Vietnam Tackles Global Minimum Tax Implications

2 février 2024

  • Vietnam
  • Entreprise
  • Investissements étrangers
  • Tax

Vietnam has embraced the global minimum tax (GMT) to harmonize its tax policies with global standards. While this new tax regime is anticipated to have certain adverse effects on foreign direct investment (FDI), the Vietnamese government is devising proactive measures to mitigate these repercussions and maintain the country’s appeal as an investment haven.

Key Ramifications of the GMT for Vietnam

The GMT mandates multinational corporations (MNCs) with consolidated revenue surpassing €750 million to pay a minimum tax rate of 15%, irrespective of the tax rate in the country where they operate. In Vietnam, this translates to the concept of a qualified domestic minimum top-up tax (QDMTT).

The QDMTT places an extra tax burden on foreign-invested enterprises (FIEs) that are part of an MNC, potentially deterring them from investing or expanding in Vietnam. This is particularly concerning for industries that heavily rely on tax incentives to attract FDI.

Vietnam’s Response: Investment Support Fund and Proactive Measures

In response to the anticipated negative impacts of the GMT, the Vietnamese government has established an investment support fund (Fund) to incentivize investments in targeted sectors. The Fund is primarily funded by proceeds from the State Budget generated by the GMT.

Eligible enterprises for the Fund are those engaged in high-tech product manufacturing, high-tech enterprises, high-tech application projects, and enterprises with investment projects in research and development centers. Eligibility is based on capital size, annual revenue, industry, or technology utilized.

Eligible taxpayers can receive cash subsidies for five specific expense categories:

  1. Human resource training and development
  2. Research and development expenses
  3. Fixed asset investments
  4. High-tech manufacturing expenses
  5. Social infrastructure systems

To qualify for Fund benefits, eligible taxpayers must submit an application dossier to the Fund Office in Hanoi between August 15th and 30th of the year following the incurred Supported Expenses. Each Supported Expense category will have a distinct reimbursement ratio, and support payments will be contingent on the actual expenses incurred by eligible taxpayers.

In addition to the Fund, the Vietnamese government is also implementing proactive measures to address the concerns of foreign investors. These measures include:

  1. Focusing on targeted industries with high growth potential that align with Vietnam’s strategic development goals
  2. Utilizing the additional revenue collected from top-up tax to enhance infrastructure and labor quality
  3. Considering cash grants for long-term qualified investments in high-tech industries

Conclusion

The introduction of the GMT poses challenges for Vietnam in attracting FDI. However, the government’s establishment of the investment support fund and proactive measures demonstrates its commitment to safeguarding the country’s competitiveness as an investment destination. By combining targeted support with infrastructure improvements and incentives for specific industries, Vietnam can mitigate the negative impacts of the GMT and continue to attract foreign investors.

Summary:

The heavily amended PRC Company Law will take effect on July 1, 2024. Please find below a summary of some of the important novelties embodied by this amended Company Law, which may have a significant impact on the rights and duties of the shareholders and management of a limited liability company (“LLC”).

The businesses active in the PRC may be interested in carefully reviewing their corporate documents (including the Articles of Association) in light of the amended Company Law and deciding necessary adaptive measures for compliance/optimization purposes during the transition period leading to the effective date of the said amended Company law.

Capital contribution.

The amended Company Law provides that the subscribed capital of an LLC shall be paid up as per its Articles of Association within a time period up to 5 years from its incorporation (NB: The previous law does not set a time limit for the capital contribution.). This requirement will retroactively apply to the companies incorporated prior to July 1st, 2024.

Despite the foregoing, a creditor or the company shall be entitled to request the shareholder(s) concerned to accelerate its/their capital contribution ahead of the due date for capital contribution should the company be unable to settle due debt(s) with its own assets.

The equity and credit may be used for the capital contribution.

Duties of directors/senior managers

The directors shall bear the obligation to form the “liquidation team,” which shall proceed with the liquidation within 15 days of the occurrence of a number of statutory circumstances substantiated in Article 229 of the Company Law. The directors shall be held liable for losses incurred by the company or creditor(s) arising from their failure to fulfill the above liquidation obligation on time.

The director(s)/senior manager(s) shall be held liable (along with the company itself) for compensating others should they cause any damages to the latter due to their intentional acts or gross negligence in the course of performing their duties.

The board of directors of an LLC shall regularly check the status of capital contributions by the shareholders. It shall cause the company to issue written reminders to the shareholder(s) failing to make capital contributions on time. Should the shareholder fail to honor its subscribed capital contribution despite the reminder, subject to a specific board resolution and a written notification with immediate effect, the company may declare that the shareholder is disqualified from making the capital contribution.

Corporate governance

An LLC may set up an “audit commission” composed of directors to exercise the function of supervisor or supervisors’ committee as per its Articles of Association. In such cases, the company may no longer need to set up separate supervisors’ committees or appoint supervisors.

However, the board of directors of an LLC having more than 300 employees shall have employees’ representative(s) elected through the democratic process unless the same LLC has a Supervisors’ Committee in place and such Committee already has the employees’ representative(s).

Egypt, with its rich history and vibrant economy, presents promising opportunities for foreign investors looking to expand their business horizons. However, entering a new market can be a complex endeavor, and understanding the intricacies of doing business in Egypt is essential for success. In this article, we will delve deeper into the various aspects of establishing and managing a company in Egypt, providing valuable insights and guidance for prospective investors.

Conducting Market Research

Before venturing into any new market, conducting thorough market research is crucial. Egypt is a diverse country with a dynamic market, and understanding the local nuances, consumer behavior, and market trends is essential. It is advisable for foreign investors to consider setting up an initial representative office, allowing them to conduct in-depth market research without fully committing to commercial operations. A representative office can employ local staff to gather market insights and report back to the parent company, enabling informed decision-making for future business initiatives. This representative office may not engage in any commercial activities and may not invoice. Hence, it is not subject to any corporate tax but will be subject to salary tax for its employees and withholding tax.

Choosing the Right Business Structure

When establishing a legal entity in Egypt, foreign investors have several options to choose from. The most common business structures for foreign direct investment are a One Person Company (OPC), Limited Liability Companies (LLCs) and Joint Stock Companies (SAEs) as 100% of the shares can be wholly owned by foreigners. The choice of structure depends on the nature of the business and the specific objectives of the foreign company. Alternatively, for specific projects or contracts with defined purposes, establishing a branch office can be a viable option.

The Company Establishment Process

Setting up a company in Egypt involves navigating through certain legal procedures. The Egyptian government has implemented measures to facilitate foreign investments and ensure a favorable business environment. Foreign investors can own 100% of their businesses in most sectors, and the minimum requirement for establishing a company is typically having at least one shareholder. In the case of LLCs, a minimum of two partners is required while in case of SAEs a minimum of 3 shareholders is required. It is important to note that a foreign director can be appointed, except for activities that require an import license, which necessitates an Egyptian partner and director.

Import and Distribution Considerations

For foreign entities planning to import and distribute goods in Egypt, specific considerations come into play. Obtaining an import license requires meeting certain criteria, including demonstrating a minimum turnover, meeting nominal capital criteria, and having an Egyptian partner holding at least 51% of the shares. These regulations aim to ensure local participation and collaboration in import-oriented activities.

Timelines and Administrative Processes

Understanding the timelines and administrative processes involved in establishing a company in Egypt is crucial for efficient planning.
While, foreign direct investors may establish the legal entity in one working day through GAFI as the commercial registry and tax card will be issued on the same day. However, the process may take up to six months, it can vary depending on various factors as follows:

  • a significant factor is the legalization of documents, which may require coordination with embassies and consulates for the legalization of documents such as power of attorney, corporate documents, and their translated versions;
  • opening a bank account for the company's capital needs to deliver all corporate documents related to the ultimate business owner (UBO) which may potentially cause delays.

Efficient Branch or Subsidiary Management

Once the company is operational, efficient branch management is vital for sustained success  as clearly defining the director’s powers through the bylaws or separate agreements is recommended. Regular communication with local management, employing competent accountants, and maintaining oversight of operations are essential to maintain control and address any issues promptly.

Joint Ventures and Board Representation

In cases where foreign investors collaborate with local partners through joint ventures, establishing a board of directors plays a crucial role. The board oversees company management and decision-making processes. It is advisable for foreign shareholders to regulate their relations with their local partners by virtue of a shareholder agreement to ensure their representation on the board, allowing them to actively participate and safeguard their interests. Maintaining open lines of communication and regular meetings are fundamental for staying informed about the company’s performance.

Conclusion

Expanding into the Egyptian market holds immense potential for foreign investors. However, navigating the business landscape requires careful planning, market research, and adherence to legal procedures. By understanding the nuances of establishing and managing a company in Egypt, foreign investors can unlock new business opportunities and forge successful ventures in this dynamic market. With the right approach and strategic decisions, Egypt can prove to be a rewarding destination for those seeking growth and expansion

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Accepting the position of director (administrator or CEO) in a Spanish company entails increasing risks. Indeed, the Supreme Court – ruling by ruling – is outlining and interpreting the precepts of the Capital Companies Act (LSC) with an increasingly rigorous and demanding approach when it comes to delimiting the framework of directors’ liability.

Of course, the content of Article 43.1 b) of the General Tax Law is not new at all when it lays the foundations for the subsidiary liability of directors for debts owed to the Tax Agency:

The following persons or entities shall be subsidiarily liable for the tax debt:

b) The de facto or de jure administrators of those legal entities that have ceased their activities, for the accrued tax obligations of these that are pending at the time of the cessation, provided that they have not done what is necessary for their payment or have adopted agreements or taken measures causing the non-payment.

It could be deduced from the reading of the transcribed provision that the subsidiary liability of the directors who, at the time of the cessation of the corporate activity, effectively held the position of director, was established; but that the liability would not reach those directors who had been so in the past but were no longer directors at the time when the company had ceased to act in the legal and economic traffic, for the tax debts pending at that time.

Well, the Supreme Court (Third Chamber) in its recent judgment of March 7th, 2023, hammers one more nail in the coffin of the liability of the directors.

The case that was the subject of the ruling consisted of determining the subsidiary liability to the Tax Agency of a director whose position had expired (due to the expiration of the statutory term) and who had called a general meeting for the appointment of new members of the administrative body of the company.

The Supreme Court understands (and establishes a doctrine for the purposes of appeal) that the director with an expired position does not « exhaust » his obligations with the call of the meeting in question, but must also, pursuant to art. 365 LSC call another general meeting to adopt the resolution to file for insolvency or dissolution due to the existence of the causes of art. 363 LSC a) (cessation of activity) and d) (paralysis of the corporate bodies) as well as, if applicable, the request for judicial dissolution in his capacity as an interested party (art. 366.1 LSC).

The reproachable conduct according to the Supreme Court (which triggers the subsidiary liability) consists in the fact that, facing the cessation of the activity of the company, the only thing he did was to call a meeting for the appointment of a new director and therefore « it did not carry out the necessary acts to be able to face the payment of the tax debts, thus meeting the subjective element necessary to be able to declare its liability ».

The court ruling insists that the condition of director is not lost with the exhaustion of the mandate due to the expiration of the position since the mercantile and fiscal obligations persist; and that the call of a meeting to appoint a new director is not enough to understand that such meeting, once held, deprives the director with expired position of the condition of director, when there is a cause of dissolution that would have obliged to call another meeting with another object and another agenda to agree on the dissolution of the inactive company.

But what is remarkable and striking in this case is that the meeting called by the director (with expired position) for the appointment of new a new director was held in June 2012, the resolutions were made public on March 1st, 2013, they were registered in the commercial registry in July of the same year and the judgment expressly states that the cessation of corporate activity occurred in April 2013 (i.e. when the meeting for the appointment of new administrators had already been held, June 2012, and when the appointment of the new director had already been made public, March 1st, 2013).

The court resolution reads as follows:

« Given the date on which the cessation of the business activity was established by the judgment a quo, April 2013, the appellant should still be considered as a director of the company in that capacity, his conduct should be considered negligent for the purposes of inclusion in the cause of subsidiary liability of art. 43.1.b) LGT ». 

The claimant director argued that Art. 222 LSC and Art. 145.1 RRM state that the appointment of directors will expire, among other cases, when the term has expired and the meeting for the appointment of a new director has been held (or the term for its holding has elapsed) that is to resolve on the approval of the accounts of the previous year. And he explained that on top of that, he had fulfilled his obligations as director calling for a general shareholders meeting where new directors were appointed 9 months before the company ceased its activities. Therefore, he no longer was a “director” on April 2103.

Despite of that argument the Supreme Court insists that, whether or not the position has expired, said expiration does not exhaust or extinguish his responsibilities as director, which must be interpreted extensively: it is not enough for him to call a meeting for the appointment of new directors, but he must act to dissolve the company or file for insolvency proceedings, as if the position had full and complete validity. 

Thus, after this strong ruling, the directors of Spanish companies, in the event of termination of the activity, even if their position has expired, must know that their liability (and specifically the subsidiary liability for tax debts) will only be released if they call a meeting to dissolve the company, if the meeting does not adopt such resolution, if they request the court for the judicial dissolution or if they file voluntary insolvency proceedings.

To summarize, they will be liable if they do not act in the same way as if their position were still in full force and effect. As we said above, it is necessary to think very much about accepting positions of director of Spanish companies.

En Algérie, les administrateurs peuvent être exposés à des risques de responsabilité civile pour infraction à la loi, violation des statuts de la société et mauvaise gestion. Les principales sources de cette responsabilité sont le droit des sociétés, la législation du travail, le droit de l’environnement, le droit fiscal et le droit des faillites.

Le droit des sociétés régit les droits et les obligations des administrateurs à l’égard de la société et de ses actionnaires. Les administrateurs doivent agir dans le cadre des pouvoirs qui leur sont conférés par les statuts de la société. S’ils outrepassent cette autorité ou manquent à leurs devoirs, ils peuvent être tenus personnellement responsables de dédommager financièrement la société.

La législation sur l’emploi régit les droits et les obligations des administrateurs envers les employés de la société. Les administrateurs doivent se conformer au droit du travail et à la réglementation de la sécurité sociale en Algérie. S’ils ne le font pas, ils peuvent être tenus personnellement responsables des dommages causés aux employés ou aux autorités de sécurité sociale.

En fonction de la nature et de la gravité de l’infraction, les administrateurs peuvent faire l’objet de sanctions civiles, administratives ou pénales, y compris des amendes, des peines d’emprisonnement ou des déchéances.

Qui peut intenter une action en responsabilité civile contre les administrateurs en Algérie?

En Algérie, les administrateurs peuvent faire l’objet d’actions en responsabilité civile de la part de différentes parties. La société elle-même peut poursuivre les administrateurs pour infraction à la loi, violation des statuts de la société et mauvaise gestion. Les actionnaires peuvent également poursuivre les administrateurs pour tout dommage causé à leurs intérêts par la faute des administrateurs. Les tiers, tels que les créanciers, les employés ou les clients, peuvent poursuivre les administrateurs pour tout préjudice causé par leurs actions ou omissions qui sont séparables de leur qualité de membres du conseil d’administration.

Par exemple, les prêteurs peuvent se retourner contre les actifs et les biens d’un administrateur si ce dernier a fourni une garantie personnelle pour les dettes de la société. Les actionnaires peuvent poursuivre les administrateurs pour manquement à leurs obligations fiduciaires, par exemple en cas de mauvaise foi, d’intérêt personnel ou de négligence. Les employés peuvent poursuivre les administrateurs pour licenciement abusif, discrimination ou harcèlement. Les clients peuvent poursuivre les administrateurs pour rupture de contrat, fausse déclaration ou produits défectueux. Les créanciers peuvent poursuivre les administrateurs pour opérations frauduleuses, opérations illicites ou fautes professionnelles.

Les risques de responsabilité pénale des administrateurs en Algérie

Les administrateurs peuvent faire l’objet de sanctions pénales pour diverses infractions liées au fonctionnement de l’entreprise et à sa gestion et ses activités quotidiennes. En vertu du droit des sociétés, les administrateurs peuvent être pénalement responsables de fraude, d’abus de biens sociaux, de fausse comptabilité, de faillite ou d’insolvabilité. Conformément à la législation algérienne sur l’emploi, les administrateurs peuvent être pénalement responsables en cas de violation du droit du travail, de la réglementation de la sécurité sociale, des règles de santé et de sécurité ou des conventions collectives. Des sanctions pénales peuvent également s’appliquer aux administrateurs en cas de violation des lois sur l’environnement, de violation des lois fiscales, d’évasion fiscale ou de falsification de documents fiscaux. Les sanctions pénales peuvent inclure des amendes, des peines d’emprisonnement ou l’interdiction d’exercer.

Qui peut engager des poursuites pénales à l’encontre des administrateurs?

Les poursuites pénales contre les administrateurs en Algérie peuvent être engagées par différentes parties. Le procureur de la République peut engager des poursuites pénales contre les dirigeants pour toute infraction relevant de sa compétence. Il peut agir de sa propre initiative ou sur plainte d’une victime ou d’un tiers. La société elle-même peut – par l’intermédiaire de son représentant légal ou de son liquidateur, selon le cas – engager des poursuites pénales contre les administrateurs pour des infractions portant atteinte à ses intérêts, telles que la fraude, l’abus de biens sociaux ou la fausse comptabilité. Les actionnaires peuvent également engager des poursuites pénales contre les administrateurs pour des infractions portant atteinte à leurs intérêts, telles que le manquement à une obligation fiduciaire, la négligence ou la mauvaise gestion. Dans une telle configuration, les actionnaires ne peuvent agir qu’au nom de la société et réclamer la réparation du préjudice subi par la société, et non le leur.

Quels sont les délais de prescription pour les affaires civiles en Algérie ? Pour les affaires pénales?

Les délais de prescription pour les affaires civiles en Algérie varient en fonction du type de demande et des parties impliquées. Les actions civiles sont généralement soumises à un délai de prescription de trois ans à compter de la date à laquelle le demandeur a eu connaissance ou aurait dû avoir connaissance du dommage et de son auteur. Il existe cependant quelques exceptions à cette règle générale:

  • les actions pour préjudice corporel ou décès injustifié sont soumises à un délai de prescription de dix ans à compter de la date du préjudice ou du décès;
  • les actions pour rupture de contrat sont soumises à un délai de prescription de cinq ans à compter de la date de la rupture ou de la résiliation;
  • les actions en responsabilité professionnelle se prescrivent par deux ans à compter de la date à laquelle le demandeur a eu connaissance ou aurait dû avoir connaissance du dommage et de son auteur, mais pas plus de dix ans à compter de la date à laquelle le service professionnel a été rendu;
  • les actions en diffamation sont soumises à un délai de prescription de trois mois à compter de la date à laquelle la déclaration diffamatoire a été publiée ou diffusée.

Les délais de prescription peuvent être interrompus par certains événements, tels que l’introduction d’une action en justice, l’envoi d’une mise en demeure, la reconnaissance d’une dette ou un paiement.

En revanche, dans les affaires pénales, le délai de prescription dépend du type d’infraction.

Quelles sont les couvertures d’assurance habituelles en matière de responsabilité des administrateurs?

L’assurance responsabilité civile des administrateurs et des dirigeants (D&O) couvre les administrateurs actuels, futurs et anciens, ainsi que les administrateurs non exécutifs, les affiliés et les dirigeants d’une entreprise. Les scénarios de risque comprennent la responsabilité des prospectus, la responsabilité des fonds de pension et la responsabilité des pratiques d’emploi. L’assurance D&O protège les administrateurs et les dirigeants ou leur entreprise ou organisation s’ils sont poursuivis en justice (la plupart des polices excluent la fraude et les délits). L’assurance D&O peut offrir trois types de couverture: (1) pour la responsabilité personnelle des administrateurs et des dirigeants; (2) pour le remboursement par l’entreprise des sommes versées aux administrateurs et aux dirigeants; (3) pour la responsabilité directe de l’entreprise.

La responsabilité potentielle d’une société holding contrôlant la nomination des administrateurs d’une filiale algérienne pour les actions de ces administrateurs

Les administrateurs de sociétés d’investissement ou de holding ne sont généralement pas considérés comme des administrateurs de fait ou des administrateurs fictifs d’entreprises communes ou de filiales, à moins que leurs actions n’aillent au-delà de ce qui peut raisonnablement être considéré comme approprié pour leur position d’administrateur de la société d’investissement ou de holding.

The limited liability company – in Italian: «Società a Responsabilità Limitata» or «S.r.l.» only – is the most popular Italian company type, mainly for the following reasons:

  • a little registered capital is enough;
  • the quota holders’ liability is limited to the pro-quota subscribed capital;
  • it is a «low-cost» company, also easy to be managed.

In Italy, the S.r.l. differs from joint-stock companies as the participation in the capital is represented by «intangible» quota(s), which cannot circulate as stocks. This is why the members of an S.R.L. are called «quota holders» and not «shareholders».

Similar companies in other countries are L.L.C. in the U.S., L.T.C. in the U.K., G.m.b.H. in Germany; S.a.r.l. in France; S.L. in Spain. 

S.r.l. in a nutshell

  • Company name: Società a responsabilità limitata – S.r.l.
  • Minimum registered capital: EUR 10.000,00 (of which only EUR 2.500,00 must be paid at incorporation). The minimum corporate capital can be as low as EUR 1,00, but when the capital is lower than EUR 10.000,00 the company will be a “simplified S.R.L.”, subject to certain special rules and limitations (see below)
  • Minimum number of quota holders: One
  • Maximum number of quota holders: None
  • Nationality of the quota holders: No limits (with some rare exceptions that must be verified on a case-by-case basis)
  • Nationality of the directors: No limits (with some rare exceptions that must be verified on a case-by-case basis)
  • Limited liability: Yes
  • Auditing: Required only if (i) the company has more than 50 employees or exceeds € 4,400,000 in assets or € 8,800,000 in turnover for two consecutive years; (ii) is obliged to prepare consolidated financial statements; or (iii) controls other companies that are required to have statutory audits.

The list of info and documents needed

To incorporate an S.r.l., the information needed is as follows:

  • the name of the new company

In Italy, there are no special limitations in identifying the company name.

  • the personal data of the quota holders and the registered capital subscribed.

In the case of a sole quota holder, special rules and restrictions apply. For example, the corporate capital shall be fully paid, and all the company documents and correspondence shall point out that the corporate capital belongs to a sole quota holder; otherwise, the sole quota holder shall be jointly liable with the company for its debts.

Please note that on the day of the incorporation of the S.r.l., each quota holder must deposit in a bank account an amount equal to at least 25% of his/her/its quota of corporate capital. The unpaid capital shall be paid within 30 days if requested by the director(s). The bank deposit can be replaced by an insurance policy or a bank guarantee (under certain requirements); or by a contribution in kind. However, in this case, the law requires an independent expert valuation and some other formalities.

In case the quota holder is a company, some additional documents may be required (e.g., the resolution adopted by the shareholders’ meeting) which shall be translated into Italian (certified translation), notarized, and apostilled or legalized, depending on the case.

  • the personal data of the director(s)

The director(s) can also be foreign nationals, but they shall hold an Italian fiscal identification number («codice fiscale»), which can be obtained from any local tax office («Agenzia delle Entrate»).

The first director(s) are appointed in the deed of incorporation.

  • the address of the registered office

The office may be also a «virtual» one, for instance, located at the office of a law or accounting firm;

  • the name and personal details of the first statutory auditors, if necessary

The “Simplified” S.r.l.

As mentioned above, when the partners set up an S.r.l. with a share capital of less than € 10,000, it will be an “S.r.l. Semplificata” (simplified S.r.l.).

Compared to the ordinary S.r.l., it enjoys some economic benefits during the incorporation phase (i.e.: exemption from paying stamp duty and secretarial fees, exemption from paying notary’s fees), but also some rather significant limitations, because the bylaws must be drafted by a standard model, and registered capital may be paid only in cash.

Should the shareholders decide to increase the registered capital to a value equal to or greater than € 10,000, they will be required to transform the company into an ‘ordinary’ S.r.l. (through a notarised public deed), thus losing the limitations seen above and thus, for example, being able to amend the bylaws.

The management of a simplified S.r.l., on the other hand, does not enjoy any benefits compared to the ordinary S.r.l., and this is the main reason why it has not been very successful in Italy. Indeed, the small registered capital may constitute a limitation to obtaining bank financing or requesting credit from suppliers.

Since these disadvantages are not balanced by any advantages or tax benefit in the management of a simplified S.r.l., the ordinary S.r.l. seems preferable, unless the founders have limited resources at the incorporation stage and can exclude from the outset that the new company will need access to bank financing or enter into particular corporate operations.

How to incorporate an S.r.l.

The deed of incorporation and the by-laws shall be executed before a Public Notary.

The deed of incorporation is a quite standard document that contains all the information provided by the law to set up an S.r.l.

The by-laws contain the company governance rules and can always be amended through a resolution of the quota holders’ meeting. The founding quota holders are free – except in the case of a simplified S.r.l. – to adapt the bylaws to their needs, establishing, for example, the manner and timing of the payment of share capital, the type of governance (sole director or board of directors), the powers and duration of the company’s administrative body, the procedures for the transfer of company shares, the majorities required for decisions by the quota holders’ meeting, the procedures and conditions for the withdrawal of quota holders, the conditions for the withdrawal, etc.

After the incorporation, a copy of the deed of incorporation and the by-laws shall be filed at the Italian Companies’ Register within 20 days. Until then, any person acting on behalf of the company will be personally liable.

Where is it more suitable to set up a new limited liability company in Europe?

I will deal in this article with two countries I know well (Spain and The Netherlands) and focus on the minimum capital requested and the online incorporation of a limited liability company, sharing some thoughts and my takeaways.

Spain: the “Create and Grow Law”

In Spain, the Business Creation and Growth Law 18/2022, of September 28, 2022 (related to aspects of incorporation of companies), known as the “Create and Grow Law”, was approved last September within the framework of the Recovery, Transformation and Resilience Plan of the Spanish government. This plan channels European funds to alleviate the consequences of the Covid-19 crisis. This law is an initiative that reflects this flexibility and, as its explanatory statement indicates, aims to encourage the creation and growth of companies, in order to contribute to the economic growth of the country and its long-term resilience. Spain thus aligns itself with other neighboring countries, where there is no minimum capital to set up a company of this type.

Is this new law interesting for foreign investors or companies looking to establish themselves in Spain?

It is certainly very interesting. The fact that the Spanish legislator abandons this reference figure of 3,000 euros is very favorable for medium-large companies willing to have a permanent establishment in Spain Nevertheless, as long as the capital does not reach the figure of €3,000, the following rules will be applied, which are intended to protect the interests of creditors or third parties that contract with the company:  (i) 20% of the profit must be allocated to the legal reserve until said reserve together with the social capital reach the figure of €3,000 (the legislator seeks that the SLs constituted in this way do not remain « undercapitalized »), and (ii) as a safeguard clause for creditors of the company, in the event of voluntary or forced liquidation of the company, if the company’s assets are insufficient to meet its obligations of payment, the partners will be jointly and severally liable for the difference between the subscribed capital and the figure of 3,000 euros.

Online incorporation of a company in Spain

The « CIRCE system » (procedure dependent on the Ministry of Industry, Commerce and Tourism that allows the start of the process of creating companies « over the Internet » ) entails an electronic procedure through agreements and communications with all the organizations and administrations that intervene in the process of incorporating companies.

The entrepreneur will only have to complete the Single Electronic Document (DUE) that includes a multitude of forms and CIRCE will automatically carry out all the necessary procedures to establish the company, communicating with all the organizations involved (Tax Agency, Social Security, Mercantile Registry, Notary, etc.). There is an obligation to review and sign the DUE before sending it. This system is not active yet, but it is expected that it will be in place when other complementary laws that support this digital process are approved by the Spanish Legislator which is necessary for the well-functioning of the system.

The Netherlands: The Flex BV law

The Flex BV law came into force on October 4, 2011. This law has given a lot of flexibility to the incorporation of new limited liability companies which has been very favorable for international companies working with different product lines, allowing to have one company for every product or service offered.

The Flex BV law has, among others, the following characteristics:

  • the creation of a Limited Liability Company is flexible, easy to establish and without many costs;
  • it only requires one shareholder who must be registered with the Dutch Trade Register. The minimum share capital for setting it up is 1 euro. The liability of the shareholder is limited to the amount of money he has invested in the company. Being a limited liability company, the BV is liable for any debts, not the director or shareholder as private individuals, except in case of mismanagement or fraud. The company requires at least one director, and the shareholders can fill this position. The company registration procedure is quite fast due to the minimum documentation required.

Online incorporation of a company in the Netherlands

 In the case of the Netherlands, in the Explanatory Memorandum of the bill implementing the Directive (EU) 2019/1151 of the European Parliament and of the Council of 20 June 2019 amending Directive (EU) 2017/1132 with regard to the use of digital instruments, it is proposed that incorporation of a BV electronically is only possible if payment on the shares takes place in cash, in order to initially limit the online formation of companies to simple situations. If it turns out that online formation works well, it can be considered whether it is useful to extend this possibility to situations in which contributions are made in a manner other than in money. Incorporation by natural persons using a model deed of incorporation must be possible within five working days from the date on which the notary has received all documents and information from the applicant or the date of payment of the share capital.

The incorporation of a BV digitally is postponed to the summer of 2023 since the House Committee for Justice and Security has decided that the act must be discussed in plenary.

The so called DOBV-system (Digital establishment of a BV), will entail a change in a number of work processes in the notaries in The Netherlands but for the Chamber of Commerce, no major changes will follow because the civil-law notary will supply the registration documents digitally to the Chamber of Commerce. Consequences the civil-law notary is the one who will have to offer a certain digital form of service, which citizens and companies will be able to use.

What positive and negative aspects can be highlighted?

Positives aspects:

  • it is very positive that through this new standard, many investors or international companies from both countries will be encouraged to create new SPVs, as the minimum capital is considered by many companies as a “barrier to entry”;
  • it will expedite the procedures for incorporating companies, essential vehicles for channeling the economic activities of businessmen in their transcendental task of creating wealth and employment, without notary and registration costs;
  • it will create a healthy competition between all the Notaries in Spain and between the notaries of Spain and the Netherlands. The Dutch notary bond expects that a further digitization of the notarial process could be achieved first in the real estate chain and subsequently also in business practice. It is important that the business market may be capable to respond quickly to this demand;
  • the share capital of a company will serve its partners to have the necessary funds with which to start their project, acquire the goods and resources necessary to start the economic activity and consolidate a long-term project (such as, for example, to buy the goods and services necessary to start up activities or to hire employees);
  • it creates business growth through financing alternatives to bank financing, such as crowdfunding or participatory financing, collective investment and venture capital.

Negatives aspects:

  • to search financing externally to start the company’s activity, which will also surely have a cost (in the form of loans, for example, with their corresponding interest rate). Additionally, in the short or medium term the company must have a capital increase to normalize their patrimonial situation and solve this evident « underfinancing » of own resources, with which, this will also suppose an additional cost in the form of notary and registry fees that must be faced in the medium or long term after the incorporation;
  • the possibility of establishing a limited liability company with only 1 euro of share capital can facilitate the creation of fictitious legal entities by people who do not wish to carry out a real economic activity, but only use the companies as a suitable instrument for the development of legal or illegal activities;
  • additionally, it also implies a clear risk for the legal certainty and the responsibility of those companies in large contracts with third parties, leaving a limit to their minimum liability while their businesses are millionaires;
  • the online constitution system can be rigid and can also generate management and processing problems if the interested parties have not been properly advised and guided by the professionals involved before arriving at the Notary. Additionally, CIRCE’s telematic systems must function properly in order to correctly serve all those interested in the constitution of a capital company;
  • there are new requirements for companies related to anti-laundry controls, for instance, to include relevant information on invoices and payments to suppliers in their annual reports and on their corporate website.

Conclusions

Although it may apparently imply a boom in the creation of limited liability companies due to the ease of incorporation, there is still much to be done at the level of corporate law at the national level and collaboration between notaries of both countries.

Spain is, with the entering into force of the Law Creation and Growth, considered among the most advanced countries in facilitating the creation of companies, reducing regulatory obstacles and favoring business restructuring and viability. The final decision will depend on the specific needs of the business, access to finance and tax regime, among others.

Additionally, to the incorporation flexibilities, we must not forget a couple of important aspects for the shareholders and directors to be aware of:

  • a company needs to be managed as well and we need to be aware of the treasury, labor or other obligations of the companies already incorporated, even if they are non-active, they must continue to publish the annual accounts and complying with all governance requirements and formal public register notifications;
  • the responsibility of the shareholders is also important to consider. A shareholder who has direct involvement in the management, may face liability in case of bankruptcy, also in the country where the subsidiary is located. As mentioned above, in Spain, in the event of voluntary or forced liquidation of the company, if the company’s assets are insufficient to meet its obligations of payment, the partners will be jointly and severally liable for the difference between the subscribed capital and the figure of 3,000 euros;
  • the last important aspect when you are doing business mainly in Europe is to consider restructuring your business or consider other forms of incorporation of companies, depending of the business model that you have opted to, for instance the use of the Societas Europaea (SE) which has the possibility to set up a holding company or a joint subsidiary together and to transfer the seat of the company without winding up the entity. The disadvantage is that you need €120,000 starting capital to set up and to have a minimum of 2 companies governed by the laws of different Member States. Other forms of incorporation are the European Cooperative Society (SCE) and the European Economic Interest Grouping (EEIG).

If you need additional information or you are planning to incorporate a limited liability company in Spain or in The Netherlands, get in touch to know more about your options and the right corporate advice for your business.

Dans quelles conditions le dirigeant d’une société peut-il être révoqué en France?

Cela dépend de la forme de la société.

Prenons les formes de sociétés commerciales les plus fréquentes.

Le gérant d’une société à responsabilité limitée ne peut être révoqué que pour juste motif, c’est-à-dire s’il a commis une faute, ou si sa révocation est nécessaire à la protection de l’intérêt social.

Dans une société anonyme, les membres du conseil d’administration et le président du conseil d’administration peuvent être révoqués « ad nutum », c’est-à-dire à tout moment et sans avoir à justifier d’un motif. Il est interdit de déroger à cette règle. Le directeur général, en revanche, ne peut être révoqué que pour juste motif.

Dans les sociétés par actions simplifiées, une forme sociale créée en 1994, les dirigeant sont en principe révocable « ad nutum », mais les statuts peuvent y déroger, et prévoir que le dirigeant ne pourra être révoqué que pour juste motif.

Une décision récente de la Cour de cassation, c’est-à-dire de la plus haute juridiction judiciaire en France, retient l’attention.

Elle concerne les sociétés par actions simplifiées (« SAS »), la forme sociale qui a le plus de succès en France : une société nouvellement créée sur deux est une SAS.

Dans les SAS, ce sont les statuts qui fixent les conditions dans lesquelles la société est dirigée, et notamment les conditions de révocation du dirigeant.

La décision de la Cour de cassation du 12 octobre 2022 (N°21-15.382) pose un principe: si les actes extra-statutaires peuvent compléter les statuts, ils ne peuvent pas y déroger.

Dans cette affaire, les statuts d’une SAS prévoyaient que le directeur général pouvait être révoqué à tout moment, et sans qu’aucun motif soit nécessaire, par décision des associés ou de l’associé unique, et que la révocation du directeur général ne lui donnerait droit à aucune indemnité.

Un directeur général avait été nommé par l’associé unique. Le même jour, l’associé unique avait adressé à ce directeur général un courrier lui précisant qu’en cas de révocation de ses fonctions sans juste motif, il bénéficierait d’une indemnité forfaitaire égale à six mois de sa rémunération.

Quelques années plus tard, la société a révoqué le directeur général, qui a exigé le paiement de son indemnité forfaitaire. Face au refus de la société de lui payer, l’ancien directeur général l’a assigné en paiement de l’indemnité.

La Cour d’appel, puis la Cour de cassation ont donné raison à la société: l’ancien dirigeant n’avait pas droit à l’indemnité. Pour la Cour de cassation, les statuts fixent les modalités de révocation du directeur général, et ce sont les statuts qui priment. Si les actes extra-statutaires peuvent compléter ces statuts, ils ne peuvent y déroger. Et même si l’acte extra-statutaire émane de l’associé unique, ou si tous les associés y ont consenti.

En conclusion

Il faut être prudent et bien analyser les statuts et les actes extra-statutaires tels que les pactes d’associés ou les conventions avec le dirigeant pour ne pas prendre de risque lors de la révocation d’un dirigeant de SAS.

Federico Vasoli

Practice areas

  • Entreprise
  • Investissements étrangers
  • Fusions et acquisitions
Contact Federico

Écrire à Vietnam Tackles Global Minimum Tax Implications





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    China – Changes to Company Law

    30 janvier 2024

    • Chine
    • Entreprise

    Vietnam has embraced the global minimum tax (GMT) to harmonize its tax policies with global standards. While this new tax regime is anticipated to have certain adverse effects on foreign direct investment (FDI), the Vietnamese government is devising proactive measures to mitigate these repercussions and maintain the country’s appeal as an investment haven.

    Key Ramifications of the GMT for Vietnam

    The GMT mandates multinational corporations (MNCs) with consolidated revenue surpassing €750 million to pay a minimum tax rate of 15%, irrespective of the tax rate in the country where they operate. In Vietnam, this translates to the concept of a qualified domestic minimum top-up tax (QDMTT).

    The QDMTT places an extra tax burden on foreign-invested enterprises (FIEs) that are part of an MNC, potentially deterring them from investing or expanding in Vietnam. This is particularly concerning for industries that heavily rely on tax incentives to attract FDI.

    Vietnam’s Response: Investment Support Fund and Proactive Measures

    In response to the anticipated negative impacts of the GMT, the Vietnamese government has established an investment support fund (Fund) to incentivize investments in targeted sectors. The Fund is primarily funded by proceeds from the State Budget generated by the GMT.

    Eligible enterprises for the Fund are those engaged in high-tech product manufacturing, high-tech enterprises, high-tech application projects, and enterprises with investment projects in research and development centers. Eligibility is based on capital size, annual revenue, industry, or technology utilized.

    Eligible taxpayers can receive cash subsidies for five specific expense categories:

    1. Human resource training and development
    2. Research and development expenses
    3. Fixed asset investments
    4. High-tech manufacturing expenses
    5. Social infrastructure systems

    To qualify for Fund benefits, eligible taxpayers must submit an application dossier to the Fund Office in Hanoi between August 15th and 30th of the year following the incurred Supported Expenses. Each Supported Expense category will have a distinct reimbursement ratio, and support payments will be contingent on the actual expenses incurred by eligible taxpayers.

    In addition to the Fund, the Vietnamese government is also implementing proactive measures to address the concerns of foreign investors. These measures include:

    1. Focusing on targeted industries with high growth potential that align with Vietnam’s strategic development goals
    2. Utilizing the additional revenue collected from top-up tax to enhance infrastructure and labor quality
    3. Considering cash grants for long-term qualified investments in high-tech industries

    Conclusion

    The introduction of the GMT poses challenges for Vietnam in attracting FDI. However, the government’s establishment of the investment support fund and proactive measures demonstrates its commitment to safeguarding the country’s competitiveness as an investment destination. By combining targeted support with infrastructure improvements and incentives for specific industries, Vietnam can mitigate the negative impacts of the GMT and continue to attract foreign investors.

    Summary:

    The heavily amended PRC Company Law will take effect on July 1, 2024. Please find below a summary of some of the important novelties embodied by this amended Company Law, which may have a significant impact on the rights and duties of the shareholders and management of a limited liability company (“LLC”).

    The businesses active in the PRC may be interested in carefully reviewing their corporate documents (including the Articles of Association) in light of the amended Company Law and deciding necessary adaptive measures for compliance/optimization purposes during the transition period leading to the effective date of the said amended Company law.

    Capital contribution.

    The amended Company Law provides that the subscribed capital of an LLC shall be paid up as per its Articles of Association within a time period up to 5 years from its incorporation (NB: The previous law does not set a time limit for the capital contribution.). This requirement will retroactively apply to the companies incorporated prior to July 1st, 2024.

    Despite the foregoing, a creditor or the company shall be entitled to request the shareholder(s) concerned to accelerate its/their capital contribution ahead of the due date for capital contribution should the company be unable to settle due debt(s) with its own assets.

    The equity and credit may be used for the capital contribution.

    Duties of directors/senior managers

    The directors shall bear the obligation to form the “liquidation team,” which shall proceed with the liquidation within 15 days of the occurrence of a number of statutory circumstances substantiated in Article 229 of the Company Law. The directors shall be held liable for losses incurred by the company or creditor(s) arising from their failure to fulfill the above liquidation obligation on time.

    The director(s)/senior manager(s) shall be held liable (along with the company itself) for compensating others should they cause any damages to the latter due to their intentional acts or gross negligence in the course of performing their duties.

    The board of directors of an LLC shall regularly check the status of capital contributions by the shareholders. It shall cause the company to issue written reminders to the shareholder(s) failing to make capital contributions on time. Should the shareholder fail to honor its subscribed capital contribution despite the reminder, subject to a specific board resolution and a written notification with immediate effect, the company may declare that the shareholder is disqualified from making the capital contribution.

    Corporate governance

    An LLC may set up an “audit commission” composed of directors to exercise the function of supervisor or supervisors’ committee as per its Articles of Association. In such cases, the company may no longer need to set up separate supervisors’ committees or appoint supervisors.

    However, the board of directors of an LLC having more than 300 employees shall have employees’ representative(s) elected through the democratic process unless the same LLC has a Supervisors’ Committee in place and such Committee already has the employees’ representative(s).

