The Conversion of a SLP & the Question of Legal Personality - SLP XXIII - #343-332*

The conversion of a special limited partnership (SLP - société en commandite spéciale) into another entity may result in the creation of a legal personality if the SLP is converted into the following entities. 

The law recognises the following corporate entities as having a legal personality:

1. the general corporate partnership/unlimited company (société en nom collectif);

2. the common limited partnership (CLP - société en commandite simple) - the fact that the CLP has a legal personality is a major difference with the SLP;

3. the public company limited by shares (société anonyme);

4. the simplified joint company (société par actions simplifiées);

5. the corporate partnership limited by shares (société en commandite par actions);

6. the limited liability company (LLC - société à responsabilité limitée) and the simplified LLC (société à responsabilité simplifiée); and finally

7. The European company.

The formal and substantive requirements applicable to the new form of company must be met.

References : Articles 320-9 and 100-2 paragraph 1 of the law of 10 August 1915 on commercial companies as amended; some publications (in French) related to the creation of a company - quelques exposés sur certaines des conditions à la création d’une société: Quelques aménagements au principe du partage des bénéfices et des pertes - Conditions de fond à la création de la société (vii) ; Le partage des bénéfices et des pertes - conditions de fond à la création de la société (vi) ; L’apport en industrie - des conditions à la création de la société (v) ; L’apport en nature - des conditions de fond à la création de la société (iv) ; L’apport en numéraire - catégories d’apports - conditions de fond à la création de la société (iii) ; L’apport - condition de fond à la création de la société (ii) ; L'affectio societatis ou la vision commune des associés - condition de fond à la création de la société (i), Bertrand Mariaux Avocats.

*Podcast #343

*YouTube Video 332* 

Bertrand Mariaux, Avocat à la Cour, LL.M. (hons.)

Prestation de serment (Swearing-in oath): Luxembourg (2011), Certificat d’Aptitude à la Profession d’Avocat, École de Formation professionnelle des Barreaux de la Cour d’appel de Paris (2009), Bond University (LL.M. (distinct.), International Legal Practice, 2010), Université Sorbonne Paris Nord & University of Limerick (Master in European & International Law - major in economics, 2008), certified Expert in Microfinance (Frankfurt School of Finance & Management, 2015), social entrepreneurship (University of Oxford, 2015 & The Wharton School of Social Policy & Practice, 2014) and social & solidarity economy (International Labour Organization Academy - Social & Solidarity Economy, Organisation Internationale du Travail - Économie Sociale et Solidaire, 2017)

Contributor: Cédric Buisine, Avocat

The Appointment of a Provisional Administrator Replacing the GP - SLP XXII - #342-331*

We have seen previously that should the general partner (GP) of a special limited partnership (SLP - société en commandite spéciale) be unable to perform his functions, a provisional administrator (administrateur provisoire) shall be appointed (cf. The General Partner's Inability to Perform His Functions, #341-330*, April 26, 2021, Bertrand Mariaux). 

Some questions come to mind: firstly, how is the provisional administrator (administrateur provisoire) appointed? Secondly, what is the liability of the provisional administrator (administrateur provisoire)? Lastly, it is also important to say a few words on any possible objection to the appointment.

I - The Appointment of a Provisional Administrator Replacing the GP

The appointment of a provisional administrator is made at the request of any interested party: 

• addressed to the President of the Chamber of the District Court (Tribunal d'arrondissement) sitting in commercial matters;

  • who may appoint a provisional administrator, 

    • whether or not he is a partner, 

    • who alone shall perform urgent and simple administrative acts until the partners decide.

II - Liability of the Provisional Administrator

The provisional administrator shall only be responsible for the execution of his mandate.

III - Opposition to the Court's Order

Any interested party may oppose this court order. This objection shall be served on (cumulatively): 

1. the partnership;

2. the appointee; and

3. the person who requested the appointment.

The opposition shall be heard as a summary proceeding (en référé).

References : Article 320-8 of the Law of 10 August 1915 on commercial companies as amended;  The General Partner's Inability to Perform His Functions, #341-330*, April 26, 2021, Bertrand Mariaux.

