The Société Civile Immobilière (SCI) is a very useful type of company when investing in real estate due to its favorable tax regime.
The SCI has its own legal personality, its share capital is not limited and the choice of the tax regime (income tax or corporation tax) is free.
This type of company has the traits of a joint venture but takes only the advantages, especially in case of succession.
The SCI allows its partners to manage and lease buildings that they have brought or acquired. Each partner holds shares, making it impossible to share the property in kind.
Choosing an SCI and opting for corporate tax imposition can allow you to save considerably in taxes, build up reserves and be profitable quickly, with a great level of freedom of organization and management left to the partners.
The SCI is a type of civil company used in the context of the management of real estate asset pools: the legal regime of the SCI is the common law regime of the civil company.
The activity of the SCI must be of a private nature. Care must be taken to limit the scope of its activities, because if its activities appear to be commercial, the SCI may be treated as a commercial corporation in terms of taxation.
The SCI must be registered with the RCS and be subject to public legal announcements to allow interested third parties to file any claims if necessary.
To form an SCI, two partners are enough, although there can be more — it all depends on your needs!
The rules regarding capital are very flexible. The capital may be fixed or variable, and no minimum is imposed by law. The capital of an SCI can therefore be very small. There is no legal deadline for the release of contributions by the partners.
In an SCI, the partner is responsible for the company's debts, up to the his share in the capital. The contribution of this party can go beyond the initial contribution. On the other hand, this responsibility is not a third-party guarantee.
The SCI is headed by one or more managers. The manager may be a partner or a person holding no share of the capital; a natural person or a legal person. The managers of SCI can be dismissed and have limited powers, in the interest of the partners. When dealing with third parties, the manager's decisions will only bind the company if he/she is acting within the scope of the corporate purpose, unless it receives the authorization of all the partners to surpass it, whilst acting in the interest of society.
Decisions are taken by the partners unanimously, but the statutes can deviate from this rule and organize more freely the decision-making within the SCI. Several possibilities are open to the founders: quorum rules, majority rules, etc. Collective decisions are taken, by default, at a general meeting. But statutes can also provide for decision-making through written consultation or the drafting of an act expressing the unanimous consent of the partners.
With SCIs, it is up to the founders to decide in the statutes whether or not they want to facilitate the transfer of shares, in other words, increase or transfer the share capital. In principle, a share transfer requires the unanimous consent of the other partners: the statutes may thus deviate from this rule by unanimously establishing a majority or by providing for the approval of the manager (s).
On the other hand, a partner in an SCI is never a prisoner of his shares: by virtue of a right of withdrawal, which allows him to be repurchased his titles by associates, third parties or by the company. The repurchase price is then fixed by an expert: but if this price does not suit the partner wishing to sell his shares, he can decide to keep them.
The SCI is not wound up by the death of a partner, as his heirs or legatees can succeed him.