The Approval of Accounts in a CLP - CLP/SCS XVII - #360-349*

As to the approval of the annual accounts of the common limited partnership (CLP - société en commandite simple), the following questions must be considered.

1- Who Decides on the Approval of the Accounts of a CLP?

The partners of the CLP decide on the approval of the company's annual accounts.

2- On What Date Must the Accounts of a CLP Be Approved?

The approval of the accounts by the partners shall take place each year on the date stipulated in the partnership agreement, and at the latest within six months of the end of the fiscal year.

For the approval of the accounts and for the first accounting year, a special vote must be held within eighteen months of the company's incorporation date. 

3- What Is the Minimum Period of Time Given to the Partners to Review the Relevant Documents Before Voting on the Approval of the Accounts of a CLP?

The time period for the partners to be able to consult the relevant documents is at least 15 days before the date on which the partners must decide on the approval of the CLP's accounts. The partnership agreement may provide for a period longer than 15 days before the decision is taken.

4- Finally, What Relevant Documents Must the Partners Be Able to Consult Within the Aforementioned Period?

To approve the accounts of the CLP, the partners must be able to have access to and obtain copies of the following documents at the company's registered office:

1. the company's annual accounts;

2. the management report, if any;

3. the report of the réviseurs d'entreprises agréés (approved statutory auditors), if any;

4. any other information provided for in the partnership agreement.

References: Article 310-5 (3) of the law of 10 August 1915 on commercial companies as amended; #358-347* Decisions of the Partners and Articles of Association of the Partnership - CLP/SCS, May 26, 2021; Partners' Decisions in the Absence of Statutory Provisions - CLP/SCS - #359-348*, May 27, 2021.

* Podcast #360

*YouTube Video 349* 

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 in the Absence of Statutory Provisions - CLP/SCS XVI - #359-348*

Earlier we identified decisions that specifically have to be taken by the partners in a common limited partnership (CLP - société en commandite simple). The partnership agreement should indicate which decisions may not be taken by the partners. The form and conditions of these decisions should also be stated. 

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

i- 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;

ii- the decisions are validly taken by a majority of the vote cast (regardless of the portion of partnership interests 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;

iii- 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 310-5(2) of the law of 10 August 1915 on commercial companies as amended; #358-347* Decisions of the Partners and Articles of Association of the Partnership - CLP/SCS, May 26, 2021, Bertrand Mariaux.

* Podcast #359

*YouTube Video 348* 

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

Decisions of the Partners and Articles of Association of the Partnership - CLP/SCS XV -#358-347*

The constitutive document and more precisely the partnership agreement of a common limited partnership (CLP / société en commandite simple), may regulate many aspects of the partnership's life cycle. 

Let us examine the decisions that must be taken by the partners (i) before considering certain decisions not taken by the partners - which decisions must be mentioned in the partnership agreement (ii). It is worth noting that with respect to the proportion of distribution of voting rights and unless the partnership agreement provides otherwise, the voting rights of each partner are proportional to her/his partnership interest. 

I - Decisions to Be Taken by the Partners

The law expressly provides for a series of decisions that have to be taken by the partners. The decisions that have to be taken by the partners are:

1. the amendments to the partnership's corporate purpose (l’objet);

2. the change of nationality to the partnership;

3. the conversion of the partnership in another corporate form; or 

4. the liquidation of the partnership.

II - Decisions Not Taken by the Partners - Form and Conditions of Adoption

Apart from the decisions to be taken by the partners (see (I) above), the partnership agreement determines which decisions the partners may not take. The partnership agreement should determine in what form and under what conditions such decisions should be taken. Should there be no stipulation in the partnership agreement in this respect, the law shall govern the adoption of decisions not taken by the partners. We will deal with this point in a later publication.

References: Article 310-5 (1) and (2) of the law of 10 August 1915 on commercial companies as amended; #345-334* Partners’ Contribution in a Common Limited Partnership - CLP/SCS II, April 30, 2021, Bertrand Mariaux.


* Podcast #358

*YouTube Video 347* 

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' Share in the Profits and Losses in a CLP - CLP/SCS XIV - #357-346*

The common limited partnership (CLP - société en commandite simple) offers flexibility. Distributions and reimbursements to partners, and the conditions under which the CLP may request their return are governed by the constitutive documentation: 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 CLP is in proportion to her/his partnership interests.

References: Article 310-4 of the law of 10 August 1915 on commercial companies as amended; #344-333* What Is a Common Limited Partnership? - CLP / SCS I, April 29, 2021 Bertrand Mariaux.

* Podcast #357

*YouTube Video 346* 

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 a CLP - CLP/SCS XIII - #356-345*

One characteristic of the limited partner (LP) is that it is prohibited from carrying out acts of management (actes de gestion) vis-à-vis third parties in a common limited partnership (CLP - société en commandite simple) as previously stated.

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

However, it will be possible for a LP: 

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

2. to act as a proxy for a manager of the company (even a general partner); or

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

The LP may act in this way without incurring joint and several liability to third parties for the company's commitments, provided that the representative capacity in which he is acting is indicated.

References: Article 310-3, §6 of the law of 10 August 1915 on commercial companies as amended; #351-340* Restrictions to the Powers of Managers’ in the Partnership Agreement of a CLP - CLP / SCS VIII, May 10, 2021; #349-338* Liability of a Common Limited Partnership’s Managers (Excl. GPs) - CLP / SCS VI, May 6, 2021, Bertrand Mariaux.