*Podcast #342

*YouTube Video 331* 

Bertrand Mariaux, Avocat à la Cour, LL.M. (hons.)

Prestation de serment (Swearing-in oath): Luxembourg (2011), Certificat d’Aptitude à la Profession d’Avocat, École de Formation professionnelle des Barreaux de la Cour d’appel de Paris (2009), Bond University (LL.M. (distinct.), International Legal Practice, 2010), Université Sorbonne Paris Nord & University of Limerick (Master in European & International Law - major in economics, 2008), certified Expert in Microfinance (Frankfurt School of Finance & Management, 2015), social entrepreneurship (University of Oxford, 2015 & The Wharton School of Social Policy & Practice, 2014) and social & solidarity economy (International Labour Organization Academy - Social & Solidarity Economy, Organisation Internationale du Travail - Économie Sociale et Solidaire, 2017)
Contributor: Cédric Buisine, Avocat

The General Partner's Inability to Perform His Functions - SLP XXI - #341-330*

As mentioned previously, the general partner (GP - associé commandité) is an indispensable part of the partnership agreement of the special limited partnership (SLP - société en commandite spéciale) - the same applies to the common limited partnership (CLP - société en commandite simple).

Indeed, it is the GP(s) who is/are liable for the partnership's commitments indefinitely, jointly and severally.

Thus - and if the GP is a sole GP - it is important to consider the possibility of :

• his death;

• its dissolution (for legal person);

• legal incapacity;

• dismissal from office;

• resignation; 

• impediment; 

• bankruptcy; or

• any other situation affecting the rights of creditors.

 If the partnership agreement stipulates that the SLP (or CLP for that matter) continues, the GP must necessarily be replaced. But what if there are no specific provisions in the partnership agreement in this regard? A provisional administrator (administrateur provisoire) shall be appointed.

Going further : Article 320-8 of the law of 10 August 1915 on commercial companies as amended ;  #321-310* What Is a Special Limited Partnership (Société en Commandite Spéciale), January 14, 2021, Bertrand Mariaux Avocats.

*Podcast #341

*YouTube Video 330* 

Bertrand Mariaux, Avocat à la Cour, LL.M. (hons.)

Prestation de serment (Swearing-in oath): Luxembourg (2011), Certificat d’Aptitude à la Profession d’Avocat, École de Formation professionnelle des Barreaux de la Cour d’appel de Paris (2009), Bond University (LL.M. (distinct.), International Legal Practice, 2010), Université Sorbonne Paris Nord & University of Limerick (Master in European & International Law - major in economics, 2008), certified Expert in Microfinance (Frankfurt School of Finance & Management, 2015), social entrepreneurship (University of Oxford, 2015 & The Wharton School of Social Policy & Practice, 2014) and social & solidarity economy (International Labour Organization Academy - Social & Solidarity Economy, Organisation Internationale du Travail - Économie Sociale et Solidaire, 2017)
Contributor: Cédric Buisine, Avocat

Redemption or Reduction of Partner's Partnership Interests - SLP XX - #340-329*

The law provides that the partnership agreement of the special limited partnership (SLP - société en commandite spéciale) may authorise the redemption or reduction of the partnership interests of one or more partners under the following conditions.

1- Who Can Redeem or Reduce the Partnership Interests of One or More Partners?

• the management; or 

• the partners.

2- To What Extent Is this Redemption or Reduction of the Partnership Interests of One or More Partners Possible?

• in whole; or

• in part.

3- How Can the Redemption or Reduction of the Partnership Interests of One or More Partners Occur?

The redemption or reduction of partner's partnership interests may be carried out at the request of one or more partners.

4- In Addition to the Above Conditions, How Are the Terms of a Redemption or Reduction of the Partnership Interests Determined? 

The terms of a redemption or reduction are contractually determined.

References : Article 320-7, §4 of the law of 10 August 1915 on commercial companies as amended ; #339-328* Enforceability of transfers and dismemberments (démembrements) of partnership interests - SLP - XIX, April 22, 2021, Bertrand Mariaux; #338-327* Partnership Interests: Transfer, Pledge and Dismemberment (Démembrement) - SLP XVIII, April 21, 2021, Bertrand Mariaux.

