NON-TRADING COMPANIES IN MONACO : THE S.C.I. AND THE S.C.P.

12 March 2021


The meaning of SCI and SCP
The three letters “SCI” stand for “société civile immobilière” (real-estate non-trading company), or “société civile particulière” for the “SCP” (particular non-trading company).
It is often referred to as a potential holding entity, which is not completely accurate, since foreign holding entities are made mostly to own a controlling interest in a subsidiary company (or companies) whereas most people setting up an SC in Monaco do it with a family wealth planning goal (generally with real estate units).
Another major difference is the liability, which tends to be limited by the form of the company abroad (such as in a limited liability company) whereas the partners of a Monaco-based SC have unlimited liability.

In theory
According to the law, the SCs are not made for trading or commercial purposes. Thus it cannot be set up to act like a distribution company, or a marketing service provider, or a bakery shop.
Instead, this type of entity allows the owners (shareholders) to manage the assets that the company will acquire, generally real estate and shares in other companies.
Exceptionally for non-trading liberal professions (doctors or lawyers for instance) the Government allows the owners of an SC (in this case, more precisely an SCP) to have a professional activity and merging their means to finance its development.

In practice
We often set up this sort of entity for parents laying the ground of their inheritance, placing their wealth into a light and discrete structure, yet legal, to be owned by their children in the future.
The Articles of Association can be drawn up in a private deed or a notarised document, before being registered at the Tax Office.
The company is then registered at the Direction de l’Expansion Economique (Business Development Agency).
The partners may be natural or legal persons. As stated in the introduction, partners have unlimited liability on the company’s debts, proportionally to their share of the capital.
It is often considered as an opaque entity, since (1) the creation of a société civile is not published in the Official Gazette and (2) the Registry does not disclose much information to the public (except a certificate of registration with the name of the company and its head office address).

Legal references
If you want to analyse in depth the laws and acts lying behind the fundamentals of the SCs management, you will be quite surprised to know that Monaco law only dedicated a few articles in the Civil Code (1670 to 1711) and a short act (the act n°797 dated February 18th, 1966)*, merely setting a the main principles to follow.
Perhaps this minimal legal background reflects the easiness with which one can set up and manage an SC. Indeed, it is a quick and cheap process (compared to other commercial forms of business).

Willing to set one up ?
Let’s be in touch and see how best to structure this company for you.

* The Act was reviewed and updated in 1988, 2004, 2011 and lately in 2020, mostly with regards to the accounting and legal obligations in relation with the fight against corruption, money laundering and the financing of terrorism.