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Major challenges in Monaco: Business Acquisition

Monaco

Unlike most countries in the world, the Principality of Monaco does not allow you to invest into to a local business. Owning any type of local business in Monaco requires government authorization. The transfer of shares is only allowed freely if it is happening to a Monégasque national.

The transfer of shares to a third party is subject to authorization from the Minister of State if the transferee is of foreign nationality or requires a declaration made to the Minister of State.

To protect Monaco’s trusted business community, the Monégasque government will pre-check the potential new business owners before it authorizes the business transaction.

For this reason, new shareholders will undergo a strict legal background check, very similar to that of new resident permit applicants. Therefore, family status, police record, current residency and many other factors are considered before the deal receives the green light.

The statutory period for review of the application is three months from notification of its eligibility.

This Monaco specific process can often cause difficulties in business expansions and fund raising, because investors typically do not like the fact that they need to wait three months for a third-party decision. It may be common around the world that investors purchase existing companies utilizing their infrastructures and want a quick turnaround; however, this is not the case in Monaco.

In the case that you purchase a company without prior government authorization, the business license of that company may be subject to termination.

If you are interested to invest into a Monaco based business, do not forget that in any investment decision, your due diligence is one of the most important tasks that you simply cannot overlook. It is very important to get firsthand information regarding the investment offers and the people involved in the investment process. Do not allow the legal process to get ahead of the due diligence, especially not the payment of shares before the government authorization.

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