    Egypt, with its rich history and vibrant economy, presents promising opportunities for foreign investors looking to expand their business horizons. However, entering a new market can be a complex endeavor, and understanding the intricacies of doing business in Egypt is essential for success. In this article, we will delve deeper into the various aspects of establishing and managing a company in Egypt, providing valuable insights and guidance for prospective investors.

    Conducting Market Research

    Before venturing into any new market, conducting thorough market research is crucial. Egypt is a diverse country with a dynamic market, and understanding the local nuances, consumer behavior, and market trends is essential. It is advisable for foreign investors to consider setting up an initial representative office, allowing them to conduct in-depth market research without fully committing to commercial operations. A representative office can employ local staff to gather market insights and report back to the parent company, enabling informed decision-making for future business initiatives. This representative office may not engage in any commercial activities and may not invoice. Hence, it is not subject to any corporate tax but will be subject to salary tax for its employees and withholding tax.

    Choosing the Right Business Structure

    When establishing a legal entity in Egypt, foreign investors have several options to choose from. The most common business structures for foreign direct investment are a One Person Company (OPC), Limited Liability Companies (LLCs) and Joint Stock Companies (SAEs) as 100% of the shares can be wholly owned by foreigners. The choice of structure depends on the nature of the business and the specific objectives of the foreign company. Alternatively, for specific projects or contracts with defined purposes, establishing a branch office can be a viable option.

    The Company Establishment Process

    Setting up a company in Egypt involves navigating through certain legal procedures. The Egyptian government has implemented measures to facilitate foreign investments and ensure a favorable business environment. Foreign investors can own 100% of their businesses in most sectors, and the minimum requirement for establishing a company is typically having at least one shareholder. In the case of LLCs, a minimum of two partners is required while in case of SAEs a minimum of 3 shareholders is required. It is important to note that a foreign director can be appointed, except for activities that require an import license, which necessitates an Egyptian partner and director.

    Import and Distribution Considerations

    For foreign entities planning to import and distribute goods in Egypt, specific considerations come into play. Obtaining an import license requires meeting certain criteria, including demonstrating a minimum turnover, meeting nominal capital criteria, and having an Egyptian partner holding at least 51% of the shares. These regulations aim to ensure local participation and collaboration in import-oriented activities.

    Timelines and Administrative Processes

    Understanding the timelines and administrative processes involved in establishing a company in Egypt is crucial for efficient planning.
    While, foreign direct investors may establish the legal entity in one working day through GAFI as the commercial registry and tax card will be issued on the same day. However, the process may take up to six months, it can vary depending on various factors as follows:

    • a significant factor is the legalization of documents, which may require coordination with embassies and consulates for the legalization of documents such as power of attorney, corporate documents, and their translated versions;
    • opening a bank account for the company's capital needs to deliver all corporate documents related to the ultimate business owner (UBO) which may potentially cause delays.

    Efficient Branch or Subsidiary Management

    Once the company is operational, efficient branch management is vital for sustained success  as clearly defining the director’s powers through the bylaws or separate agreements is recommended. Regular communication with local management, employing competent accountants, and maintaining oversight of operations are essential to maintain control and address any issues promptly.

    Joint Ventures and Board Representation

    In cases where foreign investors collaborate with local partners through joint ventures, establishing a board of directors plays a crucial role. The board oversees company management and decision-making processes. It is advisable for foreign shareholders to regulate their relations with their local partners by virtue of a shareholder agreement to ensure their representation on the board, allowing them to actively participate and safeguard their interests. Maintaining open lines of communication and regular meetings are fundamental for staying informed about the company’s performance.

    Conclusion

    Expanding into the Egyptian market holds immense potential for foreign investors. However, navigating the business landscape requires careful planning, market research, and adherence to legal procedures. By understanding the nuances of establishing and managing a company in Egypt, foreign investors can unlock new business opportunities and forge successful ventures in this dynamic market. With the right approach and strategic decisions, Egypt can prove to be a rewarding destination for those seeking growth and expansion

    Would you like to know more?

    Watch the video of this Episode here.

    Accepting the position of director (administrator or CEO) in a Spanish company entails increasing risks. Indeed, the Supreme Court – ruling by ruling – is outlining and interpreting the precepts of the Capital Companies Act (LSC) with an increasingly rigorous and demanding approach when it comes to delimiting the framework of directors’ liability.

    Of course, the content of Article 43.1 b) of the General Tax Law is not new at all when it lays the foundations for the subsidiary liability of directors for debts owed to the Tax Agency:

    The following persons or entities shall be subsidiarily liable for the tax debt:

    b) The de facto or de jure administrators of those legal entities that have ceased their activities, for the accrued tax obligations of these that are pending at the time of the cessation, provided that they have not done what is necessary for their payment or have adopted agreements or taken measures causing the non-payment.

    It could be deduced from the reading of the transcribed provision that the subsidiary liability of the directors who, at the time of the cessation of the corporate activity, effectively held the position of director, was established; but that the liability would not reach those directors who had been so in the past but were no longer directors at the time when the company had ceased to act in the legal and economic traffic, for the tax debts pending at that time.

    Well, the Supreme Court (Third Chamber) in its recent judgment of March 7th, 2023, hammers one more nail in the coffin of the liability of the directors.

    The case that was the subject of the ruling consisted of determining the subsidiary liability to the Tax Agency of a director whose position had expired (due to the expiration of the statutory term) and who had called a general meeting for the appointment of new members of the administrative body of the company.

    The Supreme Court understands (and establishes a doctrine for the purposes of appeal) that the director with an expired position does not « exhaust » his obligations with the call of the meeting in question, but must also, pursuant to art. 365 LSC call another general meeting to adopt the resolution to file for insolvency or dissolution due to the existence of the causes of art. 363 LSC a) (cessation of activity) and d) (paralysis of the corporate bodies) as well as, if applicable, the request for judicial dissolution in his capacity as an interested party (art. 366.1 LSC).

    The reproachable conduct according to the Supreme Court (which triggers the subsidiary liability) consists in the fact that, facing the cessation of the activity of the company, the only thing he did was to call a meeting for the appointment of a new director and therefore « it did not carry out the necessary acts to be able to face the payment of the tax debts, thus meeting the subjective element necessary to be able to declare its liability ».

    The court ruling insists that the condition of director is not lost with the exhaustion of the mandate due to the expiration of the position since the mercantile and fiscal obligations persist; and that the call of a meeting to appoint a new director is not enough to understand that such meeting, once held, deprives the director with expired position of the condition of director, when there is a cause of dissolution that would have obliged to call another meeting with another object and another agenda to agree on the dissolution of the inactive company.

    But what is remarkable and striking in this case is that the meeting called by the director (with expired position) for the appointment of new a new director was held in June 2012, the resolutions were made public on March 1st, 2013, they were registered in the commercial registry in July of the same year and the judgment expressly states that the cessation of corporate activity occurred in April 2013 (i.e. when the meeting for the appointment of new administrators had already been held, June 2012, and when the appointment of the new director had already been made public, March 1st, 2013).

    The court resolution reads as follows:

    « Given the date on which the cessation of the business activity was established by the judgment a quo, April 2013, the appellant should still be considered as a director of the company in that capacity, his conduct should be considered negligent for the purposes of inclusion in the cause of subsidiary liability of art. 43.1.b) LGT ». 

    The claimant director argued that Art. 222 LSC and Art. 145.1 RRM state that the appointment of directors will expire, among other cases, when the term has expired and the meeting for the appointment of a new director has been held (or the term for its holding has elapsed) that is to resolve on the approval of the accounts of the previous year. And he explained that on top of that, he had fulfilled his obligations as director calling for a general shareholders meeting where new directors were appointed 9 months before the company ceased its activities. Therefore, he no longer was a “director” on April 2103.

    Despite of that argument the Supreme Court insists that, whether or not the position has expired, said expiration does not exhaust or extinguish his responsibilities as director, which must be interpreted extensively: it is not enough for him to call a meeting for the appointment of new directors, but he must act to dissolve the company or file for insolvency proceedings, as if the position had full and complete validity. 

    Thus, after this strong ruling, the directors of Spanish companies, in the event of termination of the activity, even if their position has expired, must know that their liability (and specifically the subsidiary liability for tax debts) will only be released if they call a meeting to dissolve the company, if the meeting does not adopt such resolution, if they request the court for the judicial dissolution or if they file voluntary insolvency proceedings.

    To summarize, they will be liable if they do not act in the same way as if their position were still in full force and effect. As we said above, it is necessary to think very much about accepting positions of director of Spanish companies.

    En Algérie, les administrateurs peuvent être exposés à des risques de responsabilité civile pour infraction à la loi, violation des statuts de la société et mauvaise gestion. Les principales sources de cette responsabilité sont le droit des sociétés, la législation du travail, le droit de l’environnement, le droit fiscal et le droit des faillites.

    Le droit des sociétés régit les droits et les obligations des administrateurs à l’égard de la société et de ses actionnaires. Les administrateurs doivent agir dans le cadre des pouvoirs qui leur sont conférés par les statuts de la société. S’ils outrepassent cette autorité ou manquent à leurs devoirs, ils peuvent être tenus personnellement responsables de dédommager financièrement la société.

    La législation sur l’emploi régit les droits et les obligations des administrateurs envers les employés de la société. Les administrateurs doivent se conformer au droit du travail et à la réglementation de la sécurité sociale en Algérie. S’ils ne le font pas, ils peuvent être tenus personnellement responsables des dommages causés aux employés ou aux autorités de sécurité sociale.

    En fonction de la nature et de la gravité de l’infraction, les administrateurs peuvent faire l’objet de sanctions civiles, administratives ou pénales, y compris des amendes, des peines d’emprisonnement ou des déchéances.

    Qui peut intenter une action en responsabilité civile contre les administrateurs en Algérie?

    En Algérie, les administrateurs peuvent faire l’objet d’actions en responsabilité civile de la part de différentes parties. La société elle-même peut poursuivre les administrateurs pour infraction à la loi, violation des statuts de la société et mauvaise gestion. Les actionnaires peuvent également poursuivre les administrateurs pour tout dommage causé à leurs intérêts par la faute des administrateurs. Les tiers, tels que les créanciers, les employés ou les clients, peuvent poursuivre les administrateurs pour tout préjudice causé par leurs actions ou omissions qui sont séparables de leur qualité de membres du conseil d’administration.

    Par exemple, les prêteurs peuvent se retourner contre les actifs et les biens d’un administrateur si ce dernier a fourni une garantie personnelle pour les dettes de la société. Les actionnaires peuvent poursuivre les administrateurs pour manquement à leurs obligations fiduciaires, par exemple en cas de mauvaise foi, d’intérêt personnel ou de négligence. Les employés peuvent poursuivre les administrateurs pour licenciement abusif, discrimination ou harcèlement. Les clients peuvent poursuivre les administrateurs pour rupture de contrat, fausse déclaration ou produits défectueux. Les créanciers peuvent poursuivre les administrateurs pour opérations frauduleuses, opérations illicites ou fautes professionnelles.

    Les risques de responsabilité pénale des administrateurs en Algérie

    Les administrateurs peuvent faire l’objet de sanctions pénales pour diverses infractions liées au fonctionnement de l’entreprise et à sa gestion et ses activités quotidiennes. En vertu du droit des sociétés, les administrateurs peuvent être pénalement responsables de fraude, d’abus de biens sociaux, de fausse comptabilité, de faillite ou d’insolvabilité. Conformément à la législation algérienne sur l’emploi, les administrateurs peuvent être pénalement responsables en cas de violation du droit du travail, de la réglementation de la sécurité sociale, des règles de santé et de sécurité ou des conventions collectives. Des sanctions pénales peuvent également s’appliquer aux administrateurs en cas de violation des lois sur l’environnement, de violation des lois fiscales, d’évasion fiscale ou de falsification de documents fiscaux. Les sanctions pénales peuvent inclure des amendes, des peines d’emprisonnement ou l’interdiction d’exercer.

    Qui peut engager des poursuites pénales à l’encontre des administrateurs?

    Les poursuites pénales contre les administrateurs en Algérie peuvent être engagées par différentes parties. Le procureur de la République peut engager des poursuites pénales contre les dirigeants pour toute infraction relevant de sa compétence. Il peut agir de sa propre initiative ou sur plainte d’une victime ou d’un tiers. La société elle-même peut – par l’intermédiaire de son représentant légal ou de son liquidateur, selon le cas – engager des poursuites pénales contre les administrateurs pour des infractions portant atteinte à ses intérêts, telles que la fraude, l’abus de biens sociaux ou la fausse comptabilité. Les actionnaires peuvent également engager des poursuites pénales contre les administrateurs pour des infractions portant atteinte à leurs intérêts, telles que le manquement à une obligation fiduciaire, la négligence ou la mauvaise gestion. Dans une telle configuration, les actionnaires ne peuvent agir qu’au nom de la société et réclamer la réparation du préjudice subi par la société, et non le leur.

    Quels sont les délais de prescription pour les affaires civiles en Algérie ? Pour les affaires pénales?

    Les délais de prescription pour les affaires civiles en Algérie varient en fonction du type de demande et des parties impliquées. Les actions civiles sont généralement soumises à un délai de prescription de trois ans à compter de la date à laquelle le demandeur a eu connaissance ou aurait dû avoir connaissance du dommage et de son auteur. Il existe cependant quelques exceptions à cette règle générale:

    • les actions pour préjudice corporel ou décès injustifié sont soumises à un délai de prescription de dix ans à compter de la date du préjudice ou du décès;
    • les actions pour rupture de contrat sont soumises à un délai de prescription de cinq ans à compter de la date de la rupture ou de la résiliation;
    • les actions en responsabilité professionnelle se prescrivent par deux ans à compter de la date à laquelle le demandeur a eu connaissance ou aurait dû avoir connaissance du dommage et de son auteur, mais pas plus de dix ans à compter de la date à laquelle le service professionnel a été rendu;
    • les actions en diffamation sont soumises à un délai de prescription de trois mois à compter de la date à laquelle la déclaration diffamatoire a été publiée ou diffusée.

    Les délais de prescription peuvent être interrompus par certains événements, tels que l’introduction d’une action en justice, l’envoi d’une mise en demeure, la reconnaissance d’une dette ou un paiement.

    En revanche, dans les affaires pénales, le délai de prescription dépend du type d’infraction.

    Quelles sont les couvertures d’assurance habituelles en matière de responsabilité des administrateurs?

    L’assurance responsabilité civile des administrateurs et des dirigeants (D&O) couvre les administrateurs actuels, futurs et anciens, ainsi que les administrateurs non exécutifs, les affiliés et les dirigeants d’une entreprise. Les scénarios de risque comprennent la responsabilité des prospectus, la responsabilité des fonds de pension et la responsabilité des pratiques d’emploi. L’assurance D&O protège les administrateurs et les dirigeants ou leur entreprise ou organisation s’ils sont poursuivis en justice (la plupart des polices excluent la fraude et les délits). L’assurance D&O peut offrir trois types de couverture: (1) pour la responsabilité personnelle des administrateurs et des dirigeants; (2) pour le remboursement par l’entreprise des sommes versées aux administrateurs et aux dirigeants; (3) pour la responsabilité directe de l’entreprise.

    La responsabilité potentielle d’une société holding contrôlant la nomination des administrateurs d’une filiale algérienne pour les actions de ces administrateurs

    Les administrateurs de sociétés d’investissement ou de holding ne sont généralement pas considérés comme des administrateurs de fait ou des administrateurs fictifs d’entreprises communes ou de filiales, à moins que leurs actions n’aillent au-delà de ce qui peut raisonnablement être considéré comme approprié pour leur position d’administrateur de la société d’investissement ou de holding.

    The limited liability company – in Italian: «Società a Responsabilità Limitata» or «S.r.l.» only – is the most popular Italian company type, mainly for the following reasons:

    • a little registered capital is enough;
    • the quota holders’ liability is limited to the pro-quota subscribed capital;
    • it is a «low-cost» company, also easy to be managed.

    In Italy, the S.r.l. differs from joint-stock companies as the participation in the capital is represented by «intangible» quota(s), which cannot circulate as stocks. This is why the members of an S.R.L. are called «quota holders» and not «shareholders».

    Similar companies in other countries are L.L.C. in the U.S., L.T.C. in the U.K., G.m.b.H. in Germany; S.a.r.l. in France; S.L. in Spain. 

    S.r.l. in a nutshell

    • Company name: Società a responsabilità limitata – S.r.l.
    • Minimum registered capital: EUR 10.000,00 (of which only EUR 2.500,00 must be paid at incorporation). The minimum corporate capital can be as low as EUR 1,00, but when the capital is lower than EUR 10.000,00 the company will be a “simplified S.R.L.”, subject to certain special rules and limitations (see below)
    • Minimum number of quota holders: One
    • Maximum number of quota holders: None
    • Nationality of the quota holders: No limits (with some rare exceptions that must be verified on a case-by-case basis)
    • Nationality of the directors: No limits (with some rare exceptions that must be verified on a case-by-case basis)
    • Limited liability: Yes
    • Auditing: Required only if (i) the company has more than 50 employees or exceeds € 4,400,000 in assets or € 8,800,000 in turnover for two consecutive years; (ii) is obliged to prepare consolidated financial statements; or (iii) controls other companies that are required to have statutory audits.

    The list of info and documents needed

    To incorporate an S.r.l., the information needed is as follows:

    • the name of the new company

    In Italy, there are no special limitations in identifying the company name.

    • the personal data of the quota holders and the registered capital subscribed.

    In the case of a sole quota holder, special rules and restrictions apply. For example, the corporate capital shall be fully paid, and all the company documents and correspondence shall point out that the corporate capital belongs to a sole quota holder; otherwise, the sole quota holder shall be jointly liable with the company for its debts.

    Please note that on the day of the incorporation of the S.r.l., each quota holder must deposit in a bank account an amount equal to at least 25% of his/her/its quota of corporate capital. The unpaid capital shall be paid within 30 days if requested by the director(s). The bank deposit can be replaced by an insurance policy or a bank guarantee (under certain requirements); or by a contribution in kind. However, in this case, the law requires an independent expert valuation and some other formalities.

    In case the quota holder is a company, some additional documents may be required (e.g., the resolution adopted by the shareholders’ meeting) which shall be translated into Italian (certified translation), notarized, and apostilled or legalized, depending on the case.

    • the personal data of the director(s)

    The director(s) can also be foreign nationals, but they shall hold an Italian fiscal identification number («codice fiscale»), which can be obtained from any local tax office («Agenzia delle Entrate»).

    The first director(s) are appointed in the deed of incorporation.

    • the address of the registered office

    The office may be also a «virtual» one, for instance, located at the office of a law or accounting firm;

    • the name and personal details of the first statutory auditors, if necessary

    The “Simplified” S.r.l.

    As mentioned above, when the partners set up an S.r.l. with a share capital of less than € 10,000, it will be an “S.r.l. Semplificata” (simplified S.r.l.).

    Compared to the ordinary S.r.l., it enjoys some economic benefits during the incorporation phase (i.e.: exemption from paying stamp duty and secretarial fees, exemption from paying notary’s fees), but also some rather significant limitations, because the bylaws must be drafted by a standard model, and registered capital may be paid only in cash.

    Should the shareholders decide to increase the registered capital to a value equal to or greater than € 10,000, they will be required to transform the company into an ‘ordinary’ S.r.l. (through a notarised public deed), thus losing the limitations seen above and thus, for example, being able to amend the bylaws.

    The management of a simplified S.r.l., on the other hand, does not enjoy any benefits compared to the ordinary S.r.l., and this is the main reason why it has not been very successful in Italy. Indeed, the small registered capital may constitute a limitation to obtaining bank financing or requesting credit from suppliers.

    Since these disadvantages are not balanced by any advantages or tax benefit in the management of a simplified S.r.l., the ordinary S.r.l. seems preferable, unless the founders have limited resources at the incorporation stage and can exclude from the outset that the new company will need access to bank financing or enter into particular corporate operations.

    How to incorporate an S.r.l.

    The deed of incorporation and the by-laws shall be executed before a Public Notary.

    The deed of incorporation is a quite standard document that contains all the information provided by the law to set up an S.r.l.

    The by-laws contain the company governance rules and can always be amended through a resolution of the quota holders’ meeting. The founding quota holders are free – except in the case of a simplified S.r.l. – to adapt the bylaws to their needs, establishing, for example, the manner and timing of the payment of share capital, the type of governance (sole director or board of directors), the powers and duration of the company’s administrative body, the procedures for the transfer of company shares, the majorities required for decisions by the quota holders’ meeting, the procedures and conditions for the withdrawal of quota holders, the conditions for the withdrawal, etc.

    After the incorporation, a copy of the deed of incorporation and the by-laws shall be filed at the Italian Companies’ Register within 20 days. Until then, any person acting on behalf of the company will be personally liable.

    Where is it more suitable to set up a new limited liability company in Europe?

    I will deal in this article with two countries I know well (Spain and The Netherlands) and focus on the minimum capital requested and the online incorporation of a limited liability company, sharing some thoughts and my takeaways.

    Spain: the “Create and Grow Law”

    In Spain, the Business Creation and Growth Law 18/2022, of September 28, 2022 (related to aspects of incorporation of companies), known as the “Create and Grow Law”, was approved last September within the framework of the Recovery, Transformation and Resilience Plan of the Spanish government. This plan channels European funds to alleviate the consequences of the Covid-19 crisis. This law is an initiative that reflects this flexibility and, as its explanatory statement indicates, aims to encourage the creation and growth of companies, in order to contribute to the economic growth of the country and its long-term resilience. Spain thus aligns itself with other neighboring countries, where there is no minimum capital to set up a company of this type.

    Is this new law interesting for foreign investors or companies looking to establish themselves in Spain?

    It is certainly very interesting. The fact that the Spanish legislator abandons this reference figure of 3,000 euros is very favorable for medium-large companies willing to have a permanent establishment in Spain Nevertheless, as long as the capital does not reach the figure of €3,000, the following rules will be applied, which are intended to protect the interests of creditors or third parties that contract with the company:  (i) 20% of the profit must be allocated to the legal reserve until said reserve together with the social capital reach the figure of €3,000 (the legislator seeks that the SLs constituted in this way do not remain « undercapitalized »), and (ii) as a safeguard clause for creditors of the company, in the event of voluntary or forced liquidation of the company, if the company’s assets are insufficient to meet its obligations of payment, the partners will be jointly and severally liable for the difference between the subscribed capital and the figure of 3,000 euros.

    Online incorporation of a company in Spain

    The « CIRCE system » (procedure dependent on the Ministry of Industry, Commerce and Tourism that allows the start of the process of creating companies « over the Internet » ) entails an electronic procedure through agreements and communications with all the organizations and administrations that intervene in the process of incorporating companies.

    The entrepreneur will only have to complete the Single Electronic Document (DUE) that includes a multitude of forms and CIRCE will automatically carry out all the necessary procedures to establish the company, communicating with all the organizations involved (Tax Agency, Social Security, Mercantile Registry, Notary, etc.). There is an obligation to review and sign the DUE before sending it. This system is not active yet, but it is expected that it will be in place when other complementary laws that support this digital process are approved by the Spanish Legislator which is necessary for the well-functioning of the system.

    The Netherlands: The Flex BV law

    The Flex BV law came into force on October 4, 2011. This law has given a lot of flexibility to the incorporation of new limited liability companies which has been very favorable for international companies working with different product lines, allowing to have one company for every product or service offered.

    The Flex BV law has, among others, the following characteristics:

    • the creation of a Limited Liability Company is flexible, easy to establish and without many costs;
    • it only requires one shareholder who must be registered with the Dutch Trade Register. The minimum share capital for setting it up is 1 euro. The liability of the shareholder is limited to the amount of money he has invested in the company. Being a limited liability company, the BV is liable for any debts, not the director or shareholder as private individuals, except in case of mismanagement or fraud. The company requires at least one director, and the shareholders can fill this position. The company registration procedure is quite fast due to the minimum documentation required.

    Online incorporation of a company in the Netherlands

     In the case of the Netherlands, in the Explanatory Memorandum of the bill implementing the Directive (EU) 2019/1151 of the European Parliament and of the Council of 20 June 2019 amending Directive (EU) 2017/1132 with regard to the use of digital instruments, it is proposed that incorporation of a BV electronically is only possible if payment on the shares takes place in cash, in order to initially limit the online formation of companies to simple situations. If it turns out that online formation works well, it can be considered whether it is useful to extend this possibility to situations in which contributions are made in a manner other than in money. Incorporation by natural persons using a model deed of incorporation must be possible within five working days from the date on which the notary has received all documents and information from the applicant or the date of payment of the share capital.

    The incorporation of a BV digitally is postponed to the summer of 2023 since the House Committee for Justice and Security has decided that the act must be discussed in plenary.

    The so called DOBV-system (Digital establishment of a BV), will entail a change in a number of work processes in the notaries in The Netherlands but for the Chamber of Commerce, no major changes will follow because the civil-law notary will supply the registration documents digitally to the Chamber of Commerce. Consequences the civil-law notary is the one who will have to offer a certain digital form of service, which citizens and companies will be able to use.

    What positive and negative aspects can be highlighted?

    Positives aspects:

    • it is very positive that through this new standard, many investors or international companies from both countries will be encouraged to create new SPVs, as the minimum capital is considered by many companies as a “barrier to entry”;
    • it will expedite the procedures for incorporating companies, essential vehicles for channeling the economic activities of businessmen in their transcendental task of creating wealth and employment, without notary and registration costs;
    • it will create a healthy competition between all the Notaries in Spain and between the notaries of Spain and the Netherlands. The Dutch notary bond expects that a further digitization of the notarial process could be achieved first in the real estate chain and subsequently also in business practice. It is important that the business market may be capable to respond quickly to this demand;
    • the share capital of a company will serve its partners to have the necessary funds with which to start their project, acquire the goods and resources necessary to start the economic activity and consolidate a long-term project (such as, for example, to buy the goods and services necessary to start up activities or to hire employees);
    • it creates business growth through financing alternatives to bank financing, such as crowdfunding or participatory financing, collective investment and venture capital.

    Negatives aspects:

    • to search financing externally to start the company’s activity, which will also surely have a cost (in the form of loans, for example, with their corresponding interest rate). Additionally, in the short or medium term the company must have a capital increase to normalize their patrimonial situation and solve this evident « underfinancing » of own resources, with which, this will also suppose an additional cost in the form of notary and registry fees that must be faced in the medium or long term after the incorporation;
    • the possibility of establishing a limited liability company with only 1 euro of share capital can facilitate the creation of fictitious legal entities by people who do not wish to carry out a real economic activity, but only use the companies as a suitable instrument for the development of legal or illegal activities;
    • additionally, it also implies a clear risk for the legal certainty and the responsibility of those companies in large contracts with third parties, leaving a limit to their minimum liability while their businesses are millionaires;
    • the online constitution system can be rigid and can also generate management and processing problems if the interested parties have not been properly advised and guided by the professionals involved before arriving at the Notary. Additionally, CIRCE’s telematic systems must function properly in order to correctly serve all those interested in the constitution of a capital company;
    • there are new requirements for companies related to anti-laundry controls, for instance, to include relevant information on invoices and payments to suppliers in their annual reports and on their corporate website.

    Conclusions

    Although it may apparently imply a boom in the creation of limited liability companies due to the ease of incorporation, there is still much to be done at the level of corporate law at the national level and collaboration between notaries of both countries.

    Spain is, with the entering into force of the Law Creation and Growth, considered among the most advanced countries in facilitating the creation of companies, reducing regulatory obstacles and favoring business restructuring and viability. The final decision will depend on the specific needs of the business, access to finance and tax regime, among others.

    Additionally, to the incorporation flexibilities, we must not forget a couple of important aspects for the shareholders and directors to be aware of:

    • a company needs to be managed as well and we need to be aware of the treasury, labor or other obligations of the companies already incorporated, even if they are non-active, they must continue to publish the annual accounts and complying with all governance requirements and formal public register notifications;
    • the responsibility of the shareholders is also important to consider. A shareholder who has direct involvement in the management, may face liability in case of bankruptcy, also in the country where the subsidiary is located. As mentioned above, in Spain, in the event of voluntary or forced liquidation of the company, if the company’s assets are insufficient to meet its obligations of payment, the partners will be jointly and severally liable for the difference between the subscribed capital and the figure of 3,000 euros;
    • the last important aspect when you are doing business mainly in Europe is to consider restructuring your business or consider other forms of incorporation of companies, depending of the business model that you have opted to, for instance the use of the Societas Europaea (SE) which has the possibility to set up a holding company or a joint subsidiary together and to transfer the seat of the company without winding up the entity. The disadvantage is that you need €120,000 starting capital to set up and to have a minimum of 2 companies governed by the laws of different Member States. Other forms of incorporation are the European Cooperative Society (SCE) and the European Economic Interest Grouping (EEIG).

    If you need additional information or you are planning to incorporate a limited liability company in Spain or in The Netherlands, get in touch to know more about your options and the right corporate advice for your business.

    Dans quelles conditions le dirigeant d’une société peut-il être révoqué en France?

    Cela dépend de la forme de la société.

    Prenons les formes de sociétés commerciales les plus fréquentes.

    Le gérant d’une société à responsabilité limitée ne peut être révoqué que pour juste motif, c’est-à-dire s’il a commis une faute, ou si sa révocation est nécessaire à la protection de l’intérêt social.

    Dans une société anonyme, les membres du conseil d’administration et le président du conseil d’administration peuvent être révoqués « ad nutum », c’est-à-dire à tout moment et sans avoir à justifier d’un motif. Il est interdit de déroger à cette règle. Le directeur général, en revanche, ne peut être révoqué que pour juste motif.

    Dans les sociétés par actions simplifiées, une forme sociale créée en 1994, les dirigeant sont en principe révocable « ad nutum », mais les statuts peuvent y déroger, et prévoir que le dirigeant ne pourra être révoqué que pour juste motif.

    Une décision récente de la Cour de cassation, c’est-à-dire de la plus haute juridiction judiciaire en France, retient l’attention.

    Elle concerne les sociétés par actions simplifiées (« SAS »), la forme sociale qui a le plus de succès en France : une société nouvellement créée sur deux est une SAS.

    Dans les SAS, ce sont les statuts qui fixent les conditions dans lesquelles la société est dirigée, et notamment les conditions de révocation du dirigeant.

    La décision de la Cour de cassation du 12 octobre 2022 (N°21-15.382) pose un principe: si les actes extra-statutaires peuvent compléter les statuts, ils ne peuvent pas y déroger.

    Dans cette affaire, les statuts d’une SAS prévoyaient que le directeur général pouvait être révoqué à tout moment, et sans qu’aucun motif soit nécessaire, par décision des associés ou de l’associé unique, et que la révocation du directeur général ne lui donnerait droit à aucune indemnité.

    Un directeur général avait été nommé par l’associé unique. Le même jour, l’associé unique avait adressé à ce directeur général un courrier lui précisant qu’en cas de révocation de ses fonctions sans juste motif, il bénéficierait d’une indemnité forfaitaire égale à six mois de sa rémunération.

    Quelques années plus tard, la société a révoqué le directeur général, qui a exigé le paiement de son indemnité forfaitaire. Face au refus de la société de lui payer, l’ancien directeur général l’a assigné en paiement de l’indemnité.

    La Cour d’appel, puis la Cour de cassation ont donné raison à la société: l’ancien dirigeant n’avait pas droit à l’indemnité. Pour la Cour de cassation, les statuts fixent les modalités de révocation du directeur général, et ce sont les statuts qui priment. Si les actes extra-statutaires peuvent compléter ces statuts, ils ne peuvent y déroger. Et même si l’acte extra-statutaire émane de l’associé unique, ou si tous les associés y ont consenti.

    En conclusion

    Il faut être prudent et bien analyser les statuts et les actes extra-statutaires tels que les pactes d’associés ou les conventions avec le dirigeant pour ne pas prendre de risque lors de la révocation d’un dirigeant de SAS.

    Yang Jun

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    Écrire à Vietnam Tackles Global Minimum Tax Implications





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      Why and How to set up a Company in Egypt

      3 juillet 2023

      • Egypt
      • Entreprise

      Vietnam has embraced the global minimum tax (GMT) to harmonize its tax policies with global standards. While this new tax regime is anticipated to have certain adverse effects on foreign direct investment (FDI), the Vietnamese government is devising proactive measures to mitigate these repercussions and maintain the country’s appeal as an investment haven.

      Key Ramifications of the GMT for Vietnam

      The GMT mandates multinational corporations (MNCs) with consolidated revenue surpassing €750 million to pay a minimum tax rate of 15%, irrespective of the tax rate in the country where they operate. In Vietnam, this translates to the concept of a qualified domestic minimum top-up tax (QDMTT).

      The QDMTT places an extra tax burden on foreign-invested enterprises (FIEs) that are part of an MNC, potentially deterring them from investing or expanding in Vietnam. This is particularly concerning for industries that heavily rely on tax incentives to attract FDI.

      Vietnam’s Response: Investment Support Fund and Proactive Measures

      In response to the anticipated negative impacts of the GMT, the Vietnamese government has established an investment support fund (Fund) to incentivize investments in targeted sectors. The Fund is primarily funded by proceeds from the State Budget generated by the GMT.

      Eligible enterprises for the Fund are those engaged in high-tech product manufacturing, high-tech enterprises, high-tech application projects, and enterprises with investment projects in research and development centers. Eligibility is based on capital size, annual revenue, industry, or technology utilized.

      Eligible taxpayers can receive cash subsidies for five specific expense categories:

      1. Human resource training and development
      2. Research and development expenses
      3. Fixed asset investments
      4. High-tech manufacturing expenses
      5. Social infrastructure systems

      To qualify for Fund benefits, eligible taxpayers must submit an application dossier to the Fund Office in Hanoi between August 15th and 30th of the year following the incurred Supported Expenses. Each Supported Expense category will have a distinct reimbursement ratio, and support payments will be contingent on the actual expenses incurred by eligible taxpayers.

      In addition to the Fund, the Vietnamese government is also implementing proactive measures to address the concerns of foreign investors. These measures include:

      1. Focusing on targeted industries with high growth potential that align with Vietnam’s strategic development goals
      2. Utilizing the additional revenue collected from top-up tax to enhance infrastructure and labor quality
      3. Considering cash grants for long-term qualified investments in high-tech industries

      Conclusion

      The introduction of the GMT poses challenges for Vietnam in attracting FDI. However, the government’s establishment of the investment support fund and proactive measures demonstrates its commitment to safeguarding the country’s competitiveness as an investment destination. By combining targeted support with infrastructure improvements and incentives for specific industries, Vietnam can mitigate the negative impacts of the GMT and continue to attract foreign investors.

      Summary:

      The heavily amended PRC Company Law will take effect on July 1, 2024. Please find below a summary of some of the important novelties embodied by this amended Company Law, which may have a significant impact on the rights and duties of the shareholders and management of a limited liability company (“LLC”).

      The businesses active in the PRC may be interested in carefully reviewing their corporate documents (including the Articles of Association) in light of the amended Company Law and deciding necessary adaptive measures for compliance/optimization purposes during the transition period leading to the effective date of the said amended Company law.

      Capital contribution.

      The amended Company Law provides that the subscribed capital of an LLC shall be paid up as per its Articles of Association within a time period up to 5 years from its incorporation (NB: The previous law does not set a time limit for the capital contribution.). This requirement will retroactively apply to the companies incorporated prior to July 1st, 2024.

      Despite the foregoing, a creditor or the company shall be entitled to request the shareholder(s) concerned to accelerate its/their capital contribution ahead of the due date for capital contribution should the company be unable to settle due debt(s) with its own assets.

      The equity and credit may be used for the capital contribution.

      Duties of directors/senior managers

      The directors shall bear the obligation to form the “liquidation team,” which shall proceed with the liquidation within 15 days of the occurrence of a number of statutory circumstances substantiated in Article 229 of the Company Law. The directors shall be held liable for losses incurred by the company or creditor(s) arising from their failure to fulfill the above liquidation obligation on time.

      The director(s)/senior manager(s) shall be held liable (along with the company itself) for compensating others should they cause any damages to the latter due to their intentional acts or gross negligence in the course of performing their duties.

      The board of directors of an LLC shall regularly check the status of capital contributions by the shareholders. It shall cause the company to issue written reminders to the shareholder(s) failing to make capital contributions on time. Should the shareholder fail to honor its subscribed capital contribution despite the reminder, subject to a specific board resolution and a written notification with immediate effect, the company may declare that the shareholder is disqualified from making the capital contribution.

      Corporate governance

      An LLC may set up an “audit commission” composed of directors to exercise the function of supervisor or supervisors’ committee as per its Articles of Association. In such cases, the company may no longer need to set up separate supervisors’ committees or appoint supervisors.

      However, the board of directors of an LLC having more than 300 employees shall have employees’ representative(s) elected through the democratic process unless the same LLC has a Supervisors’ Committee in place and such Committee already has the employees’ representative(s).

      Egypt, with its rich history and vibrant economy, presents promising opportunities for foreign investors looking to expand their business horizons. However, entering a new market can be a complex endeavor, and understanding the intricacies of doing business in Egypt is essential for success. In this article, we will delve deeper into the various aspects of establishing and managing a company in Egypt, providing valuable insights and guidance for prospective investors.

      Conducting Market Research

      Before venturing into any new market, conducting thorough market research is crucial. Egypt is a diverse country with a dynamic market, and understanding the local nuances, consumer behavior, and market trends is essential. It is advisable for foreign investors to consider setting up an initial representative office, allowing them to conduct in-depth market research without fully committing to commercial operations. A representative office can employ local staff to gather market insights and report back to the parent company, enabling informed decision-making for future business initiatives. This representative office may not engage in any commercial activities and may not invoice. Hence, it is not subject to any corporate tax but will be subject to salary tax for its employees and withholding tax.

      Choosing the Right Business Structure

      When establishing a legal entity in Egypt, foreign investors have several options to choose from. The most common business structures for foreign direct investment are a One Person Company (OPC), Limited Liability Companies (LLCs) and Joint Stock Companies (SAEs) as 100% of the shares can be wholly owned by foreigners. The choice of structure depends on the nature of the business and the specific objectives of the foreign company. Alternatively, for specific projects or contracts with defined purposes, establishing a branch office can be a viable option.

      The Company Establishment Process

      Setting up a company in Egypt involves navigating through certain legal procedures. The Egyptian government has implemented measures to facilitate foreign investments and ensure a favorable business environment. Foreign investors can own 100% of their businesses in most sectors, and the minimum requirement for establishing a company is typically having at least one shareholder. In the case of LLCs, a minimum of two partners is required while in case of SAEs a minimum of 3 shareholders is required. It is important to note that a foreign director can be appointed, except for activities that require an import license, which necessitates an Egyptian partner and director.

      Import and Distribution Considerations

      For foreign entities planning to import and distribute goods in Egypt, specific considerations come into play. Obtaining an import license requires meeting certain criteria, including demonstrating a minimum turnover, meeting nominal capital criteria, and having an Egyptian partner holding at least 51% of the shares. These regulations aim to ensure local participation and collaboration in import-oriented activities.

      Timelines and Administrative Processes

      Understanding the timelines and administrative processes involved in establishing a company in Egypt is crucial for efficient planning.
      While, foreign direct investors may establish the legal entity in one working day through GAFI as the commercial registry and tax card will be issued on the same day. However, the process may take up to six months, it can vary depending on various factors as follows:

      • a significant factor is the legalization of documents, which may require coordination with embassies and consulates for the legalization of documents such as power of attorney, corporate documents, and their translated versions;
      • opening a bank account for the company's capital needs to deliver all corporate documents related to the ultimate business owner (UBO) which may potentially cause delays.

      Efficient Branch or Subsidiary Management

      Once the company is operational, efficient branch management is vital for sustained success  as clearly defining the director’s powers through the bylaws or separate agreements is recommended. Regular communication with local management, employing competent accountants, and maintaining oversight of operations are essential to maintain control and address any issues promptly.

      Joint Ventures and Board Representation

      In cases where foreign investors collaborate with local partners through joint ventures, establishing a board of directors plays a crucial role. The board oversees company management and decision-making processes. It is advisable for foreign shareholders to regulate their relations with their local partners by virtue of a shareholder agreement to ensure their representation on the board, allowing them to actively participate and safeguard their interests. Maintaining open lines of communication and regular meetings are fundamental for staying informed about the company’s performance.

      Conclusion

      Expanding into the Egyptian market holds immense potential for foreign investors. However, navigating the business landscape requires careful planning, market research, and adherence to legal procedures. By understanding the nuances of establishing and managing a company in Egypt, foreign investors can unlock new business opportunities and forge successful ventures in this dynamic market. With the right approach and strategic decisions, Egypt can prove to be a rewarding destination for those seeking growth and expansion

      Would you like to know more?

      Watch the video of this Episode here.

      Accepting the position of director (administrator or CEO) in a Spanish company entails increasing risks. Indeed, the Supreme Court – ruling by ruling – is outlining and interpreting the precepts of the Capital Companies Act (LSC) with an increasingly rigorous and demanding approach when it comes to delimiting the framework of directors’ liability.

      Of course, the content of Article 43.1 b) of the General Tax Law is not new at all when it lays the foundations for the subsidiary liability of directors for debts owed to the Tax Agency:

      The following persons or entities shall be subsidiarily liable for the tax debt:

      b) The de facto or de jure administrators of those legal entities that have ceased their activities, for the accrued tax obligations of these that are pending at the time of the cessation, provided that they have not done what is necessary for their payment or have adopted agreements or taken measures causing the non-payment.

      It could be deduced from the reading of the transcribed provision that the subsidiary liability of the directors who, at the time of the cessation of the corporate activity, effectively held the position of director, was established; but that the liability would not reach those directors who had been so in the past but were no longer directors at the time when the company had ceased to act in the legal and economic traffic, for the tax debts pending at that time.

