Monaco is a Principality where justice is independent of the executive power. The administration of justice is under the responsibility of the Directorate of Judiciary Services, which was created in 1918, under the care of its Director – State Secretary for Justice.

Monaco is not an EU member. However, the Principality has been part of the Community customs territory since 1968 given its customs union with France. Monaco is also part of the European VAT system.

Monaco is not a signatory to the Schengen Agreements, however holders of Monegasque residence permits have the right to move freely within the Schengen Area for stays lasting less than three months.

Monaco is negotiating an association agreement with the EU.

The Principality is also party to numerous treaties with other States and to international Conventions, such as the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, Convention against Transnational Organized Crime, Convention on International Trade of Endangered Species (CITES) etc.

Monaco is a civil law jurisdiction where many laws are codified.

However, there is a number of laws concerning specific subjects i.e. commercial leases, data protection, employment etc. which are not codified.

The Prince holds the judicial power but He delegates the full exercise of this power to the Courts that dispense justice in His name.

The courts are organized as follows:

1. Civil courts with three levels of jurisdiction:

1. Jurisdictions of First Instance: Justice of the Peace, Court of First Instance and specialized courts, i.e. Labour Court, Rent Arbitration Commission, Arbitration Commission for Commercial Leases;
2. Court of Appeal;
3. Court of Revision.

2. Criminal courts with also three levels of jurisdiction,

3. Supreme Court which has special jurisdiction in constitutional affairs and administrative affairs. It also rules on conflicts of jurisdiction.

Law n°1.511 of 2 December 2021 has recently modernized the judicial proceedings before the civil courts.

– The limited liability company (“société à responsabilité limitée” or SARL) is the most common form of company in Monaco. Its minimum share capital is EUR 15,000, and the company must have a bank account in Monaco. The company must have at least 2 shareholders (individuals or legal entities) and the manager (natural person) must reside in Monaco or in the surrounding cities in France or Italy. The company’s registered address must be in Monaco, either at the manager’s home address (for a limited period of two years, and subject to the landlord’s approval – in this case the company cannot have employees), or on private premises which need to be coherent with the company’s activity, or in a business center which offers domiciliation services.

– The Monegasque Joint Stock Corporation (“société anonyme monégasque” or SAM) must have at least 2 shareholders (individuals or legal entities). The Directors are not required to reside in or near Monaco.  The minimum share capital is EUR 150,000 and the company must have a bank account in Monaco. The company’s registered address must be in Monaco, either on private premises or in a business center as described above.

– Other types of entities are the “Société en Nom Collectif” (SNC) and the “Société en Commandite Simple” (SCS). These companies must have at least two partners and do not require a minimum capital.

– Furthermore, it is also possible to register a sole-trader activity (“entreprise en nom personnel”).

– Finally, civil companies are also an option (“société civile particulière” or SCP). These companies do not carry out any business but are merely limited to managing their own assets. No minimum share capital is required for an SCP. The company must have at least two shareholders (individuals or entities), local or foreign, and the manager of the civil company is not required to reside in Monaco or surrounding cities. The company’s registered address must be in Monaco, either at the manager’s home address in Monaco, or in a business center.

All new business activities in Monaco must be specifically authorized by the Government. The applicants must file an official authorisation request.

Some activities are sometimes denied because they are saturated or simply unwanted. In addition, certain activities are subject to specific regulations in Monaco.

The authorization request includes information on the company’s purpose and on the company’s shareholders and Directors, as well as a copy of the articles of association duly registered with the Tax office.

The authorities are required to provide their response within three months’ from the filing of the authorization request.

Once the authorization is granted, it will be necessary to secure a registered address and open an account with a bank in Monaco in order to pay the share capital.

The registration of the company with the Monaco Trade Registry will then be possible.

Commercial companies can be functional within approximately 6 months from the authorisation application, mostly due to administrative deadlines, and for bank account opening process. The authorization for a sole-trader activity is also submitted to the three months’ administrative deadline. Civil companies can be active within approximately one month, considering that they are not submitted to the authorization process detailed above.

Non-domestic entities cannot carry on business directly in Monaco without having to incorporate or register an entity and obtain the government authorization.

They are however free to deal with existing Monegasque entities.

– For the limited liability company (“société à responsabilité limitée” or SARL) the minimum capital is EUR 15,000 and it is divided into equal shares.

It must be fully subscribed. This means that the amount of capital determined in the company’s bylaws must correspond to the sum of the commitments of the shareholders.

Each shareholder makes a contribution in cash or in kind to the company’s capital in return for the delivery of shares.

Cash contribution

At the time of incorporation, cash contributions must be paid up in full up to the minimum share capital.

The remainder must be paid up within three years from the date of incorporation, otherwise the share capital may be reduced at the request of any interested party.

Contributions in kind

Contributions in kind must be made at incorporation.

As a general rule, the contribution is made by transferring ownership of the property to the company. However, it is also possible to make a contribution in kind, whereby the contributed property is leased to the company in exchange for the allocation of shares.

If there are contributions in kind, such as a business, a valuation must be made by an auditor unanimously chosen by the future shareholders, among the Monegasque chartered accountants.

However, the future shareholders can decide unanimously that they will not do so.

