On the 21st of June 2024, the Government introduced a draft bill n°1.094, which aims to modernise corporate law. It introduces a number of measures designed to enhance the security and flexibility of corporate law.
Standardisation of the mode of acquisition of legal personality
The draft bill aims to confer legal status on new Monegasque companies upon registration in the Répertoire du commerce et de l'industrie for commercial companies or the Registre spécial des sociétés civiles for civil companies.
This proposal would harmonize the rules on this matter for all types of companies. This would enhance legal certainty, particularly regarding the validity of acts concluded by a company in formation.
Individuals who would have undertaken acts on behalf of a company in formation would then be held jointly and severally liable for them without limit, unless the company, once duly formed and registered, assumes the obligations entered into.
Such commitments would then be considered as having been entered into by the company from the outset. The practical arrangements for such a takeover should be specified by sovereign ordinance.
Authorisation of contributions in sweat equity in Monegasque limited liability companies and public limited companies
The draft legislation aims to remove the prohibition on making contributions in sweat equity in Monegasque limited liability companies and public limited companies. This applies to instances where a shareholder provides resources, such as their work or knowledge, to the company in return for shares in the company.
The draft does not define "sweat equity" so as not to limit the types of contributions that may fall within its scope.
The draft also provides for certain measures to protect creditors against uncertain valuations of share capital. For example, S.A.R.L.s will be required to maintain a minimum share capital of €15,000, composed of contributions in cash and/or in kind (but not in sweat equity).
Extension of a company whose term has expired
As the law currently stands, a company is automatically dissolved when its term expires. The shareholders must be consulted on an extension, one year before the term's expiry and no decision can be taken on an extension once the term has expired.
The draft aims to introduce a procedure to regularise the extension of the company in Monaco, in case this consultation has not taken place.
The President of the Tribunal de première instance could, upon application within one year of the expiry of the company, authorise a consultation of the shareholders as a regularisation procedure. If the company is extended, all acts performed in accordance with the law and the articles of association prior to the extension would be deemed to have been duly performed by the extended company.
Establishment of preference shares
The draft aims to introduce the practice of preference shares, i.e. shares with rights that are different from those of ordinary shares. The Government intends to promote them and reassure economic operators about their validity by clarifying their regime.
The rights attached to the shares should be defined in the company's articles of association, with considerable scope for adaptation. For instance, preference shares could be created without voting rights or suspended upon the occurrence of a certain event. Another example would be the possibility of conferring enhanced profit-sharing rights.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