      Well, the Supreme Court (Third Chamber) in its recent judgment of March 7th, 2023, hammers one more nail in the coffin of the liability of the directors.

      The case that was the subject of the ruling consisted of determining the subsidiary liability to the Tax Agency of a director whose position had expired (due to the expiration of the statutory term) and who had called a general meeting for the appointment of new members of the administrative body of the company.

      The Supreme Court understands (and establishes a doctrine for the purposes of appeal) that the director with an expired position does not « exhaust » his obligations with the call of the meeting in question, but must also, pursuant to art. 365 LSC call another general meeting to adopt the resolution to file for insolvency or dissolution due to the existence of the causes of art. 363 LSC a) (cessation of activity) and d) (paralysis of the corporate bodies) as well as, if applicable, the request for judicial dissolution in his capacity as an interested party (art. 366.1 LSC).

      The reproachable conduct according to the Supreme Court (which triggers the subsidiary liability) consists in the fact that, facing the cessation of the activity of the company, the only thing he did was to call a meeting for the appointment of a new director and therefore « it did not carry out the necessary acts to be able to face the payment of the tax debts, thus meeting the subjective element necessary to be able to declare its liability ».

      The court ruling insists that the condition of director is not lost with the exhaustion of the mandate due to the expiration of the position since the mercantile and fiscal obligations persist; and that the call of a meeting to appoint a new director is not enough to understand that such meeting, once held, deprives the director with expired position of the condition of director, when there is a cause of dissolution that would have obliged to call another meeting with another object and another agenda to agree on the dissolution of the inactive company.

      But what is remarkable and striking in this case is that the meeting called by the director (with expired position) for the appointment of new a new director was held in June 2012, the resolutions were made public on March 1st, 2013, they were registered in the commercial registry in July of the same year and the judgment expressly states that the cessation of corporate activity occurred in April 2013 (i.e. when the meeting for the appointment of new administrators had already been held, June 2012, and when the appointment of the new director had already been made public, March 1st, 2013).

      The court resolution reads as follows:

      « Given the date on which the cessation of the business activity was established by the judgment a quo, April 2013, the appellant should still be considered as a director of the company in that capacity, his conduct should be considered negligent for the purposes of inclusion in the cause of subsidiary liability of art. 43.1.b) LGT ». 

      The claimant director argued that Art. 222 LSC and Art. 145.1 RRM state that the appointment of directors will expire, among other cases, when the term has expired and the meeting for the appointment of a new director has been held (or the term for its holding has elapsed) that is to resolve on the approval of the accounts of the previous year. And he explained that on top of that, he had fulfilled his obligations as director calling for a general shareholders meeting where new directors were appointed 9 months before the company ceased its activities. Therefore, he no longer was a “director” on April 2103.

      Despite of that argument the Supreme Court insists that, whether or not the position has expired, said expiration does not exhaust or extinguish his responsibilities as director, which must be interpreted extensively: it is not enough for him to call a meeting for the appointment of new directors, but he must act to dissolve the company or file for insolvency proceedings, as if the position had full and complete validity. 

      Thus, after this strong ruling, the directors of Spanish companies, in the event of termination of the activity, even if their position has expired, must know that their liability (and specifically the subsidiary liability for tax debts) will only be released if they call a meeting to dissolve the company, if the meeting does not adopt such resolution, if they request the court for the judicial dissolution or if they file voluntary insolvency proceedings.

      To summarize, they will be liable if they do not act in the same way as if their position were still in full force and effect. As we said above, it is necessary to think very much about accepting positions of director of Spanish companies.

      En Algérie, les administrateurs peuvent être exposés à des risques de responsabilité civile pour infraction à la loi, violation des statuts de la société et mauvaise gestion. Les principales sources de cette responsabilité sont le droit des sociétés, la législation du travail, le droit de l’environnement, le droit fiscal et le droit des faillites.

      Le droit des sociétés régit les droits et les obligations des administrateurs à l’égard de la société et de ses actionnaires. Les administrateurs doivent agir dans le cadre des pouvoirs qui leur sont conférés par les statuts de la société. S’ils outrepassent cette autorité ou manquent à leurs devoirs, ils peuvent être tenus personnellement responsables de dédommager financièrement la société.

      La législation sur l’emploi régit les droits et les obligations des administrateurs envers les employés de la société. Les administrateurs doivent se conformer au droit du travail et à la réglementation de la sécurité sociale en Algérie. S’ils ne le font pas, ils peuvent être tenus personnellement responsables des dommages causés aux employés ou aux autorités de sécurité sociale.

      En fonction de la nature et de la gravité de l’infraction, les administrateurs peuvent faire l’objet de sanctions civiles, administratives ou pénales, y compris des amendes, des peines d’emprisonnement ou des déchéances.

      Qui peut intenter une action en responsabilité civile contre les administrateurs en Algérie?

      En Algérie, les administrateurs peuvent faire l’objet d’actions en responsabilité civile de la part de différentes parties. La société elle-même peut poursuivre les administrateurs pour infraction à la loi, violation des statuts de la société et mauvaise gestion. Les actionnaires peuvent également poursuivre les administrateurs pour tout dommage causé à leurs intérêts par la faute des administrateurs. Les tiers, tels que les créanciers, les employés ou les clients, peuvent poursuivre les administrateurs pour tout préjudice causé par leurs actions ou omissions qui sont séparables de leur qualité de membres du conseil d’administration.

      Par exemple, les prêteurs peuvent se retourner contre les actifs et les biens d’un administrateur si ce dernier a fourni une garantie personnelle pour les dettes de la société. Les actionnaires peuvent poursuivre les administrateurs pour manquement à leurs obligations fiduciaires, par exemple en cas de mauvaise foi, d’intérêt personnel ou de négligence. Les employés peuvent poursuivre les administrateurs pour licenciement abusif, discrimination ou harcèlement. Les clients peuvent poursuivre les administrateurs pour rupture de contrat, fausse déclaration ou produits défectueux. Les créanciers peuvent poursuivre les administrateurs pour opérations frauduleuses, opérations illicites ou fautes professionnelles.

      Les risques de responsabilité pénale des administrateurs en Algérie

      Les administrateurs peuvent faire l’objet de sanctions pénales pour diverses infractions liées au fonctionnement de l’entreprise et à sa gestion et ses activités quotidiennes. En vertu du droit des sociétés, les administrateurs peuvent être pénalement responsables de fraude, d’abus de biens sociaux, de fausse comptabilité, de faillite ou d’insolvabilité. Conformément à la législation algérienne sur l’emploi, les administrateurs peuvent être pénalement responsables en cas de violation du droit du travail, de la réglementation de la sécurité sociale, des règles de santé et de sécurité ou des conventions collectives. Des sanctions pénales peuvent également s’appliquer aux administrateurs en cas de violation des lois sur l’environnement, de violation des lois fiscales, d’évasion fiscale ou de falsification de documents fiscaux. Les sanctions pénales peuvent inclure des amendes, des peines d’emprisonnement ou l’interdiction d’exercer.

      Qui peut engager des poursuites pénales à l’encontre des administrateurs?

      Les poursuites pénales contre les administrateurs en Algérie peuvent être engagées par différentes parties. Le procureur de la République peut engager des poursuites pénales contre les dirigeants pour toute infraction relevant de sa compétence. Il peut agir de sa propre initiative ou sur plainte d’une victime ou d’un tiers. La société elle-même peut – par l’intermédiaire de son représentant légal ou de son liquidateur, selon le cas – engager des poursuites pénales contre les administrateurs pour des infractions portant atteinte à ses intérêts, telles que la fraude, l’abus de biens sociaux ou la fausse comptabilité. Les actionnaires peuvent également engager des poursuites pénales contre les administrateurs pour des infractions portant atteinte à leurs intérêts, telles que le manquement à une obligation fiduciaire, la négligence ou la mauvaise gestion. Dans une telle configuration, les actionnaires ne peuvent agir qu’au nom de la société et réclamer la réparation du préjudice subi par la société, et non le leur.

      Quels sont les délais de prescription pour les affaires civiles en Algérie ? Pour les affaires pénales?

      Les délais de prescription pour les affaires civiles en Algérie varient en fonction du type de demande et des parties impliquées. Les actions civiles sont généralement soumises à un délai de prescription de trois ans à compter de la date à laquelle le demandeur a eu connaissance ou aurait dû avoir connaissance du dommage et de son auteur. Il existe cependant quelques exceptions à cette règle générale:

      • les actions pour préjudice corporel ou décès injustifié sont soumises à un délai de prescription de dix ans à compter de la date du préjudice ou du décès;
      • les actions pour rupture de contrat sont soumises à un délai de prescription de cinq ans à compter de la date de la rupture ou de la résiliation;
      • les actions en responsabilité professionnelle se prescrivent par deux ans à compter de la date à laquelle le demandeur a eu connaissance ou aurait dû avoir connaissance du dommage et de son auteur, mais pas plus de dix ans à compter de la date à laquelle le service professionnel a été rendu;
      • les actions en diffamation sont soumises à un délai de prescription de trois mois à compter de la date à laquelle la déclaration diffamatoire a été publiée ou diffusée.

      Les délais de prescription peuvent être interrompus par certains événements, tels que l’introduction d’une action en justice, l’envoi d’une mise en demeure, la reconnaissance d’une dette ou un paiement.

      En revanche, dans les affaires pénales, le délai de prescription dépend du type d’infraction.

      Quelles sont les couvertures d’assurance habituelles en matière de responsabilité des administrateurs?

      L’assurance responsabilité civile des administrateurs et des dirigeants (D&O) couvre les administrateurs actuels, futurs et anciens, ainsi que les administrateurs non exécutifs, les affiliés et les dirigeants d’une entreprise. Les scénarios de risque comprennent la responsabilité des prospectus, la responsabilité des fonds de pension et la responsabilité des pratiques d’emploi. L’assurance D&O protège les administrateurs et les dirigeants ou leur entreprise ou organisation s’ils sont poursuivis en justice (la plupart des polices excluent la fraude et les délits). L’assurance D&O peut offrir trois types de couverture: (1) pour la responsabilité personnelle des administrateurs et des dirigeants; (2) pour le remboursement par l’entreprise des sommes versées aux administrateurs et aux dirigeants; (3) pour la responsabilité directe de l’entreprise.

      La responsabilité potentielle d’une société holding contrôlant la nomination des administrateurs d’une filiale algérienne pour les actions de ces administrateurs

      Les administrateurs de sociétés d’investissement ou de holding ne sont généralement pas considérés comme des administrateurs de fait ou des administrateurs fictifs d’entreprises communes ou de filiales, à moins que leurs actions n’aillent au-delà de ce qui peut raisonnablement être considéré comme approprié pour leur position d’administrateur de la société d’investissement ou de holding.

      The limited liability company – in Italian: «Società a Responsabilità Limitata» or «S.r.l.» only – is the most popular Italian company type, mainly for the following reasons:

      • a little registered capital is enough;
      • the quota holders’ liability is limited to the pro-quota subscribed capital;
      • it is a «low-cost» company, also easy to be managed.

      In Italy, the S.r.l. differs from joint-stock companies as the participation in the capital is represented by «intangible» quota(s), which cannot circulate as stocks. This is why the members of an S.R.L. are called «quota holders» and not «shareholders».

      Similar companies in other countries are L.L.C. in the U.S., L.T.C. in the U.K., G.m.b.H. in Germany; S.a.r.l. in France; S.L. in Spain. 

      S.r.l. in a nutshell

      • Company name: Società a responsabilità limitata – S.r.l.
      • Minimum registered capital: EUR 10.000,00 (of which only EUR 2.500,00 must be paid at incorporation). The minimum corporate capital can be as low as EUR 1,00, but when the capital is lower than EUR 10.000,00 the company will be a “simplified S.R.L.”, subject to certain special rules and limitations (see below)
      • Minimum number of quota holders: One
      • Maximum number of quota holders: None
      • Nationality of the quota holders: No limits (with some rare exceptions that must be verified on a case-by-case basis)
      • Nationality of the directors: No limits (with some rare exceptions that must be verified on a case-by-case basis)
      • Limited liability: Yes
      • Auditing: Required only if (i) the company has more than 50 employees or exceeds € 4,400,000 in assets or € 8,800,000 in turnover for two consecutive years; (ii) is obliged to prepare consolidated financial statements; or (iii) controls other companies that are required to have statutory audits.

      The list of info and documents needed

      To incorporate an S.r.l., the information needed is as follows:

      • the name of the new company

      In Italy, there are no special limitations in identifying the company name.

      • the personal data of the quota holders and the registered capital subscribed.

      In the case of a sole quota holder, special rules and restrictions apply. For example, the corporate capital shall be fully paid, and all the company documents and correspondence shall point out that the corporate capital belongs to a sole quota holder; otherwise, the sole quota holder shall be jointly liable with the company for its debts.

      Please note that on the day of the incorporation of the S.r.l., each quota holder must deposit in a bank account an amount equal to at least 25% of his/her/its quota of corporate capital. The unpaid capital shall be paid within 30 days if requested by the director(s). The bank deposit can be replaced by an insurance policy or a bank guarantee (under certain requirements); or by a contribution in kind. However, in this case, the law requires an independent expert valuation and some other formalities.

      In case the quota holder is a company, some additional documents may be required (e.g., the resolution adopted by the shareholders’ meeting) which shall be translated into Italian (certified translation), notarized, and apostilled or legalized, depending on the case.

      • the personal data of the director(s)

      The director(s) can also be foreign nationals, but they shall hold an Italian fiscal identification number («codice fiscale»), which can be obtained from any local tax office («Agenzia delle Entrate»).

      The first director(s) are appointed in the deed of incorporation.

      • the address of the registered office

      The office may be also a «virtual» one, for instance, located at the office of a law or accounting firm;

      • the name and personal details of the first statutory auditors, if necessary

      The “Simplified” S.r.l.

      As mentioned above, when the partners set up an S.r.l. with a share capital of less than € 10,000, it will be an “S.r.l. Semplificata” (simplified S.r.l.).

      Compared to the ordinary S.r.l., it enjoys some economic benefits during the incorporation phase (i.e.: exemption from paying stamp duty and secretarial fees, exemption from paying notary’s fees), but also some rather significant limitations, because the bylaws must be drafted by a standard model, and registered capital may be paid only in cash.

      Should the shareholders decide to increase the registered capital to a value equal to or greater than € 10,000, they will be required to transform the company into an ‘ordinary’ S.r.l. (through a notarised public deed), thus losing the limitations seen above and thus, for example, being able to amend the bylaws.

      The management of a simplified S.r.l., on the other hand, does not enjoy any benefits compared to the ordinary S.r.l., and this is the main reason why it has not been very successful in Italy. Indeed, the small registered capital may constitute a limitation to obtaining bank financing or requesting credit from suppliers.

      Since these disadvantages are not balanced by any advantages or tax benefit in the management of a simplified S.r.l., the ordinary S.r.l. seems preferable, unless the founders have limited resources at the incorporation stage and can exclude from the outset that the new company will need access to bank financing or enter into particular corporate operations.

      How to incorporate an S.r.l.

      The deed of incorporation and the by-laws shall be executed before a Public Notary.

      The deed of incorporation is a quite standard document that contains all the information provided by the law to set up an S.r.l.

      The by-laws contain the company governance rules and can always be amended through a resolution of the quota holders’ meeting. The founding quota holders are free – except in the case of a simplified S.r.l. – to adapt the bylaws to their needs, establishing, for example, the manner and timing of the payment of share capital, the type of governance (sole director or board of directors), the powers and duration of the company’s administrative body, the procedures for the transfer of company shares, the majorities required for decisions by the quota holders’ meeting, the procedures and conditions for the withdrawal of quota holders, the conditions for the withdrawal, etc.

      After the incorporation, a copy of the deed of incorporation and the by-laws shall be filed at the Italian Companies’ Register within 20 days. Until then, any person acting on behalf of the company will be personally liable.

      Where is it more suitable to set up a new limited liability company in Europe?

      I will deal in this article with two countries I know well (Spain and The Netherlands) and focus on the minimum capital requested and the online incorporation of a limited liability company, sharing some thoughts and my takeaways.

      Spain: the “Create and Grow Law”

      In Spain, the Business Creation and Growth Law 18/2022, of September 28, 2022 (related to aspects of incorporation of companies), known as the “Create and Grow Law”, was approved last September within the framework of the Recovery, Transformation and Resilience Plan of the Spanish government. This plan channels European funds to alleviate the consequences of the Covid-19 crisis. This law is an initiative that reflects this flexibility and, as its explanatory statement indicates, aims to encourage the creation and growth of companies, in order to contribute to the economic growth of the country and its long-term resilience. Spain thus aligns itself with other neighboring countries, where there is no minimum capital to set up a company of this type.

      Is this new law interesting for foreign investors or companies looking to establish themselves in Spain?

      It is certainly very interesting. The fact that the Spanish legislator abandons this reference figure of 3,000 euros is very favorable for medium-large companies willing to have a permanent establishment in Spain Nevertheless, as long as the capital does not reach the figure of €3,000, the following rules will be applied, which are intended to protect the interests of creditors or third parties that contract with the company:  (i) 20% of the profit must be allocated to the legal reserve until said reserve together with the social capital reach the figure of €3,000 (the legislator seeks that the SLs constituted in this way do not remain « undercapitalized »), and (ii) as a safeguard clause for creditors of the company, in the event of voluntary or forced liquidation of the company, if the company’s assets are insufficient to meet its obligations of payment, the partners will be jointly and severally liable for the difference between the subscribed capital and the figure of 3,000 euros.

      Online incorporation of a company in Spain

      The « CIRCE system » (procedure dependent on the Ministry of Industry, Commerce and Tourism that allows the start of the process of creating companies « over the Internet » ) entails an electronic procedure through agreements and communications with all the organizations and administrations that intervene in the process of incorporating companies.

      The entrepreneur will only have to complete the Single Electronic Document (DUE) that includes a multitude of forms and CIRCE will automatically carry out all the necessary procedures to establish the company, communicating with all the organizations involved (Tax Agency, Social Security, Mercantile Registry, Notary, etc.). There is an obligation to review and sign the DUE before sending it. This system is not active yet, but it is expected that it will be in place when other complementary laws that support this digital process are approved by the Spanish Legislator which is necessary for the well-functioning of the system.

      The Netherlands: The Flex BV law

      The Flex BV law came into force on October 4, 2011. This law has given a lot of flexibility to the incorporation of new limited liability companies which has been very favorable for international companies working with different product lines, allowing to have one company for every product or service offered.

      The Flex BV law has, among others, the following characteristics:

      • the creation of a Limited Liability Company is flexible, easy to establish and without many costs;
      • it only requires one shareholder who must be registered with the Dutch Trade Register. The minimum share capital for setting it up is 1 euro. The liability of the shareholder is limited to the amount of money he has invested in the company. Being a limited liability company, the BV is liable for any debts, not the director or shareholder as private individuals, except in case of mismanagement or fraud. The company requires at least one director, and the shareholders can fill this position. The company registration procedure is quite fast due to the minimum documentation required.

      Online incorporation of a company in the Netherlands

       In the case of the Netherlands, in the Explanatory Memorandum of the bill implementing the Directive (EU) 2019/1151 of the European Parliament and of the Council of 20 June 2019 amending Directive (EU) 2017/1132 with regard to the use of digital instruments, it is proposed that incorporation of a BV electronically is only possible if payment on the shares takes place in cash, in order to initially limit the online formation of companies to simple situations. If it turns out that online formation works well, it can be considered whether it is useful to extend this possibility to situations in which contributions are made in a manner other than in money. Incorporation by natural persons using a model deed of incorporation must be possible within five working days from the date on which the notary has received all documents and information from the applicant or the date of payment of the share capital.

      The incorporation of a BV digitally is postponed to the summer of 2023 since the House Committee for Justice and Security has decided that the act must be discussed in plenary.

      The so called DOBV-system (Digital establishment of a BV), will entail a change in a number of work processes in the notaries in The Netherlands but for the Chamber of Commerce, no major changes will follow because the civil-law notary will supply the registration documents digitally to the Chamber of Commerce. Consequences the civil-law notary is the one who will have to offer a certain digital form of service, which citizens and companies will be able to use.

      What positive and negative aspects can be highlighted?

      Positives aspects:

      • it is very positive that through this new standard, many investors or international companies from both countries will be encouraged to create new SPVs, as the minimum capital is considered by many companies as a “barrier to entry”;
      • it will expedite the procedures for incorporating companies, essential vehicles for channeling the economic activities of businessmen in their transcendental task of creating wealth and employment, without notary and registration costs;
      • it will create a healthy competition between all the Notaries in Spain and between the notaries of Spain and the Netherlands. The Dutch notary bond expects that a further digitization of the notarial process could be achieved first in the real estate chain and subsequently also in business practice. It is important that the business market may be capable to respond quickly to this demand;
      • the share capital of a company will serve its partners to have the necessary funds with which to start their project, acquire the goods and resources necessary to start the economic activity and consolidate a long-term project (such as, for example, to buy the goods and services necessary to start up activities or to hire employees);
      • it creates business growth through financing alternatives to bank financing, such as crowdfunding or participatory financing, collective investment and venture capital.

      Negatives aspects:

      • to search financing externally to start the company’s activity, which will also surely have a cost (in the form of loans, for example, with their corresponding interest rate). Additionally, in the short or medium term the company must have a capital increase to normalize their patrimonial situation and solve this evident « underfinancing » of own resources, with which, this will also suppose an additional cost in the form of notary and registry fees that must be faced in the medium or long term after the incorporation;
      • the possibility of establishing a limited liability company with only 1 euro of share capital can facilitate the creation of fictitious legal entities by people who do not wish to carry out a real economic activity, but only use the companies as a suitable instrument for the development of legal or illegal activities;
      • additionally, it also implies a clear risk for the legal certainty and the responsibility of those companies in large contracts with third parties, leaving a limit to their minimum liability while their businesses are millionaires;
      • the online constitution system can be rigid and can also generate management and processing problems if the interested parties have not been properly advised and guided by the professionals involved before arriving at the Notary. Additionally, CIRCE’s telematic systems must function properly in order to correctly serve all those interested in the constitution of a capital company;
      • there are new requirements for companies related to anti-laundry controls, for instance, to include relevant information on invoices and payments to suppliers in their annual reports and on their corporate website.

      Conclusions

      Although it may apparently imply a boom in the creation of limited liability companies due to the ease of incorporation, there is still much to be done at the level of corporate law at the national level and collaboration between notaries of both countries.

      Spain is, with the entering into force of the Law Creation and Growth, considered among the most advanced countries in facilitating the creation of companies, reducing regulatory obstacles and favoring business restructuring and viability. The final decision will depend on the specific needs of the business, access to finance and tax regime, among others.

      Additionally, to the incorporation flexibilities, we must not forget a couple of important aspects for the shareholders and directors to be aware of:

      • a company needs to be managed as well and we need to be aware of the treasury, labor or other obligations of the companies already incorporated, even if they are non-active, they must continue to publish the annual accounts and complying with all governance requirements and formal public register notifications;
      • the responsibility of the shareholders is also important to consider. A shareholder who has direct involvement in the management, may face liability in case of bankruptcy, also in the country where the subsidiary is located. As mentioned above, in Spain, in the event of voluntary or forced liquidation of the company, if the company’s assets are insufficient to meet its obligations of payment, the partners will be jointly and severally liable for the difference between the subscribed capital and the figure of 3,000 euros;
      • the last important aspect when you are doing business mainly in Europe is to consider restructuring your business or consider other forms of incorporation of companies, depending of the business model that you have opted to, for instance the use of the Societas Europaea (SE) which has the possibility to set up a holding company or a joint subsidiary together and to transfer the seat of the company without winding up the entity. The disadvantage is that you need €120,000 starting capital to set up and to have a minimum of 2 companies governed by the laws of different Member States. Other forms of incorporation are the European Cooperative Society (SCE) and the European Economic Interest Grouping (EEIG).

      If you need additional information or you are planning to incorporate a limited liability company in Spain or in The Netherlands, get in touch to know more about your options and the right corporate advice for your business.

      Dans quelles conditions le dirigeant d’une société peut-il être révoqué en France?

      Cela dépend de la forme de la société.

      Prenons les formes de sociétés commerciales les plus fréquentes.

      Le gérant d’une société à responsabilité limitée ne peut être révoqué que pour juste motif, c’est-à-dire s’il a commis une faute, ou si sa révocation est nécessaire à la protection de l’intérêt social.

      Dans une société anonyme, les membres du conseil d’administration et le président du conseil d’administration peuvent être révoqués « ad nutum », c’est-à-dire à tout moment et sans avoir à justifier d’un motif. Il est interdit de déroger à cette règle. Le directeur général, en revanche, ne peut être révoqué que pour juste motif.

      Dans les sociétés par actions simplifiées, une forme sociale créée en 1994, les dirigeant sont en principe révocable « ad nutum », mais les statuts peuvent y déroger, et prévoir que le dirigeant ne pourra être révoqué que pour juste motif.

      Une décision récente de la Cour de cassation, c’est-à-dire de la plus haute juridiction judiciaire en France, retient l’attention.

      Elle concerne les sociétés par actions simplifiées (« SAS »), la forme sociale qui a le plus de succès en France : une société nouvellement créée sur deux est une SAS.

      Dans les SAS, ce sont les statuts qui fixent les conditions dans lesquelles la société est dirigée, et notamment les conditions de révocation du dirigeant.

      La décision de la Cour de cassation du 12 octobre 2022 (N°21-15.382) pose un principe: si les actes extra-statutaires peuvent compléter les statuts, ils ne peuvent pas y déroger.

      Dans cette affaire, les statuts d’une SAS prévoyaient que le directeur général pouvait être révoqué à tout moment, et sans qu’aucun motif soit nécessaire, par décision des associés ou de l’associé unique, et que la révocation du directeur général ne lui donnerait droit à aucune indemnité.

      Un directeur général avait été nommé par l’associé unique. Le même jour, l’associé unique avait adressé à ce directeur général un courrier lui précisant qu’en cas de révocation de ses fonctions sans juste motif, il bénéficierait d’une indemnité forfaitaire égale à six mois de sa rémunération.

      Quelques années plus tard, la société a révoqué le directeur général, qui a exigé le paiement de son indemnité forfaitaire. Face au refus de la société de lui payer, l’ancien directeur général l’a assigné en paiement de l’indemnité.

      La Cour d’appel, puis la Cour de cassation ont donné raison à la société: l’ancien dirigeant n’avait pas droit à l’indemnité. Pour la Cour de cassation, les statuts fixent les modalités de révocation du directeur général, et ce sont les statuts qui priment. Si les actes extra-statutaires peuvent compléter ces statuts, ils ne peuvent y déroger. Et même si l’acte extra-statutaire émane de l’associé unique, ou si tous les associés y ont consenti.

      En conclusion

      Il faut être prudent et bien analyser les statuts et les actes extra-statutaires tels que les pactes d’associés ou les conventions avec le dirigeant pour ne pas prendre de risque lors de la révocation d’un dirigeant de SAS.

      Christian Ule

      Practice areas

      • Arbitrage
      • Contrats
      • Entreprise
      • Distribution
      • Commerce international
      Contact Christian

      Écrire à Vietnam Tackles Global Minimum Tax Implications





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        Spain | New limits on company directors’ liability

        15 mai 2023

        • Espagne
        • Entreprise

        Vietnam has embraced the global minimum tax (GMT) to harmonize its tax policies with global standards. While this new tax regime is anticipated to have certain adverse effects on foreign direct investment (FDI), the Vietnamese government is devising proactive measures to mitigate these repercussions and maintain the country’s appeal as an investment haven.

        Key Ramifications of the GMT for Vietnam

        The GMT mandates multinational corporations (MNCs) with consolidated revenue surpassing €750 million to pay a minimum tax rate of 15%, irrespective of the tax rate in the country where they operate. In Vietnam, this translates to the concept of a qualified domestic minimum top-up tax (QDMTT).

        The QDMTT places an extra tax burden on foreign-invested enterprises (FIEs) that are part of an MNC, potentially deterring them from investing or expanding in Vietnam. This is particularly concerning for industries that heavily rely on tax incentives to attract FDI.

        Vietnam’s Response: Investment Support Fund and Proactive Measures

        In response to the anticipated negative impacts of the GMT, the Vietnamese government has established an investment support fund (Fund) to incentivize investments in targeted sectors. The Fund is primarily funded by proceeds from the State Budget generated by the GMT.

        Eligible enterprises for the Fund are those engaged in high-tech product manufacturing, high-tech enterprises, high-tech application projects, and enterprises with investment projects in research and development centers. Eligibility is based on capital size, annual revenue, industry, or technology utilized.

        Eligible taxpayers can receive cash subsidies for five specific expense categories:

        1. Human resource training and development
        2. Research and development expenses
        3. Fixed asset investments
        4. High-tech manufacturing expenses
        5. Social infrastructure systems

        To qualify for Fund benefits, eligible taxpayers must submit an application dossier to the Fund Office in Hanoi between August 15th and 30th of the year following the incurred Supported Expenses. Each Supported Expense category will have a distinct reimbursement ratio, and support payments will be contingent on the actual expenses incurred by eligible taxpayers.

        In addition to the Fund, the Vietnamese government is also implementing proactive measures to address the concerns of foreign investors. These measures include:

        1. Focusing on targeted industries with high growth potential that align with Vietnam’s strategic development goals
        2. Utilizing the additional revenue collected from top-up tax to enhance infrastructure and labor quality
        3. Considering cash grants for long-term qualified investments in high-tech industries

        Conclusion

        The introduction of the GMT poses challenges for Vietnam in attracting FDI. However, the government’s establishment of the investment support fund and proactive measures demonstrates its commitment to safeguarding the country’s competitiveness as an investment destination. By combining targeted support with infrastructure improvements and incentives for specific industries, Vietnam can mitigate the negative impacts of the GMT and continue to attract foreign investors.

        Summary:

        The heavily amended PRC Company Law will take effect on July 1, 2024. Please find below a summary of some of the important novelties embodied by this amended Company Law, which may have a significant impact on the rights and duties of the shareholders and management of a limited liability company (“LLC”).

        The businesses active in the PRC may be interested in carefully reviewing their corporate documents (including the Articles of Association) in light of the amended Company Law and deciding necessary adaptive measures for compliance/optimization purposes during the transition period leading to the effective date of the said amended Company law.

        Capital contribution.

        The amended Company Law provides that the subscribed capital of an LLC shall be paid up as per its Articles of Association within a time period up to 5 years from its incorporation (NB: The previous law does not set a time limit for the capital contribution.). This requirement will retroactively apply to the companies incorporated prior to July 1st, 2024.

        Despite the foregoing, a creditor or the company shall be entitled to request the shareholder(s) concerned to accelerate its/their capital contribution ahead of the due date for capital contribution should the company be unable to settle due debt(s) with its own assets.

        The equity and credit may be used for the capital contribution.

        Duties of directors/senior managers

        The directors shall bear the obligation to form the “liquidation team,” which shall proceed with the liquidation within 15 days of the occurrence of a number of statutory circumstances substantiated in Article 229 of the Company Law. The directors shall be held liable for losses incurred by the company or creditor(s) arising from their failure to fulfill the above liquidation obligation on time.

        The director(s)/senior manager(s) shall be held liable (along with the company itself) for compensating others should they cause any damages to the latter due to their intentional acts or gross negligence in the course of performing their duties.

        The board of directors of an LLC shall regularly check the status of capital contributions by the shareholders. It shall cause the company to issue written reminders to the shareholder(s) failing to make capital contributions on time. Should the shareholder fail to honor its subscribed capital contribution despite the reminder, subject to a specific board resolution and a written notification with immediate effect, the company may declare that the shareholder is disqualified from making the capital contribution.

        Corporate governance

        An LLC may set up an “audit commission” composed of directors to exercise the function of supervisor or supervisors’ committee as per its Articles of Association. In such cases, the company may no longer need to set up separate supervisors’ committees or appoint supervisors.

        However, the board of directors of an LLC having more than 300 employees shall have employees’ representative(s) elected through the democratic process unless the same LLC has a Supervisors’ Committee in place and such Committee already has the employees’ representative(s).

        Egypt, with its rich history and vibrant economy, presents promising opportunities for foreign investors looking to expand their business horizons. However, entering a new market can be a complex endeavor, and understanding the intricacies of doing business in Egypt is essential for success. In this article, we will delve deeper into the various aspects of establishing and managing a company in Egypt, providing valuable insights and guidance for prospective investors.

        Conducting Market Research

        Before venturing into any new market, conducting thorough market research is crucial. Egypt is a diverse country with a dynamic market, and understanding the local nuances, consumer behavior, and market trends is essential. It is advisable for foreign investors to consider setting up an initial representative office, allowing them to conduct in-depth market research without fully committing to commercial operations. A representative office can employ local staff to gather market insights and report back to the parent company, enabling informed decision-making for future business initiatives. This representative office may not engage in any commercial activities and may not invoice. Hence, it is not subject to any corporate tax but will be subject to salary tax for its employees and withholding tax.

        Choosing the Right Business Structure

        When establishing a legal entity in Egypt, foreign investors have several options to choose from. The most common business structures for foreign direct investment are a One Person Company (OPC), Limited Liability Companies (LLCs) and Joint Stock Companies (SAEs) as 100% of the shares can be wholly owned by foreigners. The choice of structure depends on the nature of the business and the specific objectives of the foreign company. Alternatively, for specific projects or contracts with defined purposes, establishing a branch office can be a viable option.

        The Company Establishment Process

        Setting up a company in Egypt involves navigating through certain legal procedures. The Egyptian government has implemented measures to facilitate foreign investments and ensure a favorable business environment. Foreign investors can own 100% of their businesses in most sectors, and the minimum requirement for establishing a company is typically having at least one shareholder. In the case of LLCs, a minimum of two partners is required while in case of SAEs a minimum of 3 shareholders is required. It is important to note that a foreign director can be appointed, except for activities that require an import license, which necessitates an Egyptian partner and director.

        Import and Distribution Considerations

        For foreign entities planning to import and distribute goods in Egypt, specific considerations come into play. Obtaining an import license requires meeting certain criteria, including demonstrating a minimum turnover, meeting nominal capital criteria, and having an Egyptian partner holding at least 51% of the shares. These regulations aim to ensure local participation and collaboration in import-oriented activities.

        Timelines and Administrative Processes

        Understanding the timelines and administrative processes involved in establishing a company in Egypt is crucial for efficient planning.
        While, foreign direct investors may establish the legal entity in one working day through GAFI as the commercial registry and tax card will be issued on the same day. However, the process may take up to six months, it can vary depending on various factors as follows:

        • a significant factor is the legalization of documents, which may require coordination with embassies and consulates for the legalization of documents such as power of attorney, corporate documents, and their translated versions;
        • opening a bank account for the company's capital needs to deliver all corporate documents related to the ultimate business owner (UBO) which may potentially cause delays.

        Efficient Branch or Subsidiary Management

        Once the company is operational, efficient branch management is vital for sustained success  as clearly defining the director’s powers through the bylaws or separate agreements is recommended. Regular communication with local management, employing competent accountants, and maintaining oversight of operations are essential to maintain control and address any issues promptly.

        Joint Ventures and Board Representation

        In cases where foreign investors collaborate with local partners through joint ventures, establishing a board of directors plays a crucial role. The board oversees company management and decision-making processes. It is advisable for foreign shareholders to regulate their relations with their local partners by virtue of a shareholder agreement to ensure their representation on the board, allowing them to actively participate and safeguard their interests. Maintaining open lines of communication and regular meetings are fundamental for staying informed about the company’s performance.

        Conclusion

        Expanding into the Egyptian market holds immense potential for foreign investors. However, navigating the business landscape requires careful planning, market research, and adherence to legal procedures. By understanding the nuances of establishing and managing a company in Egypt, foreign investors can unlock new business opportunities and forge successful ventures in this dynamic market. With the right approach and strategic decisions, Egypt can prove to be a rewarding destination for those seeking growth and expansion

        Would you like to know more?

        Watch the video of this Episode here.

        Accepting the position of director (administrator or CEO) in a Spanish company entails increasing risks. Indeed, the Supreme Court – ruling by ruling – is outlining and interpreting the precepts of the Capital Companies Act (LSC) with an increasingly rigorous and demanding approach when it comes to delimiting the framework of directors’ liability.

        Of course, the content of Article 43.1 b) of the General Tax Law is not new at all when it lays the foundations for the subsidiary liability of directors for debts owed to the Tax Agency:

        The following persons or entities shall be subsidiarily liable for the tax debt:

        b) The de facto or de jure administrators of those legal entities that have ceased their activities, for the accrued tax obligations of these that are pending at the time of the cessation, provided that they have not done what is necessary for their payment or have adopted agreements or taken measures causing the non-payment.

        It could be deduced from the reading of the transcribed provision that the subsidiary liability of the directors who, at the time of the cessation of the corporate activity, effectively held the position of director, was established; but that the liability would not reach those directors who had been so in the past but were no longer directors at the time when the company had ceased to act in the legal and economic traffic, for the tax debts pending at that time.

        Well, the Supreme Court (Third Chamber) in its recent judgment of March 7th, 2023, hammers one more nail in the coffin of the liability of the directors.

        The case that was the subject of the ruling consisted of determining the subsidiary liability to the Tax Agency of a director whose position had expired (due to the expiration of the statutory term) and who had called a general meeting for the appointment of new members of the administrative body of the company.

        The Supreme Court understands (and establishes a doctrine for the purposes of appeal) that the director with an expired position does not « exhaust » his obligations with the call of the meeting in question, but must also, pursuant to art. 365 LSC call another general meeting to adopt the resolution to file for insolvency or dissolution due to the existence of the causes of art. 363 LSC a) (cessation of activity) and d) (paralysis of the corporate bodies) as well as, if applicable, the request for judicial dissolution in his capacity as an interested party (art. 366.1 LSC).

        The reproachable conduct according to the Supreme Court (which triggers the subsidiary liability) consists in the fact that, facing the cessation of the activity of the company, the only thing he did was to call a meeting for the appointment of a new director and therefore « it did not carry out the necessary acts to be able to face the payment of the tax debts, thus meeting the subjective element necessary to be able to declare its liability ».

        The court ruling insists that the condition of director is not lost with the exhaustion of the mandate due to the expiration of the position since the mercantile and fiscal obligations persist; and that the call of a meeting to appoint a new director is not enough to understand that such meeting, once held, deprives the director with expired position of the condition of director, when there is a cause of dissolution that would have obliged to call another meeting with another object and another agenda to agree on the dissolution of the inactive company.

        But what is remarkable and striking in this case is that the meeting called by the director (with expired position) for the appointment of new a new director was held in June 2012, the resolutions were made public on March 1st, 2013, they were registered in the commercial registry in July of the same year and the judgment expressly states that the cessation of corporate activity occurred in April 2013 (i.e. when the meeting for the appointment of new administrators had already been held, June 2012, and when the appointment of the new director had already been made public, March 1st, 2013).

        The court resolution reads as follows:

        « Given the date on which the cessation of the business activity was established by the judgment a quo, April 2013, the appellant should still be considered as a director of the company in that capacity, his conduct should be considered negligent for the purposes of inclusion in the cause of subsidiary liability of art. 43.1.b) LGT ». 

        The claimant director argued that Art. 222 LSC and Art. 145.1 RRM state that the appointment of directors will expire, among other cases, when the term has expired and the meeting for the appointment of a new director has been held (or the term for its holding has elapsed) that is to resolve on the approval of the accounts of the previous year. And he explained that on top of that, he had fulfilled his obligations as director calling for a general shareholders meeting where new directors were appointed 9 months before the company ceased its activities. Therefore, he no longer was a “director” on April 2103.

        Despite of that argument the Supreme Court insists that, whether or not the position has expired, said expiration does not exhaust or extinguish his responsibilities as director, which must be interpreted extensively: it is not enough for him to call a meeting for the appointment of new directors, but he must act to dissolve the company or file for insolvency proceedings, as if the position had full and complete validity. 

        Thus, after this strong ruling, the directors of Spanish companies, in the event of termination of the activity, even if their position has expired, must know that their liability (and specifically the subsidiary liability for tax debts) will only be released if they call a meeting to dissolve the company, if the meeting does not adopt such resolution, if they request the court for the judicial dissolution or if they file voluntary insolvency proceedings.

        To summarize, they will be liable if they do not act in the same way as if their position were still in full force and effect. As we said above, it is necessary to think very much about accepting positions of director of Spanish companies.

        En Algérie, les administrateurs peuvent être exposés à des risques de responsabilité civile pour infraction à la loi, violation des statuts de la société et mauvaise gestion. Les principales sources de cette responsabilité sont le droit des sociétés, la législation du travail, le droit de l’environnement, le droit fiscal et le droit des faillites.

        Le droit des sociétés régit les droits et les obligations des administrateurs à l’égard de la société et de ses actionnaires. Les administrateurs doivent agir dans le cadre des pouvoirs qui leur sont conférés par les statuts de la société. S’ils outrepassent cette autorité ou manquent à leurs devoirs, ils peuvent être tenus personnellement responsables de dédommager financièrement la société.

        La législation sur l’emploi régit les droits et les obligations des administrateurs envers les employés de la société. Les administrateurs doivent se conformer au droit du travail et à la réglementation de la sécurité sociale en Algérie. S’ils ne le font pas, ils peuvent être tenus personnellement responsables des dommages causés aux employés ou aux autorités de sécurité sociale.

        En fonction de la nature et de la gravité de l’infraction, les administrateurs peuvent faire l’objet de sanctions civiles, administratives ou pénales, y compris des amendes, des peines d’emprisonnement ou des déchéances.