In this case, they are jointly and severally liable for 5 years towards third parties for the value attributed to the contributions at the time of the constitution of the company. Beyond this period, the action in warranty is prescribed.

The liability of the shareholders can also be engaged if the value of the contributions retained is different from the one proposed by the contribution auditor.

Attribution of the shares

In return for his contribution to the capital of the limited liability company, the shareholder receives a certain number of shares. These shares give him the right to participate actively in the life of the company, to receive a share of the profits made by the company and requires him to contribute to the losses incurred by the company.

– For the Monegasque Joint Stock Corporation (“société anonyme monégasque” or SAM) the minimum capital is EUR 150,000 and it is divided into shares of equal value (art.41 of the Commercial Code) which are registered shares.

The share capital must be fully subscribed.

In order for the company to be incorporated, the cash contributions must be paid up to at least one quarter of the shares subscribed by each shareholder.

(Art. 3 of the Ordinance of March 5, 1895).

The shares representing the cash contributions are negotiable after the final incorporation of the company.

Shares representing contributions in kind must be fully paid up at the time of incorporation of the company. They can only be traded two years after the final incorporation of the company.

– For the “Société en Nom Collectif” (SNC) and the “Société en Commandite Simple” (SCS) the law does not require a minimum capital.

It is therefore freely determined by the partners in the bylaws.

The law does not contain any provision relating to the payment of the share capital.

It is therefore up to the partners to foresee in the bylaws the modalities of this payment.

– For the civil companies (“société civile particulière” or SCP) the law does not require a minimum capital.

It is therefore freely determined by the shareholders in the bylaws.

See question 2 and 3.

– The limited liability companies (“société à responsabilité limitée” or SARL) are managed by one or several managers “gérant(s)” who can be shareholders or not.

The managers can act independently or jointly, depending on the wording of the bylaws which can specify further powers.

The shareholders of a SARL are liable for the loss incurred by the company up to their share in the capital.

– The Monegasque Joint Stock Corporation (“société anonyme monégasque” or SAM) companies are managed by a Board of Directors. The Directors “Administrateurs” must hold at least one stock in the company. The bylaws can provide for ownership of a minimum number of stocks. Further powers can be granted to third parties such as a Vice President/General Director through a special mandate granted by the Board of Directors.

The liability of the partners of a SAM is limited to their share in the capital.

For the “Société en Nom Collectif” (SNC) the partners of the SNC are managers unless otherwise stipulated in the bylaws. The partners cannot decide to entrust the management to a third party.

The partners of an SNC are indefinitely, jointly and severally liable for the debts of the company on the basis of their entire assets.

– For the “Société en Commandite Simple” (SCS) the general partner is the manager of the SCS. If there are several general partners, they all manage together. The bylaws may provide that only one of the general partners manages.

In an SCS, the “commandités” partners are indefinitely, jointly and severally liable for the debts of the company, while the “commanditaires” partners are liable up to their contribution to the share capital.

– For the sole trader activity the sole trader is alone and therefore takes the decisions alone.

Its liability is unlimited and extends to his/her entire assets.

This also applies to the shareholders of a civil company.

See question 2.

Apart from the creation of an entity or establishment, it is possible to enter in the capital of an existing company or to buy an existing company in order to extend business.

As far as commercial agents are concerned, their profession is defined by law n. 1.008 of 04/07/1978.

N/A

For the most common entities in Monaco, the options are either the shareholder‘s/partner‘s current account advances (avance en compte courant d‘associés) or a bank loan.

It can also take the form of a capital increase with the creation of new shares.

For commercial companies there is the distribution of dividends, which are not subject to taxes, every year.

See question 23.

Shareholders cannot give directly instructions to the management.

For the most common entities in Monaco, Managers are vested with general/daily management powers for the purpose of the company’s activity.

They can be vested with special/specific powers by the shareholders.

The bylaws might specify what the manager could not do without the express approval of the shareholders (ie. Selling company asset).

Employment law is mainly governed by a small number of laws, the implementation of which is specified in sovereign ordinances and regulations.

None of these laws or regulations are codified.

The employment contract is of particular importance in Monaco insofar as it constitutes the Law between the parties and allows for the inclusion of very specific clauses applicable during and after the period of employment. (non-competition clause, intellectual property clause, forfeiture of training, etc.)

The employment contract can be either written or verbal.

Employment law is supplemented by the case law of the Labour Court, the decisions of which fill certain legal gaps in this area.

As a large part of Employment law is based on French law, it is possible to refer to French case law on certain issues as well.

Some professions have been able to negotiate collective agreements that complement existing legislative and regulatory provisions. (e.g. the banking collective agreement with very specific rules)

In recent years, labour law has been modernised and new laws have regularly been added to the existing legislative and regulatory framework, particularly with regard to working hours.

New reforms are also to come soon.

There are also practices in Monaco which are not set out in any statute but which should be known, such as the 3-month notice period for an executive, which is not provided for in any legal statute but is nevertheless fully applied by the judges.

The practice of Monegasque Employment law requires an increased knowledge of the statutes and a great deal of experience in the field to avoid the traps.

The conditions for hiring and registering an employee in Monaco are regulated.

