2.1 Foreign equivalents

The French equivalent to the Dutch (civil-law) partnership is called société en participation (SEP). The SEP is a contract and not a legal entity. It can be used for any civil or commercial activity. It can be invisible to the outside world (occulte), with each partner externally acting in its own name. Or it can be visible (ostensible), with the partners acting jointly, whether or not under a joint name. In accordance with general French law, joint liabilities of the partners are divided (each partner owing an equal part of it), unless the law provides otherwise. A liability is joint and several, and therefore due by each partner in full, if the nature of that liability is commercial and in certain other cases, such as a joint liability for damages. Jointly-owned partnership assets are not said to be held in trust, but the partners’ joint creditors enjoy a certain preferential right to such assets (compared to the individual creditors of the partners).

The French société civile professionnelle (SCP), and certain other types of‘civil’ partnerships, can also be viewed as equivalents of the Dutch (civil-law) partnership. The SCP is available to persons exercising a liberal professions, such as lawyers, accountants, medical doctors. Their activities are deemed ‘civil’ (as opposed to ‘commercial’). In France, each partnership or company registered in the appropriate public register is a legal entity. This means all partnerships other than the SEP are legal entities, in addition to being a contractual relationship between the partners. This includes the SCP. The formal registration requirement entails that an SCP (or any other form of legal entity) cannot be established without the express will of the partners. The registration and mandatory use of a designation for the type of legal entity concerned (e.g., ‘SCP’) also help to make sure that third parties will know what type of entity they are dealing with. By law, the partners are externally liable for SCP debts, proportional to their shares in the partnership’s capital.

Germany’s equivalent of the Dutch (civil-law) partnership is called Gesellschaft bürgerlichen Rechts (GbR). This type of partnership may be used for all sorts of activities. However, a partnership which meets the substance criteria of another type of partnership (see below) will not be a GbR. A GbR which is not de facto presented to outsiders as an entity, is referred to as an Innen-GbR (internal GbR) and merely constitutes a contractual relationship between the parties. By contrast, a GbR factually presented as an entity is called Auβen-GbR (external GbR). It is not a ‘legal person’ distinct from its members, but a legal entity. It holds the legal entity status of a group (a collectivity). The Auβen-GbR can be the owner of property, the debtor of debts, the party to a contract. Legally this means that the partners from time to time (as a group), in their capacity as such, are considered as the owner, debtor, party. Legal entity status and joint ownership are combined. Each partner holds a beneficial interest in the Auβen- GbR’s assets and liabilities as a whole, which constitute a separate fund. The joint assets of the fund (the partnership assets) are available for the satisfaction of partnership debts. In addition, each partner in its private capacity is by law fully liable for the Auβen-GbR’s debts.

An English partnership also is an equivalent of the Dutch (civil-law) partnership. It may be used for all sorts of activities. It is a (contractual) relationship between the partners. The joint partners as such are referred to as the firm. The firm is not a legal entity. References to the ‘aggregate approach’ in relation to the acquisition of partnership property seem to refer to the joint partners at the time of acquisition, not to the joint partners ‘from time to time’. Each partner is fully liable for the firm’s debts. In most cases their liability is joint; for some debts it is joint and several. The assets and liabilities of the partnership constitute a separate fund available for the satisfaction of partnership creditors. The partners hold the partnership assets on trust for themselves as beneficiaries. This beneficial interest gives entitlement to the residual value of the partnership assets (after satisfaction of the partnership debts).