Between which corporate forms can/should you choose?

In essence, the choice in a management company revolves between two corporate forms:

• the limited liability company (bv)
• the limited partnership (CommV)

The only reason you would opt for a limited liability company for your management company is because you want to limit your liability. Now, the fact is that the liability of your management position is limited anyway, which makes setting up a limited liability company overkill.

The other legal forms are less suitable as management companies because of legal and statutory obligations.

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The CommV: unknown makes unloved

Preliminary figures from the Belgian Official Gazette show that in 2022, just under 25,000 limited liability companies (BVs) were created. During the same time period, only 4 800 CommVs were created.

Certainly for managerial or freelance services, the CommV is an option to be considered, but one that is too often ignored.

That's why we like to highlight the CommV with this blog.

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The CommV: the main features

The principle of a limited partnership is simple.

It is a company with legal personality, founded by at least two partners, of which at least one is a silent partner and one is a general partner.

Legal personality? This means that the corporation moves as its own legal entity in our economy, it therefore has its own rights and obligations. It can enter into contracts, take mandates, it must pay taxes, join a social insurance fund ... just to name a few.

The CommV consists of at least 2 partners, a silent partner and a general partner. The silent partner does not engage in the management of the partnership, unlike the general partner. The silent partner's liability is limited to his contribution. That contribution can be, for example, EUR 1, leaving the silent partner almost completely out of harm's way.

The general partner, however, has unlimited liability. But since liability in the context of management activities is very limited anyway, this is really a non-issue. There is no minimum contribution required, the expense side in a management company is generally limited, you don't have to stockpile, hire staff, etc.

The limited partnership is a very discrete form of company:

• You don't have to go to the notary for it.
• The name of the silent partner is not publicly disclosed.
• No financial plan is required at incorporation.
• The publication of financial statements is (in principle) not required. The number of potential potholders is thus reduced to a minimum.

Flexibility is another advantage. The bylaws can be truly customized and the distribution of profits does not require a double distribution test.

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What would you set up a limited liability company for anyway?

In two cases, we would recommend setting up a limited liability company anyway:

• When you start engaging in risky activities;
• when you start making yourself known to different (potential) clients. A PLC is perceived as more reliable than a CommV - wrongly in our opinion, however, as the saying "unknown makes unloved" undoubtedly applies here;
• when you want to use the company as an operating rather than a management company. In those cases, a limited liability company is probably more future-proof.

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Conclusion

In most cases, the limited partnership (CommV) is the most appropriate form for your management company. The CommV is discreet, flexible and inexpensive.

Including company forms other than a CommV in the exercise for your management company is actually irrelevant.