*Podcast #340

*YouTube Video 329* 

Bertrand Mariaux, Avocat à la Cour, LL.M. (hons.)

Prestation de serment (Swearing-in oath): Luxembourg (2011), Certificat d’Aptitude à la Profession d’Avocat, École de Formation professionnelle des Barreaux de la Cour d’appel de Paris (2009), Bond University (LL.M. (distinct.), International Legal Practice, 2010), Université Sorbonne Paris Nord & University of Limerick (Master in European & International Law - major in economics, 2008), certified Expert in Microfinance (Frankfurt School of Finance & Management, 2015), social entrepreneurship (University of Oxford, 2015 & The Wharton School of Social Policy & Practice, 2014) and social & solidarity economy (International Labour Organization Academy - Social & Solidarity Economy, Organisation Internationale du Travail - Économie Sociale et Solidaire, 2017)

Contributor: Cédric Buisine, Avocat

Enforceability of Transfers and Dismemberments (démembrements) of Partnership Interests - SLP XIX - #339-328*

The law provides that transfers and dismemberments (démembrements) of partnership interests are only valid against the special limited partnership (SLP - société en commandite spéciale) and third parties if they have been notified to or accepted by the partnership.

Similarly, the law further states that transfers and dismemberments (démembrement) of partnership interests cannot have any effect vis-à-vis third parties with regard to corporate commitments made prior to their publication, except where the third party was aware of them, or could not have been unaware of them.

References: Article 320-7, §3 of the law of 10 August 1915 on commercial companies as amended; #338-327* Partnership Interests: Transfer, Pledge and Dismemberment (SLP), April 21, 2021, Bertrand Mariaux.

*Podcast #339

339-328* Enforceability of transfers and dismemberments of partnership interests (SLP) *Article #339-328* *Podcast #339 *YouTube Video 328*: https://youtu.be/Mf_uG358L7E . . . . . . . . #corporate , #avocat , #ServeAndThrive , #ThriveAndAccomplishYourMission , #MariauxAvocats , #MissionDriven , #MissionDrivenVenture , #alternativeinvestment , #limitedpartnership , #LP , #SpecialLimitedPartnership , #SLP , #SCSp , #sociétéencommanditespéciale, #DFI To see this publication, go to our blog The VADE-MECUM - https://mariauxavocats.com/vademecum.

*YouTube Video 328* 

Bertrand Mariaux, Avocat à la Cour, LL.M. (hons.)

Prestation de serment (Swearing-in oath): Luxembourg (2011), Certificat d’Aptitude à la Profession d’Avocat, École de Formation professionnelle des Barreaux de la Cour d’appel de Paris (2009), Bond University (LL.M. (distinct.), International Legal Practice, 2010), Université Sorbonne Paris Nord & University of Limerick (Master in European & International Law - major in economics, 2008), certified Expert in Microfinance (Frankfurt School of Finance & Management, 2015), social entrepreneurship (University of Oxford, 2015 & The Wharton School of Social Policy & Practice, 2014) and social & solidarity economy (International Labour Organization Academy - Social & Solidarity Economy, Organisation Internationale du Travail - Économie Sociale et Solidaire, 2017)

Contributor: Cédric Buisine, Avocat

Partnership Interests: Transfer, Pledge and Dismemberment - SLP XVIII - #338-327*

Let us consider the question of transfer, dismemberment (démembrement), and pledge of partnership interests in a special limited partnership (SLP - société en commandite spéciale).

This question is governed by almost identical rules for limited and general partners (GPs) (i). The only exception is that the rules of general law (droit commun) are more restrictive for GPs' partnership interests (ii). We may also notice that there is still a great deal of room for contractual freedom.

I - Partnership Interests: Transfer, Pledge and Dismemberment (démembrement) - Similar Rules for GPs and Limited Partners (LPs)’ Partnership Interests

Whether they are partnership interests of LPs or GPs, they may only be transferred, dismembered or pledged in accordance with the terms & conditions and in the form provided for in the partnership agreement, failing which the operation shall be null and void.

If the partnership agreement is silent on the above, and except in the case of a transfer other than by reason of death, the dismemberment (démembrement) and pledging of an LP's partnership interests require the approval of the GP(s).

