Civil Society
Introduction
The civil society is a form of structure that was neglected, finding very little favor in the eyes of specialists in tax organization. A wrong idea in our point of view. To make a summary of what a civil society is, we say that it is primarily a written contract between two people wishing to share personal and real property. The real estate company (REC) is one of the few forms of civil society commonly used in the real estate field for property management.
More generally, civil society allows the management of movable property (that can move). We can easily imagine using civil society to share ownership of a stamp collection, cars, sharing the use of a plane. This helps to separate the ownership of several partners without separate statutes. To illustrate this, take the simple example of a plate of stamp collection. The value of this plate will be maximal if and only if it remains undivided. But then in this case, how to share the value of this plate between two people?
The civil society is a great tool for sharing, pooling, perform the time-sharing or separate the physical property of the legal ownership of one or more assets.
Constitution
It includes the following statements:
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Identity of the signatories of the act
Legal form and name;
Headquarters;
Corporate purpose;
Amount of subscribed capital and paid-up capital;
Duration of the company;
The establishment of a civil society does not necessarily require a notarial act. The publication in the RCS may be made by a firm of accountants. All statutory changes will require a new publication in the RCS.
Denomination
The CS may adopt such name:
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A particular denomination;
The designation of its corporate purpose;
The name must be strictly unique to the Grand Duchy of Luxembourg.
Corporate Purpose
The corporate purpose should reflect the civil nature of the activity and not commercial. The law does not define the nature of civilian activities. However, it precisely defines the commercial activities. As such, one can extrapolate consider that everything that is not commercial may be civil. Nevertheless, it will be necessary to appreciate case by case each situation. If a civil society carries out commercial transactions "scheduled and non-accessory", the company will be deemed commercial with all the implications of such a name in the legal and tax level (Corporate Income Tax - IS and Commercial Communal Tax - ICC)
Number of associates
To form a CS, a minimum of two people is required. No limit is however set for the maximum number of associated. Shareholders can be natural or legal persons (if authorized by their statutes to do such an operation).
No residency or citizenship is required. This means that a Luxembourg CS can be constituted by a non-resident or a company established in another country.
No trade capacity is required of partners, only the civil character is needed. This implies for example that minors can be associates in a civil society.
Social capital
No minimum capital is required. It is possible to subscribe a capital and the release of this capital on demand to associates according to the needs of society.
The legislator considers that the obligation of indefinite solidarity associated with passive sufficient enough in itself to cover the risks of future creditors.
Shares
The shares are in nominatives form only. They are not transferable in theory on the principle of building a partnership, what's a civil society. Notwithstanding, it is possible to specify this clause in the statutes and providing for the terms and conditions of an output associated with the benefit of a third. Note that from a tax point of view, the sale of part(s) of a real estate company is similar to a land transfer to be submitted to registration fees in proportion to the number of shares.
Management
Given the high Intuitu Personae nature of the society and therefore the importance of the will of the shareholders, the company may not have manager as specified in art. 1859 of the Civil Code.
Art. 1859. Failing special stipulations on the administration method, we follow the following rules:
1. The associates are supposed to have conferred the authority to administer one to another. What each does is valid even for the part of his associates, he took without their consent; except the right of these, or any of them, to oppose the transaction before it is concluded.
2. Each associate may use things belonging to the company, provided he uses them to their destination fixed by usage, and it does not serve against the interests of the society, or so to prevent his associates to use according to their law.
3. Each shareholder has the right to force its associates to do with him the expenses that are necessary for the preservation of things in the society.
4. One of the associates can’t make innovations on buildings dependent of the society, even when it would support the advantageous to the society, if the other associates don’t consent.
However, typically, the company is represented by a manager, accompanied by a co-manager.