All job offers must be submitted to the employment service, which can present candidates to the employer in accordance with a certain order of priority established by law.

In Monaco, there is a national preference whereby applications from employees of Monegasque nationality are given priority at the same level of competence

The employer may only conclude an employment contract with an employee who holds a work permit in Monaco.

Any new employment contract, any modification of the employment contract or any change of employer must be reported to the employment service.

An employment contract may be concluded for a fixed or indefinite period.

The law does not provide for a maximum duration for fixed-term contracts, which may be renewed as many times as necessary.

However, the renewal of a fixed-term contract is not without risk, since it can lead to the fixed-term contract being converted into an open-ended contract if it turns out that the purpose of the contract is to fill a permanent position in the company.

The fixed-term contract is subject to certain specific rules relating in particular to the duration and organisation of work, but also to the termination of the employment contract.

A fixed-term employment contract can only be terminated at the end of its term or for one of the reasons set out in Article 12 of Law 729 on employment contracts.

Law 729 also provides in its article 6 that an open-ended employment contract can always be terminated by the will of one of the parties, without obligation to justify this decision.

The contract then ends at the end of the notice period.

However, Article 6 cannot be invoked by the employer in the case of a fixed-term contract.

Collective agreements may contain additional provisions concerning fixed-term contracts.

The working hours of employees are set in general at thirty-nine hours per week, regardless of their sex or age.

Derogating to this rule, a collective labor agreement or, failing that, a company agreement, may, under certain conditions, spread the duration of work over a reference period longer than a week, but not exceeding one year. In this case, the standard working time of thirty-nine hours per week constitutes the average weekly working time over this reference period.

(Article 1 of Ordinance-Law n°677 of December 2, 1959)

(Articles 8-1 to 8-7 of Ordinance-Law n°677 of December 2, 1959 as modified by the Law n°1 505 of June 24, 2021)

The employer has nevertheless the option of extending the working hours to forty-seven hours per week but he shall ensure that the daily duration of effective work may not exceed ten hours for any employee, unless authorized by the labor inspector.

In all cases, the rest period between two consecutive working days may not be less than ten hours.

(Article 3 of Ordinance-Law n°677 of December 2, 1959)

Working hours may also be temporarily extended beyond forty-seven hours per week under exceptional circumstances and conditions set in article 4 of the Ordinance-Law n°677 of December 2, 1959.

(Article 4 of Ordinance-Law n°677 of December 2, 1959)

The average weekly working time calculated over any period of twelve consecutive weeks of effective work may not exceed forty-six hours. In the course of a single week, the working time may not exceed forty-eight hours.

Exceptions to this rule could intervene in particular sectors and in case of exceptional circumstances as set in article 5 of the Ordinance-Law n°677 of December 2, 1959.

(Article 5 of Ordinance-Law n°677 of December 2, 1959)

Hours worked in excess of thirty-nine hours per week, or the duration considered to be equivalent, will give rise to a minimum increase in salary set as follows:

• 1° for the first eight hours: twenty-five percent;
• 2° for the following hours: fifty percent.

Limited exceptions to this rule are set in articles 8 and 4 of Ordinance-Law n°677 of December 2, 1959

(Article 8 of Ordinance-Law n°677 of December 2, 1959)

(Article 4 of Ordinance-Law n°677 of December 2, 1959)

The daily work of women must be interrupted by one or more rest periods, the total duration of which may not be less than one hour.

During these rest periods, the employer may not require any work from these employees.

(Article 10 of Ordinance-Law n°677 of December 2, 1959)

Women may not be employed on any night work in factories, construction sites, workshops and their outbuildings, unless they hold managerial or technical positions involving responsibility.

All work between 10 p.m. and 5 a.m. is generally considered as night work. Another period of seven consecutive hours between 10:00 p.m. and 7:00 am may be set out as night work by a collective agreement or by specific authorization of the labor inspector.

(Article 11 of Ordinance-Law n°677 of December 2, 1959)

Concerning discrimination, many projects are under consideration in Monaco.

One of the main concerns regarding discrimination was to avoid discrimination between men and women at work.

Ordinance n. 96 of 16/06/2005 makes the Convention on the Elimination of All Forms of Discrimination against Women, adopted in New York on 18 December 1979, enforceable.

Concerning the minimum wage, it is fixed by circular n° 2022-21 of December 27, 2022 relating to the S.M.I.C. (Salaire Minimum Interprofessionnel de Croissance) applicable as of January 1, 2023.

The mimimum wage is now 1904.63 euros.

Concerning dismissal of the employee see question 15 below.

Monaco is an “employment at will jurisdiction”.

According to article 6 of Law n°729 on employment contracts of March 16, 1963, “an open-ended employment contract can always be terminated by the will of one of the parties; it ends at the end of the notice period”.

The employer does not have to justify the dismissal.

This article 6 is part of the advantages offered to companies in Monaco to modulate their payroll.

(Article 6 of Law n°729 on employment contract of March 16, 1963)

Case law provides a framework for the use of article 6. When the courts consider that the dismissal has been implemented in a brutal manner, without warning to the employee, without a minimum of formalism and therefore without a minimum of respect for the employee, the use of article 6 is generally sanctioned by the courts of Monaco.