        Qui peut intenter une action en responsabilité civile contre les administrateurs en Algérie?

        En Algérie, les administrateurs peuvent faire l’objet d’actions en responsabilité civile de la part de différentes parties. La société elle-même peut poursuivre les administrateurs pour infraction à la loi, violation des statuts de la société et mauvaise gestion. Les actionnaires peuvent également poursuivre les administrateurs pour tout dommage causé à leurs intérêts par la faute des administrateurs. Les tiers, tels que les créanciers, les employés ou les clients, peuvent poursuivre les administrateurs pour tout préjudice causé par leurs actions ou omissions qui sont séparables de leur qualité de membres du conseil d’administration.

        Par exemple, les prêteurs peuvent se retourner contre les actifs et les biens d’un administrateur si ce dernier a fourni une garantie personnelle pour les dettes de la société. Les actionnaires peuvent poursuivre les administrateurs pour manquement à leurs obligations fiduciaires, par exemple en cas de mauvaise foi, d’intérêt personnel ou de négligence. Les employés peuvent poursuivre les administrateurs pour licenciement abusif, discrimination ou harcèlement. Les clients peuvent poursuivre les administrateurs pour rupture de contrat, fausse déclaration ou produits défectueux. Les créanciers peuvent poursuivre les administrateurs pour opérations frauduleuses, opérations illicites ou fautes professionnelles.

        Les risques de responsabilité pénale des administrateurs en Algérie

        Les administrateurs peuvent faire l’objet de sanctions pénales pour diverses infractions liées au fonctionnement de l’entreprise et à sa gestion et ses activités quotidiennes. En vertu du droit des sociétés, les administrateurs peuvent être pénalement responsables de fraude, d’abus de biens sociaux, de fausse comptabilité, de faillite ou d’insolvabilité. Conformément à la législation algérienne sur l’emploi, les administrateurs peuvent être pénalement responsables en cas de violation du droit du travail, de la réglementation de la sécurité sociale, des règles de santé et de sécurité ou des conventions collectives. Des sanctions pénales peuvent également s’appliquer aux administrateurs en cas de violation des lois sur l’environnement, de violation des lois fiscales, d’évasion fiscale ou de falsification de documents fiscaux. Les sanctions pénales peuvent inclure des amendes, des peines d’emprisonnement ou l’interdiction d’exercer.

        Qui peut engager des poursuites pénales à l’encontre des administrateurs?

        Les poursuites pénales contre les administrateurs en Algérie peuvent être engagées par différentes parties. Le procureur de la République peut engager des poursuites pénales contre les dirigeants pour toute infraction relevant de sa compétence. Il peut agir de sa propre initiative ou sur plainte d’une victime ou d’un tiers. La société elle-même peut – par l’intermédiaire de son représentant légal ou de son liquidateur, selon le cas – engager des poursuites pénales contre les administrateurs pour des infractions portant atteinte à ses intérêts, telles que la fraude, l’abus de biens sociaux ou la fausse comptabilité. Les actionnaires peuvent également engager des poursuites pénales contre les administrateurs pour des infractions portant atteinte à leurs intérêts, telles que le manquement à une obligation fiduciaire, la négligence ou la mauvaise gestion. Dans une telle configuration, les actionnaires ne peuvent agir qu’au nom de la société et réclamer la réparation du préjudice subi par la société, et non le leur.

        Quels sont les délais de prescription pour les affaires civiles en Algérie ? Pour les affaires pénales?

        Les délais de prescription pour les affaires civiles en Algérie varient en fonction du type de demande et des parties impliquées. Les actions civiles sont généralement soumises à un délai de prescription de trois ans à compter de la date à laquelle le demandeur a eu connaissance ou aurait dû avoir connaissance du dommage et de son auteur. Il existe cependant quelques exceptions à cette règle générale:

        • les actions pour préjudice corporel ou décès injustifié sont soumises à un délai de prescription de dix ans à compter de la date du préjudice ou du décès;
        • les actions pour rupture de contrat sont soumises à un délai de prescription de cinq ans à compter de la date de la rupture ou de la résiliation;
        • les actions en responsabilité professionnelle se prescrivent par deux ans à compter de la date à laquelle le demandeur a eu connaissance ou aurait dû avoir connaissance du dommage et de son auteur, mais pas plus de dix ans à compter de la date à laquelle le service professionnel a été rendu;
        • les actions en diffamation sont soumises à un délai de prescription de trois mois à compter de la date à laquelle la déclaration diffamatoire a été publiée ou diffusée.

        Les délais de prescription peuvent être interrompus par certains événements, tels que l’introduction d’une action en justice, l’envoi d’une mise en demeure, la reconnaissance d’une dette ou un paiement.

        En revanche, dans les affaires pénales, le délai de prescription dépend du type d’infraction.

        Quelles sont les couvertures d’assurance habituelles en matière de responsabilité des administrateurs?

        L’assurance responsabilité civile des administrateurs et des dirigeants (D&O) couvre les administrateurs actuels, futurs et anciens, ainsi que les administrateurs non exécutifs, les affiliés et les dirigeants d’une entreprise. Les scénarios de risque comprennent la responsabilité des prospectus, la responsabilité des fonds de pension et la responsabilité des pratiques d’emploi. L’assurance D&O protège les administrateurs et les dirigeants ou leur entreprise ou organisation s’ils sont poursuivis en justice (la plupart des polices excluent la fraude et les délits). L’assurance D&O peut offrir trois types de couverture: (1) pour la responsabilité personnelle des administrateurs et des dirigeants; (2) pour le remboursement par l’entreprise des sommes versées aux administrateurs et aux dirigeants; (3) pour la responsabilité directe de l’entreprise.

        La responsabilité potentielle d’une société holding contrôlant la nomination des administrateurs d’une filiale algérienne pour les actions de ces administrateurs

        Les administrateurs de sociétés d’investissement ou de holding ne sont généralement pas considérés comme des administrateurs de fait ou des administrateurs fictifs d’entreprises communes ou de filiales, à moins que leurs actions n’aillent au-delà de ce qui peut raisonnablement être considéré comme approprié pour leur position d’administrateur de la société d’investissement ou de holding.

        The limited liability company – in Italian: «Società a Responsabilità Limitata» or «S.r.l.» only – is the most popular Italian company type, mainly for the following reasons:

        • a little registered capital is enough;
        • the quota holders’ liability is limited to the pro-quota subscribed capital;
        • it is a «low-cost» company, also easy to be managed.

        In Italy, the S.r.l. differs from joint-stock companies as the participation in the capital is represented by «intangible» quota(s), which cannot circulate as stocks. This is why the members of an S.R.L. are called «quota holders» and not «shareholders».

        Similar companies in other countries are L.L.C. in the U.S., L.T.C. in the U.K., G.m.b.H. in Germany; S.a.r.l. in France; S.L. in Spain. 

        S.r.l. in a nutshell

        • Company name: Società a responsabilità limitata – S.r.l.
        • Minimum registered capital: EUR 10.000,00 (of which only EUR 2.500,00 must be paid at incorporation). The minimum corporate capital can be as low as EUR 1,00, but when the capital is lower than EUR 10.000,00 the company will be a “simplified S.R.L.”, subject to certain special rules and limitations (see below)
        • Minimum number of quota holders: One
        • Maximum number of quota holders: None
        • Nationality of the quota holders: No limits (with some rare exceptions that must be verified on a case-by-case basis)
        • Nationality of the directors: No limits (with some rare exceptions that must be verified on a case-by-case basis)
        • Limited liability: Yes
        • Auditing: Required only if (i) the company has more than 50 employees or exceeds € 4,400,000 in assets or € 8,800,000 in turnover for two consecutive years; (ii) is obliged to prepare consolidated financial statements; or (iii) controls other companies that are required to have statutory audits.

        The list of info and documents needed

        To incorporate an S.r.l., the information needed is as follows:

        • the name of the new company

        In Italy, there are no special limitations in identifying the company name.

        • the personal data of the quota holders and the registered capital subscribed.

        In the case of a sole quota holder, special rules and restrictions apply. For example, the corporate capital shall be fully paid, and all the company documents and correspondence shall point out that the corporate capital belongs to a sole quota holder; otherwise, the sole quota holder shall be jointly liable with the company for its debts.

        Please note that on the day of the incorporation of the S.r.l., each quota holder must deposit in a bank account an amount equal to at least 25% of his/her/its quota of corporate capital. The unpaid capital shall be paid within 30 days if requested by the director(s). The bank deposit can be replaced by an insurance policy or a bank guarantee (under certain requirements); or by a contribution in kind. However, in this case, the law requires an independent expert valuation and some other formalities.

        In case the quota holder is a company, some additional documents may be required (e.g., the resolution adopted by the shareholders’ meeting) which shall be translated into Italian (certified translation), notarized, and apostilled or legalized, depending on the case.

        • the personal data of the director(s)

        The director(s) can also be foreign nationals, but they shall hold an Italian fiscal identification number («codice fiscale»), which can be obtained from any local tax office («Agenzia delle Entrate»).

        The first director(s) are appointed in the deed of incorporation.

        • the address of the registered office

        The office may be also a «virtual» one, for instance, located at the office of a law or accounting firm;

        • the name and personal details of the first statutory auditors, if necessary

        The “Simplified” S.r.l.

        As mentioned above, when the partners set up an S.r.l. with a share capital of less than € 10,000, it will be an “S.r.l. Semplificata” (simplified S.r.l.).

        Compared to the ordinary S.r.l., it enjoys some economic benefits during the incorporation phase (i.e.: exemption from paying stamp duty and secretarial fees, exemption from paying notary’s fees), but also some rather significant limitations, because the bylaws must be drafted by a standard model, and registered capital may be paid only in cash.

        Should the shareholders decide to increase the registered capital to a value equal to or greater than € 10,000, they will be required to transform the company into an ‘ordinary’ S.r.l. (through a notarised public deed), thus losing the limitations seen above and thus, for example, being able to amend the bylaws.

        The management of a simplified S.r.l., on the other hand, does not enjoy any benefits compared to the ordinary S.r.l., and this is the main reason why it has not been very successful in Italy. Indeed, the small registered capital may constitute a limitation to obtaining bank financing or requesting credit from suppliers.

        Since these disadvantages are not balanced by any advantages or tax benefit in the management of a simplified S.r.l., the ordinary S.r.l. seems preferable, unless the founders have limited resources at the incorporation stage and can exclude from the outset that the new company will need access to bank financing or enter into particular corporate operations.

        How to incorporate an S.r.l.

        The deed of incorporation and the by-laws shall be executed before a Public Notary.

        The deed of incorporation is a quite standard document that contains all the information provided by the law to set up an S.r.l.

        The by-laws contain the company governance rules and can always be amended through a resolution of the quota holders’ meeting. The founding quota holders are free – except in the case of a simplified S.r.l. – to adapt the bylaws to their needs, establishing, for example, the manner and timing of the payment of share capital, the type of governance (sole director or board of directors), the powers and duration of the company’s administrative body, the procedures for the transfer of company shares, the majorities required for decisions by the quota holders’ meeting, the procedures and conditions for the withdrawal of quota holders, the conditions for the withdrawal, etc.

        After the incorporation, a copy of the deed of incorporation and the by-laws shall be filed at the Italian Companies’ Register within 20 days. Until then, any person acting on behalf of the company will be personally liable.

        Where is it more suitable to set up a new limited liability company in Europe?

        I will deal in this article with two countries I know well (Spain and The Netherlands) and focus on the minimum capital requested and the online incorporation of a limited liability company, sharing some thoughts and my takeaways.

        Spain: the “Create and Grow Law”

        In Spain, the Business Creation and Growth Law 18/2022, of September 28, 2022 (related to aspects of incorporation of companies), known as the “Create and Grow Law”, was approved last September within the framework of the Recovery, Transformation and Resilience Plan of the Spanish government. This plan channels European funds to alleviate the consequences of the Covid-19 crisis. This law is an initiative that reflects this flexibility and, as its explanatory statement indicates, aims to encourage the creation and growth of companies, in order to contribute to the economic growth of the country and its long-term resilience. Spain thus aligns itself with other neighboring countries, where there is no minimum capital to set up a company of this type.

        Is this new law interesting for foreign investors or companies looking to establish themselves in Spain?

        It is certainly very interesting. The fact that the Spanish legislator abandons this reference figure of 3,000 euros is very favorable for medium-large companies willing to have a permanent establishment in Spain Nevertheless, as long as the capital does not reach the figure of €3,000, the following rules will be applied, which are intended to protect the interests of creditors or third parties that contract with the company:  (i) 20% of the profit must be allocated to the legal reserve until said reserve together with the social capital reach the figure of €3,000 (the legislator seeks that the SLs constituted in this way do not remain « undercapitalized »), and (ii) as a safeguard clause for creditors of the company, in the event of voluntary or forced liquidation of the company, if the company’s assets are insufficient to meet its obligations of payment, the partners will be jointly and severally liable for the difference between the subscribed capital and the figure of 3,000 euros.

        Online incorporation of a company in Spain

        The « CIRCE system » (procedure dependent on the Ministry of Industry, Commerce and Tourism that allows the start of the process of creating companies « over the Internet » ) entails an electronic procedure through agreements and communications with all the organizations and administrations that intervene in the process of incorporating companies.

        The entrepreneur will only have to complete the Single Electronic Document (DUE) that includes a multitude of forms and CIRCE will automatically carry out all the necessary procedures to establish the company, communicating with all the organizations involved (Tax Agency, Social Security, Mercantile Registry, Notary, etc.). There is an obligation to review and sign the DUE before sending it. This system is not active yet, but it is expected that it will be in place when other complementary laws that support this digital process are approved by the Spanish Legislator which is necessary for the well-functioning of the system.

        The Netherlands: The Flex BV law

        The Flex BV law came into force on October 4, 2011. This law has given a lot of flexibility to the incorporation of new limited liability companies which has been very favorable for international companies working with different product lines, allowing to have one company for every product or service offered.

        The Flex BV law has, among others, the following characteristics:

        • the creation of a Limited Liability Company is flexible, easy to establish and without many costs;
        • it only requires one shareholder who must be registered with the Dutch Trade Register. The minimum share capital for setting it up is 1 euro. The liability of the shareholder is limited to the amount of money he has invested in the company. Being a limited liability company, the BV is liable for any debts, not the director or shareholder as private individuals, except in case of mismanagement or fraud. The company requires at least one director, and the shareholders can fill this position. The company registration procedure is quite fast due to the minimum documentation required.

        Online incorporation of a company in the Netherlands

         In the case of the Netherlands, in the Explanatory Memorandum of the bill implementing the Directive (EU) 2019/1151 of the European Parliament and of the Council of 20 June 2019 amending Directive (EU) 2017/1132 with regard to the use of digital instruments, it is proposed that incorporation of a BV electronically is only possible if payment on the shares takes place in cash, in order to initially limit the online formation of companies to simple situations. If it turns out that online formation works well, it can be considered whether it is useful to extend this possibility to situations in which contributions are made in a manner other than in money. Incorporation by natural persons using a model deed of incorporation must be possible within five working days from the date on which the notary has received all documents and information from the applicant or the date of payment of the share capital.

        The incorporation of a BV digitally is postponed to the summer of 2023 since the House Committee for Justice and Security has decided that the act must be discussed in plenary.

        The so called DOBV-system (Digital establishment of a BV), will entail a change in a number of work processes in the notaries in The Netherlands but for the Chamber of Commerce, no major changes will follow because the civil-law notary will supply the registration documents digitally to the Chamber of Commerce. Consequences the civil-law notary is the one who will have to offer a certain digital form of service, which citizens and companies will be able to use.

        What positive and negative aspects can be highlighted?

        Positives aspects:

        • it is very positive that through this new standard, many investors or international companies from both countries will be encouraged to create new SPVs, as the minimum capital is considered by many companies as a “barrier to entry”;
        • it will expedite the procedures for incorporating companies, essential vehicles for channeling the economic activities of businessmen in their transcendental task of creating wealth and employment, without notary and registration costs;
        • it will create a healthy competition between all the Notaries in Spain and between the notaries of Spain and the Netherlands. The Dutch notary bond expects that a further digitization of the notarial process could be achieved first in the real estate chain and subsequently also in business practice. It is important that the business market may be capable to respond quickly to this demand;
        • the share capital of a company will serve its partners to have the necessary funds with which to start their project, acquire the goods and resources necessary to start the economic activity and consolidate a long-term project (such as, for example, to buy the goods and services necessary to start up activities or to hire employees);
        • it creates business growth through financing alternatives to bank financing, such as crowdfunding or participatory financing, collective investment and venture capital.

        Negatives aspects:

        • to search financing externally to start the company’s activity, which will also surely have a cost (in the form of loans, for example, with their corresponding interest rate). Additionally, in the short or medium term the company must have a capital increase to normalize their patrimonial situation and solve this evident « underfinancing » of own resources, with which, this will also suppose an additional cost in the form of notary and registry fees that must be faced in the medium or long term after the incorporation;
        • the possibility of establishing a limited liability company with only 1 euro of share capital can facilitate the creation of fictitious legal entities by people who do not wish to carry out a real economic activity, but only use the companies as a suitable instrument for the development of legal or illegal activities;
        • additionally, it also implies a clear risk for the legal certainty and the responsibility of those companies in large contracts with third parties, leaving a limit to their minimum liability while their businesses are millionaires;
        • the online constitution system can be rigid and can also generate management and processing problems if the interested parties have not been properly advised and guided by the professionals involved before arriving at the Notary. Additionally, CIRCE’s telematic systems must function properly in order to correctly serve all those interested in the constitution of a capital company;
        • there are new requirements for companies related to anti-laundry controls, for instance, to include relevant information on invoices and payments to suppliers in their annual reports and on their corporate website.

        Conclusions

        Although it may apparently imply a boom in the creation of limited liability companies due to the ease of incorporation, there is still much to be done at the level of corporate law at the national level and collaboration between notaries of both countries.

        Spain is, with the entering into force of the Law Creation and Growth, considered among the most advanced countries in facilitating the creation of companies, reducing regulatory obstacles and favoring business restructuring and viability. The final decision will depend on the specific needs of the business, access to finance and tax regime, among others.

        Additionally, to the incorporation flexibilities, we must not forget a couple of important aspects for the shareholders and directors to be aware of:

        • a company needs to be managed as well and we need to be aware of the treasury, labor or other obligations of the companies already incorporated, even if they are non-active, they must continue to publish the annual accounts and complying with all governance requirements and formal public register notifications;
        • the responsibility of the shareholders is also important to consider. A shareholder who has direct involvement in the management, may face liability in case of bankruptcy, also in the country where the subsidiary is located. As mentioned above, in Spain, in the event of voluntary or forced liquidation of the company, if the company’s assets are insufficient to meet its obligations of payment, the partners will be jointly and severally liable for the difference between the subscribed capital and the figure of 3,000 euros;
        • the last important aspect when you are doing business mainly in Europe is to consider restructuring your business or consider other forms of incorporation of companies, depending of the business model that you have opted to, for instance the use of the Societas Europaea (SE) which has the possibility to set up a holding company or a joint subsidiary together and to transfer the seat of the company without winding up the entity. The disadvantage is that you need €120,000 starting capital to set up and to have a minimum of 2 companies governed by the laws of different Member States. Other forms of incorporation are the European Cooperative Society (SCE) and the European Economic Interest Grouping (EEIG).

        If you need additional information or you are planning to incorporate a limited liability company in Spain or in The Netherlands, get in touch to know more about your options and the right corporate advice for your business.

        Dans quelles conditions le dirigeant d’une société peut-il être révoqué en France?

        Cela dépend de la forme de la société.

        Prenons les formes de sociétés commerciales les plus fréquentes.

        Le gérant d’une société à responsabilité limitée ne peut être révoqué que pour juste motif, c’est-à-dire s’il a commis une faute, ou si sa révocation est nécessaire à la protection de l’intérêt social.

        Dans une société anonyme, les membres du conseil d’administration et le président du conseil d’administration peuvent être révoqués « ad nutum », c’est-à-dire à tout moment et sans avoir à justifier d’un motif. Il est interdit de déroger à cette règle. Le directeur général, en revanche, ne peut être révoqué que pour juste motif.

        Dans les sociétés par actions simplifiées, une forme sociale créée en 1994, les dirigeant sont en principe révocable « ad nutum », mais les statuts peuvent y déroger, et prévoir que le dirigeant ne pourra être révoqué que pour juste motif.

        Une décision récente de la Cour de cassation, c’est-à-dire de la plus haute juridiction judiciaire en France, retient l’attention.

        Elle concerne les sociétés par actions simplifiées (« SAS »), la forme sociale qui a le plus de succès en France : une société nouvellement créée sur deux est une SAS.

        Dans les SAS, ce sont les statuts qui fixent les conditions dans lesquelles la société est dirigée, et notamment les conditions de révocation du dirigeant.

        La décision de la Cour de cassation du 12 octobre 2022 (N°21-15.382) pose un principe: si les actes extra-statutaires peuvent compléter les statuts, ils ne peuvent pas y déroger.

        Dans cette affaire, les statuts d’une SAS prévoyaient que le directeur général pouvait être révoqué à tout moment, et sans qu’aucun motif soit nécessaire, par décision des associés ou de l’associé unique, et que la révocation du directeur général ne lui donnerait droit à aucune indemnité.

        Un directeur général avait été nommé par l’associé unique. Le même jour, l’associé unique avait adressé à ce directeur général un courrier lui précisant qu’en cas de révocation de ses fonctions sans juste motif, il bénéficierait d’une indemnité forfaitaire égale à six mois de sa rémunération.

        Quelques années plus tard, la société a révoqué le directeur général, qui a exigé le paiement de son indemnité forfaitaire. Face au refus de la société de lui payer, l’ancien directeur général l’a assigné en paiement de l’indemnité.

        La Cour d’appel, puis la Cour de cassation ont donné raison à la société: l’ancien dirigeant n’avait pas droit à l’indemnité. Pour la Cour de cassation, les statuts fixent les modalités de révocation du directeur général, et ce sont les statuts qui priment. Si les actes extra-statutaires peuvent compléter ces statuts, ils ne peuvent y déroger. Et même si l’acte extra-statutaire émane de l’associé unique, ou si tous les associés y ont consenti.

        En conclusion

        Il faut être prudent et bien analyser les statuts et les actes extra-statutaires tels que les pactes d’associés ou les conventions avec le dirigeant pour ne pas prendre de risque lors de la révocation d’un dirigeant de SAS.

        Javier Gaspar

        Practice areas

        • Arbitrage
        • Distribution
        • Franchise
        • Litiges
        • Sport
        Contact Javier

        Écrire à Vietnam Tackles Global Minimum Tax Implications





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          Algérie | la responsabilité des administrateurs d’entreprise

          6 mai 2023

          • Algérie
          • Entreprise

          Vietnam has embraced the global minimum tax (GMT) to harmonize its tax policies with global standards. While this new tax regime is anticipated to have certain adverse effects on foreign direct investment (FDI), the Vietnamese government is devising proactive measures to mitigate these repercussions and maintain the country’s appeal as an investment haven.

          Key Ramifications of the GMT for Vietnam

          The GMT mandates multinational corporations (MNCs) with consolidated revenue surpassing €750 million to pay a minimum tax rate of 15%, irrespective of the tax rate in the country where they operate. In Vietnam, this translates to the concept of a qualified domestic minimum top-up tax (QDMTT).

          The QDMTT places an extra tax burden on foreign-invested enterprises (FIEs) that are part of an MNC, potentially deterring them from investing or expanding in Vietnam. This is particularly concerning for industries that heavily rely on tax incentives to attract FDI.

          Vietnam’s Response: Investment Support Fund and Proactive Measures

          In response to the anticipated negative impacts of the GMT, the Vietnamese government has established an investment support fund (Fund) to incentivize investments in targeted sectors. The Fund is primarily funded by proceeds from the State Budget generated by the GMT.

          Eligible enterprises for the Fund are those engaged in high-tech product manufacturing, high-tech enterprises, high-tech application projects, and enterprises with investment projects in research and development centers. Eligibility is based on capital size, annual revenue, industry, or technology utilized.

          Eligible taxpayers can receive cash subsidies for five specific expense categories:

          1. Human resource training and development
          2. Research and development expenses
          3. Fixed asset investments
          4. High-tech manufacturing expenses
          5. Social infrastructure systems

          To qualify for Fund benefits, eligible taxpayers must submit an application dossier to the Fund Office in Hanoi between August 15th and 30th of the year following the incurred Supported Expenses. Each Supported Expense category will have a distinct reimbursement ratio, and support payments will be contingent on the actual expenses incurred by eligible taxpayers.

          In addition to the Fund, the Vietnamese government is also implementing proactive measures to address the concerns of foreign investors. These measures include:

          1. Focusing on targeted industries with high growth potential that align with Vietnam’s strategic development goals
          2. Utilizing the additional revenue collected from top-up tax to enhance infrastructure and labor quality
          3. Considering cash grants for long-term qualified investments in high-tech industries

          Conclusion

          The introduction of the GMT poses challenges for Vietnam in attracting FDI. However, the government’s establishment of the investment support fund and proactive measures demonstrates its commitment to safeguarding the country’s competitiveness as an investment destination. By combining targeted support with infrastructure improvements and incentives for specific industries, Vietnam can mitigate the negative impacts of the GMT and continue to attract foreign investors.

          Summary:

          The heavily amended PRC Company Law will take effect on July 1, 2024. Please find below a summary of some of the important novelties embodied by this amended Company Law, which may have a significant impact on the rights and duties of the shareholders and management of a limited liability company (“LLC”).

          The businesses active in the PRC may be interested in carefully reviewing their corporate documents (including the Articles of Association) in light of the amended Company Law and deciding necessary adaptive measures for compliance/optimization purposes during the transition period leading to the effective date of the said amended Company law.

          Capital contribution.

          The amended Company Law provides that the subscribed capital of an LLC shall be paid up as per its Articles of Association within a time period up to 5 years from its incorporation (NB: The previous law does not set a time limit for the capital contribution.). This requirement will retroactively apply to the companies incorporated prior to July 1st, 2024.

          Despite the foregoing, a creditor or the company shall be entitled to request the shareholder(s) concerned to accelerate its/their capital contribution ahead of the due date for capital contribution should the company be unable to settle due debt(s) with its own assets.

          The equity and credit may be used for the capital contribution.

          Duties of directors/senior managers

          The directors shall bear the obligation to form the “liquidation team,” which shall proceed with the liquidation within 15 days of the occurrence of a number of statutory circumstances substantiated in Article 229 of the Company Law. The directors shall be held liable for losses incurred by the company or creditor(s) arising from their failure to fulfill the above liquidation obligation on time.

          The director(s)/senior manager(s) shall be held liable (along with the company itself) for compensating others should they cause any damages to the latter due to their intentional acts or gross negligence in the course of performing their duties.

          The board of directors of an LLC shall regularly check the status of capital contributions by the shareholders. It shall cause the company to issue written reminders to the shareholder(s) failing to make capital contributions on time. Should the shareholder fail to honor its subscribed capital contribution despite the reminder, subject to a specific board resolution and a written notification with immediate effect, the company may declare that the shareholder is disqualified from making the capital contribution.

          Corporate governance

          An LLC may set up an “audit commission” composed of directors to exercise the function of supervisor or supervisors’ committee as per its Articles of Association. In such cases, the company may no longer need to set up separate supervisors’ committees or appoint supervisors.

          However, the board of directors of an LLC having more than 300 employees shall have employees’ representative(s) elected through the democratic process unless the same LLC has a Supervisors’ Committee in place and such Committee already has the employees’ representative(s).

          Egypt, with its rich history and vibrant economy, presents promising opportunities for foreign investors looking to expand their business horizons. However, entering a new market can be a complex endeavor, and understanding the intricacies of doing business in Egypt is essential for success. In this article, we will delve deeper into the various aspects of establishing and managing a company in Egypt, providing valuable insights and guidance for prospective investors.

          Conducting Market Research

          Before venturing into any new market, conducting thorough market research is crucial. Egypt is a diverse country with a dynamic market, and understanding the local nuances, consumer behavior, and market trends is essential. It is advisable for foreign investors to consider setting up an initial representative office, allowing them to conduct in-depth market research without fully committing to commercial operations. A representative office can employ local staff to gather market insights and report back to the parent company, enabling informed decision-making for future business initiatives. This representative office may not engage in any commercial activities and may not invoice. Hence, it is not subject to any corporate tax but will be subject to salary tax for its employees and withholding tax.

          Choosing the Right Business Structure

          When establishing a legal entity in Egypt, foreign investors have several options to choose from. The most common business structures for foreign direct investment are a One Person Company (OPC), Limited Liability Companies (LLCs) and Joint Stock Companies (SAEs) as 100% of the shares can be wholly owned by foreigners. The choice of structure depends on the nature of the business and the specific objectives of the foreign company. Alternatively, for specific projects or contracts with defined purposes, establishing a branch office can be a viable option.

          The Company Establishment Process

          Setting up a company in Egypt involves navigating through certain legal procedures. The Egyptian government has implemented measures to facilitate foreign investments and ensure a favorable business environment. Foreign investors can own 100% of their businesses in most sectors, and the minimum requirement for establishing a company is typically having at least one shareholder. In the case of LLCs, a minimum of two partners is required while in case of SAEs a minimum of 3 shareholders is required. It is important to note that a foreign director can be appointed, except for activities that require an import license, which necessitates an Egyptian partner and director.

          Import and Distribution Considerations

          For foreign entities planning to import and distribute goods in Egypt, specific considerations come into play. Obtaining an import license requires meeting certain criteria, including demonstrating a minimum turnover, meeting nominal capital criteria, and having an Egyptian partner holding at least 51% of the shares. These regulations aim to ensure local participation and collaboration in import-oriented activities.

          Timelines and Administrative Processes

          Understanding the timelines and administrative processes involved in establishing a company in Egypt is crucial for efficient planning.
          While, foreign direct investors may establish the legal entity in one working day through GAFI as the commercial registry and tax card will be issued on the same day. However, the process may take up to six months, it can vary depending on various factors as follows:

          • a significant factor is the legalization of documents, which may require coordination with embassies and consulates for the legalization of documents such as power of attorney, corporate documents, and their translated versions;
          • opening a bank account for the company's capital needs to deliver all corporate documents related to the ultimate business owner (UBO) which may potentially cause delays.

          Efficient Branch or Subsidiary Management

          Once the company is operational, efficient branch management is vital for sustained success  as clearly defining the director’s powers through the bylaws or separate agreements is recommended. Regular communication with local management, employing competent accountants, and maintaining oversight of operations are essential to maintain control and address any issues promptly.

          Joint Ventures and Board Representation

          In cases where foreign investors collaborate with local partners through joint ventures, establishing a board of directors plays a crucial role. The board oversees company management and decision-making processes. It is advisable for foreign shareholders to regulate their relations with their local partners by virtue of a shareholder agreement to ensure their representation on the board, allowing them to actively participate and safeguard their interests. Maintaining open lines of communication and regular meetings are fundamental for staying informed about the company’s performance.

          Conclusion

          Expanding into the Egyptian market holds immense potential for foreign investors. However, navigating the business landscape requires careful planning, market research, and adherence to legal procedures. By understanding the nuances of establishing and managing a company in Egypt, foreign investors can unlock new business opportunities and forge successful ventures in this dynamic market. With the right approach and strategic decisions, Egypt can prove to be a rewarding destination for those seeking growth and expansion

          Would you like to know more?

          Watch the video of this Episode here.

          Accepting the position of director (administrator or CEO) in a Spanish company entails increasing risks. Indeed, the Supreme Court – ruling by ruling – is outlining and interpreting the precepts of the Capital Companies Act (LSC) with an increasingly rigorous and demanding approach when it comes to delimiting the framework of directors’ liability.

          Of course, the content of Article 43.1 b) of the General Tax Law is not new at all when it lays the foundations for the subsidiary liability of directors for debts owed to the Tax Agency:

          The following persons or entities shall be subsidiarily liable for the tax debt:

          b) The de facto or de jure administrators of those legal entities that have ceased their activities, for the accrued tax obligations of these that are pending at the time of the cessation, provided that they have not done what is necessary for their payment or have adopted agreements or taken measures causing the non-payment.

          It could be deduced from the reading of the transcribed provision that the subsidiary liability of the directors who, at the time of the cessation of the corporate activity, effectively held the position of director, was established; but that the liability would not reach those directors who had been so in the past but were no longer directors at the time when the company had ceased to act in the legal and economic traffic, for the tax debts pending at that time.

          Well, the Supreme Court (Third Chamber) in its recent judgment of March 7th, 2023, hammers one more nail in the coffin of the liability of the directors.

          The case that was the subject of the ruling consisted of determining the subsidiary liability to the Tax Agency of a director whose position had expired (due to the expiration of the statutory term) and who had called a general meeting for the appointment of new members of the administrative body of the company.

          The Supreme Court understands (and establishes a doctrine for the purposes of appeal) that the director with an expired position does not « exhaust » his obligations with the call of the meeting in question, but must also, pursuant to art. 365 LSC call another general meeting to adopt the resolution to file for insolvency or dissolution due to the existence of the causes of art. 363 LSC a) (cessation of activity) and d) (paralysis of the corporate bodies) as well as, if applicable, the request for judicial dissolution in his capacity as an interested party (art. 366.1 LSC).

          The reproachable conduct according to the Supreme Court (which triggers the subsidiary liability) consists in the fact that, facing the cessation of the activity of the company, the only thing he did was to call a meeting for the appointment of a new director and therefore « it did not carry out the necessary acts to be able to face the payment of the tax debts, thus meeting the subjective element necessary to be able to declare its liability ».

          The court ruling insists that the condition of director is not lost with the exhaustion of the mandate due to the expiration of the position since the mercantile and fiscal obligations persist; and that the call of a meeting to appoint a new director is not enough to understand that such meeting, once held, deprives the director with expired position of the condition of director, when there is a cause of dissolution that would have obliged to call another meeting with another object and another agenda to agree on the dissolution of the inactive company.

          But what is remarkable and striking in this case is that the meeting called by the director (with expired position) for the appointment of new a new director was held in June 2012, the resolutions were made public on March 1st, 2013, they were registered in the commercial registry in July of the same year and the judgment expressly states that the cessation of corporate activity occurred in April 2013 (i.e. when the meeting for the appointment of new administrators had already been held, June 2012, and when the appointment of the new director had already been made public, March 1st, 2013).

          The court resolution reads as follows:

          « Given the date on which the cessation of the business activity was established by the judgment a quo, April 2013, the appellant should still be considered as a director of the company in that capacity, his conduct should be considered negligent for the purposes of inclusion in the cause of subsidiary liability of art. 43.1.b) LGT ». 

          The claimant director argued that Art. 222 LSC and Art. 145.1 RRM state that the appointment of directors will expire, among other cases, when the term has expired and the meeting for the appointment of a new director has been held (or the term for its holding has elapsed) that is to resolve on the approval of the accounts of the previous year. And he explained that on top of that, he had fulfilled his obligations as director calling for a general shareholders meeting where new directors were appointed 9 months before the company ceased its activities. Therefore, he no longer was a “director” on April 2103.

          Despite of that argument the Supreme Court insists that, whether or not the position has expired, said expiration does not exhaust or extinguish his responsibilities as director, which must be interpreted extensively: it is not enough for him to call a meeting for the appointment of new directors, but he must act to dissolve the company or file for insolvency proceedings, as if the position had full and complete validity. 

          Thus, after this strong ruling, the directors of Spanish companies, in the event of termination of the activity, even if their position has expired, must know that their liability (and specifically the subsidiary liability for tax debts) will only be released if they call a meeting to dissolve the company, if the meeting does not adopt such resolution, if they request the court for the judicial dissolution or if they file voluntary insolvency proceedings.

          To summarize, they will be liable if they do not act in the same way as if their position were still in full force and effect. As we said above, it is necessary to think very much about accepting positions of director of Spanish companies.

          En Algérie, les administrateurs peuvent être exposés à des risques de responsabilité civile pour infraction à la loi, violation des statuts de la société et mauvaise gestion. Les principales sources de cette responsabilité sont le droit des sociétés, la législation du travail, le droit de l’environnement, le droit fiscal et le droit des faillites.

          Le droit des sociétés régit les droits et les obligations des administrateurs à l’égard de la société et de ses actionnaires. Les administrateurs doivent agir dans le cadre des pouvoirs qui leur sont conférés par les statuts de la société. S’ils outrepassent cette autorité ou manquent à leurs devoirs, ils peuvent être tenus personnellement responsables de dédommager financièrement la société.

          La législation sur l’emploi régit les droits et les obligations des administrateurs envers les employés de la société. Les administrateurs doivent se conformer au droit du travail et à la réglementation de la sécurité sociale en Algérie. S’ils ne le font pas, ils peuvent être tenus personnellement responsables des dommages causés aux employés ou aux autorités de sécurité sociale.

          En fonction de la nature et de la gravité de l’infraction, les administrateurs peuvent faire l’objet de sanctions civiles, administratives ou pénales, y compris des amendes, des peines d’emprisonnement ou des déchéances.

          Qui peut intenter une action en responsabilité civile contre les administrateurs en Algérie?

          En Algérie, les administrateurs peuvent faire l’objet d’actions en responsabilité civile de la part de différentes parties. La société elle-même peut poursuivre les administrateurs pour infraction à la loi, violation des statuts de la société et mauvaise gestion. Les actionnaires peuvent également poursuivre les administrateurs pour tout dommage causé à leurs intérêts par la faute des administrateurs. Les tiers, tels que les créanciers, les employés ou les clients, peuvent poursuivre les administrateurs pour tout préjudice causé par leurs actions ou omissions qui sont séparables de leur qualité de membres du conseil d’administration.

          Par exemple, les prêteurs peuvent se retourner contre les actifs et les biens d’un administrateur si ce dernier a fourni une garantie personnelle pour les dettes de la société. Les actionnaires peuvent poursuivre les administrateurs pour manquement à leurs obligations fiduciaires, par exemple en cas de mauvaise foi, d’intérêt personnel ou de négligence. Les employés peuvent poursuivre les administrateurs pour licenciement abusif, discrimination ou harcèlement. Les clients peuvent poursuivre les administrateurs pour rupture de contrat, fausse déclaration ou produits défectueux. Les créanciers peuvent poursuivre les administrateurs pour opérations frauduleuses, opérations illicites ou fautes professionnelles.

          Les risques de responsabilité pénale des administrateurs en Algérie

          Les administrateurs peuvent faire l’objet de sanctions pénales pour diverses infractions liées au fonctionnement de l’entreprise et à sa gestion et ses activités quotidiennes. En vertu du droit des sociétés, les administrateurs peuvent être pénalement responsables de fraude, d’abus de biens sociaux, de fausse comptabilité, de faillite ou d’insolvabilité. Conformément à la législation algérienne sur l’emploi, les administrateurs peuvent être pénalement responsables en cas de violation du droit du travail, de la réglementation de la sécurité sociale, des règles de santé et de sécurité ou des conventions collectives. Des sanctions pénales peuvent également s’appliquer aux administrateurs en cas de violation des lois sur l’environnement, de violation des lois fiscales, d’évasion fiscale ou de falsification de documents fiscaux. Les sanctions pénales peuvent inclure des amendes, des peines d’emprisonnement ou l’interdiction d’exercer.

          Qui peut engager des poursuites pénales à l’encontre des administrateurs?

          Les poursuites pénales contre les administrateurs en Algérie peuvent être engagées par différentes parties. Le procureur de la République peut engager des poursuites pénales contre les dirigeants pour toute infraction relevant de sa compétence. Il peut agir de sa propre initiative ou sur plainte d’une victime ou d’un tiers. La société elle-même peut – par l’intermédiaire de son représentant légal ou de son liquidateur, selon le cas – engager des poursuites pénales contre les administrateurs pour des infractions portant atteinte à ses intérêts, telles que la fraude, l’abus de biens sociaux ou la fausse comptabilité. Les actionnaires peuvent également engager des poursuites pénales contre les administrateurs pour des infractions portant atteinte à leurs intérêts, telles que le manquement à une obligation fiduciaire, la négligence ou la mauvaise gestion. Dans une telle configuration, les actionnaires ne peuvent agir qu’au nom de la société et réclamer la réparation du préjudice subi par la société, et non le leur.

          Quels sont les délais de prescription pour les affaires civiles en Algérie ? Pour les affaires pénales?

          Les délais de prescription pour les affaires civiles en Algérie varient en fonction du type de demande et des parties impliquées. Les actions civiles sont généralement soumises à un délai de prescription de trois ans à compter de la date à laquelle le demandeur a eu connaissance ou aurait dû avoir connaissance du dommage et de son auteur. Il existe cependant quelques exceptions à cette règle générale:

          • les actions pour préjudice corporel ou décès injustifié sont soumises à un délai de prescription de dix ans à compter de la date du préjudice ou du décès;
          • les actions pour rupture de contrat sont soumises à un délai de prescription de cinq ans à compter de la date de la rupture ou de la résiliation;
          • les actions en responsabilité professionnelle se prescrivent par deux ans à compter de la date à laquelle le demandeur a eu connaissance ou aurait dû avoir connaissance du dommage et de son auteur, mais pas plus de dix ans à compter de la date à laquelle le service professionnel a été rendu;
          • les actions en diffamation sont soumises à un délai de prescription de trois mois à compter de la date à laquelle la déclaration diffamatoire a été publiée ou diffusée.

          Les délais de prescription peuvent être interrompus par certains événements, tels que l’introduction d’une action en justice, l’envoi d’une mise en demeure, la reconnaissance d’une dette ou un paiement.

          En revanche, dans les affaires pénales, le délai de prescription dépend du type d’infraction.

