Last month we published an article about "Major challenges in Monaco: Business Acquisition". The topic generated a major interest and we decided to ask our trusted business advisory partner, VK*P business advisors to ensure us their unparalleled, professional inputs on the topic. The fonders of VK*P business advisors have over 3,000 people informed and guided on business and residency matters.
In most jurisdictions, purchasing a company can be tricky, costly and lengthy; Monaco is no exception.
Besides the due diligence the acquirer must go through (preferably with an advisor), there are three crucial elements to look at in Monaco.
The Legal form
Buying a business in Monaco means applying for a business permit (just like setting up a business, act 1.144).
Monaco Wealth Management provided some information with this regards in a recent article.
However, this rule does not apply to SAMs, the shareholders (exception made for the founders) being anonymous (Société Anonyme Monégasque). This is the only form of company allowing an acquisition of the shares without an application process (unless the acquirer also become a managing director, then a business permit is required).
The company’s purpose
The purpose (or objet social in French) defines the activity that a company can perform.
Since Monaco is a highly regulated place, the Government is very cautious with the authorisations to be delivered. They tend to allow companies with a narrow company’s purpose. In some rare cases, there are some companies (usually companies established in the previous century) have a broad range of services or activities.
The acquirer needs to assess the compatibility between their project and the company’s purpose, which might require an amendment, when acceptable (SAMs cannot change much their purpose).
The sector of activity
The company’s purpose makes the company part of a certain sector. In order to guarantee the safety and the stability of the economy, the Government makes countless efforts to avoid “overcrowding” some sectors. In fact, there are several areas in which it is not possible to obtain a business permit anymore, such as real estate agencies, legal advisory services, transportation, to name a few.
Since purchasing a company implies a business permit process, when it comes to these oversupplied areas, the purchase may well be rejected by the Government. Rules always have an exception; the 10-years principle. In these same oversupplied areas, the purchase can be accepted and the permit granted if the company to be bought is more than 10 years old.
As Monaco Wealth Management puts it, more than an administrative process, it is indeed a challenge.
Do you have a question?
Monaco Wealth Management is working with the some of the most experienced advisors in the Principality of Monaco.
Since 2010 we gained a member base of 9,000 Monaco residents, and our trusted partner, VK*P business advisors have over 3,000 people informed and guided on business and residency matters. If you have any questions about Monaco residency, business formation or business development we are happy to assist you in English, French, Italian and Spanish. Please feel free to contact us.
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