Monaco: Types of Company
The categories of business entity in Monaco are defined by the Commercial Code, which is essentially similar to its French equivalent. For business-people used to common law jurisdictions, the civil law company framework can be confusing: companies are still companies, but their management structure is defined by statute to a far greater extent, and must be entered into the official commercial registry if it is to have legal force. 'Directors' have extensive statutory powers but are not normally executive: executive management is delegated to a named Managing Director (administrateur delegue) or to a General Manager (Gerant) whose name is entered into the Commercial Register - and hence he derives his power.
Until recently, one of the key differences between the Monagesque Commercial Code and most others, including the French one, was that the convenient and reasonably simple SARL did not exist. A SARL (Societe a Responsabilite Limitee) is the nearest equivalent to the Anglo-Saxon limited company, although the similarity should not be pushed too far. The Societe Anonyme (SA) is the grander type of civil code limited company and is a much more constipated form - there isn't an equivalent in common law jurisdictions.
Article 26 of Monaco's Commercial Code deals with the types of companies that can be incorporated in Monaco. In offshore terms limited liability companies incorporated in Monaco are not attractive corporate vehicles because of the extremely cumbersome and bureaucratic formation procedures, the fairly heavy taxation of foreign activity, and the rather expensive professional services in Monaco. See Direct Corporate Taxation and Offshore Legal and Tax Regimes for details of Monagesque corporate taxes and low-tax alternatives.
As of October 2012, there were 37 Corporate Service Providers (CSPs) licensed to operate in Monaco. The licensing requirements are tiered with all applicants required to meet specific minimum standards including a detailed client identification protocol, appropriate education and experience, verification of source of funds, and a police background check.
Additional requirements must be met when the legal form selected to hold the license is a Monegasque limited liability company (Société Anonyme Monégasque, SAM). Conditions for approval unique to the SAM include minimum capitalization of EUR150,000, a requirement to retain the services of a notary, appointment of two statutory auditors from an approved list who must prepare an annual statement and a statutory audit report. All individuals and partnerships are licensed for two years renewable upon reapplication.
For CSPs that are not SAMS, oversight is currently not as robust as the licensing process. The DEE has power under Law No. 1.144, 1991, to conduct on site reviews. This authority has been sparingly employed.