          Quelles sont les couvertures d’assurance habituelles en matière de responsabilité des administrateurs?

          L’assurance responsabilité civile des administrateurs et des dirigeants (D&O) couvre les administrateurs actuels, futurs et anciens, ainsi que les administrateurs non exécutifs, les affiliés et les dirigeants d’une entreprise. Les scénarios de risque comprennent la responsabilité des prospectus, la responsabilité des fonds de pension et la responsabilité des pratiques d’emploi. L’assurance D&O protège les administrateurs et les dirigeants ou leur entreprise ou organisation s’ils sont poursuivis en justice (la plupart des polices excluent la fraude et les délits). L’assurance D&O peut offrir trois types de couverture: (1) pour la responsabilité personnelle des administrateurs et des dirigeants; (2) pour le remboursement par l’entreprise des sommes versées aux administrateurs et aux dirigeants; (3) pour la responsabilité directe de l’entreprise.

          La responsabilité potentielle d’une société holding contrôlant la nomination des administrateurs d’une filiale algérienne pour les actions de ces administrateurs

          Les administrateurs de sociétés d’investissement ou de holding ne sont généralement pas considérés comme des administrateurs de fait ou des administrateurs fictifs d’entreprises communes ou de filiales, à moins que leurs actions n’aillent au-delà de ce qui peut raisonnablement être considéré comme approprié pour leur position d’administrateur de la société d’investissement ou de holding.

          The limited liability company – in Italian: «Società a Responsabilità Limitata» or «S.r.l.» only – is the most popular Italian company type, mainly for the following reasons:

          • a little registered capital is enough;
          • the quota holders’ liability is limited to the pro-quota subscribed capital;
          • it is a «low-cost» company, also easy to be managed.

          In Italy, the S.r.l. differs from joint-stock companies as the participation in the capital is represented by «intangible» quota(s), which cannot circulate as stocks. This is why the members of an S.R.L. are called «quota holders» and not «shareholders».

          Similar companies in other countries are L.L.C. in the U.S., L.T.C. in the U.K., G.m.b.H. in Germany; S.a.r.l. in France; S.L. in Spain. 

          S.r.l. in a nutshell

          • Company name: Società a responsabilità limitata – S.r.l.
          • Minimum registered capital: EUR 10.000,00 (of which only EUR 2.500,00 must be paid at incorporation). The minimum corporate capital can be as low as EUR 1,00, but when the capital is lower than EUR 10.000,00 the company will be a “simplified S.R.L.”, subject to certain special rules and limitations (see below)
          • Minimum number of quota holders: One
          • Maximum number of quota holders: None
          • Nationality of the quota holders: No limits (with some rare exceptions that must be verified on a case-by-case basis)
          • Nationality of the directors: No limits (with some rare exceptions that must be verified on a case-by-case basis)
          • Limited liability: Yes
          • Auditing: Required only if (i) the company has more than 50 employees or exceeds € 4,400,000 in assets or € 8,800,000 in turnover for two consecutive years; (ii) is obliged to prepare consolidated financial statements; or (iii) controls other companies that are required to have statutory audits.

          The list of info and documents needed

          To incorporate an S.r.l., the information needed is as follows:

          • the name of the new company

          In Italy, there are no special limitations in identifying the company name.

          • the personal data of the quota holders and the registered capital subscribed.

          In the case of a sole quota holder, special rules and restrictions apply. For example, the corporate capital shall be fully paid, and all the company documents and correspondence shall point out that the corporate capital belongs to a sole quota holder; otherwise, the sole quota holder shall be jointly liable with the company for its debts.

          Please note that on the day of the incorporation of the S.r.l., each quota holder must deposit in a bank account an amount equal to at least 25% of his/her/its quota of corporate capital. The unpaid capital shall be paid within 30 days if requested by the director(s). The bank deposit can be replaced by an insurance policy or a bank guarantee (under certain requirements); or by a contribution in kind. However, in this case, the law requires an independent expert valuation and some other formalities.

          In case the quota holder is a company, some additional documents may be required (e.g., the resolution adopted by the shareholders’ meeting) which shall be translated into Italian (certified translation), notarized, and apostilled or legalized, depending on the case.

          • the personal data of the director(s)

          The director(s) can also be foreign nationals, but they shall hold an Italian fiscal identification number («codice fiscale»), which can be obtained from any local tax office («Agenzia delle Entrate»).

          The first director(s) are appointed in the deed of incorporation.

          • the address of the registered office

          The office may be also a «virtual» one, for instance, located at the office of a law or accounting firm;

          • the name and personal details of the first statutory auditors, if necessary

          The “Simplified” S.r.l.

          As mentioned above, when the partners set up an S.r.l. with a share capital of less than € 10,000, it will be an “S.r.l. Semplificata” (simplified S.r.l.).

          Compared to the ordinary S.r.l., it enjoys some economic benefits during the incorporation phase (i.e.: exemption from paying stamp duty and secretarial fees, exemption from paying notary’s fees), but also some rather significant limitations, because the bylaws must be drafted by a standard model, and registered capital may be paid only in cash.

          Should the shareholders decide to increase the registered capital to a value equal to or greater than € 10,000, they will be required to transform the company into an ‘ordinary’ S.r.l. (through a notarised public deed), thus losing the limitations seen above and thus, for example, being able to amend the bylaws.

          The management of a simplified S.r.l., on the other hand, does not enjoy any benefits compared to the ordinary S.r.l., and this is the main reason why it has not been very successful in Italy. Indeed, the small registered capital may constitute a limitation to obtaining bank financing or requesting credit from suppliers.

          Since these disadvantages are not balanced by any advantages or tax benefit in the management of a simplified S.r.l., the ordinary S.r.l. seems preferable, unless the founders have limited resources at the incorporation stage and can exclude from the outset that the new company will need access to bank financing or enter into particular corporate operations.

          How to incorporate an S.r.l.

          The deed of incorporation and the by-laws shall be executed before a Public Notary.

          The deed of incorporation is a quite standard document that contains all the information provided by the law to set up an S.r.l.

          The by-laws contain the company governance rules and can always be amended through a resolution of the quota holders’ meeting. The founding quota holders are free – except in the case of a simplified S.r.l. – to adapt the bylaws to their needs, establishing, for example, the manner and timing of the payment of share capital, the type of governance (sole director or board of directors), the powers and duration of the company’s administrative body, the procedures for the transfer of company shares, the majorities required for decisions by the quota holders’ meeting, the procedures and conditions for the withdrawal of quota holders, the conditions for the withdrawal, etc.

          After the incorporation, a copy of the deed of incorporation and the by-laws shall be filed at the Italian Companies’ Register within 20 days. Until then, any person acting on behalf of the company will be personally liable.

          Where is it more suitable to set up a new limited liability company in Europe?

          I will deal in this article with two countries I know well (Spain and The Netherlands) and focus on the minimum capital requested and the online incorporation of a limited liability company, sharing some thoughts and my takeaways.

          Spain: the “Create and Grow Law”

          In Spain, the Business Creation and Growth Law 18/2022, of September 28, 2022 (related to aspects of incorporation of companies), known as the “Create and Grow Law”, was approved last September within the framework of the Recovery, Transformation and Resilience Plan of the Spanish government. This plan channels European funds to alleviate the consequences of the Covid-19 crisis. This law is an initiative that reflects this flexibility and, as its explanatory statement indicates, aims to encourage the creation and growth of companies, in order to contribute to the economic growth of the country and its long-term resilience. Spain thus aligns itself with other neighboring countries, where there is no minimum capital to set up a company of this type.

          Is this new law interesting for foreign investors or companies looking to establish themselves in Spain?

          It is certainly very interesting. The fact that the Spanish legislator abandons this reference figure of 3,000 euros is very favorable for medium-large companies willing to have a permanent establishment in Spain Nevertheless, as long as the capital does not reach the figure of €3,000, the following rules will be applied, which are intended to protect the interests of creditors or third parties that contract with the company:  (i) 20% of the profit must be allocated to the legal reserve until said reserve together with the social capital reach the figure of €3,000 (the legislator seeks that the SLs constituted in this way do not remain « undercapitalized »), and (ii) as a safeguard clause for creditors of the company, in the event of voluntary or forced liquidation of the company, if the company’s assets are insufficient to meet its obligations of payment, the partners will be jointly and severally liable for the difference between the subscribed capital and the figure of 3,000 euros.

          Online incorporation of a company in Spain

          The « CIRCE system » (procedure dependent on the Ministry of Industry, Commerce and Tourism that allows the start of the process of creating companies « over the Internet » ) entails an electronic procedure through agreements and communications with all the organizations and administrations that intervene in the process of incorporating companies.

          The entrepreneur will only have to complete the Single Electronic Document (DUE) that includes a multitude of forms and CIRCE will automatically carry out all the necessary procedures to establish the company, communicating with all the organizations involved (Tax Agency, Social Security, Mercantile Registry, Notary, etc.). There is an obligation to review and sign the DUE before sending it. This system is not active yet, but it is expected that it will be in place when other complementary laws that support this digital process are approved by the Spanish Legislator which is necessary for the well-functioning of the system.

          The Netherlands: The Flex BV law

          The Flex BV law came into force on October 4, 2011. This law has given a lot of flexibility to the incorporation of new limited liability companies which has been very favorable for international companies working with different product lines, allowing to have one company for every product or service offered.

          The Flex BV law has, among others, the following characteristics:

          • the creation of a Limited Liability Company is flexible, easy to establish and without many costs;
          • it only requires one shareholder who must be registered with the Dutch Trade Register. The minimum share capital for setting it up is 1 euro. The liability of the shareholder is limited to the amount of money he has invested in the company. Being a limited liability company, the BV is liable for any debts, not the director or shareholder as private individuals, except in case of mismanagement or fraud. The company requires at least one director, and the shareholders can fill this position. The company registration procedure is quite fast due to the minimum documentation required.

          Online incorporation of a company in the Netherlands

           In the case of the Netherlands, in the Explanatory Memorandum of the bill implementing the Directive (EU) 2019/1151 of the European Parliament and of the Council of 20 June 2019 amending Directive (EU) 2017/1132 with regard to the use of digital instruments, it is proposed that incorporation of a BV electronically is only possible if payment on the shares takes place in cash, in order to initially limit the online formation of companies to simple situations. If it turns out that online formation works well, it can be considered whether it is useful to extend this possibility to situations in which contributions are made in a manner other than in money. Incorporation by natural persons using a model deed of incorporation must be possible within five working days from the date on which the notary has received all documents and information from the applicant or the date of payment of the share capital.

          The incorporation of a BV digitally is postponed to the summer of 2023 since the House Committee for Justice and Security has decided that the act must be discussed in plenary.

          The so called DOBV-system (Digital establishment of a BV), will entail a change in a number of work processes in the notaries in The Netherlands but for the Chamber of Commerce, no major changes will follow because the civil-law notary will supply the registration documents digitally to the Chamber of Commerce. Consequences the civil-law notary is the one who will have to offer a certain digital form of service, which citizens and companies will be able to use.

          What positive and negative aspects can be highlighted?

          Positives aspects:

          • it is very positive that through this new standard, many investors or international companies from both countries will be encouraged to create new SPVs, as the minimum capital is considered by many companies as a “barrier to entry”;
          • it will expedite the procedures for incorporating companies, essential vehicles for channeling the economic activities of businessmen in their transcendental task of creating wealth and employment, without notary and registration costs;
          • it will create a healthy competition between all the Notaries in Spain and between the notaries of Spain and the Netherlands. The Dutch notary bond expects that a further digitization of the notarial process could be achieved first in the real estate chain and subsequently also in business practice. It is important that the business market may be capable to respond quickly to this demand;
          • the share capital of a company will serve its partners to have the necessary funds with which to start their project, acquire the goods and resources necessary to start the economic activity and consolidate a long-term project (such as, for example, to buy the goods and services necessary to start up activities or to hire employees);
          • it creates business growth through financing alternatives to bank financing, such as crowdfunding or participatory financing, collective investment and venture capital.

          Negatives aspects:

          • to search financing externally to start the company’s activity, which will also surely have a cost (in the form of loans, for example, with their corresponding interest rate). Additionally, in the short or medium term the company must have a capital increase to normalize their patrimonial situation and solve this evident « underfinancing » of own resources, with which, this will also suppose an additional cost in the form of notary and registry fees that must be faced in the medium or long term after the incorporation;
          • the possibility of establishing a limited liability company with only 1 euro of share capital can facilitate the creation of fictitious legal entities by people who do not wish to carry out a real economic activity, but only use the companies as a suitable instrument for the development of legal or illegal activities;
          • additionally, it also implies a clear risk for the legal certainty and the responsibility of those companies in large contracts with third parties, leaving a limit to their minimum liability while their businesses are millionaires;
          • the online constitution system can be rigid and can also generate management and processing problems if the interested parties have not been properly advised and guided by the professionals involved before arriving at the Notary. Additionally, CIRCE’s telematic systems must function properly in order to correctly serve all those interested in the constitution of a capital company;
          • there are new requirements for companies related to anti-laundry controls, for instance, to include relevant information on invoices and payments to suppliers in their annual reports and on their corporate website.

          Conclusions

          Although it may apparently imply a boom in the creation of limited liability companies due to the ease of incorporation, there is still much to be done at the level of corporate law at the national level and collaboration between notaries of both countries.

          Spain is, with the entering into force of the Law Creation and Growth, considered among the most advanced countries in facilitating the creation of companies, reducing regulatory obstacles and favoring business restructuring and viability. The final decision will depend on the specific needs of the business, access to finance and tax regime, among others.

          Additionally, to the incorporation flexibilities, we must not forget a couple of important aspects for the shareholders and directors to be aware of:

          • a company needs to be managed as well and we need to be aware of the treasury, labor or other obligations of the companies already incorporated, even if they are non-active, they must continue to publish the annual accounts and complying with all governance requirements and formal public register notifications;
          • the responsibility of the shareholders is also important to consider. A shareholder who has direct involvement in the management, may face liability in case of bankruptcy, also in the country where the subsidiary is located. As mentioned above, in Spain, in the event of voluntary or forced liquidation of the company, if the company’s assets are insufficient to meet its obligations of payment, the partners will be jointly and severally liable for the difference between the subscribed capital and the figure of 3,000 euros;
          • the last important aspect when you are doing business mainly in Europe is to consider restructuring your business or consider other forms of incorporation of companies, depending of the business model that you have opted to, for instance the use of the Societas Europaea (SE) which has the possibility to set up a holding company or a joint subsidiary together and to transfer the seat of the company without winding up the entity. The disadvantage is that you need €120,000 starting capital to set up and to have a minimum of 2 companies governed by the laws of different Member States. Other forms of incorporation are the European Cooperative Society (SCE) and the European Economic Interest Grouping (EEIG).

          If you need additional information or you are planning to incorporate a limited liability company in Spain or in The Netherlands, get in touch to know more about your options and the right corporate advice for your business.

          Dans quelles conditions le dirigeant d’une société peut-il être révoqué en France?

          Cela dépend de la forme de la société.

          Prenons les formes de sociétés commerciales les plus fréquentes.

          Le gérant d’une société à responsabilité limitée ne peut être révoqué que pour juste motif, c’est-à-dire s’il a commis une faute, ou si sa révocation est nécessaire à la protection de l’intérêt social.

          Dans une société anonyme, les membres du conseil d’administration et le président du conseil d’administration peuvent être révoqués « ad nutum », c’est-à-dire à tout moment et sans avoir à justifier d’un motif. Il est interdit de déroger à cette règle. Le directeur général, en revanche, ne peut être révoqué que pour juste motif.

          Dans les sociétés par actions simplifiées, une forme sociale créée en 1994, les dirigeant sont en principe révocable « ad nutum », mais les statuts peuvent y déroger, et prévoir que le dirigeant ne pourra être révoqué que pour juste motif.

          Une décision récente de la Cour de cassation, c’est-à-dire de la plus haute juridiction judiciaire en France, retient l’attention.

          Elle concerne les sociétés par actions simplifiées (« SAS »), la forme sociale qui a le plus de succès en France : une société nouvellement créée sur deux est une SAS.

          Dans les SAS, ce sont les statuts qui fixent les conditions dans lesquelles la société est dirigée, et notamment les conditions de révocation du dirigeant.

          La décision de la Cour de cassation du 12 octobre 2022 (N°21-15.382) pose un principe: si les actes extra-statutaires peuvent compléter les statuts, ils ne peuvent pas y déroger.

          Dans cette affaire, les statuts d’une SAS prévoyaient que le directeur général pouvait être révoqué à tout moment, et sans qu’aucun motif soit nécessaire, par décision des associés ou de l’associé unique, et que la révocation du directeur général ne lui donnerait droit à aucune indemnité.

          Un directeur général avait été nommé par l’associé unique. Le même jour, l’associé unique avait adressé à ce directeur général un courrier lui précisant qu’en cas de révocation de ses fonctions sans juste motif, il bénéficierait d’une indemnité forfaitaire égale à six mois de sa rémunération.

          Quelques années plus tard, la société a révoqué le directeur général, qui a exigé le paiement de son indemnité forfaitaire. Face au refus de la société de lui payer, l’ancien directeur général l’a assigné en paiement de l’indemnité.

          La Cour d’appel, puis la Cour de cassation ont donné raison à la société: l’ancien dirigeant n’avait pas droit à l’indemnité. Pour la Cour de cassation, les statuts fixent les modalités de révocation du directeur général, et ce sont les statuts qui priment. Si les actes extra-statutaires peuvent compléter ces statuts, ils ne peuvent y déroger. Et même si l’acte extra-statutaire émane de l’associé unique, ou si tous les associés y ont consenti.

          En conclusion

          Il faut être prudent et bien analyser les statuts et les actes extra-statutaires tels que les pactes d’associés ou les conventions avec le dirigeant pour ne pas prendre de risque lors de la révocation d’un dirigeant de SAS.

          Christian Steiner

          Practice areas

          • Entreprise
          • Commerce international
          • Travail
          • Litiges
          • Taxe
          Contact Christian

          Écrire à Vietnam Tackles Global Minimum Tax Implications





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            How to establish a «Limited Liability Company» (S.r.l.) in Italy

            3 mai 2023

            • Italie
            • Entreprise

            Vietnam has embraced the global minimum tax (GMT) to harmonize its tax policies with global standards. While this new tax regime is anticipated to have certain adverse effects on foreign direct investment (FDI), the Vietnamese government is devising proactive measures to mitigate these repercussions and maintain the country’s appeal as an investment haven.

            Key Ramifications of the GMT for Vietnam

            The GMT mandates multinational corporations (MNCs) with consolidated revenue surpassing €750 million to pay a minimum tax rate of 15%, irrespective of the tax rate in the country where they operate. In Vietnam, this translates to the concept of a qualified domestic minimum top-up tax (QDMTT).

            The QDMTT places an extra tax burden on foreign-invested enterprises (FIEs) that are part of an MNC, potentially deterring them from investing or expanding in Vietnam. This is particularly concerning for industries that heavily rely on tax incentives to attract FDI.

            Vietnam’s Response: Investment Support Fund and Proactive Measures

            In response to the anticipated negative impacts of the GMT, the Vietnamese government has established an investment support fund (Fund) to incentivize investments in targeted sectors. The Fund is primarily funded by proceeds from the State Budget generated by the GMT.

            Eligible enterprises for the Fund are those engaged in high-tech product manufacturing, high-tech enterprises, high-tech application projects, and enterprises with investment projects in research and development centers. Eligibility is based on capital size, annual revenue, industry, or technology utilized.

            Eligible taxpayers can receive cash subsidies for five specific expense categories:

            1. Human resource training and development
            2. Research and development expenses
            3. Fixed asset investments
            4. High-tech manufacturing expenses
            5. Social infrastructure systems

            To qualify for Fund benefits, eligible taxpayers must submit an application dossier to the Fund Office in Hanoi between August 15th and 30th of the year following the incurred Supported Expenses. Each Supported Expense category will have a distinct reimbursement ratio, and support payments will be contingent on the actual expenses incurred by eligible taxpayers.

            In addition to the Fund, the Vietnamese government is also implementing proactive measures to address the concerns of foreign investors. These measures include:

            1. Focusing on targeted industries with high growth potential that align with Vietnam’s strategic development goals
            2. Utilizing the additional revenue collected from top-up tax to enhance infrastructure and labor quality
            3. Considering cash grants for long-term qualified investments in high-tech industries

            Conclusion

            The introduction of the GMT poses challenges for Vietnam in attracting FDI. However, the government’s establishment of the investment support fund and proactive measures demonstrates its commitment to safeguarding the country’s competitiveness as an investment destination. By combining targeted support with infrastructure improvements and incentives for specific industries, Vietnam can mitigate the negative impacts of the GMT and continue to attract foreign investors.

            Summary:

            The heavily amended PRC Company Law will take effect on July 1, 2024. Please find below a summary of some of the important novelties embodied by this amended Company Law, which may have a significant impact on the rights and duties of the shareholders and management of a limited liability company (“LLC”).

            The businesses active in the PRC may be interested in carefully reviewing their corporate documents (including the Articles of Association) in light of the amended Company Law and deciding necessary adaptive measures for compliance/optimization purposes during the transition period leading to the effective date of the said amended Company law.

            Capital contribution.

            The amended Company Law provides that the subscribed capital of an LLC shall be paid up as per its Articles of Association within a time period up to 5 years from its incorporation (NB: The previous law does not set a time limit for the capital contribution.). This requirement will retroactively apply to the companies incorporated prior to July 1st, 2024.

            Despite the foregoing, a creditor or the company shall be entitled to request the shareholder(s) concerned to accelerate its/their capital contribution ahead of the due date for capital contribution should the company be unable to settle due debt(s) with its own assets.

            The equity and credit may be used for the capital contribution.

            Duties of directors/senior managers

            The directors shall bear the obligation to form the “liquidation team,” which shall proceed with the liquidation within 15 days of the occurrence of a number of statutory circumstances substantiated in Article 229 of the Company Law. The directors shall be held liable for losses incurred by the company or creditor(s) arising from their failure to fulfill the above liquidation obligation on time.

            The director(s)/senior manager(s) shall be held liable (along with the company itself) for compensating others should they cause any damages to the latter due to their intentional acts or gross negligence in the course of performing their duties.

            The board of directors of an LLC shall regularly check the status of capital contributions by the shareholders. It shall cause the company to issue written reminders to the shareholder(s) failing to make capital contributions on time. Should the shareholder fail to honor its subscribed capital contribution despite the reminder, subject to a specific board resolution and a written notification with immediate effect, the company may declare that the shareholder is disqualified from making the capital contribution.

            Corporate governance

            An LLC may set up an “audit commission” composed of directors to exercise the function of supervisor or supervisors’ committee as per its Articles of Association. In such cases, the company may no longer need to set up separate supervisors’ committees or appoint supervisors.

            However, the board of directors of an LLC having more than 300 employees shall have employees’ representative(s) elected through the democratic process unless the same LLC has a Supervisors’ Committee in place and such Committee already has the employees’ representative(s).

            Egypt, with its rich history and vibrant economy, presents promising opportunities for foreign investors looking to expand their business horizons. However, entering a new market can be a complex endeavor, and understanding the intricacies of doing business in Egypt is essential for success. In this article, we will delve deeper into the various aspects of establishing and managing a company in Egypt, providing valuable insights and guidance for prospective investors.

            Conducting Market Research

            Before venturing into any new market, conducting thorough market research is crucial. Egypt is a diverse country with a dynamic market, and understanding the local nuances, consumer behavior, and market trends is essential. It is advisable for foreign investors to consider setting up an initial representative office, allowing them to conduct in-depth market research without fully committing to commercial operations. A representative office can employ local staff to gather market insights and report back to the parent company, enabling informed decision-making for future business initiatives. This representative office may not engage in any commercial activities and may not invoice. Hence, it is not subject to any corporate tax but will be subject to salary tax for its employees and withholding tax.

            Choosing the Right Business Structure

            When establishing a legal entity in Egypt, foreign investors have several options to choose from. The most common business structures for foreign direct investment are a One Person Company (OPC), Limited Liability Companies (LLCs) and Joint Stock Companies (SAEs) as 100% of the shares can be wholly owned by foreigners. The choice of structure depends on the nature of the business and the specific objectives of the foreign company. Alternatively, for specific projects or contracts with defined purposes, establishing a branch office can be a viable option.

            The Company Establishment Process

            Setting up a company in Egypt involves navigating through certain legal procedures. The Egyptian government has implemented measures to facilitate foreign investments and ensure a favorable business environment. Foreign investors can own 100% of their businesses in most sectors, and the minimum requirement for establishing a company is typically having at least one shareholder. In the case of LLCs, a minimum of two partners is required while in case of SAEs a minimum of 3 shareholders is required. It is important to note that a foreign director can be appointed, except for activities that require an import license, which necessitates an Egyptian partner and director.

            Import and Distribution Considerations

            For foreign entities planning to import and distribute goods in Egypt, specific considerations come into play. Obtaining an import license requires meeting certain criteria, including demonstrating a minimum turnover, meeting nominal capital criteria, and having an Egyptian partner holding at least 51% of the shares. These regulations aim to ensure local participation and collaboration in import-oriented activities.

            Timelines and Administrative Processes

            Understanding the timelines and administrative processes involved in establishing a company in Egypt is crucial for efficient planning.
            While, foreign direct investors may establish the legal entity in one working day through GAFI as the commercial registry and tax card will be issued on the same day. However, the process may take up to six months, it can vary depending on various factors as follows:

            • a significant factor is the legalization of documents, which may require coordination with embassies and consulates for the legalization of documents such as power of attorney, corporate documents, and their translated versions;
            • opening a bank account for the company's capital needs to deliver all corporate documents related to the ultimate business owner (UBO) which may potentially cause delays.

            Efficient Branch or Subsidiary Management

            Once the company is operational, efficient branch management is vital for sustained success  as clearly defining the director’s powers through the bylaws or separate agreements is recommended. Regular communication with local management, employing competent accountants, and maintaining oversight of operations are essential to maintain control and address any issues promptly.

            Joint Ventures and Board Representation

            In cases where foreign investors collaborate with local partners through joint ventures, establishing a board of directors plays a crucial role. The board oversees company management and decision-making processes. It is advisable for foreign shareholders to regulate their relations with their local partners by virtue of a shareholder agreement to ensure their representation on the board, allowing them to actively participate and safeguard their interests. Maintaining open lines of communication and regular meetings are fundamental for staying informed about the company’s performance.

            Conclusion

            Expanding into the Egyptian market holds immense potential for foreign investors. However, navigating the business landscape requires careful planning, market research, and adherence to legal procedures. By understanding the nuances of establishing and managing a company in Egypt, foreign investors can unlock new business opportunities and forge successful ventures in this dynamic market. With the right approach and strategic decisions, Egypt can prove to be a rewarding destination for those seeking growth and expansion

            Would you like to know more?

            Watch the video of this Episode here.

            Accepting the position of director (administrator or CEO) in a Spanish company entails increasing risks. Indeed, the Supreme Court – ruling by ruling – is outlining and interpreting the precepts of the Capital Companies Act (LSC) with an increasingly rigorous and demanding approach when it comes to delimiting the framework of directors’ liability.

            Of course, the content of Article 43.1 b) of the General Tax Law is not new at all when it lays the foundations for the subsidiary liability of directors for debts owed to the Tax Agency:

            The following persons or entities shall be subsidiarily liable for the tax debt:

            b) The de facto or de jure administrators of those legal entities that have ceased their activities, for the accrued tax obligations of these that are pending at the time of the cessation, provided that they have not done what is necessary for their payment or have adopted agreements or taken measures causing the non-payment.

            It could be deduced from the reading of the transcribed provision that the subsidiary liability of the directors who, at the time of the cessation of the corporate activity, effectively held the position of director, was established; but that the liability would not reach those directors who had been so in the past but were no longer directors at the time when the company had ceased to act in the legal and economic traffic, for the tax debts pending at that time.

            Well, the Supreme Court (Third Chamber) in its recent judgment of March 7th, 2023, hammers one more nail in the coffin of the liability of the directors.

            The case that was the subject of the ruling consisted of determining the subsidiary liability to the Tax Agency of a director whose position had expired (due to the expiration of the statutory term) and who had called a general meeting for the appointment of new members of the administrative body of the company.

            The Supreme Court understands (and establishes a doctrine for the purposes of appeal) that the director with an expired position does not « exhaust » his obligations with the call of the meeting in question, but must also, pursuant to art. 365 LSC call another general meeting to adopt the resolution to file for insolvency or dissolution due to the existence of the causes of art. 363 LSC a) (cessation of activity) and d) (paralysis of the corporate bodies) as well as, if applicable, the request for judicial dissolution in his capacity as an interested party (art. 366.1 LSC).

            The reproachable conduct according to the Supreme Court (which triggers the subsidiary liability) consists in the fact that, facing the cessation of the activity of the company, the only thing he did was to call a meeting for the appointment of a new director and therefore « it did not carry out the necessary acts to be able to face the payment of the tax debts, thus meeting the subjective element necessary to be able to declare its liability ».

            The court ruling insists that the condition of director is not lost with the exhaustion of the mandate due to the expiration of the position since the mercantile and fiscal obligations persist; and that the call of a meeting to appoint a new director is not enough to understand that such meeting, once held, deprives the director with expired position of the condition of director, when there is a cause of dissolution that would have obliged to call another meeting with another object and another agenda to agree on the dissolution of the inactive company.

            But what is remarkable and striking in this case is that the meeting called by the director (with expired position) for the appointment of new a new director was held in June 2012, the resolutions were made public on March 1st, 2013, they were registered in the commercial registry in July of the same year and the judgment expressly states that the cessation of corporate activity occurred in April 2013 (i.e. when the meeting for the appointment of new administrators had already been held, June 2012, and when the appointment of the new director had already been made public, March 1st, 2013).

            The court resolution reads as follows:

            « Given the date on which the cessation of the business activity was established by the judgment a quo, April 2013, the appellant should still be considered as a director of the company in that capacity, his conduct should be considered negligent for the purposes of inclusion in the cause of subsidiary liability of art. 43.1.b) LGT ». 

            The claimant director argued that Art. 222 LSC and Art. 145.1 RRM state that the appointment of directors will expire, among other cases, when the term has expired and the meeting for the appointment of a new director has been held (or the term for its holding has elapsed) that is to resolve on the approval of the accounts of the previous year. And he explained that on top of that, he had fulfilled his obligations as director calling for a general shareholders meeting where new directors were appointed 9 months before the company ceased its activities. Therefore, he no longer was a “director” on April 2103.

            Despite of that argument the Supreme Court insists that, whether or not the position has expired, said expiration does not exhaust or extinguish his responsibilities as director, which must be interpreted extensively: it is not enough for him to call a meeting for the appointment of new directors, but he must act to dissolve the company or file for insolvency proceedings, as if the position had full and complete validity. 

            Thus, after this strong ruling, the directors of Spanish companies, in the event of termination of the activity, even if their position has expired, must know that their liability (and specifically the subsidiary liability for tax debts) will only be released if they call a meeting to dissolve the company, if the meeting does not adopt such resolution, if they request the court for the judicial dissolution or if they file voluntary insolvency proceedings.

            To summarize, they will be liable if they do not act in the same way as if their position were still in full force and effect. As we said above, it is necessary to think very much about accepting positions of director of Spanish companies.

            En Algérie, les administrateurs peuvent être exposés à des risques de responsabilité civile pour infraction à la loi, violation des statuts de la société et mauvaise gestion. Les principales sources de cette responsabilité sont le droit des sociétés, la législation du travail, le droit de l’environnement, le droit fiscal et le droit des faillites.

            Le droit des sociétés régit les droits et les obligations des administrateurs à l’égard de la société et de ses actionnaires. Les administrateurs doivent agir dans le cadre des pouvoirs qui leur sont conférés par les statuts de la société. S’ils outrepassent cette autorité ou manquent à leurs devoirs, ils peuvent être tenus personnellement responsables de dédommager financièrement la société.

            La législation sur l’emploi régit les droits et les obligations des administrateurs envers les employés de la société. Les administrateurs doivent se conformer au droit du travail et à la réglementation de la sécurité sociale en Algérie. S’ils ne le font pas, ils peuvent être tenus personnellement responsables des dommages causés aux employés ou aux autorités de sécurité sociale.

            En fonction de la nature et de la gravité de l’infraction, les administrateurs peuvent faire l’objet de sanctions civiles, administratives ou pénales, y compris des amendes, des peines d’emprisonnement ou des déchéances.

            Qui peut intenter une action en responsabilité civile contre les administrateurs en Algérie?

            En Algérie, les administrateurs peuvent faire l’objet d’actions en responsabilité civile de la part de différentes parties. La société elle-même peut poursuivre les administrateurs pour infraction à la loi, violation des statuts de la société et mauvaise gestion. Les actionnaires peuvent également poursuivre les administrateurs pour tout dommage causé à leurs intérêts par la faute des administrateurs. Les tiers, tels que les créanciers, les employés ou les clients, peuvent poursuivre les administrateurs pour tout préjudice causé par leurs actions ou omissions qui sont séparables de leur qualité de membres du conseil d’administration.

            Par exemple, les prêteurs peuvent se retourner contre les actifs et les biens d’un administrateur si ce dernier a fourni une garantie personnelle pour les dettes de la société. Les actionnaires peuvent poursuivre les administrateurs pour manquement à leurs obligations fiduciaires, par exemple en cas de mauvaise foi, d’intérêt personnel ou de négligence. Les employés peuvent poursuivre les administrateurs pour licenciement abusif, discrimination ou harcèlement. Les clients peuvent poursuivre les administrateurs pour rupture de contrat, fausse déclaration ou produits défectueux. Les créanciers peuvent poursuivre les administrateurs pour opérations frauduleuses, opérations illicites ou fautes professionnelles.

            Les risques de responsabilité pénale des administrateurs en Algérie

            Les administrateurs peuvent faire l’objet de sanctions pénales pour diverses infractions liées au fonctionnement de l’entreprise et à sa gestion et ses activités quotidiennes. En vertu du droit des sociétés, les administrateurs peuvent être pénalement responsables de fraude, d’abus de biens sociaux, de fausse comptabilité, de faillite ou d’insolvabilité. Conformément à la législation algérienne sur l’emploi, les administrateurs peuvent être pénalement responsables en cas de violation du droit du travail, de la réglementation de la sécurité sociale, des règles de santé et de sécurité ou des conventions collectives. Des sanctions pénales peuvent également s’appliquer aux administrateurs en cas de violation des lois sur l’environnement, de violation des lois fiscales, d’évasion fiscale ou de falsification de documents fiscaux. Les sanctions pénales peuvent inclure des amendes, des peines d’emprisonnement ou l’interdiction d’exercer.

            Qui peut engager des poursuites pénales à l’encontre des administrateurs?

            Les poursuites pénales contre les administrateurs en Algérie peuvent être engagées par différentes parties. Le procureur de la République peut engager des poursuites pénales contre les dirigeants pour toute infraction relevant de sa compétence. Il peut agir de sa propre initiative ou sur plainte d’une victime ou d’un tiers. La société elle-même peut – par l’intermédiaire de son représentant légal ou de son liquidateur, selon le cas – engager des poursuites pénales contre les administrateurs pour des infractions portant atteinte à ses intérêts, telles que la fraude, l’abus de biens sociaux ou la fausse comptabilité. Les actionnaires peuvent également engager des poursuites pénales contre les administrateurs pour des infractions portant atteinte à leurs intérêts, telles que le manquement à une obligation fiduciaire, la négligence ou la mauvaise gestion. Dans une telle configuration, les actionnaires ne peuvent agir qu’au nom de la société et réclamer la réparation du préjudice subi par la société, et non le leur.

            Quels sont les délais de prescription pour les affaires civiles en Algérie ? Pour les affaires pénales?

            Les délais de prescription pour les affaires civiles en Algérie varient en fonction du type de demande et des parties impliquées. Les actions civiles sont généralement soumises à un délai de prescription de trois ans à compter de la date à laquelle le demandeur a eu connaissance ou aurait dû avoir connaissance du dommage et de son auteur. Il existe cependant quelques exceptions à cette règle générale:

            • les actions pour préjudice corporel ou décès injustifié sont soumises à un délai de prescription de dix ans à compter de la date du préjudice ou du décès;
            • les actions pour rupture de contrat sont soumises à un délai de prescription de cinq ans à compter de la date de la rupture ou de la résiliation;
            • les actions en responsabilité professionnelle se prescrivent par deux ans à compter de la date à laquelle le demandeur a eu connaissance ou aurait dû avoir connaissance du dommage et de son auteur, mais pas plus de dix ans à compter de la date à laquelle le service professionnel a été rendu;
            • les actions en diffamation sont soumises à un délai de prescription de trois mois à compter de la date à laquelle la déclaration diffamatoire a été publiée ou diffusée.

            Les délais de prescription peuvent être interrompus par certains événements, tels que l’introduction d’une action en justice, l’envoi d’une mise en demeure, la reconnaissance d’une dette ou un paiement.

            En revanche, dans les affaires pénales, le délai de prescription dépend du type d’infraction.

            Quelles sont les couvertures d’assurance habituelles en matière de responsabilité des administrateurs?

            L’assurance responsabilité civile des administrateurs et des dirigeants (D&O) couvre les administrateurs actuels, futurs et anciens, ainsi que les administrateurs non exécutifs, les affiliés et les dirigeants d’une entreprise. Les scénarios de risque comprennent la responsabilité des prospectus, la responsabilité des fonds de pension et la responsabilité des pratiques d’emploi. L’assurance D&O protège les administrateurs et les dirigeants ou leur entreprise ou organisation s’ils sont poursuivis en justice (la plupart des polices excluent la fraude et les délits). L’assurance D&O peut offrir trois types de couverture: (1) pour la responsabilité personnelle des administrateurs et des dirigeants; (2) pour le remboursement par l’entreprise des sommes versées aux administrateurs et aux dirigeants; (3) pour la responsabilité directe de l’entreprise.

            La responsabilité potentielle d’une société holding contrôlant la nomination des administrateurs d’une filiale algérienne pour les actions de ces administrateurs

            Les administrateurs de sociétés d’investissement ou de holding ne sont généralement pas considérés comme des administrateurs de fait ou des administrateurs fictifs d’entreprises communes ou de filiales, à moins que leurs actions n’aillent au-delà de ce qui peut raisonnablement être considéré comme approprié pour leur position d’administrateur de la société d’investissement ou de holding.

            The limited liability company – in Italian: «Società a Responsabilità Limitata» or «S.r.l.» only – is the most popular Italian company type, mainly for the following reasons:

            • a little registered capital is enough;
            • the quota holders’ liability is limited to the pro-quota subscribed capital;
            • it is a «low-cost» company, also easy to be managed.

            In Italy, the S.r.l. differs from joint-stock companies as the participation in the capital is represented by «intangible» quota(s), which cannot circulate as stocks. This is why the members of an S.R.L. are called «quota holders» and not «shareholders».

            Similar companies in other countries are L.L.C. in the U.S., L.T.C. in the U.K., G.m.b.H. in Germany; S.a.r.l. in France; S.L. in Spain. 

            S.r.l. in a nutshell

            • Company name: Società a responsabilità limitata – S.r.l.
            • Minimum registered capital: EUR 10.000,00 (of which only EUR 2.500,00 must be paid at incorporation). The minimum corporate capital can be as low as EUR 1,00, but when the capital is lower than EUR 10.000,00 the company will be a “simplified S.R.L.”, subject to certain special rules and limitations (see below)
            • Minimum number of quota holders: One
            • Maximum number of quota holders: None
            • Nationality of the quota holders: No limits (with some rare exceptions that must be verified on a case-by-case basis)
            • Nationality of the directors: No limits (with some rare exceptions that must be verified on a case-by-case basis)
            • Limited liability: Yes
            • Auditing: Required only if (i) the company has more than 50 employees or exceeds € 4,400,000 in assets or € 8,800,000 in turnover for two consecutive years; (ii) is obliged to prepare consolidated financial statements; or (iii) controls other companies that are required to have statutory audits.

            The list of info and documents needed

            To incorporate an S.r.l., the information needed is as follows:

            • the name of the new company

            In Italy, there are no special limitations in identifying the company name.

            • the personal data of the quota holders and the registered capital subscribed.

            In the case of a sole quota holder, special rules and restrictions apply. For example, the corporate capital shall be fully paid, and all the company documents and correspondence shall point out that the corporate capital belongs to a sole quota holder; otherwise, the sole quota holder shall be jointly liable with the company for its debts.

            Please note that on the day of the incorporation of the S.r.l., each quota holder must deposit in a bank account an amount equal to at least 25% of his/her/its quota of corporate capital. The unpaid capital shall be paid within 30 days if requested by the director(s). The bank deposit can be replaced by an insurance policy or a bank guarantee (under certain requirements); or by a contribution in kind. However, in this case, the law requires an independent expert valuation and some other formalities.

            In case the quota holder is a company, some additional documents may be required (e.g., the resolution adopted by the shareholders’ meeting) which shall be translated into Italian (certified translation), notarized, and apostilled or legalized, depending on the case.

            • the personal data of the director(s)

            The director(s) can also be foreign nationals, but they shall hold an Italian fiscal identification number («codice fiscale»), which can be obtained from any local tax office («Agenzia delle Entrate»).

            The first director(s) are appointed in the deed of incorporation.

            • the address of the registered office

            The office may be also a «virtual» one, for instance, located at the office of a law or accounting firm;

            • the name and personal details of the first statutory auditors, if necessary

            The “Simplified” S.r.l.

            As mentioned above, when the partners set up an S.r.l. with a share capital of less than € 10,000, it will be an “S.r.l. Semplificata” (simplified S.r.l.).