In the same case (as in the previous paragraph), but this time for the GP's partnership interest(s), additional steps are required. 

II - GP’s Partnership Interest(s): Transfer, Pledge and Dismemberment (démembrement) - Restrictions

As mentioned above, in the absence of provisions to the contrary in the SLP's partnership agreement, and for a transfer other than a transfer by reason of death, a dismemberment (démembrement) and pledging of GPs' partnership interests requires this time:

1. the approval of all the partners; and

2. that the latter decide in the same manner as when amending the partnership agreement.

References: Article 320-7 §1 & 2 of the Law of 10 August 1915 on commercial companies as amended ; #336-325* Partners' Decisions and Partnership Agreement (SLP), April 19, 2021, Bertrand Mariaux; #337-326* What About Partners' Decisions in the Absence of Statutory Provisions in an SLP? April 20, 2021, Bertrand Mariaux.

*Podcast #338

338-327* Partnership Interests: Transfer, Pledge and Dismemberment (SLP) *Article #338-327* *Podcast #338 *YouTube Video 327* . . . . . . . . #ImpactInvesting , #corporate , #avocat , #ServeAndThrive , #ThriveAndAccomplishYourMission , #MariauxAvocats , #MissionDriven , #MissionDrivenVenture , #alternativeinvestment , #limitedpartnership , #LP , #SpecialLimitedPartnership , #SLP , #SCSp , #sociétéencommanditespéciale, #DFI To see this publication, go to our blog The VADE-MECUM - https://mariauxavocats.com/vademecum.

*YouTube Video 327* 

Bertrand Mariaux, Avocat à la Cour, LL.M. (hons.)

Prestation de serment (Swearing-in oath): Luxembourg (2011), Certificat d’Aptitude à la Profession d’Avocat, École de Formation professionnelle des Barreaux de la Cour d’appel de Paris (2009), Bond University (LL.M. (distinct.), International Legal Practice, 2010), Université Sorbonne Paris Nord & University of Limerick (Master in European & International Law - major in economics, 2008), certified Expert in Microfinance (Frankfurt School of Finance & Management, 2015), social entrepreneurship (University of Oxford, 2015 & The Wharton School of Social Policy & Practice, 2014) and social & solidarity economy (International Labour Organization Academy - Social & Solidarity Economy, Organisation Internationale du Travail - Économie Sociale et Solidaire, 2017)
Contributor: Cédric Buisine, Avocat

What About the Partners' Decisions in the Absence of Statutory Provisions in an SLP? - SLP XVII - #337-326*

Earlier we mentioned the decisions that specifically have to be taken by the partners in a special limited partnership (SLP - société en commandite spéciale). The partnership agreement should therefore indicate which decisions are not taken by the partners. The form and conditions of these decisions should also be stated. 

However, if the partnership agreement of the SLP is silent:

1- the decisions of the partners are taken: 

• in a general meeting; or 

• through a written consultation;

the written consultation takes place as follows:

• each partner has to receive the text of the resolutions or decisions to be taken expressly stated and shall cast his vote in writing;

2- the decisions are validly taken by a majority of the votes cast (regardless of the portion of interest shares represented);

however, for decisions regarding:

• changes to the company's purpose;

• the change of nationality of the company;

• the conversion or liquidation of the company;

the latter are adopted only by the approval of:

• the partners’ quorum representing 3/4 of the partnership interests; and

• of all general partners;

3- such meetings or written consultations may be convened or initiated by:

• the manager or managers; or by

• partners representing more than half of the partnership interests.

References: Article 320-6 §2 of the law of 10 August 1915 on commercial companies as amended; Partners' Decisions and Partnership Agreement (SLP), April 19, 2021, Bertrand Mariaux, #336-325*.

*Podcast #337

What About Partners' Decisions in the Absence of Statutory Provisions (SLP)? *Article #337-326* *Podcast #337 *YouTube Video 326* . . . . . . . . #ImpactInvesting , #corporate , #avocat , #ServeAndThrive , #ThriveAndAccomplishYourMission , #MariauxAvocats , #MissionDriven , #MissionDrivenVenture , #alternativeinvestment , #limitedpartnership , #LP , #SpecialLimitedPartnership , #SLP , #SCSp , #sociétéencommanditespéciale, #DFI To see this publication, go to our blog The VADE-MECUM - https://mariauxavocats.com/vademecum.