It should also be noted that article 6 does not apply to certain sectors of activity in Monaco. This is notably the case in the banking sector, or sometimes in the hotel industry.

By application of the collective agreement for banks in Monaco, the use of Article 6 in the banking sector is totally prohibited.

In the hotel sector, the use of dismissal without cause is prohibited by certain establishment agreements (e.g. Fairmont Hotel and Columbus Hotel).

A fixed-term employment contract can only be terminated before its term by the will of one party for justified reasons or in case of serious misconduct, force majeure or the reasons provided for in the contract or determined by the employer’s internal regulations.

(Article 12 of Law n°729 on employment contract of March 16, 1963)

The existence and duration of the notice period are determined by law, the employment contract, internal regulations, collective agreements or, in the absence thereof, by custom.

Unless the collective agreement or, failing that, customary practice, provides for a longer period of notice or a lower seniority requirement, employees are entitled, except in the case of serious misconduct, to a one-month notice period if they have been with the same employer for more than six uninterrupted months.

If seniority with the same employer exceeds two uninterrupted years, employees are entitled, at the option of the employer:

– to a notice period of two months,

– or to a one-month notice period and a special indemnity that may be cumulated with the indemnities for dismissal or redundancy instituted by law or those granted by virtue of the employment contract, internal regulations, collective labor agreements or customs.

(Article 7 of Law n°729 on employment contract of March 16, 1963)

The notice period is reduced by half if the employee takes the initiative to terminate the contract.

(Article 8 of Law n°729 on employment contract of March 16, 1963)

Failure to observe the notice period entitles the employee to compensation corresponding to the remuneration he would have received during this period that was not effectively observed.

However, the contract may be terminated without notice if it results from the agreement of the parties, a serious fault or a case of force majeure.

(Article 11 of Law n°729 on employment contract of March 16, 1963)

Any abusive breach of an employment contract may give rise to damages which will be fixed by the judge in the absence of agreement between the parties. The judgment must expressly mention the reason alleged by the party that has breached the contract.

These damages are not to be confused with the indemnity for failure to observe the notice period, nor with the dismissal indemnity determined by article 1 of law n° 410 of June 4, 1945 or possibly provided for by the contract or collective agreement.

(Article 13 of Law n°729 on employment contract of March 16, 1963)

Any employee with a permanent employment contract dismissed after two years of uninterrupted seniority at the service of the same employer, is entitled, except in the case of serious misconduct, to a dismissal indemnity the minimum amount of which shall not be less than the amount of the indemnities of the same nature paid to employees in the same professions, businesses or industries in the neighboring economic region.

(Article 1 of Law n°845 on dismissal or layoff compensation of June 27, 1968)

In the event that the dismissal is not justified by a reason considered valid, the employer must pay the employee a severance compensation. Each month worked entitles the employee to an indemnity equal to one day of salary.

The amount of the severance compensation may not exceed six month ofsalary.

This severance compensation allowance is not owed when the employee has reached the age at which he/she is entitled to receive a retirement pension.

(Article 2 of Law n°845 on dismissal or layoff compensation of June 27, 1968)

Dismissal indemnity (article 1 of the Law n°845) may not be combined with severance compensation (article 2 of the Law n°845).

The dismissal indemnity referred to in Article 1 shall be paid on the day on which the dismissal takes effect. Its amount shall be deducted from the severance application provided for in Article 2, where applicable.

The severance compensation shall not be cumulative with any other compensation or indemnity provided for in any statute or collective agreement in connection with the employee’s departure from the company.

The dismissal indemnity (article 1 of the Law n°845) is not to be confused with the compensation for failure to observe the notice period or with the severance compensation for wrongful termination of the contract.

(Article 3 of Law n°845 on dismissal or layoff compensation of June 27, 1968)

2/. Collective dismissals

By application of the Ministerial Decreeno. 70-265 of July 28, 1970, collective redundancies for economic reasons are governed in Monaco by the provisions of Amendment no. 12 to the National Collective Labor Agreement, which is rendered mandatory for all employers and employees of industrial and commercial companies in Monaco belonging to professional sectors it covers.

In order to be recognized as a valid reason, the collective dismissal must be based on an economic justification, the criteria of which have been defined by case law.

By application of Amendment n°12 to the National Collective Labor Agreement and related case law, the employer is required to respect numerous obligations in order to carry out a collective redundancy.

The employer shall inform and consult employee representatives on collective redundancy projects.

In order to ensure that the staff delegates are informed and to enable them to play their consultative role effectively, management must give them, in a written document, useful information concerning the scale of the envisioned redundancies, the occupational categories concerned and the reasons which led it to present the project to the delegates for their advice.

(Article 7 of the Amendment n° 12 to the National Collective Labor Agreement)

When the company consults the employee representatives on a collective redundancy project resulting from a merger, concentration or restructuring decision, it must inform them of the economic or technical factors that are at the origin of this situation and indicate the measures it has taken or plans to take to limit the redundancy measures.