            Compared to the ordinary S.r.l., it enjoys some economic benefits during the incorporation phase (i.e.: exemption from paying stamp duty and secretarial fees, exemption from paying notary’s fees), but also some rather significant limitations, because the bylaws must be drafted by a standard model, and registered capital may be paid only in cash.

            Should the shareholders decide to increase the registered capital to a value equal to or greater than € 10,000, they will be required to transform the company into an ‘ordinary’ S.r.l. (through a notarised public deed), thus losing the limitations seen above and thus, for example, being able to amend the bylaws.

            The management of a simplified S.r.l., on the other hand, does not enjoy any benefits compared to the ordinary S.r.l., and this is the main reason why it has not been very successful in Italy. Indeed, the small registered capital may constitute a limitation to obtaining bank financing or requesting credit from suppliers.

            Since these disadvantages are not balanced by any advantages or tax benefit in the management of a simplified S.r.l., the ordinary S.r.l. seems preferable, unless the founders have limited resources at the incorporation stage and can exclude from the outset that the new company will need access to bank financing or enter into particular corporate operations.

            How to incorporate an S.r.l.

            The deed of incorporation and the by-laws shall be executed before a Public Notary.

            The deed of incorporation is a quite standard document that contains all the information provided by the law to set up an S.r.l.

            The by-laws contain the company governance rules and can always be amended through a resolution of the quota holders’ meeting. The founding quota holders are free – except in the case of a simplified S.r.l. – to adapt the bylaws to their needs, establishing, for example, the manner and timing of the payment of share capital, the type of governance (sole director or board of directors), the powers and duration of the company’s administrative body, the procedures for the transfer of company shares, the majorities required for decisions by the quota holders’ meeting, the procedures and conditions for the withdrawal of quota holders, the conditions for the withdrawal, etc.

            After the incorporation, a copy of the deed of incorporation and the by-laws shall be filed at the Italian Companies’ Register within 20 days. Until then, any person acting on behalf of the company will be personally liable.

            Where is it more suitable to set up a new limited liability company in Europe?

            I will deal in this article with two countries I know well (Spain and The Netherlands) and focus on the minimum capital requested and the online incorporation of a limited liability company, sharing some thoughts and my takeaways.

            Spain: the “Create and Grow Law”

            In Spain, the Business Creation and Growth Law 18/2022, of September 28, 2022 (related to aspects of incorporation of companies), known as the “Create and Grow Law”, was approved last September within the framework of the Recovery, Transformation and Resilience Plan of the Spanish government. This plan channels European funds to alleviate the consequences of the Covid-19 crisis. This law is an initiative that reflects this flexibility and, as its explanatory statement indicates, aims to encourage the creation and growth of companies, in order to contribute to the economic growth of the country and its long-term resilience. Spain thus aligns itself with other neighboring countries, where there is no minimum capital to set up a company of this type.

            Is this new law interesting for foreign investors or companies looking to establish themselves in Spain?

            It is certainly very interesting. The fact that the Spanish legislator abandons this reference figure of 3,000 euros is very favorable for medium-large companies willing to have a permanent establishment in Spain Nevertheless, as long as the capital does not reach the figure of €3,000, the following rules will be applied, which are intended to protect the interests of creditors or third parties that contract with the company:  (i) 20% of the profit must be allocated to the legal reserve until said reserve together with the social capital reach the figure of €3,000 (the legislator seeks that the SLs constituted in this way do not remain « undercapitalized »), and (ii) as a safeguard clause for creditors of the company, in the event of voluntary or forced liquidation of the company, if the company’s assets are insufficient to meet its obligations of payment, the partners will be jointly and severally liable for the difference between the subscribed capital and the figure of 3,000 euros.

            Online incorporation of a company in Spain

            The « CIRCE system » (procedure dependent on the Ministry of Industry, Commerce and Tourism that allows the start of the process of creating companies « over the Internet » ) entails an electronic procedure through agreements and communications with all the organizations and administrations that intervene in the process of incorporating companies.

            The entrepreneur will only have to complete the Single Electronic Document (DUE) that includes a multitude of forms and CIRCE will automatically carry out all the necessary procedures to establish the company, communicating with all the organizations involved (Tax Agency, Social Security, Mercantile Registry, Notary, etc.). There is an obligation to review and sign the DUE before sending it. This system is not active yet, but it is expected that it will be in place when other complementary laws that support this digital process are approved by the Spanish Legislator which is necessary for the well-functioning of the system.

            The Netherlands: The Flex BV law

            The Flex BV law came into force on October 4, 2011. This law has given a lot of flexibility to the incorporation of new limited liability companies which has been very favorable for international companies working with different product lines, allowing to have one company for every product or service offered.

            The Flex BV law has, among others, the following characteristics:

            • the creation of a Limited Liability Company is flexible, easy to establish and without many costs;
            • it only requires one shareholder who must be registered with the Dutch Trade Register. The minimum share capital for setting it up is 1 euro. The liability of the shareholder is limited to the amount of money he has invested in the company. Being a limited liability company, the BV is liable for any debts, not the director or shareholder as private individuals, except in case of mismanagement or fraud. The company requires at least one director, and the shareholders can fill this position. The company registration procedure is quite fast due to the minimum documentation required.

            Online incorporation of a company in the Netherlands

             In the case of the Netherlands, in the Explanatory Memorandum of the bill implementing the Directive (EU) 2019/1151 of the European Parliament and of the Council of 20 June 2019 amending Directive (EU) 2017/1132 with regard to the use of digital instruments, it is proposed that incorporation of a BV electronically is only possible if payment on the shares takes place in cash, in order to initially limit the online formation of companies to simple situations. If it turns out that online formation works well, it can be considered whether it is useful to extend this possibility to situations in which contributions are made in a manner other than in money. Incorporation by natural persons using a model deed of incorporation must be possible within five working days from the date on which the notary has received all documents and information from the applicant or the date of payment of the share capital.

            The incorporation of a BV digitally is postponed to the summer of 2023 since the House Committee for Justice and Security has decided that the act must be discussed in plenary.

            The so called DOBV-system (Digital establishment of a BV), will entail a change in a number of work processes in the notaries in The Netherlands but for the Chamber of Commerce, no major changes will follow because the civil-law notary will supply the registration documents digitally to the Chamber of Commerce. Consequences the civil-law notary is the one who will have to offer a certain digital form of service, which citizens and companies will be able to use.

            What positive and negative aspects can be highlighted?

            Positives aspects:

            • it is very positive that through this new standard, many investors or international companies from both countries will be encouraged to create new SPVs, as the minimum capital is considered by many companies as a “barrier to entry”;
            • it will expedite the procedures for incorporating companies, essential vehicles for channeling the economic activities of businessmen in their transcendental task of creating wealth and employment, without notary and registration costs;
            • it will create a healthy competition between all the Notaries in Spain and between the notaries of Spain and the Netherlands. The Dutch notary bond expects that a further digitization of the notarial process could be achieved first in the real estate chain and subsequently also in business practice. It is important that the business market may be capable to respond quickly to this demand;
            • the share capital of a company will serve its partners to have the necessary funds with which to start their project, acquire the goods and resources necessary to start the economic activity and consolidate a long-term project (such as, for example, to buy the goods and services necessary to start up activities or to hire employees);
            • it creates business growth through financing alternatives to bank financing, such as crowdfunding or participatory financing, collective investment and venture capital.

            Negatives aspects:

            • to search financing externally to start the company’s activity, which will also surely have a cost (in the form of loans, for example, with their corresponding interest rate). Additionally, in the short or medium term the company must have a capital increase to normalize their patrimonial situation and solve this evident « underfinancing » of own resources, with which, this will also suppose an additional cost in the form of notary and registry fees that must be faced in the medium or long term after the incorporation;
            • the possibility of establishing a limited liability company with only 1 euro of share capital can facilitate the creation of fictitious legal entities by people who do not wish to carry out a real economic activity, but only use the companies as a suitable instrument for the development of legal or illegal activities;
            • additionally, it also implies a clear risk for the legal certainty and the responsibility of those companies in large contracts with third parties, leaving a limit to their minimum liability while their businesses are millionaires;
            • the online constitution system can be rigid and can also generate management and processing problems if the interested parties have not been properly advised and guided by the professionals involved before arriving at the Notary. Additionally, CIRCE’s telematic systems must function properly in order to correctly serve all those interested in the constitution of a capital company;
            • there are new requirements for companies related to anti-laundry controls, for instance, to include relevant information on invoices and payments to suppliers in their annual reports and on their corporate website.

            Conclusions

            Although it may apparently imply a boom in the creation of limited liability companies due to the ease of incorporation, there is still much to be done at the level of corporate law at the national level and collaboration between notaries of both countries.

            Spain is, with the entering into force of the Law Creation and Growth, considered among the most advanced countries in facilitating the creation of companies, reducing regulatory obstacles and favoring business restructuring and viability. The final decision will depend on the specific needs of the business, access to finance and tax regime, among others.

            Additionally, to the incorporation flexibilities, we must not forget a couple of important aspects for the shareholders and directors to be aware of:

            • a company needs to be managed as well and we need to be aware of the treasury, labor or other obligations of the companies already incorporated, even if they are non-active, they must continue to publish the annual accounts and complying with all governance requirements and formal public register notifications;
            • the responsibility of the shareholders is also important to consider. A shareholder who has direct involvement in the management, may face liability in case of bankruptcy, also in the country where the subsidiary is located. As mentioned above, in Spain, in the event of voluntary or forced liquidation of the company, if the company’s assets are insufficient to meet its obligations of payment, the partners will be jointly and severally liable for the difference between the subscribed capital and the figure of 3,000 euros;
            • the last important aspect when you are doing business mainly in Europe is to consider restructuring your business or consider other forms of incorporation of companies, depending of the business model that you have opted to, for instance the use of the Societas Europaea (SE) which has the possibility to set up a holding company or a joint subsidiary together and to transfer the seat of the company without winding up the entity. The disadvantage is that you need €120,000 starting capital to set up and to have a minimum of 2 companies governed by the laws of different Member States. Other forms of incorporation are the European Cooperative Society (SCE) and the European Economic Interest Grouping (EEIG).

            If you need additional information or you are planning to incorporate a limited liability company in Spain or in The Netherlands, get in touch to know more about your options and the right corporate advice for your business.

            Dans quelles conditions le dirigeant d’une société peut-il être révoqué en France?

            Cela dépend de la forme de la société.

            Prenons les formes de sociétés commerciales les plus fréquentes.

            Le gérant d’une société à responsabilité limitée ne peut être révoqué que pour juste motif, c’est-à-dire s’il a commis une faute, ou si sa révocation est nécessaire à la protection de l’intérêt social.

            Dans une société anonyme, les membres du conseil d’administration et le président du conseil d’administration peuvent être révoqués « ad nutum », c’est-à-dire à tout moment et sans avoir à justifier d’un motif. Il est interdit de déroger à cette règle. Le directeur général, en revanche, ne peut être révoqué que pour juste motif.

            Dans les sociétés par actions simplifiées, une forme sociale créée en 1994, les dirigeant sont en principe révocable « ad nutum », mais les statuts peuvent y déroger, et prévoir que le dirigeant ne pourra être révoqué que pour juste motif.

            Une décision récente de la Cour de cassation, c’est-à-dire de la plus haute juridiction judiciaire en France, retient l’attention.

            Elle concerne les sociétés par actions simplifiées (« SAS »), la forme sociale qui a le plus de succès en France : une société nouvellement créée sur deux est une SAS.

            Dans les SAS, ce sont les statuts qui fixent les conditions dans lesquelles la société est dirigée, et notamment les conditions de révocation du dirigeant.

            La décision de la Cour de cassation du 12 octobre 2022 (N°21-15.382) pose un principe: si les actes extra-statutaires peuvent compléter les statuts, ils ne peuvent pas y déroger.

            Dans cette affaire, les statuts d’une SAS prévoyaient que le directeur général pouvait être révoqué à tout moment, et sans qu’aucun motif soit nécessaire, par décision des associés ou de l’associé unique, et que la révocation du directeur général ne lui donnerait droit à aucune indemnité.

            Un directeur général avait été nommé par l’associé unique. Le même jour, l’associé unique avait adressé à ce directeur général un courrier lui précisant qu’en cas de révocation de ses fonctions sans juste motif, il bénéficierait d’une indemnité forfaitaire égale à six mois de sa rémunération.

            Quelques années plus tard, la société a révoqué le directeur général, qui a exigé le paiement de son indemnité forfaitaire. Face au refus de la société de lui payer, l’ancien directeur général l’a assigné en paiement de l’indemnité.

            La Cour d’appel, puis la Cour de cassation ont donné raison à la société: l’ancien dirigeant n’avait pas droit à l’indemnité. Pour la Cour de cassation, les statuts fixent les modalités de révocation du directeur général, et ce sont les statuts qui priment. Si les actes extra-statutaires peuvent compléter ces statuts, ils ne peuvent y déroger. Et même si l’acte extra-statutaire émane de l’associé unique, ou si tous les associés y ont consenti.

            En conclusion

            Il faut être prudent et bien analyser les statuts et les actes extra-statutaires tels que les pactes d’associés ou les conventions avec le dirigeant pour ne pas prendre de risque lors de la révocation d’un dirigeant de SAS.

            Roberto Luzi Crivellini

            Practice areas

            • Arbitrage
            • Distribution
            • e-commerce
            • Commerce international
            • Litiges
            Contact Roberto

            Écrire à Vietnam Tackles Global Minimum Tax Implications





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              The incorporation of limited liability companies in The Netherlands and in Spain

              24 janvier 2023

              • Netherlands
              • Espagne
              • Entreprise

              Vietnam has embraced the global minimum tax (GMT) to harmonize its tax policies with global standards. While this new tax regime is anticipated to have certain adverse effects on foreign direct investment (FDI), the Vietnamese government is devising proactive measures to mitigate these repercussions and maintain the country’s appeal as an investment haven.

              Key Ramifications of the GMT for Vietnam

              The GMT mandates multinational corporations (MNCs) with consolidated revenue surpassing €750 million to pay a minimum tax rate of 15%, irrespective of the tax rate in the country where they operate. In Vietnam, this translates to the concept of a qualified domestic minimum top-up tax (QDMTT).

              The QDMTT places an extra tax burden on foreign-invested enterprises (FIEs) that are part of an MNC, potentially deterring them from investing or expanding in Vietnam. This is particularly concerning for industries that heavily rely on tax incentives to attract FDI.

              Vietnam’s Response: Investment Support Fund and Proactive Measures

              In response to the anticipated negative impacts of the GMT, the Vietnamese government has established an investment support fund (Fund) to incentivize investments in targeted sectors. The Fund is primarily funded by proceeds from the State Budget generated by the GMT.

              Eligible enterprises for the Fund are those engaged in high-tech product manufacturing, high-tech enterprises, high-tech application projects, and enterprises with investment projects in research and development centers. Eligibility is based on capital size, annual revenue, industry, or technology utilized.

              Eligible taxpayers can receive cash subsidies for five specific expense categories:

              1. Human resource training and development
              2. Research and development expenses
              3. Fixed asset investments
              4. High-tech manufacturing expenses
              5. Social infrastructure systems

              To qualify for Fund benefits, eligible taxpayers must submit an application dossier to the Fund Office in Hanoi between August 15th and 30th of the year following the incurred Supported Expenses. Each Supported Expense category will have a distinct reimbursement ratio, and support payments will be contingent on the actual expenses incurred by eligible taxpayers.

              In addition to the Fund, the Vietnamese government is also implementing proactive measures to address the concerns of foreign investors. These measures include:

              1. Focusing on targeted industries with high growth potential that align with Vietnam’s strategic development goals
              2. Utilizing the additional revenue collected from top-up tax to enhance infrastructure and labor quality
              3. Considering cash grants for long-term qualified investments in high-tech industries

              Conclusion

              The introduction of the GMT poses challenges for Vietnam in attracting FDI. However, the government’s establishment of the investment support fund and proactive measures demonstrates its commitment to safeguarding the country’s competitiveness as an investment destination. By combining targeted support with infrastructure improvements and incentives for specific industries, Vietnam can mitigate the negative impacts of the GMT and continue to attract foreign investors.

              Summary:

              The heavily amended PRC Company Law will take effect on July 1, 2024. Please find below a summary of some of the important novelties embodied by this amended Company Law, which may have a significant impact on the rights and duties of the shareholders and management of a limited liability company (“LLC”).

              The businesses active in the PRC may be interested in carefully reviewing their corporate documents (including the Articles of Association) in light of the amended Company Law and deciding necessary adaptive measures for compliance/optimization purposes during the transition period leading to the effective date of the said amended Company law.

              Capital contribution.

              The amended Company Law provides that the subscribed capital of an LLC shall be paid up as per its Articles of Association within a time period up to 5 years from its incorporation (NB: The previous law does not set a time limit for the capital contribution.). This requirement will retroactively apply to the companies incorporated prior to July 1st, 2024.

              Despite the foregoing, a creditor or the company shall be entitled to request the shareholder(s) concerned to accelerate its/their capital contribution ahead of the due date for capital contribution should the company be unable to settle due debt(s) with its own assets.

              The equity and credit may be used for the capital contribution.

              Duties of directors/senior managers

              The directors shall bear the obligation to form the “liquidation team,” which shall proceed with the liquidation within 15 days of the occurrence of a number of statutory circumstances substantiated in Article 229 of the Company Law. The directors shall be held liable for losses incurred by the company or creditor(s) arising from their failure to fulfill the above liquidation obligation on time.

              The director(s)/senior manager(s) shall be held liable (along with the company itself) for compensating others should they cause any damages to the latter due to their intentional acts or gross negligence in the course of performing their duties.

              The board of directors of an LLC shall regularly check the status of capital contributions by the shareholders. It shall cause the company to issue written reminders to the shareholder(s) failing to make capital contributions on time. Should the shareholder fail to honor its subscribed capital contribution despite the reminder, subject to a specific board resolution and a written notification with immediate effect, the company may declare that the shareholder is disqualified from making the capital contribution.

              Corporate governance

              An LLC may set up an “audit commission” composed of directors to exercise the function of supervisor or supervisors’ committee as per its Articles of Association. In such cases, the company may no longer need to set up separate supervisors’ committees or appoint supervisors.

              However, the board of directors of an LLC having more than 300 employees shall have employees’ representative(s) elected through the democratic process unless the same LLC has a Supervisors’ Committee in place and such Committee already has the employees’ representative(s).

              Egypt, with its rich history and vibrant economy, presents promising opportunities for foreign investors looking to expand their business horizons. However, entering a new market can be a complex endeavor, and understanding the intricacies of doing business in Egypt is essential for success. In this article, we will delve deeper into the various aspects of establishing and managing a company in Egypt, providing valuable insights and guidance for prospective investors.

              Conducting Market Research

              Before venturing into any new market, conducting thorough market research is crucial. Egypt is a diverse country with a dynamic market, and understanding the local nuances, consumer behavior, and market trends is essential. It is advisable for foreign investors to consider setting up an initial representative office, allowing them to conduct in-depth market research without fully committing to commercial operations. A representative office can employ local staff to gather market insights and report back to the parent company, enabling informed decision-making for future business initiatives. This representative office may not engage in any commercial activities and may not invoice. Hence, it is not subject to any corporate tax but will be subject to salary tax for its employees and withholding tax.

              Choosing the Right Business Structure

              When establishing a legal entity in Egypt, foreign investors have several options to choose from. The most common business structures for foreign direct investment are a One Person Company (OPC), Limited Liability Companies (LLCs) and Joint Stock Companies (SAEs) as 100% of the shares can be wholly owned by foreigners. The choice of structure depends on the nature of the business and the specific objectives of the foreign company. Alternatively, for specific projects or contracts with defined purposes, establishing a branch office can be a viable option.

              The Company Establishment Process

              Setting up a company in Egypt involves navigating through certain legal procedures. The Egyptian government has implemented measures to facilitate foreign investments and ensure a favorable business environment. Foreign investors can own 100% of their businesses in most sectors, and the minimum requirement for establishing a company is typically having at least one shareholder. In the case of LLCs, a minimum of two partners is required while in case of SAEs a minimum of 3 shareholders is required. It is important to note that a foreign director can be appointed, except for activities that require an import license, which necessitates an Egyptian partner and director.

              Import and Distribution Considerations

              For foreign entities planning to import and distribute goods in Egypt, specific considerations come into play. Obtaining an import license requires meeting certain criteria, including demonstrating a minimum turnover, meeting nominal capital criteria, and having an Egyptian partner holding at least 51% of the shares. These regulations aim to ensure local participation and collaboration in import-oriented activities.

              Timelines and Administrative Processes

              Understanding the timelines and administrative processes involved in establishing a company in Egypt is crucial for efficient planning.
              While, foreign direct investors may establish the legal entity in one working day through GAFI as the commercial registry and tax card will be issued on the same day. However, the process may take up to six months, it can vary depending on various factors as follows:

              • a significant factor is the legalization of documents, which may require coordination with embassies and consulates for the legalization of documents such as power of attorney, corporate documents, and their translated versions;
              • opening a bank account for the company's capital needs to deliver all corporate documents related to the ultimate business owner (UBO) which may potentially cause delays.

              Efficient Branch or Subsidiary Management

              Once the company is operational, efficient branch management is vital for sustained success  as clearly defining the director’s powers through the bylaws or separate agreements is recommended. Regular communication with local management, employing competent accountants, and maintaining oversight of operations are essential to maintain control and address any issues promptly.

              Joint Ventures and Board Representation

              In cases where foreign investors collaborate with local partners through joint ventures, establishing a board of directors plays a crucial role. The board oversees company management and decision-making processes. It is advisable for foreign shareholders to regulate their relations with their local partners by virtue of a shareholder agreement to ensure their representation on the board, allowing them to actively participate and safeguard their interests. Maintaining open lines of communication and regular meetings are fundamental for staying informed about the company’s performance.

              Conclusion

              Expanding into the Egyptian market holds immense potential for foreign investors. However, navigating the business landscape requires careful planning, market research, and adherence to legal procedures. By understanding the nuances of establishing and managing a company in Egypt, foreign investors can unlock new business opportunities and forge successful ventures in this dynamic market. With the right approach and strategic decisions, Egypt can prove to be a rewarding destination for those seeking growth and expansion

              Would you like to know more?

              Watch the video of this Episode here.

              Accepting the position of director (administrator or CEO) in a Spanish company entails increasing risks. Indeed, the Supreme Court – ruling by ruling – is outlining and interpreting the precepts of the Capital Companies Act (LSC) with an increasingly rigorous and demanding approach when it comes to delimiting the framework of directors’ liability.

              Of course, the content of Article 43.1 b) of the General Tax Law is not new at all when it lays the foundations for the subsidiary liability of directors for debts owed to the Tax Agency:

              The following persons or entities shall be subsidiarily liable for the tax debt:

              b) The de facto or de jure administrators of those legal entities that have ceased their activities, for the accrued tax obligations of these that are pending at the time of the cessation, provided that they have not done what is necessary for their payment or have adopted agreements or taken measures causing the non-payment.

              It could be deduced from the reading of the transcribed provision that the subsidiary liability of the directors who, at the time of the cessation of the corporate activity, effectively held the position of director, was established; but that the liability would not reach those directors who had been so in the past but were no longer directors at the time when the company had ceased to act in the legal and economic traffic, for the tax debts pending at that time.

              Well, the Supreme Court (Third Chamber) in its recent judgment of March 7th, 2023, hammers one more nail in the coffin of the liability of the directors.

              The case that was the subject of the ruling consisted of determining the subsidiary liability to the Tax Agency of a director whose position had expired (due to the expiration of the statutory term) and who had called a general meeting for the appointment of new members of the administrative body of the company.

              The Supreme Court understands (and establishes a doctrine for the purposes of appeal) that the director with an expired position does not « exhaust » his obligations with the call of the meeting in question, but must also, pursuant to art. 365 LSC call another general meeting to adopt the resolution to file for insolvency or dissolution due to the existence of the causes of art. 363 LSC a) (cessation of activity) and d) (paralysis of the corporate bodies) as well as, if applicable, the request for judicial dissolution in his capacity as an interested party (art. 366.1 LSC).

              The reproachable conduct according to the Supreme Court (which triggers the subsidiary liability) consists in the fact that, facing the cessation of the activity of the company, the only thing he did was to call a meeting for the appointment of a new director and therefore « it did not carry out the necessary acts to be able to face the payment of the tax debts, thus meeting the subjective element necessary to be able to declare its liability ».

              The court ruling insists that the condition of director is not lost with the exhaustion of the mandate due to the expiration of the position since the mercantile and fiscal obligations persist; and that the call of a meeting to appoint a new director is not enough to understand that such meeting, once held, deprives the director with expired position of the condition of director, when there is a cause of dissolution that would have obliged to call another meeting with another object and another agenda to agree on the dissolution of the inactive company.

              But what is remarkable and striking in this case is that the meeting called by the director (with expired position) for the appointment of new a new director was held in June 2012, the resolutions were made public on March 1st, 2013, they were registered in the commercial registry in July of the same year and the judgment expressly states that the cessation of corporate activity occurred in April 2013 (i.e. when the meeting for the appointment of new administrators had already been held, June 2012, and when the appointment of the new director had already been made public, March 1st, 2013).

              The court resolution reads as follows:

              « Given the date on which the cessation of the business activity was established by the judgment a quo, April 2013, the appellant should still be considered as a director of the company in that capacity, his conduct should be considered negligent for the purposes of inclusion in the cause of subsidiary liability of art. 43.1.b) LGT ». 

              The claimant director argued that Art. 222 LSC and Art. 145.1 RRM state that the appointment of directors will expire, among other cases, when the term has expired and the meeting for the appointment of a new director has been held (or the term for its holding has elapsed) that is to resolve on the approval of the accounts of the previous year. And he explained that on top of that, he had fulfilled his obligations as director calling for a general shareholders meeting where new directors were appointed 9 months before the company ceased its activities. Therefore, he no longer was a “director” on April 2103.

              Despite of that argument the Supreme Court insists that, whether or not the position has expired, said expiration does not exhaust or extinguish his responsibilities as director, which must be interpreted extensively: it is not enough for him to call a meeting for the appointment of new directors, but he must act to dissolve the company or file for insolvency proceedings, as if the position had full and complete validity. 

              Thus, after this strong ruling, the directors of Spanish companies, in the event of termination of the activity, even if their position has expired, must know that their liability (and specifically the subsidiary liability for tax debts) will only be released if they call a meeting to dissolve the company, if the meeting does not adopt such resolution, if they request the court for the judicial dissolution or if they file voluntary insolvency proceedings.

              To summarize, they will be liable if they do not act in the same way as if their position were still in full force and effect. As we said above, it is necessary to think very much about accepting positions of director of Spanish companies.

              En Algérie, les administrateurs peuvent être exposés à des risques de responsabilité civile pour infraction à la loi, violation des statuts de la société et mauvaise gestion. Les principales sources de cette responsabilité sont le droit des sociétés, la législation du travail, le droit de l’environnement, le droit fiscal et le droit des faillites.

              Le droit des sociétés régit les droits et les obligations des administrateurs à l’égard de la société et de ses actionnaires. Les administrateurs doivent agir dans le cadre des pouvoirs qui leur sont conférés par les statuts de la société. S’ils outrepassent cette autorité ou manquent à leurs devoirs, ils peuvent être tenus personnellement responsables de dédommager financièrement la société.

              La législation sur l’emploi régit les droits et les obligations des administrateurs envers les employés de la société. Les administrateurs doivent se conformer au droit du travail et à la réglementation de la sécurité sociale en Algérie. S’ils ne le font pas, ils peuvent être tenus personnellement responsables des dommages causés aux employés ou aux autorités de sécurité sociale.

              En fonction de la nature et de la gravité de l’infraction, les administrateurs peuvent faire l’objet de sanctions civiles, administratives ou pénales, y compris des amendes, des peines d’emprisonnement ou des déchéances.

              Qui peut intenter une action en responsabilité civile contre les administrateurs en Algérie?

              En Algérie, les administrateurs peuvent faire l’objet d’actions en responsabilité civile de la part de différentes parties. La société elle-même peut poursuivre les administrateurs pour infraction à la loi, violation des statuts de la société et mauvaise gestion. Les actionnaires peuvent également poursuivre les administrateurs pour tout dommage causé à leurs intérêts par la faute des administrateurs. Les tiers, tels que les créanciers, les employés ou les clients, peuvent poursuivre les administrateurs pour tout préjudice causé par leurs actions ou omissions qui sont séparables de leur qualité de membres du conseil d’administration.

              Par exemple, les prêteurs peuvent se retourner contre les actifs et les biens d’un administrateur si ce dernier a fourni une garantie personnelle pour les dettes de la société. Les actionnaires peuvent poursuivre les administrateurs pour manquement à leurs obligations fiduciaires, par exemple en cas de mauvaise foi, d’intérêt personnel ou de négligence. Les employés peuvent poursuivre les administrateurs pour licenciement abusif, discrimination ou harcèlement. Les clients peuvent poursuivre les administrateurs pour rupture de contrat, fausse déclaration ou produits défectueux. Les créanciers peuvent poursuivre les administrateurs pour opérations frauduleuses, opérations illicites ou fautes professionnelles.

              Les risques de responsabilité pénale des administrateurs en Algérie

              Les administrateurs peuvent faire l’objet de sanctions pénales pour diverses infractions liées au fonctionnement de l’entreprise et à sa gestion et ses activités quotidiennes. En vertu du droit des sociétés, les administrateurs peuvent être pénalement responsables de fraude, d’abus de biens sociaux, de fausse comptabilité, de faillite ou d’insolvabilité. Conformément à la législation algérienne sur l’emploi, les administrateurs peuvent être pénalement responsables en cas de violation du droit du travail, de la réglementation de la sécurité sociale, des règles de santé et de sécurité ou des conventions collectives. Des sanctions pénales peuvent également s’appliquer aux administrateurs en cas de violation des lois sur l’environnement, de violation des lois fiscales, d’évasion fiscale ou de falsification de documents fiscaux. Les sanctions pénales peuvent inclure des amendes, des peines d’emprisonnement ou l’interdiction d’exercer.

              Qui peut engager des poursuites pénales à l’encontre des administrateurs?

              Les poursuites pénales contre les administrateurs en Algérie peuvent être engagées par différentes parties. Le procureur de la République peut engager des poursuites pénales contre les dirigeants pour toute infraction relevant de sa compétence. Il peut agir de sa propre initiative ou sur plainte d’une victime ou d’un tiers. La société elle-même peut – par l’intermédiaire de son représentant légal ou de son liquidateur, selon le cas – engager des poursuites pénales contre les administrateurs pour des infractions portant atteinte à ses intérêts, telles que la fraude, l’abus de biens sociaux ou la fausse comptabilité. Les actionnaires peuvent également engager des poursuites pénales contre les administrateurs pour des infractions portant atteinte à leurs intérêts, telles que le manquement à une obligation fiduciaire, la négligence ou la mauvaise gestion. Dans une telle configuration, les actionnaires ne peuvent agir qu’au nom de la société et réclamer la réparation du préjudice subi par la société, et non le leur.

              Quels sont les délais de prescription pour les affaires civiles en Algérie ? Pour les affaires pénales?

              Les délais de prescription pour les affaires civiles en Algérie varient en fonction du type de demande et des parties impliquées. Les actions civiles sont généralement soumises à un délai de prescription de trois ans à compter de la date à laquelle le demandeur a eu connaissance ou aurait dû avoir connaissance du dommage et de son auteur. Il existe cependant quelques exceptions à cette règle générale:

              • les actions pour préjudice corporel ou décès injustifié sont soumises à un délai de prescription de dix ans à compter de la date du préjudice ou du décès;
              • les actions pour rupture de contrat sont soumises à un délai de prescription de cinq ans à compter de la date de la rupture ou de la résiliation;
              • les actions en responsabilité professionnelle se prescrivent par deux ans à compter de la date à laquelle le demandeur a eu connaissance ou aurait dû avoir connaissance du dommage et de son auteur, mais pas plus de dix ans à compter de la date à laquelle le service professionnel a été rendu;
              • les actions en diffamation sont soumises à un délai de prescription de trois mois à compter de la date à laquelle la déclaration diffamatoire a été publiée ou diffusée.

              Les délais de prescription peuvent être interrompus par certains événements, tels que l’introduction d’une action en justice, l’envoi d’une mise en demeure, la reconnaissance d’une dette ou un paiement.

              En revanche, dans les affaires pénales, le délai de prescription dépend du type d’infraction.

              Quelles sont les couvertures d’assurance habituelles en matière de responsabilité des administrateurs?

              L’assurance responsabilité civile des administrateurs et des dirigeants (D&O) couvre les administrateurs actuels, futurs et anciens, ainsi que les administrateurs non exécutifs, les affiliés et les dirigeants d’une entreprise. Les scénarios de risque comprennent la responsabilité des prospectus, la responsabilité des fonds de pension et la responsabilité des pratiques d’emploi. L’assurance D&O protège les administrateurs et les dirigeants ou leur entreprise ou organisation s’ils sont poursuivis en justice (la plupart des polices excluent la fraude et les délits). L’assurance D&O peut offrir trois types de couverture: (1) pour la responsabilité personnelle des administrateurs et des dirigeants; (2) pour le remboursement par l’entreprise des sommes versées aux administrateurs et aux dirigeants; (3) pour la responsabilité directe de l’entreprise.

              La responsabilité potentielle d’une société holding contrôlant la nomination des administrateurs d’une filiale algérienne pour les actions de ces administrateurs

              Les administrateurs de sociétés d’investissement ou de holding ne sont généralement pas considérés comme des administrateurs de fait ou des administrateurs fictifs d’entreprises communes ou de filiales, à moins que leurs actions n’aillent au-delà de ce qui peut raisonnablement être considéré comme approprié pour leur position d’administrateur de la société d’investissement ou de holding.

              The limited liability company – in Italian: «Società a Responsabilità Limitata» or «S.r.l.» only – is the most popular Italian company type, mainly for the following reasons:

              • a little registered capital is enough;
              • the quota holders’ liability is limited to the pro-quota subscribed capital;
              • it is a «low-cost» company, also easy to be managed.

              In Italy, the S.r.l. differs from joint-stock companies as the participation in the capital is represented by «intangible» quota(s), which cannot circulate as stocks. This is why the members of an S.R.L. are called «quota holders» and not «shareholders».

              Similar companies in other countries are L.L.C. in the U.S., L.T.C. in the U.K., G.m.b.H. in Germany; S.a.r.l. in France; S.L. in Spain. 

              S.r.l. in a nutshell

              • Company name: Società a responsabilità limitata – S.r.l.
              • Minimum registered capital: EUR 10.000,00 (of which only EUR 2.500,00 must be paid at incorporation). The minimum corporate capital can be as low as EUR 1,00, but when the capital is lower than EUR 10.000,00 the company will be a “simplified S.R.L.”, subject to certain special rules and limitations (see below)
              • Minimum number of quota holders: One
              • Maximum number of quota holders: None
              • Nationality of the quota holders: No limits (with some rare exceptions that must be verified on a case-by-case basis)
              • Nationality of the directors: No limits (with some rare exceptions that must be verified on a case-by-case basis)
              • Limited liability: Yes
              • Auditing: Required only if (i) the company has more than 50 employees or exceeds € 4,400,000 in assets or € 8,800,000 in turnover for two consecutive years; (ii) is obliged to prepare consolidated financial statements; or (iii) controls other companies that are required to have statutory audits.

              The list of info and documents needed

              To incorporate an S.r.l., the information needed is as follows:

              • the name of the new company

              In Italy, there are no special limitations in identifying the company name.

              • the personal data of the quota holders and the registered capital subscribed.

              In the case of a sole quota holder, special rules and restrictions apply. For example, the corporate capital shall be fully paid, and all the company documents and correspondence shall point out that the corporate capital belongs to a sole quota holder; otherwise, the sole quota holder shall be jointly liable with the company for its debts.

              Please note that on the day of the incorporation of the S.r.l., each quota holder must deposit in a bank account an amount equal to at least 25% of his/her/its quota of corporate capital. The unpaid capital shall be paid within 30 days if requested by the director(s). The bank deposit can be replaced by an insurance policy or a bank guarantee (under certain requirements); or by a contribution in kind. However, in this case, the law requires an independent expert valuation and some other formalities.

              In case the quota holder is a company, some additional documents may be required (e.g., the resolution adopted by the shareholders’ meeting) which shall be translated into Italian (certified translation), notarized, and apostilled or legalized, depending on the case.

              • the personal data of the director(s)

              The director(s) can also be foreign nationals, but they shall hold an Italian fiscal identification number («codice fiscale»), which can be obtained from any local tax office («Agenzia delle Entrate»).

              The first director(s) are appointed in the deed of incorporation.

              • the address of the registered office

              The office may be also a «virtual» one, for instance, located at the office of a law or accounting firm;

              • the name and personal details of the first statutory auditors, if necessary

              The “Simplified” S.r.l.

              As mentioned above, when the partners set up an S.r.l. with a share capital of less than € 10,000, it will be an “S.r.l. Semplificata” (simplified S.r.l.).

              Compared to the ordinary S.r.l., it enjoys some economic benefits during the incorporation phase (i.e.: exemption from paying stamp duty and secretarial fees, exemption from paying notary’s fees), but also some rather significant limitations, because the bylaws must be drafted by a standard model, and registered capital may be paid only in cash.

              Should the shareholders decide to increase the registered capital to a value equal to or greater than € 10,000, they will be required to transform the company into an ‘ordinary’ S.r.l. (through a notarised public deed), thus losing the limitations seen above and thus, for example, being able to amend the bylaws.

              The management of a simplified S.r.l., on the other hand, does not enjoy any benefits compared to the ordinary S.r.l., and this is the main reason why it has not been very successful in Italy. Indeed, the small registered capital may constitute a limitation to obtaining bank financing or requesting credit from suppliers.

              Since these disadvantages are not balanced by any advantages or tax benefit in the management of a simplified S.r.l., the ordinary S.r.l. seems preferable, unless the founders have limited resources at the incorporation stage and can exclude from the outset that the new company will need access to bank financing or enter into particular corporate operations.

              How to incorporate an S.r.l.

              The deed of incorporation and the by-laws shall be executed before a Public Notary.

              The deed of incorporation is a quite standard document that contains all the information provided by the law to set up an S.r.l.

              The by-laws contain the company governance rules and can always be amended through a resolution of the quota holders’ meeting. The founding quota holders are free – except in the case of a simplified S.r.l. – to adapt the bylaws to their needs, establishing, for example, the manner and timing of the payment of share capital, the type of governance (sole director or board of directors), the powers and duration of the company’s administrative body, the procedures for the transfer of company shares, the majorities required for decisions by the quota holders’ meeting, the procedures and conditions for the withdrawal of quota holders, the conditions for the withdrawal, etc.

              After the incorporation, a copy of the deed of incorporation and the by-laws shall be filed at the Italian Companies’ Register within 20 days. Until then, any person acting on behalf of the company will be personally liable.

              Where is it more suitable to set up a new limited liability company in Europe?

              I will deal in this article with two countries I know well (Spain and The Netherlands) and focus on the minimum capital requested and the online incorporation of a limited liability company, sharing some thoughts and my takeaways.

              Spain: the “Create and Grow Law”

              In Spain, the Business Creation and Growth Law 18/2022, of September 28, 2022 (related to aspects of incorporation of companies), known as the “Create and Grow Law”, was approved last September within the framework of the Recovery, Transformation and Resilience Plan of the Spanish government. This plan channels European funds to alleviate the consequences of the Covid-19 crisis. This law is an initiative that reflects this flexibility and, as its explanatory statement indicates, aims to encourage the creation and growth of companies, in order to contribute to the economic growth of the country and its long-term resilience. Spain thus aligns itself with other neighboring countries, where there is no minimum capital to set up a company of this type.

              Is this new law interesting for foreign investors or companies looking to establish themselves in Spain?

              It is certainly very interesting. The fact that the Spanish legislator abandons this reference figure of 3,000 euros is very favorable for medium-large companies willing to have a permanent establishment in Spain Nevertheless, as long as the capital does not reach the figure of €3,000, the following rules will be applied, which are intended to protect the interests of creditors or third parties that contract with the company:  (i) 20% of the profit must be allocated to the legal reserve until said reserve together with the social capital reach the figure of €3,000 (the legislator seeks that the SLs constituted in this way do not remain « undercapitalized »), and (ii) as a safeguard clause for creditors of the company, in the event of voluntary or forced liquidation of the company, if the company’s assets are insufficient to meet its obligations of payment, the partners will be jointly and severally liable for the difference between the subscribed capital and the figure of 3,000 euros.

              Online incorporation of a company in Spain

              The « CIRCE system » (procedure dependent on the Ministry of Industry, Commerce and Tourism that allows the start of the process of creating companies « over the Internet » ) entails an electronic procedure through agreements and communications with all the organizations and administrations that intervene in the process of incorporating companies.

              The entrepreneur will only have to complete the Single Electronic Document (DUE) that includes a multitude of forms and CIRCE will automatically carry out all the necessary procedures to establish the company, communicating with all the organizations involved (Tax Agency, Social Security, Mercantile Registry, Notary, etc.). There is an obligation to review and sign the DUE before sending it. This system is not active yet, but it is expected that it will be in place when other complementary laws that support this digital process are approved by the Spanish Legislator which is necessary for the well-functioning of the system.

              The Netherlands: The Flex BV law

              The Flex BV law came into force on October 4, 2011. This law has given a lot of flexibility to the incorporation of new limited liability companies which has been very favorable for international companies working with different product lines, allowing to have one company for every product or service offered.

