Advantages and disadvantages of the LLC?
How does an LLC work?
Responsibility of the manager of SARL?
What are the characteristics of the LLC?
The limited liability company is the legal form that allows several partners to carry out a commercial activity.
The limited liability company (SARL) is a commercial company formed by partners who do not necessarily hold the status of trader. The liability of the partners within the framework of an LLC is limited to their capital contributions. Hybrid, the SARL is halfway between capital companies and partnerships. There are many advantages attributed to it, in particular a simplified and less restrictive mode of operation. The management of the SARL is entrusted to one or more managers; moral or physical person ; associated or not. The appointment of the manager, the duration of his mandate as well as his suspension are determined during the ordinary meeting of the partners who hold financial rights (dividends) within the company.
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What are the advantages and disadvantages of the LLC?
Absence of minimum capital, simplicity of incorporation formalities, there are many advantages attributed to the LLC.
The two major advantages of the SARL are:
Guaranteed security: taking part in the capital of a SARL means limiting the liability of each partner to his capital contribution and therefore only jeopardizing their initial outlay.
A fairly fluid sale of shares which allows fundraising by opening up the capital to outside investors.
If the SARL offers advantages to the partners, it also reserves disadvantages in particular:
The rigid legal framework to which it is subject. Indeed, any modification of the articles of association, capital increase or sale and transmission of shares must be validated by all the partners.
A limited number of associates: once the bar of 50 associates has been exceeded, there is a need to transform the SARL into an SA within 2 years, if necessary the company is dissolved.
What are the majority rules in an LLC?
Decision-making within an LLC is subject to the majority rule: 50% of the shares plus one vote in AGO (ordinary general meeting) and ¾ in AGE (ordinary general meeting)
Within the framework of an LLC, the manager alone can only take decisions relating to the normal management of the company. Concerning the partners of an LLC, apart from ordinary decisions, they are the only ones who can initiate statutory changes. The organization of shareholder votes within a limited liability company is divided as follows:
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Voting in AGO: any deliberation in general meeting requires the absolute majority of shares (51%).
Voting at the EGM: unless mentioned in the articles of association, extraordinary decisions are adopted by obtaining ¾ of the shares.
What is the role and responsibility of the manager of an LLC?
The managers are liable, individually or jointly, as the case may be, towards the company or towards third parties.
Running a limited liability company requires the appointment of one or more managers from among the partners or third parties.
Managing an LLC exposes the manager to taking on responsibility and risk. The risks incurred by the manager may be pecuniary in nature and therefore involve the civil liability of the manager or general risks related to his criminal liability.
The manager therefore engages his individual or joint liability towards the company as well as its third parties in the event that there is mismanagement, violation of the articles of association or even cases of infringement of the provisions of the law on limited liability companies (example: non-convocation of the assembly).
In the event of damage, the law allows the partners to seek compensation either individually or as a group to bring social action for liability against the managers. The latter may demand compensation for the said damage or the payment of damages.
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What is the co-management of a SARL?
Within a SARL, the missions relating to the management and administration of the company can be divided in such a way as to lighten the workload borne by the manager: this is called co-management. The role of co-managers is quite similar to that of the manager, with the only difference that co-management requires the appointment of at least two managers. The latter work in the name and on behalf of the company. The co-managers of a SARL are appointed and revoked by the partners, they can combine the function of manager and partner at the same time. The advantages of administration in the form of co-management are the continuity of management and the distribution of administration functions. However, appointing two or more managers to manage the company increases the risk of disagreement between co-managers, which can harm the internal organization of the SARL. From a legal point of view, co-management can be organized in two ways:
Joint co-management: This is an obligation of an agreement of the co-managers to make a decision. This mode is commonly called “joint signing”. Only the agreement of the co-managers can bind the company vis-à-vis third parties.
Separate (or disjoint) co-management: In this form, each manager is authorized to bind the company. Consequently, he engages his sole responsibility if the co-manager does not agree to a decision.
Read also: Business creation: Which legal form to choose?
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