(Article 8 of the Amendment n° 12 to the National Collective Labor Agreement)

When, for economic reasons, a company is considering a collective dismissal, it must – except in cases of force majeure or exceptional economic circumstances of an emergency nature – respect a time limit between the date on which the delegates concerned by the said redundancy are brought together to discuss the matter, and the final decision of the head of the company or establishment.

This period varies from 8 days to three months depending on the number of employees concerned and if a collective dismissal is envisioned within a maximum period of six months, following a merger of several companies, a concentration of the means of production between several establishments depending on one or more companies, a restructuring of the company or a departure of the company from the territory of Monaco. An extension beyond this period remains possible under certain conditions. 

(Articles 9, 10 of the Amendment n° 12 to the National Collective Labor Agreement)

If a merger, concentration or restructuring operation leads to a reduction in the workforce, this reduction must be achieved, as far as possible, through natural or voluntary departures. In the same case, when the company has recourse to internal transfers, it must ensure that these transfers do not result in the downgrading of employees, by adapting workstations, and by appropriate vocational rehabilitation or training measures.

(Article 12 of the Amendment n° 12 to the National Collective Labor Agreement)

When a company has carried out internal transfers in order to reduce the number of employees included in a collective redundancy of an economic nature and it has not been possible to avoid downgrading, various measures to protect employees and mitigate the effects of downgrading are provided for.

(Articles 13, 14, 15, 16 of the Amendment n° 12 to the National Collective Labor Agreement)

Companies must seek out the possibilities of redeployment that may be suitable for employees whose dismissal has been decided, as well as the means of training and retraining that could be used by them.

(Article 17 of the Amendment n° 12 to the National Collective Labor Agreement)

An employee who is dismissed in the context of a collective redundancy resulting from a merger, concentration or restructuring operation and who has found a new job during the period of notice may leave the company without having to pay the compensation in lieu of notice corresponding to the unexecuted part of his notice period, and retaining the benefit of his legal or conventional redundancy compensation. The employer may only refuse to give his consent for reasons of service.

(Article 18 of the Amendment no. 12 to the National Collective Labor Agreement)

Employees included in a collective redundancy of an economic nature are given priority for re-employment for a period of one year from the date of their redundancy.

(Article 20 of the Amendment n° 12 to the National Collective Labor Agreement)

All companies with more than 11 employees must hold elections to choose employee representatives for a period of one year.

Employee representatives can hold several mandates in a row.

The number of representatives depends on the size of the company. In companies with 11 employees there must be at least one full and one substitute representative.

The employee representatives are the main contacts for the employer and the labour inspector.

Their task is to report to the employer all individual and collective complaints relating to the application of wage rates and job classifications, laws and regulations, worker protection, health and safety and social security.

They can also negotiate and conclude collective agreements with the employer on these same issues.

However, the law does not impose any obligation on employers to negotiate.

Employee representatives must be consulted on :

– collective redundancies (at least 10 employees) of an economic nature

– Working hours (when the planned working hours exceed 48 hours)

– The setting of paid holidays

– Draft internal regulations

In order to carry out their mission, the staff representatives have a monthly time credit to carry out their duties and the right to move freely inside and outside the company.

The employer must also meet with them once a month and answer their questions.

Finally, employee representatives have special protection throughout their term of office and for six months after they have finished their duties, which protects them from any risk of unfair dismissal.

For many years, the Principality has been actively engaged in the fight against money laundering and terrorist financing (AML/CFT).

In domestic law, Monaco has adopted an AML/CFT legal framework in line with the international standards recommended by the “Groupe d’Action Financière (GAFI)”.

With this objective and since the first anti-money laundering law of 1993, the Monegasque legal and regulatory framework has been regularly amended and, on several occasions, strengthened to take into account the evolution of international best practices.

Today, the legal system is based on law n° 1.362 of August 3, 2009 which has completely revised the provisions which were previously scattered in different statutes and updated the standards in accordance with the GAFI Recommendations.

In order to ensure the implementation of these measures, the Principality has set up a specialized agency “le Service d’Information et de Contrôle sur les Circuits Financiers (SICCFIN)“.

With significant investigative powers, SICCFIN has a dual mission:

• to analyze and process suspicious transactions reported by professionals ;
• to control the proper implementation of legal obligations by carrying out on-site visits.

Since joining the Council of Europe in 2004, Monaco has regularly participated in the work of the MONEYVAL Committee of Experts. The objective of this Committee is to ensure that Member States have put in place an effective system to counter money laundering and the financing of terrorism, and that they comply with the relevant international standards in this field.

Also at the international level, SICCFIN is a member of the Egmont Group (an international organization that brings together the operational FIUs of more than 140 countries) and has signed, since February 2015, 61 administrative cooperation agreements with its foreign counterparts.

The SICCFIN is competent as soon as a transaction is linked to Monaco.

The legal system is based on law n° 1.362 of August 3, 2009 that is regularily updated by new Laws and Ordinances.

The latest law in this area is law n° 1559 of February 29, 2024 adapting legislative provisions to fight money laundering, the financing of terrorism and the proliferation of weapons of mass destruction (Part IV).

As for the obligation to report economic crimes to the relevant authority, a report must be made to SICCFIN by the professionals, subject to anti money laundering law, who know of a suspicious transaction, a transaction or a fact concerning a natural or legal person established in a country deemed to be a risk country, or in the event of a transaction or fact concerning a natural or legal person subject to measures of freezing funds in application of international economic sanctions.