              The Flex BV law has, among others, the following characteristics:

              • the creation of a Limited Liability Company is flexible, easy to establish and without many costs;
              • it only requires one shareholder who must be registered with the Dutch Trade Register. The minimum share capital for setting it up is 1 euro. The liability of the shareholder is limited to the amount of money he has invested in the company. Being a limited liability company, the BV is liable for any debts, not the director or shareholder as private individuals, except in case of mismanagement or fraud. The company requires at least one director, and the shareholders can fill this position. The company registration procedure is quite fast due to the minimum documentation required.

              Online incorporation of a company in the Netherlands

               In the case of the Netherlands, in the Explanatory Memorandum of the bill implementing the Directive (EU) 2019/1151 of the European Parliament and of the Council of 20 June 2019 amending Directive (EU) 2017/1132 with regard to the use of digital instruments, it is proposed that incorporation of a BV electronically is only possible if payment on the shares takes place in cash, in order to initially limit the online formation of companies to simple situations. If it turns out that online formation works well, it can be considered whether it is useful to extend this possibility to situations in which contributions are made in a manner other than in money. Incorporation by natural persons using a model deed of incorporation must be possible within five working days from the date on which the notary has received all documents and information from the applicant or the date of payment of the share capital.

              The incorporation of a BV digitally is postponed to the summer of 2023 since the House Committee for Justice and Security has decided that the act must be discussed in plenary.

              The so called DOBV-system (Digital establishment of a BV), will entail a change in a number of work processes in the notaries in The Netherlands but for the Chamber of Commerce, no major changes will follow because the civil-law notary will supply the registration documents digitally to the Chamber of Commerce. Consequences the civil-law notary is the one who will have to offer a certain digital form of service, which citizens and companies will be able to use.

              What positive and negative aspects can be highlighted?

              Positives aspects:

              • it is very positive that through this new standard, many investors or international companies from both countries will be encouraged to create new SPVs, as the minimum capital is considered by many companies as a “barrier to entry”;
              • it will expedite the procedures for incorporating companies, essential vehicles for channeling the economic activities of businessmen in their transcendental task of creating wealth and employment, without notary and registration costs;
              • it will create a healthy competition between all the Notaries in Spain and between the notaries of Spain and the Netherlands. The Dutch notary bond expects that a further digitization of the notarial process could be achieved first in the real estate chain and subsequently also in business practice. It is important that the business market may be capable to respond quickly to this demand;
              • the share capital of a company will serve its partners to have the necessary funds with which to start their project, acquire the goods and resources necessary to start the economic activity and consolidate a long-term project (such as, for example, to buy the goods and services necessary to start up activities or to hire employees);
              • it creates business growth through financing alternatives to bank financing, such as crowdfunding or participatory financing, collective investment and venture capital.

              Negatives aspects:

              • to search financing externally to start the company’s activity, which will also surely have a cost (in the form of loans, for example, with their corresponding interest rate). Additionally, in the short or medium term the company must have a capital increase to normalize their patrimonial situation and solve this evident « underfinancing » of own resources, with which, this will also suppose an additional cost in the form of notary and registry fees that must be faced in the medium or long term after the incorporation;
              • the possibility of establishing a limited liability company with only 1 euro of share capital can facilitate the creation of fictitious legal entities by people who do not wish to carry out a real economic activity, but only use the companies as a suitable instrument for the development of legal or illegal activities;
              • additionally, it also implies a clear risk for the legal certainty and the responsibility of those companies in large contracts with third parties, leaving a limit to their minimum liability while their businesses are millionaires;
              • the online constitution system can be rigid and can also generate management and processing problems if the interested parties have not been properly advised and guided by the professionals involved before arriving at the Notary. Additionally, CIRCE’s telematic systems must function properly in order to correctly serve all those interested in the constitution of a capital company;
              • there are new requirements for companies related to anti-laundry controls, for instance, to include relevant information on invoices and payments to suppliers in their annual reports and on their corporate website.

              Conclusions

              Although it may apparently imply a boom in the creation of limited liability companies due to the ease of incorporation, there is still much to be done at the level of corporate law at the national level and collaboration between notaries of both countries.

              Spain is, with the entering into force of the Law Creation and Growth, considered among the most advanced countries in facilitating the creation of companies, reducing regulatory obstacles and favoring business restructuring and viability. The final decision will depend on the specific needs of the business, access to finance and tax regime, among others.

              Additionally, to the incorporation flexibilities, we must not forget a couple of important aspects for the shareholders and directors to be aware of:

              • a company needs to be managed as well and we need to be aware of the treasury, labor or other obligations of the companies already incorporated, even if they are non-active, they must continue to publish the annual accounts and complying with all governance requirements and formal public register notifications;
              • the responsibility of the shareholders is also important to consider. A shareholder who has direct involvement in the management, may face liability in case of bankruptcy, also in the country where the subsidiary is located. As mentioned above, in Spain, in the event of voluntary or forced liquidation of the company, if the company’s assets are insufficient to meet its obligations of payment, the partners will be jointly and severally liable for the difference between the subscribed capital and the figure of 3,000 euros;
              • the last important aspect when you are doing business mainly in Europe is to consider restructuring your business or consider other forms of incorporation of companies, depending of the business model that you have opted to, for instance the use of the Societas Europaea (SE) which has the possibility to set up a holding company or a joint subsidiary together and to transfer the seat of the company without winding up the entity. The disadvantage is that you need €120,000 starting capital to set up and to have a minimum of 2 companies governed by the laws of different Member States. Other forms of incorporation are the European Cooperative Society (SCE) and the European Economic Interest Grouping (EEIG).

              If you need additional information or you are planning to incorporate a limited liability company in Spain or in The Netherlands, get in touch to know more about your options and the right corporate advice for your business.

              Dans quelles conditions le dirigeant d’une société peut-il être révoqué en France?

              Cela dépend de la forme de la société.

              Prenons les formes de sociétés commerciales les plus fréquentes.

              Le gérant d’une société à responsabilité limitée ne peut être révoqué que pour juste motif, c’est-à-dire s’il a commis une faute, ou si sa révocation est nécessaire à la protection de l’intérêt social.

              Dans une société anonyme, les membres du conseil d’administration et le président du conseil d’administration peuvent être révoqués « ad nutum », c’est-à-dire à tout moment et sans avoir à justifier d’un motif. Il est interdit de déroger à cette règle. Le directeur général, en revanche, ne peut être révoqué que pour juste motif.

              Dans les sociétés par actions simplifiées, une forme sociale créée en 1994, les dirigeant sont en principe révocable « ad nutum », mais les statuts peuvent y déroger, et prévoir que le dirigeant ne pourra être révoqué que pour juste motif.

              Une décision récente de la Cour de cassation, c’est-à-dire de la plus haute juridiction judiciaire en France, retient l’attention.

              Elle concerne les sociétés par actions simplifiées (« SAS »), la forme sociale qui a le plus de succès en France : une société nouvellement créée sur deux est une SAS.

              Dans les SAS, ce sont les statuts qui fixent les conditions dans lesquelles la société est dirigée, et notamment les conditions de révocation du dirigeant.

              La décision de la Cour de cassation du 12 octobre 2022 (N°21-15.382) pose un principe: si les actes extra-statutaires peuvent compléter les statuts, ils ne peuvent pas y déroger.

              Dans cette affaire, les statuts d’une SAS prévoyaient que le directeur général pouvait être révoqué à tout moment, et sans qu’aucun motif soit nécessaire, par décision des associés ou de l’associé unique, et que la révocation du directeur général ne lui donnerait droit à aucune indemnité.

              Un directeur général avait été nommé par l’associé unique. Le même jour, l’associé unique avait adressé à ce directeur général un courrier lui précisant qu’en cas de révocation de ses fonctions sans juste motif, il bénéficierait d’une indemnité forfaitaire égale à six mois de sa rémunération.

              Quelques années plus tard, la société a révoqué le directeur général, qui a exigé le paiement de son indemnité forfaitaire. Face au refus de la société de lui payer, l’ancien directeur général l’a assigné en paiement de l’indemnité.

              La Cour d’appel, puis la Cour de cassation ont donné raison à la société: l’ancien dirigeant n’avait pas droit à l’indemnité. Pour la Cour de cassation, les statuts fixent les modalités de révocation du directeur général, et ce sont les statuts qui priment. Si les actes extra-statutaires peuvent compléter ces statuts, ils ne peuvent y déroger. Et même si l’acte extra-statutaire émane de l’associé unique, ou si tous les associés y ont consenti.

              En conclusion

              Il faut être prudent et bien analyser les statuts et les actes extra-statutaires tels que les pactes d’associés ou les conventions avec le dirigeant pour ne pas prendre de risque lors de la révocation d’un dirigeant de SAS.

              Sonia García Navasquillo

              Practice areas

              • Commerce international
              • Conformité
              • Entreprise
              • Règlement extrajudiciaire des litiges
              Contact Sonia

              Écrire à Vietnam Tackles Global Minimum Tax Implications





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                France – Révocation d’un dirigeant de société par actions simplifiée: priorité aux statuts!

                19 décembre 2022

                • France
                • Employment
                • Entreprise
                • Travail

                Vietnam has embraced the global minimum tax (GMT) to harmonize its tax policies with global standards. While this new tax regime is anticipated to have certain adverse effects on foreign direct investment (FDI), the Vietnamese government is devising proactive measures to mitigate these repercussions and maintain the country’s appeal as an investment haven.

                Key Ramifications of the GMT for Vietnam

                The GMT mandates multinational corporations (MNCs) with consolidated revenue surpassing €750 million to pay a minimum tax rate of 15%, irrespective of the tax rate in the country where they operate. In Vietnam, this translates to the concept of a qualified domestic minimum top-up tax (QDMTT).

                The QDMTT places an extra tax burden on foreign-invested enterprises (FIEs) that are part of an MNC, potentially deterring them from investing or expanding in Vietnam. This is particularly concerning for industries that heavily rely on tax incentives to attract FDI.

                Vietnam’s Response: Investment Support Fund and Proactive Measures

                In response to the anticipated negative impacts of the GMT, the Vietnamese government has established an investment support fund (Fund) to incentivize investments in targeted sectors. The Fund is primarily funded by proceeds from the State Budget generated by the GMT.

                Eligible enterprises for the Fund are those engaged in high-tech product manufacturing, high-tech enterprises, high-tech application projects, and enterprises with investment projects in research and development centers. Eligibility is based on capital size, annual revenue, industry, or technology utilized.

                Eligible taxpayers can receive cash subsidies for five specific expense categories:

                1. Human resource training and development
                2. Research and development expenses
                3. Fixed asset investments
                4. High-tech manufacturing expenses
                5. Social infrastructure systems

                To qualify for Fund benefits, eligible taxpayers must submit an application dossier to the Fund Office in Hanoi between August 15th and 30th of the year following the incurred Supported Expenses. Each Supported Expense category will have a distinct reimbursement ratio, and support payments will be contingent on the actual expenses incurred by eligible taxpayers.

                In addition to the Fund, the Vietnamese government is also implementing proactive measures to address the concerns of foreign investors. These measures include:

                1. Focusing on targeted industries with high growth potential that align with Vietnam’s strategic development goals
                2. Utilizing the additional revenue collected from top-up tax to enhance infrastructure and labor quality
                3. Considering cash grants for long-term qualified investments in high-tech industries

                Conclusion

                The introduction of the GMT poses challenges for Vietnam in attracting FDI. However, the government’s establishment of the investment support fund and proactive measures demonstrates its commitment to safeguarding the country’s competitiveness as an investment destination. By combining targeted support with infrastructure improvements and incentives for specific industries, Vietnam can mitigate the negative impacts of the GMT and continue to attract foreign investors.

                Summary:

                The heavily amended PRC Company Law will take effect on July 1, 2024. Please find below a summary of some of the important novelties embodied by this amended Company Law, which may have a significant impact on the rights and duties of the shareholders and management of a limited liability company (“LLC”).

                The businesses active in the PRC may be interested in carefully reviewing their corporate documents (including the Articles of Association) in light of the amended Company Law and deciding necessary adaptive measures for compliance/optimization purposes during the transition period leading to the effective date of the said amended Company law.

                Capital contribution.

                The amended Company Law provides that the subscribed capital of an LLC shall be paid up as per its Articles of Association within a time period up to 5 years from its incorporation (NB: The previous law does not set a time limit for the capital contribution.). This requirement will retroactively apply to the companies incorporated prior to July 1st, 2024.

                Despite the foregoing, a creditor or the company shall be entitled to request the shareholder(s) concerned to accelerate its/their capital contribution ahead of the due date for capital contribution should the company be unable to settle due debt(s) with its own assets.

                The equity and credit may be used for the capital contribution.

                Duties of directors/senior managers

                The directors shall bear the obligation to form the “liquidation team,” which shall proceed with the liquidation within 15 days of the occurrence of a number of statutory circumstances substantiated in Article 229 of the Company Law. The directors shall be held liable for losses incurred by the company or creditor(s) arising from their failure to fulfill the above liquidation obligation on time.

                The director(s)/senior manager(s) shall be held liable (along with the company itself) for compensating others should they cause any damages to the latter due to their intentional acts or gross negligence in the course of performing their duties.

                The board of directors of an LLC shall regularly check the status of capital contributions by the shareholders. It shall cause the company to issue written reminders to the shareholder(s) failing to make capital contributions on time. Should the shareholder fail to honor its subscribed capital contribution despite the reminder, subject to a specific board resolution and a written notification with immediate effect, the company may declare that the shareholder is disqualified from making the capital contribution.

                Corporate governance

                An LLC may set up an “audit commission” composed of directors to exercise the function of supervisor or supervisors’ committee as per its Articles of Association. In such cases, the company may no longer need to set up separate supervisors’ committees or appoint supervisors.

                However, the board of directors of an LLC having more than 300 employees shall have employees’ representative(s) elected through the democratic process unless the same LLC has a Supervisors’ Committee in place and such Committee already has the employees’ representative(s).

                Egypt, with its rich history and vibrant economy, presents promising opportunities for foreign investors looking to expand their business horizons. However, entering a new market can be a complex endeavor, and understanding the intricacies of doing business in Egypt is essential for success. In this article, we will delve deeper into the various aspects of establishing and managing a company in Egypt, providing valuable insights and guidance for prospective investors.

                Conducting Market Research

                Before venturing into any new market, conducting thorough market research is crucial. Egypt is a diverse country with a dynamic market, and understanding the local nuances, consumer behavior, and market trends is essential. It is advisable for foreign investors to consider setting up an initial representative office, allowing them to conduct in-depth market research without fully committing to commercial operations. A representative office can employ local staff to gather market insights and report back to the parent company, enabling informed decision-making for future business initiatives. This representative office may not engage in any commercial activities and may not invoice. Hence, it is not subject to any corporate tax but will be subject to salary tax for its employees and withholding tax.

                Choosing the Right Business Structure

                When establishing a legal entity in Egypt, foreign investors have several options to choose from. The most common business structures for foreign direct investment are a One Person Company (OPC), Limited Liability Companies (LLCs) and Joint Stock Companies (SAEs) as 100% of the shares can be wholly owned by foreigners. The choice of structure depends on the nature of the business and the specific objectives of the foreign company. Alternatively, for specific projects or contracts with defined purposes, establishing a branch office can be a viable option.

                The Company Establishment Process

                Setting up a company in Egypt involves navigating through certain legal procedures. The Egyptian government has implemented measures to facilitate foreign investments and ensure a favorable business environment. Foreign investors can own 100% of their businesses in most sectors, and the minimum requirement for establishing a company is typically having at least one shareholder. In the case of LLCs, a minimum of two partners is required while in case of SAEs a minimum of 3 shareholders is required. It is important to note that a foreign director can be appointed, except for activities that require an import license, which necessitates an Egyptian partner and director.

                Import and Distribution Considerations

                For foreign entities planning to import and distribute goods in Egypt, specific considerations come into play. Obtaining an import license requires meeting certain criteria, including demonstrating a minimum turnover, meeting nominal capital criteria, and having an Egyptian partner holding at least 51% of the shares. These regulations aim to ensure local participation and collaboration in import-oriented activities.

                Timelines and Administrative Processes

                Understanding the timelines and administrative processes involved in establishing a company in Egypt is crucial for efficient planning.
                While, foreign direct investors may establish the legal entity in one working day through GAFI as the commercial registry and tax card will be issued on the same day. However, the process may take up to six months, it can vary depending on various factors as follows:

                • a significant factor is the legalization of documents, which may require coordination with embassies and consulates for the legalization of documents such as power of attorney, corporate documents, and their translated versions;
                • opening a bank account for the company's capital needs to deliver all corporate documents related to the ultimate business owner (UBO) which may potentially cause delays.

                Efficient Branch or Subsidiary Management

                Once the company is operational, efficient branch management is vital for sustained success  as clearly defining the director’s powers through the bylaws or separate agreements is recommended. Regular communication with local management, employing competent accountants, and maintaining oversight of operations are essential to maintain control and address any issues promptly.

                Joint Ventures and Board Representation

                In cases where foreign investors collaborate with local partners through joint ventures, establishing a board of directors plays a crucial role. The board oversees company management and decision-making processes. It is advisable for foreign shareholders to regulate their relations with their local partners by virtue of a shareholder agreement to ensure their representation on the board, allowing them to actively participate and safeguard their interests. Maintaining open lines of communication and regular meetings are fundamental for staying informed about the company’s performance.

                Conclusion

                Expanding into the Egyptian market holds immense potential for foreign investors. However, navigating the business landscape requires careful planning, market research, and adherence to legal procedures. By understanding the nuances of establishing and managing a company in Egypt, foreign investors can unlock new business opportunities and forge successful ventures in this dynamic market. With the right approach and strategic decisions, Egypt can prove to be a rewarding destination for those seeking growth and expansion

                Would you like to know more?

                Watch the video of this Episode here.

                Accepting the position of director (administrator or CEO) in a Spanish company entails increasing risks. Indeed, the Supreme Court – ruling by ruling – is outlining and interpreting the precepts of the Capital Companies Act (LSC) with an increasingly rigorous and demanding approach when it comes to delimiting the framework of directors’ liability.

                Of course, the content of Article 43.1 b) of the General Tax Law is not new at all when it lays the foundations for the subsidiary liability of directors for debts owed to the Tax Agency:

                The following persons or entities shall be subsidiarily liable for the tax debt:

                b) The de facto or de jure administrators of those legal entities that have ceased their activities, for the accrued tax obligations of these that are pending at the time of the cessation, provided that they have not done what is necessary for their payment or have adopted agreements or taken measures causing the non-payment.

                It could be deduced from the reading of the transcribed provision that the subsidiary liability of the directors who, at the time of the cessation of the corporate activity, effectively held the position of director, was established; but that the liability would not reach those directors who had been so in the past but were no longer directors at the time when the company had ceased to act in the legal and economic traffic, for the tax debts pending at that time.

                Well, the Supreme Court (Third Chamber) in its recent judgment of March 7th, 2023, hammers one more nail in the coffin of the liability of the directors.

                The case that was the subject of the ruling consisted of determining the subsidiary liability to the Tax Agency of a director whose position had expired (due to the expiration of the statutory term) and who had called a general meeting for the appointment of new members of the administrative body of the company.

                The Supreme Court understands (and establishes a doctrine for the purposes of appeal) that the director with an expired position does not « exhaust » his obligations with the call of the meeting in question, but must also, pursuant to art. 365 LSC call another general meeting to adopt the resolution to file for insolvency or dissolution due to the existence of the causes of art. 363 LSC a) (cessation of activity) and d) (paralysis of the corporate bodies) as well as, if applicable, the request for judicial dissolution in his capacity as an interested party (art. 366.1 LSC).

                The reproachable conduct according to the Supreme Court (which triggers the subsidiary liability) consists in the fact that, facing the cessation of the activity of the company, the only thing he did was to call a meeting for the appointment of a new director and therefore « it did not carry out the necessary acts to be able to face the payment of the tax debts, thus meeting the subjective element necessary to be able to declare its liability ».

                The court ruling insists that the condition of director is not lost with the exhaustion of the mandate due to the expiration of the position since the mercantile and fiscal obligations persist; and that the call of a meeting to appoint a new director is not enough to understand that such meeting, once held, deprives the director with expired position of the condition of director, when there is a cause of dissolution that would have obliged to call another meeting with another object and another agenda to agree on the dissolution of the inactive company.

                But what is remarkable and striking in this case is that the meeting called by the director (with expired position) for the appointment of new a new director was held in June 2012, the resolutions were made public on March 1st, 2013, they were registered in the commercial registry in July of the same year and the judgment expressly states that the cessation of corporate activity occurred in April 2013 (i.e. when the meeting for the appointment of new administrators had already been held, June 2012, and when the appointment of the new director had already been made public, March 1st, 2013).

                The court resolution reads as follows:

                « Given the date on which the cessation of the business activity was established by the judgment a quo, April 2013, the appellant should still be considered as a director of the company in that capacity, his conduct should be considered negligent for the purposes of inclusion in the cause of subsidiary liability of art. 43.1.b) LGT ». 

                The claimant director argued that Art. 222 LSC and Art. 145.1 RRM state that the appointment of directors will expire, among other cases, when the term has expired and the meeting for the appointment of a new director has been held (or the term for its holding has elapsed) that is to resolve on the approval of the accounts of the previous year. And he explained that on top of that, he had fulfilled his obligations as director calling for a general shareholders meeting where new directors were appointed 9 months before the company ceased its activities. Therefore, he no longer was a “director” on April 2103.

                Despite of that argument the Supreme Court insists that, whether or not the position has expired, said expiration does not exhaust or extinguish his responsibilities as director, which must be interpreted extensively: it is not enough for him to call a meeting for the appointment of new directors, but he must act to dissolve the company or file for insolvency proceedings, as if the position had full and complete validity. 

                Thus, after this strong ruling, the directors of Spanish companies, in the event of termination of the activity, even if their position has expired, must know that their liability (and specifically the subsidiary liability for tax debts) will only be released if they call a meeting to dissolve the company, if the meeting does not adopt such resolution, if they request the court for the judicial dissolution or if they file voluntary insolvency proceedings.

                To summarize, they will be liable if they do not act in the same way as if their position were still in full force and effect. As we said above, it is necessary to think very much about accepting positions of director of Spanish companies.

                En Algérie, les administrateurs peuvent être exposés à des risques de responsabilité civile pour infraction à la loi, violation des statuts de la société et mauvaise gestion. Les principales sources de cette responsabilité sont le droit des sociétés, la législation du travail, le droit de l’environnement, le droit fiscal et le droit des faillites.

                Le droit des sociétés régit les droits et les obligations des administrateurs à l’égard de la société et de ses actionnaires. Les administrateurs doivent agir dans le cadre des pouvoirs qui leur sont conférés par les statuts de la société. S’ils outrepassent cette autorité ou manquent à leurs devoirs, ils peuvent être tenus personnellement responsables de dédommager financièrement la société.

                La législation sur l’emploi régit les droits et les obligations des administrateurs envers les employés de la société. Les administrateurs doivent se conformer au droit du travail et à la réglementation de la sécurité sociale en Algérie. S’ils ne le font pas, ils peuvent être tenus personnellement responsables des dommages causés aux employés ou aux autorités de sécurité sociale.

                En fonction de la nature et de la gravité de l’infraction, les administrateurs peuvent faire l’objet de sanctions civiles, administratives ou pénales, y compris des amendes, des peines d’emprisonnement ou des déchéances.

                Qui peut intenter une action en responsabilité civile contre les administrateurs en Algérie?

                En Algérie, les administrateurs peuvent faire l’objet d’actions en responsabilité civile de la part de différentes parties. La société elle-même peut poursuivre les administrateurs pour infraction à la loi, violation des statuts de la société et mauvaise gestion. Les actionnaires peuvent également poursuivre les administrateurs pour tout dommage causé à leurs intérêts par la faute des administrateurs. Les tiers, tels que les créanciers, les employés ou les clients, peuvent poursuivre les administrateurs pour tout préjudice causé par leurs actions ou omissions qui sont séparables de leur qualité de membres du conseil d’administration.

                Par exemple, les prêteurs peuvent se retourner contre les actifs et les biens d’un administrateur si ce dernier a fourni une garantie personnelle pour les dettes de la société. Les actionnaires peuvent poursuivre les administrateurs pour manquement à leurs obligations fiduciaires, par exemple en cas de mauvaise foi, d’intérêt personnel ou de négligence. Les employés peuvent poursuivre les administrateurs pour licenciement abusif, discrimination ou harcèlement. Les clients peuvent poursuivre les administrateurs pour rupture de contrat, fausse déclaration ou produits défectueux. Les créanciers peuvent poursuivre les administrateurs pour opérations frauduleuses, opérations illicites ou fautes professionnelles.

                Les risques de responsabilité pénale des administrateurs en Algérie

                Les administrateurs peuvent faire l’objet de sanctions pénales pour diverses infractions liées au fonctionnement de l’entreprise et à sa gestion et ses activités quotidiennes. En vertu du droit des sociétés, les administrateurs peuvent être pénalement responsables de fraude, d’abus de biens sociaux, de fausse comptabilité, de faillite ou d’insolvabilité. Conformément à la législation algérienne sur l’emploi, les administrateurs peuvent être pénalement responsables en cas de violation du droit du travail, de la réglementation de la sécurité sociale, des règles de santé et de sécurité ou des conventions collectives. Des sanctions pénales peuvent également s’appliquer aux administrateurs en cas de violation des lois sur l’environnement, de violation des lois fiscales, d’évasion fiscale ou de falsification de documents fiscaux. Les sanctions pénales peuvent inclure des amendes, des peines d’emprisonnement ou l’interdiction d’exercer.

                Qui peut engager des poursuites pénales à l’encontre des administrateurs?

                Les poursuites pénales contre les administrateurs en Algérie peuvent être engagées par différentes parties. Le procureur de la République peut engager des poursuites pénales contre les dirigeants pour toute infraction relevant de sa compétence. Il peut agir de sa propre initiative ou sur plainte d’une victime ou d’un tiers. La société elle-même peut – par l’intermédiaire de son représentant légal ou de son liquidateur, selon le cas – engager des poursuites pénales contre les administrateurs pour des infractions portant atteinte à ses intérêts, telles que la fraude, l’abus de biens sociaux ou la fausse comptabilité. Les actionnaires peuvent également engager des poursuites pénales contre les administrateurs pour des infractions portant atteinte à leurs intérêts, telles que le manquement à une obligation fiduciaire, la négligence ou la mauvaise gestion. Dans une telle configuration, les actionnaires ne peuvent agir qu’au nom de la société et réclamer la réparation du préjudice subi par la société, et non le leur.

                Quels sont les délais de prescription pour les affaires civiles en Algérie ? Pour les affaires pénales?

                Les délais de prescription pour les affaires civiles en Algérie varient en fonction du type de demande et des parties impliquées. Les actions civiles sont généralement soumises à un délai de prescription de trois ans à compter de la date à laquelle le demandeur a eu connaissance ou aurait dû avoir connaissance du dommage et de son auteur. Il existe cependant quelques exceptions à cette règle générale:

                • les actions pour préjudice corporel ou décès injustifié sont soumises à un délai de prescription de dix ans à compter de la date du préjudice ou du décès;
                • les actions pour rupture de contrat sont soumises à un délai de prescription de cinq ans à compter de la date de la rupture ou de la résiliation;
                • les actions en responsabilité professionnelle se prescrivent par deux ans à compter de la date à laquelle le demandeur a eu connaissance ou aurait dû avoir connaissance du dommage et de son auteur, mais pas plus de dix ans à compter de la date à laquelle le service professionnel a été rendu;
                • les actions en diffamation sont soumises à un délai de prescription de trois mois à compter de la date à laquelle la déclaration diffamatoire a été publiée ou diffusée.

                Les délais de prescription peuvent être interrompus par certains événements, tels que l’introduction d’une action en justice, l’envoi d’une mise en demeure, la reconnaissance d’une dette ou un paiement.

                En revanche, dans les affaires pénales, le délai de prescription dépend du type d’infraction.

                Quelles sont les couvertures d’assurance habituelles en matière de responsabilité des administrateurs?

                L’assurance responsabilité civile des administrateurs et des dirigeants (D&O) couvre les administrateurs actuels, futurs et anciens, ainsi que les administrateurs non exécutifs, les affiliés et les dirigeants d’une entreprise. Les scénarios de risque comprennent la responsabilité des prospectus, la responsabilité des fonds de pension et la responsabilité des pratiques d’emploi. L’assurance D&O protège les administrateurs et les dirigeants ou leur entreprise ou organisation s’ils sont poursuivis en justice (la plupart des polices excluent la fraude et les délits). L’assurance D&O peut offrir trois types de couverture: (1) pour la responsabilité personnelle des administrateurs et des dirigeants; (2) pour le remboursement par l’entreprise des sommes versées aux administrateurs et aux dirigeants; (3) pour la responsabilité directe de l’entreprise.

                La responsabilité potentielle d’une société holding contrôlant la nomination des administrateurs d’une filiale algérienne pour les actions de ces administrateurs

                Les administrateurs de sociétés d’investissement ou de holding ne sont généralement pas considérés comme des administrateurs de fait ou des administrateurs fictifs d’entreprises communes ou de filiales, à moins que leurs actions n’aillent au-delà de ce qui peut raisonnablement être considéré comme approprié pour leur position d’administrateur de la société d’investissement ou de holding.

                The limited liability company – in Italian: «Società a Responsabilità Limitata» or «S.r.l.» only – is the most popular Italian company type, mainly for the following reasons:

                • a little registered capital is enough;
                • the quota holders’ liability is limited to the pro-quota subscribed capital;
                • it is a «low-cost» company, also easy to be managed.

                In Italy, the S.r.l. differs from joint-stock companies as the participation in the capital is represented by «intangible» quota(s), which cannot circulate as stocks. This is why the members of an S.R.L. are called «quota holders» and not «shareholders».

                Similar companies in other countries are L.L.C. in the U.S., L.T.C. in the U.K., G.m.b.H. in Germany; S.a.r.l. in France; S.L. in Spain. 

                S.r.l. in a nutshell

                • Company name: Società a responsabilità limitata – S.r.l.
                • Minimum registered capital: EUR 10.000,00 (of which only EUR 2.500,00 must be paid at incorporation). The minimum corporate capital can be as low as EUR 1,00, but when the capital is lower than EUR 10.000,00 the company will be a “simplified S.R.L.”, subject to certain special rules and limitations (see below)
                • Minimum number of quota holders: One
                • Maximum number of quota holders: None
                • Nationality of the quota holders: No limits (with some rare exceptions that must be verified on a case-by-case basis)
                • Nationality of the directors: No limits (with some rare exceptions that must be verified on a case-by-case basis)
                • Limited liability: Yes
                • Auditing: Required only if (i) the company has more than 50 employees or exceeds € 4,400,000 in assets or € 8,800,000 in turnover for two consecutive years; (ii) is obliged to prepare consolidated financial statements; or (iii) controls other companies that are required to have statutory audits.

                The list of info and documents needed

                To incorporate an S.r.l., the information needed is as follows:

                • the name of the new company

                In Italy, there are no special limitations in identifying the company name.

                • the personal data of the quota holders and the registered capital subscribed.

                In the case of a sole quota holder, special rules and restrictions apply. For example, the corporate capital shall be fully paid, and all the company documents and correspondence shall point out that the corporate capital belongs to a sole quota holder; otherwise, the sole quota holder shall be jointly liable with the company for its debts.

                Please note that on the day of the incorporation of the S.r.l., each quota holder must deposit in a bank account an amount equal to at least 25% of his/her/its quota of corporate capital. The unpaid capital shall be paid within 30 days if requested by the director(s). The bank deposit can be replaced by an insurance policy or a bank guarantee (under certain requirements); or by a contribution in kind. However, in this case, the law requires an independent expert valuation and some other formalities.

                In case the quota holder is a company, some additional documents may be required (e.g., the resolution adopted by the shareholders’ meeting) which shall be translated into Italian (certified translation), notarized, and apostilled or legalized, depending on the case.

                • the personal data of the director(s)

                The director(s) can also be foreign nationals, but they shall hold an Italian fiscal identification number («codice fiscale»), which can be obtained from any local tax office («Agenzia delle Entrate»).

                The first director(s) are appointed in the deed of incorporation.

                • the address of the registered office

                The office may be also a «virtual» one, for instance, located at the office of a law or accounting firm;

                • the name and personal details of the first statutory auditors, if necessary

                The “Simplified” S.r.l.

                As mentioned above, when the partners set up an S.r.l. with a share capital of less than € 10,000, it will be an “S.r.l. Semplificata” (simplified S.r.l.).

                Compared to the ordinary S.r.l., it enjoys some economic benefits during the incorporation phase (i.e.: exemption from paying stamp duty and secretarial fees, exemption from paying notary’s fees), but also some rather significant limitations, because the bylaws must be drafted by a standard model, and registered capital may be paid only in cash.

                Should the shareholders decide to increase the registered capital to a value equal to or greater than € 10,000, they will be required to transform the company into an ‘ordinary’ S.r.l. (through a notarised public deed), thus losing the limitations seen above and thus, for example, being able to amend the bylaws.

                The management of a simplified S.r.l., on the other hand, does not enjoy any benefits compared to the ordinary S.r.l., and this is the main reason why it has not been very successful in Italy. Indeed, the small registered capital may constitute a limitation to obtaining bank financing or requesting credit from suppliers.

                Since these disadvantages are not balanced by any advantages or tax benefit in the management of a simplified S.r.l., the ordinary S.r.l. seems preferable, unless the founders have limited resources at the incorporation stage and can exclude from the outset that the new company will need access to bank financing or enter into particular corporate operations.

                How to incorporate an S.r.l.

                The deed of incorporation and the by-laws shall be executed before a Public Notary.

                The deed of incorporation is a quite standard document that contains all the information provided by the law to set up an S.r.l.

                The by-laws contain the company governance rules and can always be amended through a resolution of the quota holders’ meeting. The founding quota holders are free – except in the case of a simplified S.r.l. – to adapt the bylaws to their needs, establishing, for example, the manner and timing of the payment of share capital, the type of governance (sole director or board of directors), the powers and duration of the company’s administrative body, the procedures for the transfer of company shares, the majorities required for decisions by the quota holders’ meeting, the procedures and conditions for the withdrawal of quota holders, the conditions for the withdrawal, etc.

                After the incorporation, a copy of the deed of incorporation and the by-laws shall be filed at the Italian Companies’ Register within 20 days. Until then, any person acting on behalf of the company will be personally liable.

                Where is it more suitable to set up a new limited liability company in Europe?

                I will deal in this article with two countries I know well (Spain and The Netherlands) and focus on the minimum capital requested and the online incorporation of a limited liability company, sharing some thoughts and my takeaways.

                Spain: the “Create and Grow Law”

                In Spain, the Business Creation and Growth Law 18/2022, of September 28, 2022 (related to aspects of incorporation of companies), known as the “Create and Grow Law”, was approved last September within the framework of the Recovery, Transformation and Resilience Plan of the Spanish government. This plan channels European funds to alleviate the consequences of the Covid-19 crisis. This law is an initiative that reflects this flexibility and, as its explanatory statement indicates, aims to encourage the creation and growth of companies, in order to contribute to the economic growth of the country and its long-term resilience. Spain thus aligns itself with other neighboring countries, where there is no minimum capital to set up a company of this type.

                Is this new law interesting for foreign investors or companies looking to establish themselves in Spain?

                It is certainly very interesting. The fact that the Spanish legislator abandons this reference figure of 3,000 euros is very favorable for medium-large companies willing to have a permanent establishment in Spain Nevertheless, as long as the capital does not reach the figure of €3,000, the following rules will be applied, which are intended to protect the interests of creditors or third parties that contract with the company:  (i) 20% of the profit must be allocated to the legal reserve until said reserve together with the social capital reach the figure of €3,000 (the legislator seeks that the SLs constituted in this way do not remain « undercapitalized »), and (ii) as a safeguard clause for creditors of the company, in the event of voluntary or forced liquidation of the company, if the company’s assets are insufficient to meet its obligations of payment, the partners will be jointly and severally liable for the difference between the subscribed capital and the figure of 3,000 euros.

                Online incorporation of a company in Spain

                The « CIRCE system » (procedure dependent on the Ministry of Industry, Commerce and Tourism that allows the start of the process of creating companies « over the Internet » ) entails an electronic procedure through agreements and communications with all the organizations and administrations that intervene in the process of incorporating companies.

                The entrepreneur will only have to complete the Single Electronic Document (DUE) that includes a multitude of forms and CIRCE will automatically carry out all the necessary procedures to establish the company, communicating with all the organizations involved (Tax Agency, Social Security, Mercantile Registry, Notary, etc.). There is an obligation to review and sign the DUE before sending it. This system is not active yet, but it is expected that it will be in place when other complementary laws that support this digital process are approved by the Spanish Legislator which is necessary for the well-functioning of the system.

                The Netherlands: The Flex BV law

                The Flex BV law came into force on October 4, 2011. This law has given a lot of flexibility to the incorporation of new limited liability companies which has been very favorable for international companies working with different product lines, allowing to have one company for every product or service offered.

                The Flex BV law has, among others, the following characteristics:

                • the creation of a Limited Liability Company is flexible, easy to establish and without many costs;
                • it only requires one shareholder who must be registered with the Dutch Trade Register. The minimum share capital for setting it up is 1 euro. The liability of the shareholder is limited to the amount of money he has invested in the company. Being a limited liability company, the BV is liable for any debts, not the director or shareholder as private individuals, except in case of mismanagement or fraud. The company requires at least one director, and the shareholders can fill this position. The company registration procedure is quite fast due to the minimum documentation required.

                Online incorporation of a company in the Netherlands

                 In the case of the Netherlands, in the Explanatory Memorandum of the bill implementing the Directive (EU) 2019/1151 of the European Parliament and of the Council of 20 June 2019 amending Directive (EU) 2017/1132 with regard to the use of digital instruments, it is proposed that incorporation of a BV electronically is only possible if payment on the shares takes place in cash, in order to initially limit the online formation of companies to simple situations. If it turns out that online formation works well, it can be considered whether it is useful to extend this possibility to situations in which contributions are made in a manner other than in money. Incorporation by natural persons using a model deed of incorporation must be possible within five working days from the date on which the notary has received all documents and information from the applicant or the date of payment of the share capital.

                The incorporation of a BV digitally is postponed to the summer of 2023 since the House Committee for Justice and Security has decided that the act must be discussed in plenary.

                The so called DOBV-system (Digital establishment of a BV), will entail a change in a number of work processes in the notaries in The Netherlands but for the Chamber of Commerce, no major changes will follow because the civil-law notary will supply the registration documents digitally to the Chamber of Commerce. Consequences the civil-law notary is the one who will have to offer a certain digital form of service, which citizens and companies will be able to use.

                What positive and negative aspects can be highlighted?

                Positives aspects:

                • it is very positive that through this new standard, many investors or international companies from both countries will be encouraged to create new SPVs, as the minimum capital is considered by many companies as a “barrier to entry”;
                • it will expedite the procedures for incorporating companies, essential vehicles for channeling the economic activities of businessmen in their transcendental task of creating wealth and employment, without notary and registration costs;
                • it will create a healthy competition between all the Notaries in Spain and between the notaries of Spain and the Netherlands. The Dutch notary bond expects that a further digitization of the notarial process could be achieved first in the real estate chain and subsequently also in business practice. It is important that the business market may be capable to respond quickly to this demand;
                • the share capital of a company will serve its partners to have the necessary funds with which to start their project, acquire the goods and resources necessary to start the economic activity and consolidate a long-term project (such as, for example, to buy the goods and services necessary to start up activities or to hire employees);
                • it creates business growth through financing alternatives to bank financing, such as crowdfunding or participatory financing, collective investment and venture capital.

                Negatives aspects:

                • to search financing externally to start the company’s activity, which will also surely have a cost (in the form of loans, for example, with their corresponding interest rate). Additionally, in the short or medium term the company must have a capital increase to normalize their patrimonial situation and solve this evident « underfinancing » of own resources, with which, this will also suppose an additional cost in the form of notary and registry fees that must be faced in the medium or long term after the incorporation;
                • the possibility of establishing a limited liability company with only 1 euro of share capital can facilitate the creation of fictitious legal entities by people who do not wish to carry out a real economic activity, but only use the companies as a suitable instrument for the development of legal or illegal activities;
                • additionally, it also implies a clear risk for the legal certainty and the responsibility of those companies in large contracts with third parties, leaving a limit to their minimum liability while their businesses are millionaires;
                • the online constitution system can be rigid and can also generate management and processing problems if the interested parties have not been properly advised and guided by the professionals involved before arriving at the Notary. Additionally, CIRCE’s telematic systems must function properly in order to correctly serve all those interested in the constitution of a capital company;
                • there are new requirements for companies related to anti-laundry controls, for instance, to include relevant information on invoices and payments to suppliers in their annual reports and on their corporate website.

                Conclusions

                Although it may apparently imply a boom in the creation of limited liability companies due to the ease of incorporation, there is still much to be done at the level of corporate law at the national level and collaboration between notaries of both countries.

                Spain is, with the entering into force of the Law Creation and Growth, considered among the most advanced countries in facilitating the creation of companies, reducing regulatory obstacles and favoring business restructuring and viability. The final decision will depend on the specific needs of the business, access to finance and tax regime, among others.