*Podcast #356

*YouTube Video 345* 

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

Acts Expressly Authorised for the Limited Partner - CLP/SCS XII - #355-344*

What about the acts authorised for the limited partner (LP) which do not constitute acts of management (actes de gestion) and for which it is  jointly and severally liable to third parties, in a common limited partnership (CLP - société en commandite simple)? The law sheds light on a series of acts that do not fall within the category of sanctioned acts of management (actes de gestion).

The acts authorised for the LP and therefore not constituting acts of management (actes de gestion) sanctioned by law are the following:

1. the exercise of the prerogatives of a partner;

2. advice and guidance given to:

   1. the CLP;

   2. its affiliated entities; or

   3. their managers;

3. acts of control and supervision;

4. granting of: 

   1. loans;

   2. guarantees; or

   3. security interests; or

5. any other assistance to : 

   1. the company; or

   2. its affiliated entities; and

6. authorisations given to the managers in the cases provided for in the CLP's partnership agreement for acts which exceed their powers.

References: Article 310-3, §5 of the law of 10 August 1915 on commercial companies as amended; #354-343* Liability of the Limited Partner and Management Act - CLP/SCS XXI, May 17, 2021; #353-342* Conclusion by the LP of Transactions With the CLP Itself - CLP/SCS XX, May 12, 2021, Bertrand Mariaux.

*Podcast #355

*YouTube Video 344* 

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

Liability of the Limited Partner and Management Acts (actes de gestion) - CLP/SCS XI - #354-343*

In our first presentation on common limited partnerships (CLPs - sociétés en commandite simple), we mentioned that only general partners (GPs - associés commandités) are jointly and severally liable for the commitments of the CLP.

In a CLP, the limited partner (LP - associé commanditaire) is prohibited from carrying out management acts (actes de gestion) vis-à-vis third parties. 

However, if the LP were to engage in acts of management (actes de gestion) of the CLP vis-à-vis third parties, she/he would be held indefinitely and jointly and severally liable vis-à-vis third parties for all the partnership's commitments relating to the said acts of management. The LP would then be in breach of the law.

The LP would also be held indefinitely and jointly and severally liable vis-à-vis third parties if she/he has habitually acted in a management capacity (actes de gestion) in respect of partnership commitment(s) in which he did not take part.

A certain number of acts will not fall within the scope of management acts (actes de gestion) for which the LP incurs indefinite and joint liability vis-à-vis third parties. We will be discussing these next.

References: Article 310-3, paragraphs 3 and 4 of the law of 10 August 1915 on commercial companies as amended; #344-333* What Is a Common Limited Partnership? - CLP / SCS I, April 29, 2021 Bertrand Mariaux.

*Podcast #354

*YouTube Video 343* 

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

Conclusion by the LP of Transactions With the CLP Itself - CLP/SCS X - #353-342*

A limited partner (LP) may enter into any transaction with the common limited partnership (CLP) - société en commandite simple itself. This transaction will not affect the rank of any unsecured or privileged creditor of that same LP. The terms of the transaction with this LP may not create a prejudice to the status of the other LPs of the CLP. A transaction with a LP will not breach the principle of equal treatment of the LPs by the GP of the CLP. There is no conflict of interest in this case.

References: Article 310-3, §1 of the law of 10 August 1915 on commercial companies as amended; #345-334* Partners’ Contribution in a Common Limited Partnership - CLP/SCS II, April 30, 2021, Bertrand Mariaux.

*Podcast #353

*YouTube Video 342* 

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

Acts Exceeding the Corporate Purpose of the CLP - Management - CLP/SCS IX - #352-341*

The common limited partnership (CLP - société en commandite simple) will be bound by the acts performed by the managers even if these acts go beyond the partnership purpose. However, the partnership will not be bound, if it proves that the third party concerned by the said act: 

1. knew that this act exceeded the company's purpose; or that he 

2. could not have been unaware of it in the circumstances.

The above principle is not unique to the CLP.

References : Articles 310-2, §5 and 6 of the law of 10 August 1915 on commercial companies as amended; Restrictions to the Powers of Managers’ in the Partnership Agreement of a CLP #351-340* - CLP / SCS VIII, Bertrand Mariaux.

*Podcast #352

*YouTube Video 341* 

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

Restrictions to the Powers of Managers’ in the Partnership Agreement of a CLP - CLP/SCS VIII - #351-340*

As previously mentioned, the managers of a common limited partnership (CLP - société en commandite simple) may perform all acts in the name of the partnership that are necessary or useful for the fulfilment of the partnership's purpose. These provisions are not public policy (d’ordre public). When restricting the powers of the managers in the partnership agreement of a CLP, there are two elements to bear in mind.

1- Enforceability Against Third Parties of Partnership Provisions Restricting the Powers of the Managers of a CLP - Principle

If the partnership agreement were to restrict the powers of the managers, these provisions would be unenforceable against third parties, even if these restrictions were published.

2- Exception to the Unenforceability Against Third Parties of Partnership Provisions Restricting the Powers of the Managers of a CLP

However the partnership agreement may allow one or more managers to represent the company, alone or jointly. And this clause will be enforceable against third parties under the usual conditions provided for by the law of 19 December 2002 on the Trade and Companies Register (Title I, Chapter Vbis).

References: Article 310-2, §4 of the law of 10 August 1915 on commercial companies as amended; The Powers of the Managers of a Common Limited Partnership - CLP / SCS VII, May 7, 2021, Bertrand Mariaux.

*Podcast #351

*YouTube Video 340* 

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