*YouTube Video 326* 

Bertrand Mariaux, Avocat à la Cour, LL.M. (hons.)

Prestation de serment (Swearing-in oath): Luxembourg (2011), Certificat d’Aptitude à la Profession d’Avocat, École de Formation professionnelle des Barreaux de la Cour d’appel de Paris (2009), Bond University (LL.M. (distinct.), International Legal Practice, 2010), Université Sorbonne Paris Nord & University of Limerick (Master in European & International Law - major in economics, 2008), certified Expert in Microfinance (Frankfurt School of Finance & Management, 2015), social entrepreneurship (University of Oxford, 2015 & The Wharton School of Social Policy & Practice, 2014) and social & solidarity economy (International Labour Organization Academy - Social & Solidarity Economy, Organisation Internationale du Travail - Économie Sociale et Solidaire, 2017)
Contributor: Cédric Buisine, Avocat

Partners' Decisions & Partnership Agreement - SLP XVI - #336-325*

First, it is important to mention that, with regard to the proportion of voting rights and unless the partnership agreement provides otherwise, the voting rights of each partner are proportional to the partnership interest that each partner holds in the special limited partnership (SLP - société en commandite spéciale). Let us consider the decisions that must be taken by the partners (i) before mentioning certain elements that must be indicated in the partnership agreement (ii). 

I - Decisions to Be Taken By the Partners

The law expressly provides a series of decisions that must be taken by the partners. There are as follows:

1. changes in the company's object;

2. change of nationality of the company; or

3. conversion; or 

4. the liquidation of the company.

II - Decisions Not Taken By the Partners, Forms and Conditions of Adoption 

The partnership agreement shall determine which decisions the partners do not take. The partnership agreement shall also determine in what forms and under what conditions these decisions are to be taken. If there are no stipulations in the partnership agreement in this respect, the law will govern some of these elements, which we will discuss later.

References: Article 320-6 §1 & 2 of the law of 10 August 1915 on commercial companies as amended; Acts Expressly Authorised for the Limited Partner (SLP/SCSp) - SLP XIII, April 8, 2021, #333-322*, Bertrand Mariaux.

*Podcast #336

Partners' Decisions & Partnership Agreement (SLP) *Article #336-325* *Podcast #336 *YouTube Video 325* . . . . . . . . #ImpactInvesting , #corporate , #avocat , #ServeAndThrive , #ThriveAndAccomplishYourMission , #MariauxAvocats , #MissionDriven , #MissionDrivenVenture , #alternativeinvestment , #limitedpartnership , #LP , #SpecialLimitedPartnership , #SLP , #SCSp , #sociétéencommanditespéciale, #DFI To see this publication, go to our blog The VADE-MECUM - https://mariauxavocats.com/vademecum.

*YouTube Video 325* 

Partners' Decisions & Partnership Agreement (SLP)*Article #336-325**Podcast #336*YouTube Video 325* To see this publication, go to our blog The VADE-MECUM - ...

Bertrand Mariaux, Avocat à la Cour, LL.M. (hons.)

Prestation de serment (Swearing-in oath): Luxembourg (2011), Certificat d’Aptitude à la Profession d’Avocat, École de Formation professionnelle des Barreaux de la Cour d’appel de Paris (2009), Bond University (LL.M. (distinct.), International Legal Practice, 2010), Université Sorbonne Paris Nord & University of Limerick (Master in European & International Law - major in economics, 2008), certified Expert in Microfinance (Frankfurt School of Finance & Management, 2015), social entrepreneurship (University of Oxford, 2015 & The Wharton School of Social Policy & Practice, 2014) and social & solidarity economy (International Labour Organization Academy - Social & Solidarity Economy, Organisation Internationale du Travail - Économie Sociale et Solidaire, 2017)

Contributor: Cédric Buisine, Avocat

The Partners' Share in the Profits and Losses - SLP XV - #335-324*

The special limited partnership (SLP - société en commandite spéciale - one of the Luxembourg partnerships) offers real flexibility to its partners, due to its contractual nature.