                Additionally, to the incorporation flexibilities, we must not forget a couple of important aspects for the shareholders and directors to be aware of:

                • a company needs to be managed as well and we need to be aware of the treasury, labor or other obligations of the companies already incorporated, even if they are non-active, they must continue to publish the annual accounts and complying with all governance requirements and formal public register notifications;
                • the responsibility of the shareholders is also important to consider. A shareholder who has direct involvement in the management, may face liability in case of bankruptcy, also in the country where the subsidiary is located. As mentioned above, in Spain, in the event of voluntary or forced liquidation of the company, if the company’s assets are insufficient to meet its obligations of payment, the partners will be jointly and severally liable for the difference between the subscribed capital and the figure of 3,000 euros;
                • the last important aspect when you are doing business mainly in Europe is to consider restructuring your business or consider other forms of incorporation of companies, depending of the business model that you have opted to, for instance the use of the Societas Europaea (SE) which has the possibility to set up a holding company or a joint subsidiary together and to transfer the seat of the company without winding up the entity. The disadvantage is that you need €120,000 starting capital to set up and to have a minimum of 2 companies governed by the laws of different Member States. Other forms of incorporation are the European Cooperative Society (SCE) and the European Economic Interest Grouping (EEIG).

                If you need additional information or you are planning to incorporate a limited liability company in Spain or in The Netherlands, get in touch to know more about your options and the right corporate advice for your business.

                Dans quelles conditions le dirigeant d’une société peut-il être révoqué en France?

                Cela dépend de la forme de la société.

                Prenons les formes de sociétés commerciales les plus fréquentes.

                Le gérant d’une société à responsabilité limitée ne peut être révoqué que pour juste motif, c’est-à-dire s’il a commis une faute, ou si sa révocation est nécessaire à la protection de l’intérêt social.

                Dans une société anonyme, les membres du conseil d’administration et le président du conseil d’administration peuvent être révoqués « ad nutum », c’est-à-dire à tout moment et sans avoir à justifier d’un motif. Il est interdit de déroger à cette règle. Le directeur général, en revanche, ne peut être révoqué que pour juste motif.

                Dans les sociétés par actions simplifiées, une forme sociale créée en 1994, les dirigeant sont en principe révocable « ad nutum », mais les statuts peuvent y déroger, et prévoir que le dirigeant ne pourra être révoqué que pour juste motif.

                Une décision récente de la Cour de cassation, c’est-à-dire de la plus haute juridiction judiciaire en France, retient l’attention.

                Elle concerne les sociétés par actions simplifiées (« SAS »), la forme sociale qui a le plus de succès en France : une société nouvellement créée sur deux est une SAS.

                Dans les SAS, ce sont les statuts qui fixent les conditions dans lesquelles la société est dirigée, et notamment les conditions de révocation du dirigeant.

                La décision de la Cour de cassation du 12 octobre 2022 (N°21-15.382) pose un principe: si les actes extra-statutaires peuvent compléter les statuts, ils ne peuvent pas y déroger.

                Dans cette affaire, les statuts d’une SAS prévoyaient que le directeur général pouvait être révoqué à tout moment, et sans qu’aucun motif soit nécessaire, par décision des associés ou de l’associé unique, et que la révocation du directeur général ne lui donnerait droit à aucune indemnité.

                Un directeur général avait été nommé par l’associé unique. Le même jour, l’associé unique avait adressé à ce directeur général un courrier lui précisant qu’en cas de révocation de ses fonctions sans juste motif, il bénéficierait d’une indemnité forfaitaire égale à six mois de sa rémunération.

                Quelques années plus tard, la société a révoqué le directeur général, qui a exigé le paiement de son indemnité forfaitaire. Face au refus de la société de lui payer, l’ancien directeur général l’a assigné en paiement de l’indemnité.

                La Cour d’appel, puis la Cour de cassation ont donné raison à la société: l’ancien dirigeant n’avait pas droit à l’indemnité. Pour la Cour de cassation, les statuts fixent les modalités de révocation du directeur général, et ce sont les statuts qui priment. Si les actes extra-statutaires peuvent compléter ces statuts, ils ne peuvent y déroger. Et même si l’acte extra-statutaire émane de l’associé unique, ou si tous les associés y ont consenti.

                En conclusion

                Il faut être prudent et bien analyser les statuts et les actes extra-statutaires tels que les pactes d’associés ou les conventions avec le dirigeant pour ne pas prendre de risque lors de la révocation d’un dirigeant de SAS.

                Clotilde Normand

                Practice areas

                • Règlement extrajudiciaire des litiges
                • Contrats
                • Recouvrement des crédits
                • Insolvabilité
                • Litiges
                Contact Clotilde

                Écrire à Vietnam Tackles Global Minimum Tax Implications





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                  Spain – Abuse of rights in corporate resolutions

                  15 décembre 2022

                  • Espagne
                  • Entreprise
                  • Litiges

                  Vietnam has embraced the global minimum tax (GMT) to harmonize its tax policies with global standards. While this new tax regime is anticipated to have certain adverse effects on foreign direct investment (FDI), the Vietnamese government is devising proactive measures to mitigate these repercussions and maintain the country’s appeal as an investment haven.

                  Key Ramifications of the GMT for Vietnam

                  The GMT mandates multinational corporations (MNCs) with consolidated revenue surpassing €750 million to pay a minimum tax rate of 15%, irrespective of the tax rate in the country where they operate. In Vietnam, this translates to the concept of a qualified domestic minimum top-up tax (QDMTT).

                  The QDMTT places an extra tax burden on foreign-invested enterprises (FIEs) that are part of an MNC, potentially deterring them from investing or expanding in Vietnam. This is particularly concerning for industries that heavily rely on tax incentives to attract FDI.

                  Vietnam’s Response: Investment Support Fund and Proactive Measures

                  In response to the anticipated negative impacts of the GMT, the Vietnamese government has established an investment support fund (Fund) to incentivize investments in targeted sectors. The Fund is primarily funded by proceeds from the State Budget generated by the GMT.

                  Eligible enterprises for the Fund are those engaged in high-tech product manufacturing, high-tech enterprises, high-tech application projects, and enterprises with investment projects in research and development centers. Eligibility is based on capital size, annual revenue, industry, or technology utilized.

                  Eligible taxpayers can receive cash subsidies for five specific expense categories:

                  1. Human resource training and development
                  2. Research and development expenses
                  3. Fixed asset investments
                  4. High-tech manufacturing expenses
                  5. Social infrastructure systems

                  To qualify for Fund benefits, eligible taxpayers must submit an application dossier to the Fund Office in Hanoi between August 15th and 30th of the year following the incurred Supported Expenses. Each Supported Expense category will have a distinct reimbursement ratio, and support payments will be contingent on the actual expenses incurred by eligible taxpayers.

                  In addition to the Fund, the Vietnamese government is also implementing proactive measures to address the concerns of foreign investors. These measures include:

                  1. Focusing on targeted industries with high growth potential that align with Vietnam’s strategic development goals
                  2. Utilizing the additional revenue collected from top-up tax to enhance infrastructure and labor quality
                  3. Considering cash grants for long-term qualified investments in high-tech industries

                  Conclusion

                  The introduction of the GMT poses challenges for Vietnam in attracting FDI. However, the government’s establishment of the investment support fund and proactive measures demonstrates its commitment to safeguarding the country’s competitiveness as an investment destination. By combining targeted support with infrastructure improvements and incentives for specific industries, Vietnam can mitigate the negative impacts of the GMT and continue to attract foreign investors.

                  Summary:

                  The heavily amended PRC Company Law will take effect on July 1, 2024. Please find below a summary of some of the important novelties embodied by this amended Company Law, which may have a significant impact on the rights and duties of the shareholders and management of a limited liability company (“LLC”).

                  The businesses active in the PRC may be interested in carefully reviewing their corporate documents (including the Articles of Association) in light of the amended Company Law and deciding necessary adaptive measures for compliance/optimization purposes during the transition period leading to the effective date of the said amended Company law.

                  Capital contribution.

                  The amended Company Law provides that the subscribed capital of an LLC shall be paid up as per its Articles of Association within a time period up to 5 years from its incorporation (NB: The previous law does not set a time limit for the capital contribution.). This requirement will retroactively apply to the companies incorporated prior to July 1st, 2024.

                  Despite the foregoing, a creditor or the company shall be entitled to request the shareholder(s) concerned to accelerate its/their capital contribution ahead of the due date for capital contribution should the company be unable to settle due debt(s) with its own assets.

                  The equity and credit may be used for the capital contribution.

                  Duties of directors/senior managers

                  The directors shall bear the obligation to form the “liquidation team,” which shall proceed with the liquidation within 15 days of the occurrence of a number of statutory circumstances substantiated in Article 229 of the Company Law. The directors shall be held liable for losses incurred by the company or creditor(s) arising from their failure to fulfill the above liquidation obligation on time.

                  The director(s)/senior manager(s) shall be held liable (along with the company itself) for compensating others should they cause any damages to the latter due to their intentional acts or gross negligence in the course of performing their duties.

                  The board of directors of an LLC shall regularly check the status of capital contributions by the shareholders. It shall cause the company to issue written reminders to the shareholder(s) failing to make capital contributions on time. Should the shareholder fail to honor its subscribed capital contribution despite the reminder, subject to a specific board resolution and a written notification with immediate effect, the company may declare that the shareholder is disqualified from making the capital contribution.

                  Corporate governance

                  An LLC may set up an “audit commission” composed of directors to exercise the function of supervisor or supervisors’ committee as per its Articles of Association. In such cases, the company may no longer need to set up separate supervisors’ committees or appoint supervisors.

                  However, the board of directors of an LLC having more than 300 employees shall have employees’ representative(s) elected through the democratic process unless the same LLC has a Supervisors’ Committee in place and such Committee already has the employees’ representative(s).

                  Egypt, with its rich history and vibrant economy, presents promising opportunities for foreign investors looking to expand their business horizons. However, entering a new market can be a complex endeavor, and understanding the intricacies of doing business in Egypt is essential for success. In this article, we will delve deeper into the various aspects of establishing and managing a company in Egypt, providing valuable insights and guidance for prospective investors.

                  Conducting Market Research

                  Before venturing into any new market, conducting thorough market research is crucial. Egypt is a diverse country with a dynamic market, and understanding the local nuances, consumer behavior, and market trends is essential. It is advisable for foreign investors to consider setting up an initial representative office, allowing them to conduct in-depth market research without fully committing to commercial operations. A representative office can employ local staff to gather market insights and report back to the parent company, enabling informed decision-making for future business initiatives. This representative office may not engage in any commercial activities and may not invoice. Hence, it is not subject to any corporate tax but will be subject to salary tax for its employees and withholding tax.

                  Choosing the Right Business Structure

                  When establishing a legal entity in Egypt, foreign investors have several options to choose from. The most common business structures for foreign direct investment are a One Person Company (OPC), Limited Liability Companies (LLCs) and Joint Stock Companies (SAEs) as 100% of the shares can be wholly owned by foreigners. The choice of structure depends on the nature of the business and the specific objectives of the foreign company. Alternatively, for specific projects or contracts with defined purposes, establishing a branch office can be a viable option.

                  The Company Establishment Process

                  Setting up a company in Egypt involves navigating through certain legal procedures. The Egyptian government has implemented measures to facilitate foreign investments and ensure a favorable business environment. Foreign investors can own 100% of their businesses in most sectors, and the minimum requirement for establishing a company is typically having at least one shareholder. In the case of LLCs, a minimum of two partners is required while in case of SAEs a minimum of 3 shareholders is required. It is important to note that a foreign director can be appointed, except for activities that require an import license, which necessitates an Egyptian partner and director.

                  Import and Distribution Considerations

                  For foreign entities planning to import and distribute goods in Egypt, specific considerations come into play. Obtaining an import license requires meeting certain criteria, including demonstrating a minimum turnover, meeting nominal capital criteria, and having an Egyptian partner holding at least 51% of the shares. These regulations aim to ensure local participation and collaboration in import-oriented activities.

                  Timelines and Administrative Processes

                  Understanding the timelines and administrative processes involved in establishing a company in Egypt is crucial for efficient planning.
                  While, foreign direct investors may establish the legal entity in one working day through GAFI as the commercial registry and tax card will be issued on the same day. However, the process may take up to six months, it can vary depending on various factors as follows:

                  • a significant factor is the legalization of documents, which may require coordination with embassies and consulates for the legalization of documents such as power of attorney, corporate documents, and their translated versions;
                  • opening a bank account for the company's capital needs to deliver all corporate documents related to the ultimate business owner (UBO) which may potentially cause delays.

                  Efficient Branch or Subsidiary Management

                  Once the company is operational, efficient branch management is vital for sustained success  as clearly defining the director’s powers through the bylaws or separate agreements is recommended. Regular communication with local management, employing competent accountants, and maintaining oversight of operations are essential to maintain control and address any issues promptly.

                  Joint Ventures and Board Representation

                  In cases where foreign investors collaborate with local partners through joint ventures, establishing a board of directors plays a crucial role. The board oversees company management and decision-making processes. It is advisable for foreign shareholders to regulate their relations with their local partners by virtue of a shareholder agreement to ensure their representation on the board, allowing them to actively participate and safeguard their interests. Maintaining open lines of communication and regular meetings are fundamental for staying informed about the company’s performance.

                  Conclusion

                  Expanding into the Egyptian market holds immense potential for foreign investors. However, navigating the business landscape requires careful planning, market research, and adherence to legal procedures. By understanding the nuances of establishing and managing a company in Egypt, foreign investors can unlock new business opportunities and forge successful ventures in this dynamic market. With the right approach and strategic decisions, Egypt can prove to be a rewarding destination for those seeking growth and expansion

                  Would you like to know more?

                  Watch the video of this Episode here.

                  Accepting the position of director (administrator or CEO) in a Spanish company entails increasing risks. Indeed, the Supreme Court – ruling by ruling – is outlining and interpreting the precepts of the Capital Companies Act (LSC) with an increasingly rigorous and demanding approach when it comes to delimiting the framework of directors’ liability.

                  Of course, the content of Article 43.1 b) of the General Tax Law is not new at all when it lays the foundations for the subsidiary liability of directors for debts owed to the Tax Agency:

                  The following persons or entities shall be subsidiarily liable for the tax debt:

                  b) The de facto or de jure administrators of those legal entities that have ceased their activities, for the accrued tax obligations of these that are pending at the time of the cessation, provided that they have not done what is necessary for their payment or have adopted agreements or taken measures causing the non-payment.

                  It could be deduced from the reading of the transcribed provision that the subsidiary liability of the directors who, at the time of the cessation of the corporate activity, effectively held the position of director, was established; but that the liability would not reach those directors who had been so in the past but were no longer directors at the time when the company had ceased to act in the legal and economic traffic, for the tax debts pending at that time.

                  Well, the Supreme Court (Third Chamber) in its recent judgment of March 7th, 2023, hammers one more nail in the coffin of the liability of the directors.

                  The case that was the subject of the ruling consisted of determining the subsidiary liability to the Tax Agency of a director whose position had expired (due to the expiration of the statutory term) and who had called a general meeting for the appointment of new members of the administrative body of the company.

                  The Supreme Court understands (and establishes a doctrine for the purposes of appeal) that the director with an expired position does not « exhaust » his obligations with the call of the meeting in question, but must also, pursuant to art. 365 LSC call another general meeting to adopt the resolution to file for insolvency or dissolution due to the existence of the causes of art. 363 LSC a) (cessation of activity) and d) (paralysis of the corporate bodies) as well as, if applicable, the request for judicial dissolution in his capacity as an interested party (art. 366.1 LSC).

                  The reproachable conduct according to the Supreme Court (which triggers the subsidiary liability) consists in the fact that, facing the cessation of the activity of the company, the only thing he did was to call a meeting for the appointment of a new director and therefore « it did not carry out the necessary acts to be able to face the payment of the tax debts, thus meeting the subjective element necessary to be able to declare its liability ».

                  The court ruling insists that the condition of director is not lost with the exhaustion of the mandate due to the expiration of the position since the mercantile and fiscal obligations persist; and that the call of a meeting to appoint a new director is not enough to understand that such meeting, once held, deprives the director with expired position of the condition of director, when there is a cause of dissolution that would have obliged to call another meeting with another object and another agenda to agree on the dissolution of the inactive company.

                  But what is remarkable and striking in this case is that the meeting called by the director (with expired position) for the appointment of new a new director was held in June 2012, the resolutions were made public on March 1st, 2013, they were registered in the commercial registry in July of the same year and the judgment expressly states that the cessation of corporate activity occurred in April 2013 (i.e. when the meeting for the appointment of new administrators had already been held, June 2012, and when the appointment of the new director had already been made public, March 1st, 2013).

                  The court resolution reads as follows:

                  « Given the date on which the cessation of the business activity was established by the judgment a quo, April 2013, the appellant should still be considered as a director of the company in that capacity, his conduct should be considered negligent for the purposes of inclusion in the cause of subsidiary liability of art. 43.1.b) LGT ». 

                  The claimant director argued that Art. 222 LSC and Art. 145.1 RRM state that the appointment of directors will expire, among other cases, when the term has expired and the meeting for the appointment of a new director has been held (or the term for its holding has elapsed) that is to resolve on the approval of the accounts of the previous year. And he explained that on top of that, he had fulfilled his obligations as director calling for a general shareholders meeting where new directors were appointed 9 months before the company ceased its activities. Therefore, he no longer was a “director” on April 2103.

                  Despite of that argument the Supreme Court insists that, whether or not the position has expired, said expiration does not exhaust or extinguish his responsibilities as director, which must be interpreted extensively: it is not enough for him to call a meeting for the appointment of new directors, but he must act to dissolve the company or file for insolvency proceedings, as if the position had full and complete validity. 

                  Thus, after this strong ruling, the directors of Spanish companies, in the event of termination of the activity, even if their position has expired, must know that their liability (and specifically the subsidiary liability for tax debts) will only be released if they call a meeting to dissolve the company, if the meeting does not adopt such resolution, if they request the court for the judicial dissolution or if they file voluntary insolvency proceedings.

                  To summarize, they will be liable if they do not act in the same way as if their position were still in full force and effect. As we said above, it is necessary to think very much about accepting positions of director of Spanish companies.

                  En Algérie, les administrateurs peuvent être exposés à des risques de responsabilité civile pour infraction à la loi, violation des statuts de la société et mauvaise gestion. Les principales sources de cette responsabilité sont le droit des sociétés, la législation du travail, le droit de l’environnement, le droit fiscal et le droit des faillites.

                  Le droit des sociétés régit les droits et les obligations des administrateurs à l’égard de la société et de ses actionnaires. Les administrateurs doivent agir dans le cadre des pouvoirs qui leur sont conférés par les statuts de la société. S’ils outrepassent cette autorité ou manquent à leurs devoirs, ils peuvent être tenus personnellement responsables de dédommager financièrement la société.

                  La législation sur l’emploi régit les droits et les obligations des administrateurs envers les employés de la société. Les administrateurs doivent se conformer au droit du travail et à la réglementation de la sécurité sociale en Algérie. S’ils ne le font pas, ils peuvent être tenus personnellement responsables des dommages causés aux employés ou aux autorités de sécurité sociale.

                  En fonction de la nature et de la gravité de l’infraction, les administrateurs peuvent faire l’objet de sanctions civiles, administratives ou pénales, y compris des amendes, des peines d’emprisonnement ou des déchéances.

                  Qui peut intenter une action en responsabilité civile contre les administrateurs en Algérie?

                  En Algérie, les administrateurs peuvent faire l’objet d’actions en responsabilité civile de la part de différentes parties. La société elle-même peut poursuivre les administrateurs pour infraction à la loi, violation des statuts de la société et mauvaise gestion. Les actionnaires peuvent également poursuivre les administrateurs pour tout dommage causé à leurs intérêts par la faute des administrateurs. Les tiers, tels que les créanciers, les employés ou les clients, peuvent poursuivre les administrateurs pour tout préjudice causé par leurs actions ou omissions qui sont séparables de leur qualité de membres du conseil d’administration.

                  Par exemple, les prêteurs peuvent se retourner contre les actifs et les biens d’un administrateur si ce dernier a fourni une garantie personnelle pour les dettes de la société. Les actionnaires peuvent poursuivre les administrateurs pour manquement à leurs obligations fiduciaires, par exemple en cas de mauvaise foi, d’intérêt personnel ou de négligence. Les employés peuvent poursuivre les administrateurs pour licenciement abusif, discrimination ou harcèlement. Les clients peuvent poursuivre les administrateurs pour rupture de contrat, fausse déclaration ou produits défectueux. Les créanciers peuvent poursuivre les administrateurs pour opérations frauduleuses, opérations illicites ou fautes professionnelles.

                  Les risques de responsabilité pénale des administrateurs en Algérie

                  Les administrateurs peuvent faire l’objet de sanctions pénales pour diverses infractions liées au fonctionnement de l’entreprise et à sa gestion et ses activités quotidiennes. En vertu du droit des sociétés, les administrateurs peuvent être pénalement responsables de fraude, d’abus de biens sociaux, de fausse comptabilité, de faillite ou d’insolvabilité. Conformément à la législation algérienne sur l’emploi, les administrateurs peuvent être pénalement responsables en cas de violation du droit du travail, de la réglementation de la sécurité sociale, des règles de santé et de sécurité ou des conventions collectives. Des sanctions pénales peuvent également s’appliquer aux administrateurs en cas de violation des lois sur l’environnement, de violation des lois fiscales, d’évasion fiscale ou de falsification de documents fiscaux. Les sanctions pénales peuvent inclure des amendes, des peines d’emprisonnement ou l’interdiction d’exercer.

                  Qui peut engager des poursuites pénales à l’encontre des administrateurs?

                  Les poursuites pénales contre les administrateurs en Algérie peuvent être engagées par différentes parties. Le procureur de la République peut engager des poursuites pénales contre les dirigeants pour toute infraction relevant de sa compétence. Il peut agir de sa propre initiative ou sur plainte d’une victime ou d’un tiers. La société elle-même peut – par l’intermédiaire de son représentant légal ou de son liquidateur, selon le cas – engager des poursuites pénales contre les administrateurs pour des infractions portant atteinte à ses intérêts, telles que la fraude, l’abus de biens sociaux ou la fausse comptabilité. Les actionnaires peuvent également engager des poursuites pénales contre les administrateurs pour des infractions portant atteinte à leurs intérêts, telles que le manquement à une obligation fiduciaire, la négligence ou la mauvaise gestion. Dans une telle configuration, les actionnaires ne peuvent agir qu’au nom de la société et réclamer la réparation du préjudice subi par la société, et non le leur.

                  Quels sont les délais de prescription pour les affaires civiles en Algérie ? Pour les affaires pénales?

                  Les délais de prescription pour les affaires civiles en Algérie varient en fonction du type de demande et des parties impliquées. Les actions civiles sont généralement soumises à un délai de prescription de trois ans à compter de la date à laquelle le demandeur a eu connaissance ou aurait dû avoir connaissance du dommage et de son auteur. Il existe cependant quelques exceptions à cette règle générale:

                  • les actions pour préjudice corporel ou décès injustifié sont soumises à un délai de prescription de dix ans à compter de la date du préjudice ou du décès;
                  • les actions pour rupture de contrat sont soumises à un délai de prescription de cinq ans à compter de la date de la rupture ou de la résiliation;
                  • les actions en responsabilité professionnelle se prescrivent par deux ans à compter de la date à laquelle le demandeur a eu connaissance ou aurait dû avoir connaissance du dommage et de son auteur, mais pas plus de dix ans à compter de la date à laquelle le service professionnel a été rendu;
                  • les actions en diffamation sont soumises à un délai de prescription de trois mois à compter de la date à laquelle la déclaration diffamatoire a été publiée ou diffusée.

                  Les délais de prescription peuvent être interrompus par certains événements, tels que l’introduction d’une action en justice, l’envoi d’une mise en demeure, la reconnaissance d’une dette ou un paiement.

                  En revanche, dans les affaires pénales, le délai de prescription dépend du type d’infraction.

                  Quelles sont les couvertures d’assurance habituelles en matière de responsabilité des administrateurs?

                  L’assurance responsabilité civile des administrateurs et des dirigeants (D&O) couvre les administrateurs actuels, futurs et anciens, ainsi que les administrateurs non exécutifs, les affiliés et les dirigeants d’une entreprise. Les scénarios de risque comprennent la responsabilité des prospectus, la responsabilité des fonds de pension et la responsabilité des pratiques d’emploi. L’assurance D&O protège les administrateurs et les dirigeants ou leur entreprise ou organisation s’ils sont poursuivis en justice (la plupart des polices excluent la fraude et les délits). L’assurance D&O peut offrir trois types de couverture: (1) pour la responsabilité personnelle des administrateurs et des dirigeants; (2) pour le remboursement par l’entreprise des sommes versées aux administrateurs et aux dirigeants; (3) pour la responsabilité directe de l’entreprise.

                  La responsabilité potentielle d’une société holding contrôlant la nomination des administrateurs d’une filiale algérienne pour les actions de ces administrateurs

                  Les administrateurs de sociétés d’investissement ou de holding ne sont généralement pas considérés comme des administrateurs de fait ou des administrateurs fictifs d’entreprises communes ou de filiales, à moins que leurs actions n’aillent au-delà de ce qui peut raisonnablement être considéré comme approprié pour leur position d’administrateur de la société d’investissement ou de holding.

                  The limited liability company – in Italian: «Società a Responsabilità Limitata» or «S.r.l.» only – is the most popular Italian company type, mainly for the following reasons:

                  • a little registered capital is enough;
                  • the quota holders’ liability is limited to the pro-quota subscribed capital;
                  • it is a «low-cost» company, also easy to be managed.

                  In Italy, the S.r.l. differs from joint-stock companies as the participation in the capital is represented by «intangible» quota(s), which cannot circulate as stocks. This is why the members of an S.R.L. are called «quota holders» and not «shareholders».

                  Similar companies in other countries are L.L.C. in the U.S., L.T.C. in the U.K., G.m.b.H. in Germany; S.a.r.l. in France; S.L. in Spain. 

                  S.r.l. in a nutshell

                  • Company name: Società a responsabilità limitata – S.r.l.
                  • Minimum registered capital: EUR 10.000,00 (of which only EUR 2.500,00 must be paid at incorporation). The minimum corporate capital can be as low as EUR 1,00, but when the capital is lower than EUR 10.000,00 the company will be a “simplified S.R.L.”, subject to certain special rules and limitations (see below)
                  • Minimum number of quota holders: One
                  • Maximum number of quota holders: None
                  • Nationality of the quota holders: No limits (with some rare exceptions that must be verified on a case-by-case basis)
                  • Nationality of the directors: No limits (with some rare exceptions that must be verified on a case-by-case basis)
                  • Limited liability: Yes
                  • Auditing: Required only if (i) the company has more than 50 employees or exceeds € 4,400,000 in assets or € 8,800,000 in turnover for two consecutive years; (ii) is obliged to prepare consolidated financial statements; or (iii) controls other companies that are required to have statutory audits.

                  The list of info and documents needed

                  To incorporate an S.r.l., the information needed is as follows:

                  • the name of the new company

                  In Italy, there are no special limitations in identifying the company name.

                  • the personal data of the quota holders and the registered capital subscribed.

                  In the case of a sole quota holder, special rules and restrictions apply. For example, the corporate capital shall be fully paid, and all the company documents and correspondence shall point out that the corporate capital belongs to a sole quota holder; otherwise, the sole quota holder shall be jointly liable with the company for its debts.

                  Please note that on the day of the incorporation of the S.r.l., each quota holder must deposit in a bank account an amount equal to at least 25% of his/her/its quota of corporate capital. The unpaid capital shall be paid within 30 days if requested by the director(s). The bank deposit can be replaced by an insurance policy or a bank guarantee (under certain requirements); or by a contribution in kind. However, in this case, the law requires an independent expert valuation and some other formalities.

                  In case the quota holder is a company, some additional documents may be required (e.g., the resolution adopted by the shareholders’ meeting) which shall be translated into Italian (certified translation), notarized, and apostilled or legalized, depending on the case.

                  • the personal data of the director(s)

                  The director(s) can also be foreign nationals, but they shall hold an Italian fiscal identification number («codice fiscale»), which can be obtained from any local tax office («Agenzia delle Entrate»).

                  The first director(s) are appointed in the deed of incorporation.

                  • the address of the registered office

                  The office may be also a «virtual» one, for instance, located at the office of a law or accounting firm;

                  • the name and personal details of the first statutory auditors, if necessary

                  The “Simplified” S.r.l.

                  As mentioned above, when the partners set up an S.r.l. with a share capital of less than € 10,000, it will be an “S.r.l. Semplificata” (simplified S.r.l.).

                  Compared to the ordinary S.r.l., it enjoys some economic benefits during the incorporation phase (i.e.: exemption from paying stamp duty and secretarial fees, exemption from paying notary’s fees), but also some rather significant limitations, because the bylaws must be drafted by a standard model, and registered capital may be paid only in cash.

                  Should the shareholders decide to increase the registered capital to a value equal to or greater than € 10,000, they will be required to transform the company into an ‘ordinary’ S.r.l. (through a notarised public deed), thus losing the limitations seen above and thus, for example, being able to amend the bylaws.

                  The management of a simplified S.r.l., on the other hand, does not enjoy any benefits compared to the ordinary S.r.l., and this is the main reason why it has not been very successful in Italy. Indeed, the small registered capital may constitute a limitation to obtaining bank financing or requesting credit from suppliers.

                  Since these disadvantages are not balanced by any advantages or tax benefit in the management of a simplified S.r.l., the ordinary S.r.l. seems preferable, unless the founders have limited resources at the incorporation stage and can exclude from the outset that the new company will need access to bank financing or enter into particular corporate operations.

                  How to incorporate an S.r.l.

                  The deed of incorporation and the by-laws shall be executed before a Public Notary.

                  The deed of incorporation is a quite standard document that contains all the information provided by the law to set up an S.r.l.

                  The by-laws contain the company governance rules and can always be amended through a resolution of the quota holders’ meeting. The founding quota holders are free – except in the case of a simplified S.r.l. – to adapt the bylaws to their needs, establishing, for example, the manner and timing of the payment of share capital, the type of governance (sole director or board of directors), the powers and duration of the company’s administrative body, the procedures for the transfer of company shares, the majorities required for decisions by the quota holders’ meeting, the procedures and conditions for the withdrawal of quota holders, the conditions for the withdrawal, etc.

                  After the incorporation, a copy of the deed of incorporation and the by-laws shall be filed at the Italian Companies’ Register within 20 days. Until then, any person acting on behalf of the company will be personally liable.

                  Where is it more suitable to set up a new limited liability company in Europe?

                  I will deal in this article with two countries I know well (Spain and The Netherlands) and focus on the minimum capital requested and the online incorporation of a limited liability company, sharing some thoughts and my takeaways.

                  Spain: the “Create and Grow Law”

                  In Spain, the Business Creation and Growth Law 18/2022, of September 28, 2022 (related to aspects of incorporation of companies), known as the “Create and Grow Law”, was approved last September within the framework of the Recovery, Transformation and Resilience Plan of the Spanish government. This plan channels European funds to alleviate the consequences of the Covid-19 crisis. This law is an initiative that reflects this flexibility and, as its explanatory statement indicates, aims to encourage the creation and growth of companies, in order to contribute to the economic growth of the country and its long-term resilience. Spain thus aligns itself with other neighboring countries, where there is no minimum capital to set up a company of this type.

                  Is this new law interesting for foreign investors or companies looking to establish themselves in Spain?

                  It is certainly very interesting. The fact that the Spanish legislator abandons this reference figure of 3,000 euros is very favorable for medium-large companies willing to have a permanent establishment in Spain Nevertheless, as long as the capital does not reach the figure of €3,000, the following rules will be applied, which are intended to protect the interests of creditors or third parties that contract with the company:  (i) 20% of the profit must be allocated to the legal reserve until said reserve together with the social capital reach the figure of €3,000 (the legislator seeks that the SLs constituted in this way do not remain « undercapitalized »), and (ii) as a safeguard clause for creditors of the company, in the event of voluntary or forced liquidation of the company, if the company’s assets are insufficient to meet its obligations of payment, the partners will be jointly and severally liable for the difference between the subscribed capital and the figure of 3,000 euros.

                  Online incorporation of a company in Spain

                  The « CIRCE system » (procedure dependent on the Ministry of Industry, Commerce and Tourism that allows the start of the process of creating companies « over the Internet » ) entails an electronic procedure through agreements and communications with all the organizations and administrations that intervene in the process of incorporating companies.

                  The entrepreneur will only have to complete the Single Electronic Document (DUE) that includes a multitude of forms and CIRCE will automatically carry out all the necessary procedures to establish the company, communicating with all the organizations involved (Tax Agency, Social Security, Mercantile Registry, Notary, etc.). There is an obligation to review and sign the DUE before sending it. This system is not active yet, but it is expected that it will be in place when other complementary laws that support this digital process are approved by the Spanish Legislator which is necessary for the well-functioning of the system.

                  The Netherlands: The Flex BV law

                  The Flex BV law came into force on October 4, 2011. This law has given a lot of flexibility to the incorporation of new limited liability companies which has been very favorable for international companies working with different product lines, allowing to have one company for every product or service offered.

                  The Flex BV law has, among others, the following characteristics:

                  • the creation of a Limited Liability Company is flexible, easy to establish and without many costs;
                  • it only requires one shareholder who must be registered with the Dutch Trade Register. The minimum share capital for setting it up is 1 euro. The liability of the shareholder is limited to the amount of money he has invested in the company. Being a limited liability company, the BV is liable for any debts, not the director or shareholder as private individuals, except in case of mismanagement or fraud. The company requires at least one director, and the shareholders can fill this position. The company registration procedure is quite fast due to the minimum documentation required.

                  Online incorporation of a company in the Netherlands

                   In the case of the Netherlands, in the Explanatory Memorandum of the bill implementing the Directive (EU) 2019/1151 of the European Parliament and of the Council of 20 June 2019 amending Directive (EU) 2017/1132 with regard to the use of digital instruments, it is proposed that incorporation of a BV electronically is only possible if payment on the shares takes place in cash, in order to initially limit the online formation of companies to simple situations. If it turns out that online formation works well, it can be considered whether it is useful to extend this possibility to situations in which contributions are made in a manner other than in money. Incorporation by natural persons using a model deed of incorporation must be possible within five working days from the date on which the notary has received all documents and information from the applicant or the date of payment of the share capital.

                  The incorporation of a BV digitally is postponed to the summer of 2023 since the House Committee for Justice and Security has decided that the act must be discussed in plenary.

                  The so called DOBV-system (Digital establishment of a BV), will entail a change in a number of work processes in the notaries in The Netherlands but for the Chamber of Commerce, no major changes will follow because the civil-law notary will supply the registration documents digitally to the Chamber of Commerce. Consequences the civil-law notary is the one who will have to offer a certain digital form of service, which citizens and companies will be able to use.

                  What positive and negative aspects can be highlighted?

                  Positives aspects:

                  • it is very positive that through this new standard, many investors or international companies from both countries will be encouraged to create new SPVs, as the minimum capital is considered by many companies as a “barrier to entry”;
                  • it will expedite the procedures for incorporating companies, essential vehicles for channeling the economic activities of businessmen in their transcendental task of creating wealth and employment, without notary and registration costs;
                  • it will create a healthy competition between all the Notaries in Spain and between the notaries of Spain and the Netherlands. The Dutch notary bond expects that a further digitization of the notarial process could be achieved first in the real estate chain and subsequently also in business practice. It is important that the business market may be capable to respond quickly to this demand;
                  • the share capital of a company will serve its partners to have the necessary funds with which to start their project, acquire the goods and resources necessary to start the economic activity and consolidate a long-term project (such as, for example, to buy the goods and services necessary to start up activities or to hire employees);
                  • it creates business growth through financing alternatives to bank financing, such as crowdfunding or participatory financing, collective investment and venture capital.

                  Negatives aspects:

                  • to search financing externally to start the company’s activity, which will also surely have a cost (in the form of loans, for example, with their corresponding interest rate). Additionally, in the short or medium term the company must have a capital increase to normalize their patrimonial situation and solve this evident « underfinancing » of own resources, with which, this will also suppose an additional cost in the form of notary and registry fees that must be faced in the medium or long term after the incorporation;
                  • the possibility of establishing a limited liability company with only 1 euro of share capital can facilitate the creation of fictitious legal entities by people who do not wish to carry out a real economic activity, but only use the companies as a suitable instrument for the development of legal or illegal activities;
                  • additionally, it also implies a clear risk for the legal certainty and the responsibility of those companies in large contracts with third parties, leaving a limit to their minimum liability while their businesses are millionaires;
                  • the online constitution system can be rigid and can also generate management and processing problems if the interested parties have not been properly advised and guided by the professionals involved before arriving at the Notary. Additionally, CIRCE’s telematic systems must function properly in order to correctly serve all those interested in the constitution of a capital company;
                  • there are new requirements for companies related to anti-laundry controls, for instance, to include relevant information on invoices and payments to suppliers in their annual reports and on their corporate website.

                  Conclusions

                  Although it may apparently imply a boom in the creation of limited liability companies due to the ease of incorporation, there is still much to be done at the level of corporate law at the national level and collaboration between notaries of both countries.

                  Spain is, with the entering into force of the Law Creation and Growth, considered among the most advanced countries in facilitating the creation of companies, reducing regulatory obstacles and favoring business restructuring and viability. The final decision will depend on the specific needs of the business, access to finance and tax regime, among others.

                  Additionally, to the incorporation flexibilities, we must not forget a couple of important aspects for the shareholders and directors to be aware of:

                  • a company needs to be managed as well and we need to be aware of the treasury, labor or other obligations of the companies already incorporated, even if they are non-active, they must continue to publish the annual accounts and complying with all governance requirements and formal public register notifications;
                  • the responsibility of the shareholders is also important to consider. A shareholder who has direct involvement in the management, may face liability in case of bankruptcy, also in the country where the subsidiary is located. As mentioned above, in Spain, in the event of voluntary or forced liquidation of the company, if the company’s assets are insufficient to meet its obligations of payment, the partners will be jointly and severally liable for the difference between the subscribed capital and the figure of 3,000 euros;
                  • the last important aspect when you are doing business mainly in Europe is to consider restructuring your business or consider other forms of incorporation of companies, depending of the business model that you have opted to, for instance the use of the Societas Europaea (SE) which has the possibility to set up a holding company or a joint subsidiary together and to transfer the seat of the company without winding up the entity. The disadvantage is that you need €120,000 starting capital to set up and to have a minimum of 2 companies governed by the laws of different Member States. Other forms of incorporation are the European Cooperative Society (SCE) and the European Economic Interest Grouping (EEIG).

                  If you need additional information or you are planning to incorporate a limited liability company in Spain or in The Netherlands, get in touch to know more about your options and the right corporate advice for your business.

                  Dans quelles conditions le dirigeant d’une société peut-il être révoqué en France?

                  Cela dépend de la forme de la société.

                  Prenons les formes de sociétés commerciales les plus fréquentes.

                  Le gérant d’une société à responsabilité limitée ne peut être révoqué que pour juste motif, c’est-à-dire s’il a commis une faute, ou si sa révocation est nécessaire à la protection de l’intérêt social.

                  Dans une société anonyme, les membres du conseil d’administration et le président du conseil d’administration peuvent être révoqués « ad nutum », c’est-à-dire à tout moment et sans avoir à justifier d’un motif. Il est interdit de déroger à cette règle. Le directeur général, en revanche, ne peut être révoqué que pour juste motif.

                  Dans les sociétés par actions simplifiées, une forme sociale créée en 1994, les dirigeant sont en principe révocable « ad nutum », mais les statuts peuvent y déroger, et prévoir que le dirigeant ne pourra être révoqué que pour juste motif.

                  Une décision récente de la Cour de cassation, c’est-à-dire de la plus haute juridiction judiciaire en France, retient l’attention.

                  Elle concerne les sociétés par actions simplifiées (« SAS »), la forme sociale qui a le plus de succès en France : une société nouvellement créée sur deux est une SAS.

                  Dans les SAS, ce sont les statuts qui fixent les conditions dans lesquelles la société est dirigée, et notamment les conditions de révocation du dirigeant.

                  La décision de la Cour de cassation du 12 octobre 2022 (N°21-15.382) pose un principe: si les actes extra-statutaires peuvent compléter les statuts, ils ne peuvent pas y déroger.

                  Dans cette affaire, les statuts d’une SAS prévoyaient que le directeur général pouvait être révoqué à tout moment, et sans qu’aucun motif soit nécessaire, par décision des associés ou de l’associé unique, et que la révocation du directeur général ne lui donnerait droit à aucune indemnité.

                  Un directeur général avait été nommé par l’associé unique. Le même jour, l’associé unique avait adressé à ce directeur général un courrier lui précisant qu’en cas de révocation de ses fonctions sans juste motif, il bénéficierait d’une indemnité forfaitaire égale à six mois de sa rémunération.

                  Quelques années plus tard, la société a révoqué le directeur général, qui a exigé le paiement de son indemnité forfaitaire. Face au refus de la société de lui payer, l’ancien directeur général l’a assigné en paiement de l’indemnité.

                  La Cour d’appel, puis la Cour de cassation ont donné raison à la société: l’ancien dirigeant n’avait pas droit à l’indemnité. Pour la Cour de cassation, les statuts fixent les modalités de révocation du directeur général, et ce sont les statuts qui priment. Si les actes extra-statutaires peuvent compléter ces statuts, ils ne peuvent y déroger. Et même si l’acte extra-statutaire émane de l’associé unique, ou si tous les associés y ont consenti.

                  En conclusion

                  Il faut être prudent et bien analyser les statuts et les actes extra-statutaires tels que les pactes d’associés ou les conventions avec le dirigeant pour ne pas prendre de risque lors de la révocation d’un dirigeant de SAS.

                  Javier Gaspar

                  Practice areas

                  • Arbitrage
                  • Distribution
                  • Franchise
                  • Litiges
                  • Sport
                  Contact Javier

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