Monegasque Company Law and M&A: Balancing Tradition and Innovation | Monaco

As the Principality of Monaco has one of the highest wealth densities in the world, there are ample investment opportunities. In recent years, and particularly since the post-COVID-19 period, an upturn in M&A activity has been observed in the small (and dynamic) territory of two square kilometres.

Meeting managers’ or investors’ expectations within the Monegasque legal framework is one of the most common challenges. Some argue that Monegasque company law is lagging behind and unsubstantial compared to the laws of neighbouring European countries. For example, there is no equivalent in Monaco to the French société par actions simplifiée (SAS), which offers great operating flexibility. Additionally, unlike in many other countries, at least two shareholders are required to set up a Monegasque company, and there is no regime for preference shares.

The most common commercial company forms in M&A deals are currently the Société Anonyme Monégasque or SAM (public limited company) and the Société à Responsabilité Limitée or SARL (limited liability company). Monegasque corporate law for the SARL is quite rigid. The SAM is a little more flexible, but it should be noted that the rules applicable to this type of company derive from an 1895 ordinance that has been only slightly modified since.

However, it seems that investors’ wishes have been heard. The Principality is now working to modernise many areas. Currently under review by the National Assembly are two bills bills aimed at introducing two new company forms: the SIMA and the SURL. The SIMA (Société d’Innovation Monégasque par Actions or public limited Monegasque innovation company) is designed to be more flexible, creating many opportunities for statutory inventiveness while enabling the development of innovative projects through a specific regime that meets the needs of both startups and investors.

It is proposed that a natural person or a legal entity could be the sole shareholder of the company and the minimum share capital would be set at EUR20,000 (compared to SAM’s minimum share capital of EUR150,000). Regarding shareholders’ political and pecuniary rights, this form opens the door to multiple-voting shares and preferred dividend shares, that are not currently regulated.

The SURL (Société Unipersonelle à Responsabilité Limitée), or single-member limited liability company, also aims to enable a single person, legal or natural, to create a company. The rules governing the SURL would be largely the same as those governing the SARL, with only minor adaptations for the fact that it has a single shareholder. The minimum share capital would be EUR5,000 for companies with a sole shareholder who is a natural person, and EUR20,000 euros for companies with a legal entity as sole shareholder (for comparison, the minimum share capital in a SARL is currently EUR15,000).

We believe these changes will make the Monegasque market an even more attractive place for both local and foreign investors. However, as we are still awaiting the adoption of the above-mentioned bills, it should be pointed out that the current legal framework also has its advantages, as the absence of exhaustive or updated legal texts gives lawyers more latitude to propose customised solutions.