See question 17 and 18.

N/A

– For the Monegasque “sociétés anonymes“ and „sociétés en commandite par actions“, the directors or managers must convene, within six months of the end of the fiscal year, a shareholders’ meeting to which the balance sheet, the profit and loss account, the management report of the board of directors or the managers, and the reports of the statutory auditor(s) provided for under articles 24 and 25 of law no. 408 of January 20, 1945, are submitted.

Within three months following this meeting, they must submit to the Trade Registry :

1°- A certificate drawn up and signed by the auditors mentioning:

• The names and addresses of the directors or managers as well as those of the auditor(s) in office
• The approval or rejection by the general assembly of the balance sheet and the profit and loss account
• The conformity (or lack of conformity) of the company’s activity to that for which its incorporation was authorized
• The indication that the certification of the accounts has been given, refused or is subject to reservations
• The opinion of the auditor(s) on the regularity of the holding of the general meeting with regard to the stipulations of the articles of association and the legal and regulatory provisions in force

2°- The auditors’ report on the accounts

– For the other Monegasque commercial companies, the manager must, first of all, convene within six months of the closing of the fiscal year the assembly of the shareholders in order to submit to its approval the following documents :

• The inventory, the balance sheet, the profit and loss account
• The management report on the past fiscal year
• The report on the execution of the contracts and undertakings intervened, directly or through an intermediary, between the company and one of its managers or partners

Then, within three months following the holding of this meeting, the manager must submit the following documents to the Répertoire du Commerce et de l’Industrie (Trade Registry) :

• The balance sheet
• The profit and loss account
• A certificate signed by him/her which includes
• The names and addresses of the managers and partners as well as, if applicable, the auditor in office
• The indication that the annual accounts have been established in accordance with the legal provisions
• The approval or rejection by the general assembly of the balance sheet and the profit and loss account
• The indication of the compliance with the legal and statutory provisions and, in particular, of the conformity of the activity of the company with its corporate purpose

For companies without an auditor, the certificate must be signed by a member of the order of chartered accountants and approved accountants who expresses his appreciation of the plausibility and consistency of the information provided by the manager.

There is no annual compliance requirements.

However :

– For limited liability companies (“société à responsabilité limitée” SARL) in order to make certain acts effective against third parties, the manager must carry out publicity formalities which vary according to the nature of the decision.

In this respect, any modification of the articles of association concerning the form of the company, its corporate purpose, the appointment of the managers, the amount of the share capital, the duration and the transfer of the registered office, implies a notice in the official gazette (Journal de Monaco) and filing the minutes of the extraordinary general meeting with the general registry of the courts for it to be displayed there.

– For the Monegasque Joint Stock Corporation (“société anonyme monégasque” SAM) in order to make certain corporate acts effective against third parties, the Directors must carry out publicity formalities which vary according to the nature of the decision.

In this respect, any amendment to the articles of association approved by ministerial order must be published in the Official Gazette (Journal de Monaco) and filed with the general registry. Changes made by the board of Directors are recorded in the trade registry.

– For the civil companies (“société civile particulière” or SCP) they are obliged to keep an accounting record of all the operations they carry out in the form of a statement of incomes and expenses.

The manager is required to keep the accounting records and the corresponding supporting documents, including bank documents, at the registered office of the company for at least five years.

– For limited liability companies (“sociétés à responsabilité limitée” SARL) the manager must hold two types of meetings: ordinary general meetings (OGM) and extraordinary general meetings (EGM).

Ordinary general meeting (OGM)

The annual approval of the accounts is a mandatory responsibility of the OGM.

Decisions are adopted in accordance with the provisions of the bylaws.

(Article 35-5 of the Commercial Code)

There is no rule about the quorum for decisions, unless specified in the bylaws.

Extraordinary General Meeting (EGM)

The purpose of the EGM is to rule on any modification of the bylaws such as the modification of the legal form, the change of the company name, the capital increases, etc.

Decisions are adopted in accordance with the provisions of the bylaws.

However, decisions relating to the change of nationality of the company, the transformation into a general partnership, a limited partnership or a partnership limited by shares, or the early dissolution of the company, must be taken unanimously.

Ensuring the information of the shareholders

In case of a meeting, the manager must convene the shareholders and communicate all documents to them, in order to allow them to vote with the full knowledge of the facts.

For the ordinary general assembly, he must keep at the disposal of the shareholders or their representatives at the head office :

• The annual accounts
• The management report
• With the possibility for the shareholders or their representatives to take a copy of those documents.

– For Monegasque Joint Stock Corporations (“sociétés anonymes monégasques” SAM) Directors must also convene two types of meetings: ordinary general meetings (OGM) and extraordinary general meetings (EGM).

Ordinary general meetings (OGM)

The annual approval of the accounts is a mandatory responsibility of the OGM.

The ordinary general meeting can only deliberate if it is composed of a number of shareholders representing a quarter of the share capital. If this number is not met at the end of the first convocation, a second meeting is convened in the form and time prescribed by the articles of association.

