The CNS: complete guide

The SNC, or Société en Nom Collectif, refers to a little-used legal form.

Indeed, the latter has a number of specific features and is only interesting for a certain category of projects.

This is the legal form favored by commercial companies, and implies unlimited liability for its partners.

Today's focus is on the features, advantages and disadvantages of SNC.

Special features of the CNS

First of all, it makes sense to take stock of the particularities of a CNS:

• As far as the number of partners is concerned, an SNC must have at least 2 partners, but there is no legal maximum. Partners may be individuals or legal entities.
• The company's share capital is freely determined by the partners when they draw up the articles of association. One euro is sufficient. The cash contributions used to form the share capital may be paid in full or in part at the time of incorporation. If payments are to be made at a later date, they can be made as and when required by the managing partners.
• The company may be managed by one or more managers, who may or may not be partners.
• With regard to the liability of associates, they have unlimited joint and several liability for all their personal assets.
• As far as the SNC's tax regime is concerned, the profits generated are not subject to corporate income tax (impôt sur les sociétés or IS). It is up to each partner to be taxed on a portion of the profits for which he or she is responsible under the Income Tax (Impôt sur les Revenus or IR) regime. However, under certain conditions, an SNC can opt to pay corporation tax. In particular, this option allows the manager's remuneration to be deducted from income.
• In terms of social protection, the manager is affiliated to the "Travailleurs Non-Salariés" scheme, and therefore to the RSI. The partners, for their part, are also subject to the regime for non-salaried workers.
• Finally, with regard to CNS decision-makingThese can be divided into two categories:
  • Day-to-day decisions are then made by the manager(s) in charge.
  • More important decisions are usually taken by the Annual General Meeting.

The CNS has a number of features that you need to know about.

But what are the advantages and disadvantages?

Advantages of CNS

This section deals with the advantages available to an SNC.

The main advantages of such a structure are :

• As mentioned above, there is no minimum share capital requirement for an SNC. This makes it relatively easy to create this type of structure. It also makes it possible to significantly reduce the costs involved in setting up an SNC.
• The creation of an SNC is facilitated by the fact that a private deed is all that is required to formalize the formation of such a structure. No notarial deed is required.
• The revocability of a managing director must be unanimous. This reinforces the stability of the company's management.
• Stability is also a feature of the capital. In fact, the capital is closed, since all share transfers must be unanimous.
• The principle of joint and several liability for associates can help reassure investors, banks and customers, and thus boost business development.
• It's also worth noting that the administrative burden on such a company is limited. Indeed, it is not necessary for an SNC to keep annual accounts. This makes it a relatively discreet company.
• Lastly, contributions to share capital can come directly from the work of associates.

Disadvantages of CNS

Finally, it's time to take a look at all the disadvantages often attributed to an SNC:

• First and foremost is the principle of joint and several liability of associates. While this may reassure a number of investors, it also represents a major risk for partners in the event of problems. Their personal assets are not protected.
• Secondly, such a structure is often criticized for its lack of dynamism. Indeed, collective decision-making often makes development difficult. This formalism can sometimes become a disadvantage.
• The collegiality described earlier can turn into a disadvantage. Indeed, because a share transfer is decided unanimously, it can prove difficult to sell one's shares.
• Finally, taxation under the personal income tax system can quickly become unfavorable from a tax point of view.

The SNC is a very specific legal form that is only suitable for specific types of project.

It is therefore important to know your project well in order to determine the legal form best suited to it.