Thus, distributions and reimbursements to partners and the conditions under which the SLP may request their restitution are governed by the partnership agreement. 

Therefore, as the law provides, unless otherwise stipulated in the partnership agreement, the share of each partner in the profits and losses of the SLP is in proportion to his partnership interest.

References: Article 320-5 of the law of 10 August 1915 on commercial companies as amended ; What Is a Special Limited Partnership (Société en Commandite Spéciale) January 14, 2021, #321-310*, Bertrand Mariaux.

*Podcast #335 (see Link on LinkedIn Article)

*YouTube Video 324* 

Bertrand Mariaux, Avocat à la Cour, LL.M. (hons.)

Prestation de serment (Swearing-in oath): Luxembourg (2011), Certificat d’Aptitude à la Profession d’Avocat, École de Formation professionnelle des Barreaux de la Cour d’appel de Paris (2009), Bond University (LL.M. (distinct.), International Legal Practice, 2010), Université Sorbonne Paris Nord & University of Limerick (Master in European & International Law - major in economics, 2008), certified Expert in Microfinance (Frankfurt School of Finance & Management, 2015), social entrepreneurship (University of Oxford, 2015 & The Wharton School of Social Policy & Practice, 2014) and social & solidarity economy (International Labour Organization Academy - Social & Solidarity Economy, Organisation Internationale du Travail - Économie Sociale et Solidaire, 2017)

Contributor: Cédric Buisine, Avocat

The Possibility for a Limited Partner to Act in the Management of an SLP - SLP XIV - #334-323*

In our previous publications we stated that in a special limited partnership (SLP - société en commandite spéciale) one of the specific attributes of the limited partner (LP) is that he is prohibited from performing acts of management with respect to third parties.

If he were to disregard this prohibition, the LP would be held indefinitely, jointly and severally liable to third parties for all the company's commitments in which he had participated.

However, it will be possible for an LP: 

1. to act as a member of a management body; or 

2. to act as a proxy for a manager of the SLP (a manager who may also be general partner as well); or

3. to be granted a corporate signature power by the latter even when acting as a representative of the company.

The LP will be able to act in this manner without incurring joint and several liability vis-à-vis third parties for the company's commitments, provided that the representative capacity in which he is acting is indicated, as required by law.

References: Article 320-4, §6 of the law of 10 August 1915 on commercial companies as amended; #213-202* De la possibilité pour un associé commanditaire d’agir dans la gestion d’une SCSp, 20 juillet 2020, Bertrand Mariaux; #331-320*-Two Specific Features of the Limited Partner-SLP XI-March 24, 2021, Bertrand Mariaux; #328-317-The Liability of the Managers of an SLP (Excl. GP)-SLP-VIII, March 3, 2021, Bertrand Mariaux; #211-200* Responsabilité de l’associé commanditaire (limited partner) et acte de gestion (SCSp), 18 juillet 2020, Bertrand Mariaux; #210-199* Deux particularités de l’associé commanditaire (limited partner) - SCSp, 17 juillet 2020, Bertrand Mariaux.

*Podcast #334

334-323* - The Possibility for a Limited Partner to Act in the Management of an SLP - SLP XIV *Article #334-323* *YouTube Video 323* . . . . . . . .

*YouTube Video 323*

Bertrand Mariaux, Avocat à la Cour, LL.M. (hons.)

Prestation de serment (Swearing-in oath): Luxembourg (2011), Certificat d’Aptitude à la Profession d’Avocat, École de Formation professionnelle des Barreaux de la Cour d’appel de Paris (2009), Bond University (LL.M. (distinct.), International Legal Practice, 2010), Université Sorbonne Paris Nord & University of Limerick (Master in European & International Law - major in economics, 2008), certified Expert in Microfinance (Frankfurt School of Finance & Management, 2015), social entrepreneurship (University of Oxford, 2015 & The Wharton School of Social Policy & Practice, 2014) and social & solidarity economy (International Labour Organization Academy - Social & Solidarity Economy, Organisation Internationale du Travail - Économie Sociale et Solidaire, 2017)

Contributor: Cédric Buisine, Avocat