluded with that partner: mention in the register (mentioned above) (new art. 35-7 CCom).

→ As a consequence of the creation of the SURL, it is added that ‘In the event of all the shares in a limited liability company being combined in a single hand, the provisions of the first paragraph of Article1703-1 of the Civil Code relating to dissolution by operation of law shall not apply’; In the event of the dissolution of a single-member limited liability company, the provisions of the third paragraph of article 1703-I of the Civil Code are applicable (dissolution results in the transfer of all the company's assets and liabilities to the sole member, without the need for liquidation. Where the sole shareholder is a natural person, universal transfer only occurs in the case of solvent companies'). (new art. 35-8 CCom.)

→ Prevention of conflicts of interest and protection of the company's resources: under penalty of nullity, managers or members other than legal entities, legal representatives of associated legal entities, close relations (spouse, ascendants and descendants), and any intermediary, are prohibited from contracting, in any form whatsoever, loans from the company, from being granted an overdraft by the company, in a current account or otherwise, and from having their commitments to third parties guaranteed or endorsed by the company. (new art. 35-9 CCom.)

¤ PROVISIONS RELATING TO THE CREATION OF A CONCILIATION PROCEDURE ("PROCÉDURE DE CONCILIATION")

Title V of the future law (‘L.’) inserts into the Commercial Code (New Preliminary Title of Book III, art. 407-1 to 407-14 CCom) a procedure designed to avoid the cessation of payments and the opening of collective proceedings through an amicable settlement mechanism.

→ Establishment of a confidential and voluntary conciliation procedure, inspired by French law, available to debtors engaged in a commercial or craft activity who are experiencing legal, economic or financial difficulties, whether proven or predictable, and who have not been in a state of cessation of payments for more than 15 days.

→ As from the filing of the application by the debtor, the Court of First Instance may not declare a state of suspension of payments, a judicial settlement or the liquidation of assets while the conciliation proceedings are in progress.

→ The conciliation procedure, at the request of the debtor, is opened by the President of the Court of First Instance (the order refusing to open conciliation proceedings may be appealed, judged within 2 months of the referral to the Court), who after consulting the Public Prosecutor, appoints a conciliator whose task is to encourage the debtor and its main creditors and, where applicable, its usual co-contractors to reach an amicable agreement designed to put an end to the company's difficulties. At the request of the debtor and after consultation with the participating creditors, it may be tasked with organising a partial or total sale of the business, which may be implemented as part of a subsequent judicial settlement or liquidation procedure.

→ At the joint request of the parties, the President of the Court of First Instance shall record their agreement and give it enforceability. This decision is not published and is not subject to appeal.

→ The debtor may apply to the Court for homologation of the agreement reached if: 1) the debtor is not in suspension of payments or the agreement reached puts an end to it; 2) the terms of the agreement are such as to ensure the continued operation of the business; 3) the agreement does not prejudice the interests of non-signatory creditors.

→ The homologation of the agreement puts an end to the conciliation procedure.

→ The judgement ruling on the homologation of the agreement and the judgement rejecting the homologation are subject to appeal, which is judged within 2 months of referral to the Court. The judgement ruling on the homologation of the agreement may also be opposed by a third party.

→ The other provisions govern issues related to the approved agreement (consequences, termination of the agreement in the event of non-performance, automatic termination of the agreement, etc.).

¤ DISPOSITIONS DIVERSES, ABROGATIVES et TRANSITOIRES

Title VI of the future law (‘L.’) (art. 80 to 93) provides for other updates to the Commercial Code (art. 33 CCom), including penalties for the transfer of shares of SAMs and for keeping the register of shareholders (new articles 43-1, 43-2 CCom), and replaces the references to the Sovereign Order of 5 March 1895, which will be repealed.

In addition, following the example of the provisions for SAMs, minority shareholders may request in writing that items or draft resolutions be included on the meeting agenda (new art. 51-5-1 CCom), and a right of warning has been introduced for minority non-managing shareholders (new art. 51-5-2 CCom), also a right to information for shareholders of commercial companies other than joint stock companies (does not oblige the manager to breach a secret or confidentiality agreements that would be enforceable against the shareholders or to reveal information that would harm the interests of the company) (art. 51-6 Com).

Amendments have also been made to Law no. 1.144 of 26 July 1991 on the exercise of certain economic and legal activities, as amended.

Title VII is devoted to the repeal provisions (art. 94 to 98).

Title VIII contains the transitional provisions (art. 99 to 101).

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Related texts on economic law reform :

• Loi n° 1.433 du 8 novembre 2016 portant création du bail à usage de bureau (office lease)
• Loi n° 1.439 du 2 décembre 2016 portant création de l'activité de multi family office (activity of multi family office)
• Loi n° 1.490 du 23 juin 2020 relative à la domiciliation d'une activité professionnelle dans un local à usage d'habitation dont l'État est propriétaire, modifiée (domiciliation of a professional activity in residential premises owned by the State)
• Loi n° 1.515 du 23 décembre 2021 portant modification de la loi n° 1.338 du 7 septembre 2007 sur les activités financières, modifiée (financial activities)
• Loi n° 1.529 du 29 juillet 2022 portant diverses dispositions d'ordre économique et juridique (various economic and legal provisions)

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