This meeting deliberates regardless of the value of the capital represented by the shareholders present.

Extraordinary general meetings (EGM) 

The purpose of the EGM is to rule on any modification of the articles of association such as the modification of the legal form, the change of the company name, the capital increases, etc.

The extraordinary general meeting can only deliberate if it is composed of a number of shareholders representing half of the share capital. If this number is not met at the end of the first convocation, a second meeting is convened at the earliest one month after the first.

During this interval, notices are published every week in the Official Gazette (Journal de Monaco), and at least twice, at ten-day intervals, in one of the main newspapers in the neighboring french department of the Maritimes Alpes, announcing the date of the second meeting and indicating the points on which it will have to deliberate.

This meeting can only deliberate if it gathers a majority of three quarters of the shares represented, whatever the number.

The directors are obliged to convene the extraordinary meeting within one month of the request of shareholders representing one tenth of the share capital.

Voting on deliberations and minutes

At all meetings, resolutions are passed by a majority of votes.

Once the resolutions have been submitted to the vote and the agenda has been completed, the minutes are drawn up and signed by the officers of the meeting; the attendance sheet is appended, showing the names and addresses of the shareholders and the number of shares held by each.

Ensuring that shareholders are informed

In the event of a meeting, the directors must provide them with all documents enabling them to vote with full knowledge of the facts.

For the ordinary shareholders’ meeting, the directors must make available to the shareholders or their proxies, at the registered office or at any other place indicated in the notice of meeting, at least fifteen days before the meeting, the list of shareholders, the balance sheet, the profit and loss account, the report of the board of directors, the reports of the statutory auditor(s) and, in general, all the documents which, according to law, must be communicated to the meeting.

The shareholders may take copies of these documents.

According to Law n. 1.549 of 06/07/2023 on the fight against money laundering, terrorist financing and corruption, the beneficial owner is :

• the natural person(s) who ultimately owns or controls the client, and/or the natural person(s) on whose behalf a transaction is carried out. A beneficial owner is also the natural person(s) who ultimately exercises effective control over a legal entity or structure.

Beneficial owners must be registered in the “Register of Beneficial Owners” attached to the Trade and Industry Register (RCI).

The following legal persons and entities are required to declare their beneficial owners :

• Commercial companies and economic interest groups registered in the TradeRegistry
• Non trading companies (“sociétés civiles”) registered in the special register held by the Trade Registry

VAT

Value Added Tax is levied in Monaco on the same basis (same substantive rules regulating the transactions subject to VAT) and at the same rates than in France (normal rate: 20%, intermediary rate: 10%, reduced rate: 5.5%, super reduced rate: 2.1%).

However, some specific transactions are expressly exempted from VAT in Monaco while the same transactions will not be VAT exempted in France.

For example, services provided by attorneys, legal and tax advisors, bailiffs, chartered accountants, notaries, are (for the time being) exempted from VAT in the Principality of Monaco.

Tax on Profits (« Impôt sur les Bénéfices »)

Businesses carrying out an industrial or commercial activity in the Principality and making more than 25% of their gross turnover outside Monaco are liable to a Tax on Profits in Monaco.

On the contrary, Monaco based businesses deriving their entire turnover from activities carried out within the Principality are not subject to the Tax on Profits in Monaco.

As of 1^st January 2022, the Tax rate in Monaco is 25%.

This Tax rate is applicable on the net profits determined by the difference between the gross turnover and the tax deductible expenses.

The main specific regime applicable to expenses relates to the deductibility of the manager(s)’ remuneration. The manager(s)’ remuneration is deductible from the gross turnover by reference to a predetermined scale according to which the deductible remuneration depends on the gross turnover of the business.

This scale differs between service providing businesses and businesses carrying out sales activities (e.g. for a service provider business the maximum deductible expenses for the manager salary will be EUR 426 384 if the turnover is between EUR 875 001 and EUR 1 000 000 whereas for a business carrying out sales activities the maximum deductible expenses will be EUR 219 960 if the turnover is between EUR 750 000 and EUR 1 000 000).

In the same way, amortization of non-commercial motor vehicles is only deductible up to a purchase value of EUR 18 300 (this amount can be higher:EUR 30 000, or lower: EUR 9 900, for certain types of vehicles with predetermined carbon emissions).

Withholding tax

There is no withholding tax on dividends or interests in the Principality of Monaco.

The main tax credits and tax incentives offered in the Principality of Monaco relate to the Tax on Profits.

Tax Credit for Research

Businesses incurring certain types of research and development expenditures might benefit from a Research Tax Credit designed to promote and encourage innovation.

The businesses eligible to this regime are those that are carrying out industrial, commercial or agricultural activities and that are subject to the Tax on profits in Monaco.

Three types of research and development expenditures give right to the Research Tax Credit:

• fundamental research with the aim of acquiring new knowledge
• applied research carried out with the view of identifying the possible applications of a new knowledge acquired from fundamental research
• experimental development which is designed to collect the technical data that will help for decision making, especially thanks to prototypes and/or pilot plants

The main expenditures that are likely to benefit from Research Tax Credit are staff costs, i.e. wages paid to researchers and technicians that are directly and exclusively involved in eligible research and development activities within the business.

