The countdown has begun: Theresa May, the British Prime Minister, has chosen a clear break with the European Union and displayed a strong willingness to leave the Common Market. Brexit negotiations will begin at the end of March 2017 and continue for 2 years.
So the next question for these companies is where exactly can they easily incorporate at the best price
In France, like in the UK, you can incorporate a company by yourself or by using the services of a lawyer to fill in all your technical documents (bylaws, declaration of non-conviction, tax summary).
In the UK, if you do it yourself, the incorporation process costs £12 (excluding taxes) and it can be completed online within minutes. If you use the services of a lawyer, the price can increase up to £100 (excluding taxes) depending on the package you chose. By comparison in France, if you do it yourself, the fixed costs can increase to €200-€350 (excluding taxes) and up to €600-€1000 (excluding taxes) if you use an expert (notary, lawyer, accountant).
In Belgium (SPRL), Luxembourg (SARL) or Germany (GmbH or UG), you cannot incorporate your company by yourself. Notaries are the only people allowed to draft bylaws and file them with the Court. This will incur further costs.
One exception however is that at the beginning of 2017, Luxembourg introduced the SARL-s, a new form of limited company that can be incorporated without the need for notaries or lawyers. However it is strictly regulated: share capital must be between €1 and €12,000; partners must be individuals and cannot be partners in several companies; more importantly, the manager must be a resident of Luxembourg. In other words, if one of the company's partner's is a VC, an accelerator or simply a company, you will be required to go through a lawyer or notary and the CEO will need to take up residence in Luxembourg
In France, the UK and Germany, you will not be required to share your professional qualifications at the time of incorporation unless your company's activity is legally regulated (for example, if you are a lawyer, driver, doctor, etc.).
In Belgium, be advised that you will need to justify your management skills by providing a copy of a degree, details of your professional background or by taking a test.
In Luxembourg, you will also need to provide the authorities with a trade permit based on your degree, professional background or the completion of an examination
Launching a company can be a consuming adventure, thus providing a business plan can be a real obstacle and sometimes a time killer.
This being said, in Belgium, you need to provide a financial plan for the next two or three years of your company activity and you need to provide your notary with this information.
In Luxembourg, the business plan needs to contain the details of business activities for at least the next three years. Good luck on developing those business documents while working with your partner from your parents' living room!
Luckily, in France and in the UK, the authorities don't ask for business documents at the time of incorporation. Nevertheless, in France, should you choose a bank to deposit your share capital, the bank will ask for these financial documents. Alternatively, by using alf, you can avoid meetings with the bank as we offer secure official escrow accounts without the need to justify a business plan
In France and in the UK, you can set up your limited company with a share capital of €1 (SAS or SASU) or £1. Thus, you can decide to limit partner liability to a reasonable amount.
In Germany, if you create a GmbH, the minimum share capital required is €25,000, half of which (€12,500) must actually be paid before the company can be officially entered onto the commercial register!
To simplify the situation and make it more attractive, a company form called UG was created in Germany, requiring a minimum share capital of €1. However, you'll need to secure ¼ of your yearly profits until you reach the total amount of €25,000. Moreover, it's important to know that UG-type companies have a very bad reputation with the banks due to the limited share capital involved, which may limit your ability to find the best bank.
In Luxembourg, the minimum capital required for a SARL is €12,500. However, you can choose to open a SARL-s with a share capital of between €1 and €12,000 if you accept the disadvantages described above. Furthermore, you'll need to secure 5% of your yearly profits until you reach the total amount of €12,500.
In Belgium, the minimum share capital for a SPRL is €18,550, of which at least 1/5 must be paid upfront (€6,200).
Testing your idea can be a costly experiment, therefore locking share capital can quickly become a real handicap, as you'll have to invest much more than the value of your expected profits.
Do remember that in France you still must justify having half of your share capital by the end of the financial year; that's why there's no need to have a high share capital, so you can use the money for your investments!
In the United Kingdom, it is increasingly difficult to open a bank account without strong guarantees. It helps to have a permanent resident amongst your board of directors otherwise, you'll lose a lot of time.
In Belgium, you need to open your bank account before the incorporation of your company.
In Luxembourg, France, and Germany, you must pay-up the required share capital to an escrow account before the signature of the bylaws. If you choose to engage in the incorporation process without a lawyer or notary, the process is as follows:
Step 1: You draft your by laws;
Step 2: You find a bank that will open an escrow account locked from any transaction until the effective incorporation of the company;
Step 3: As soon as bank details are available (IBAN, BIC) partners should immediately transfer their share capital to this new account;
Step 4: In Luxembourg and Germany, the managing director of the new company informs the notary that the transaction is complete and the notary sends the incorporation documents to the Court. In France, the Chairman collects the Bank certificate, issues the list of founders;
Step 5: In Luxembourg and Germany, once the company is incorporated, the notary will provide the entrepreneur with a certificate of release. In France, the entrepreneur shall deliver this certificate to the bank accompanied by:
The bank is then entitled to release the capital, which is then available to the company.
All bank account on-boarding processes are roughly the same and every entrepreneur must overcome the obstacle of opening an escrow account.
At alf, in addition to the administrative services we provide (preparation of administrative files, electronic signature), we also open the escrow account on your behalf into which you deposit your share capital online. This fully secured account is opened at the Caisse des Dépôts et Consignations and the money is returned as soon as you have opened a bank account for your company unless you select the option to open your company's online current account with our partner (Ibanfirst).