Thus, it is crucial:

• to keep and update the list of the employees working on the business’ research and development projects
• to be able to provide justification of their qualifications (diplomas)
• to identify the research and development projects that they are working on and to keep records of the time spend by these employees on each project

The amount of amortization of immovable assets assigned to research and development activities can be taken into consideration for the computation of the Research Tax Credit.

External expenses relating to services obtained from third parties (i.e. service providers) can be allowed into the Research Tax Credit regime under specific conditions detailed in Sovereign Order n° 10.325 of 17 October 1991, as modified.

The Research Tax Credit rate is:

• 30% of the research and development expenditures below EUR 100 million
• 5% of the research and development expenditures above EUR 100 million

The Research Tax Credit is calculated on the annual tax return for each civil year and can be carried forward without limitation of time if not offset against the Tax on Profits owed for the current fiscal year.

New Companies Regime

This tax incentive is available for new companies incorporated after the 1^st October 1991 which are subject to the Tax on profits which develop a genuinely new activity for the Principality.

To be eligible, the companies must not carry out any activity within the banking, finance, insurance or real estate management sectors and not be held by another company (directly or indirectly) for more than 50% of their share capital.

The eligible companies enjoy a Business Tax exemption for their first two years of activity in the Principality and are subject to reduced Tax on profits rates for the following three years:

• from the 1^st month of activity to the 24^th month: Tax on profits exemption
• 12 following months (third year): the Tax on profits is computed on 25% of the taxable profits
• 12 following months (fourth year): the Tax on profits is computed on 50% of the taxable profits
• 12 following months (fifth year): the Tax on profits is computed on 75% of the taxable profits

State Aids

There are several State Aid regimes offered by the Principality of Monaco or Monegasque public entities such as the Monegasque Funds for Credit Insurance, the Monegasque Fund for innovation, the Industrial allowance, the Monegasque Fund EUREKA, etc.

Concerning the capital controls in Monaco, the provisions relating to the fight against money laundering, corruption and the financing of terrorism will apply.

Depending on the amounts, the origin of the funds, the persons involved and the nature of the operation, specific vigilance will have to be applied by the professionals concerned under penalties of law.

The French provisions concerning exchange control when they exist are applicable in the Principality by virtue of Ordinance n°3.066 of July 25, 1945.

In Monaco there is no withholding tax.

The bylaws of a Monegasque company must be registered with the tax authorities, which levy a tax of 1% of the share capital.

Also, concerning civil companies (“société civile particulière”), if this civil company holds real estate, any transfer of share will entail a registration fee of 1% of the price of the real estate.

N/A

There are no specific rules in this field under the laws of Monaco.

However, if a relevant transaction involving one or more Monegasque entities has an impact in a country other than Monaco, the rules of that other country may apply.

For instance, under the guidelines of the French competition authority, merger control shall apply to all companies regardless of their nationality or location, whether or not they have assets or a structure in France, and whether or not the transaction is carried out outside the French territory, provided that they have a turnover in France and exceed the relevant thresholds. In that case, the French control procedure shall apply.

N/A considering that there are no specific rules in this field.

See questions 14-15.

All new business activities in Monaco must be specifically authorized by the Government. The applicants must file an official authorisation request.

Some activities are sometimes denied because they are saturated or simply unwanted. In addition, certain activities are subject to specific regulations in Monaco.

Also, and concerning the activities listed below:

1°) management of portfolios on behalf of third parties;

2°) management of undertakings for collective investment under Monegasque law

3°) reception and transmission of orders on behalf of third parties

4°) advice and assistance in the matters referred to in 1°) to 3°)

5°) the execution of orders on behalf of third parties

6°) the management of undertakings for collective investment under foreign law

7°) trading for own account (“compte propre”)

Such activities are subject to the prior obtaining of an agreement issued by the Commission for the control of financial activities in application of law n. 1.338 of 07/09/2007 on financial activities and an authorization of the company by the Monaco Government.

See question 27.

The liquidation of a legal entity established in Monaco can be voluntary or compulsory.

A voluntary liquidation is decided by the company members in a general meeting and it is conducted by an appointed liquidator, who will prepare a report on the company’s assets and liabilities.

The report will be approved by the shareholders during a second general meeting.

A compulsory liquidation is requested by the Court who will appoint a liquidator to conduct the process and take all the necessary steps in order to close the business.

The liquidator can be an individual or corporate body, appointed for this purpose.

The liquidator represents the company in the liquidation process and may take all the necessary decisions in order to remove the company from the Trade Registry.

In addition, the liquidator must prepare an inventory of the assets and liabilities and then pay the liabilities to possible creditors and distribute the available balance to the entitled shareholders.

The liquidator must, however, be limited to the tasks assigned to it by the partners and cannot continue the current activity of the company in any way without the approval of the shareholders.

The liquidator has a duty to keep shareholders informed regarding the process at least once a year through a written report, elaboration of a balance sheet and a general assembly meeting.

In order to get the company removed from the Trade Registry, the liquidator must deliver specific documents.

At the end of the liquidation, the liquidator must convene a general meeting of liquidation, where the shareholders must approve the final accounts and terminate the legal personality ofthe company.