Limited partnership or société en commandite par actions

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Limited partnership or société en commandite par actions

  1. 1. THE LIMITED PARTNERSHIP - SOCIÉTÉ EN COMMANDITE PAR ACTIONS Hermès History Differences between LP and SCA
  2. 2. HERMÈS HISTORY <ul><li>Founded in 1837 by Thierry Hermès in Paris </li></ul><ul><li>Began as a Saddle Company </li></ul><ul><li>After WWII – Grandson, Emile Hermès brought the company to the Luxury Goods Industry with Leather Bags and Travel Accessories </li></ul><ul><li>Today Emile Hermès SARL maintains 73% of the interest in Hermès International SA </li></ul>
  3. 3. HERMÈS HISTORY <ul><li>Entered the Paris Stock Exchange in 1993 </li></ul><ul><li>The Hermès family descendants consists of 170 members, which 73 are adults </li></ul><ul><li>Out of 40 6 th Generation Hermès descendents 10 work within the company running various divisions </li></ul><ul><li>In 2009 net sales were €289 Million or $390 Million </li></ul>
  4. 4. DIFFERENCES BETWEEN LP AND SCA <ul><li>Must have at least two partners, one must be a General Partner </li></ul><ul><li>Partners can be either Limited or General but not both </li></ul><ul><li>General Partners are liable for debt, Limited Partners can partake in debt sharing </li></ul><ul><li>The General Partners maintain control and make decisions </li></ul><ul><li>Must have a minimum of one General Partner and three Limited Partners </li></ul><ul><li>Partners can be both Limited and General </li></ul><ul><li>General Partners are jointly liable for debt </li></ul><ul><li>A Supervisory Board is created during the Ordinary General Meeting of Shareholders </li></ul><ul><li>Limited Partnership </li></ul><ul><li>Société en Commandite Par Actions </li></ul>
  5. 5. DIFFERENCES BETWEEN LP AND SCA <ul><li>Limited Partners hold a percentage of the partnership which allows for profit sharing </li></ul><ul><li>Limited Partners cannot participate in management decisions </li></ul><ul><li>Limited Partners hold shares of the SCA which allows for profit sharing </li></ul><ul><li>Limited Partners can participate in the management of an SCA </li></ul><ul><li>By-Laws can be designed to guarantee family control of the SCA regardless of their status of a General or Limited Partner </li></ul><ul><li>Limited Partnership </li></ul><ul><li>Société en Commandite Par Actions </li></ul>
  6. 6. DIFFERENCES BETWEEN LP AND SCA <ul><li>Considered a flow-through entity and not taxed as a Corporation </li></ul><ul><li>SCA is taxed as a Corporation </li></ul><ul><li>Limited Partnership </li></ul><ul><li>Société en Commandite Par Actions </li></ul>The Family-Held Sociétés à Responsabilité Limitée (SARLs) can opt for taxation under personal income tax
  7. 7. THE OMINOUS THREAT TO HERMÈS Current Events Hermès Family Defensive Tax Consequences
  8. 8. CURRENT EVENTS <ul><li>Chairman and Chief Executive, Mr. Jean-Louis Dumas, the Grandson of Emile Hermès, died earlier this year </li></ul><ul><li>The Limited Partnership Laurent Momméja sold €1.8 Million shares </li></ul><ul><ul><li>Owned by Hermès Decedents </li></ul></ul><ul><li>Moët Hennessy Louis Vuitton SA (LVMH) gained a 17.1% stake in Hermès </li></ul><ul><ul><li>LVMH brands include Louis Vuitton, Christian Dior and Tag Heuer </li></ul></ul>
  9. 9. CURRENT EVENTS <ul><li>Bernard Arnault the LVMH Chairman and Majority Owner indicated he was not interest in taking control of Hermès </li></ul><ul><li>LVMH is utilizing Equity Swaps and Stake-building to increase shares, Mr. Arnault indicated it was “intended as friendly” </li></ul>
  10. 10. THE HERMES FAMILY DEFENSIVE <ul><li>Main form of defensive is the Société en Commandite Par Actions (SCA) </li></ul><ul><li>Emile Hermès SARL plans to take 50% of the family share holdings and secure them into an unlisted holding company, Le Journal du Dimanche </li></ul><ul><li>Need approval from the Autorite des Marches Financiers or AMF </li></ul><ul><ul><li>Considered a “reclassification” of the families existing position and not a new holding company </li></ul></ul>
  11. 11. TAX CONSEQUENCES <ul><li>If AMF grants Emile Hermès SARL the ability to create a new holding company </li></ul><ul><ul><li>Shareholders will not be able to sell some of their stock on the open market </li></ul></ul><ul><ul><li>Emile Hermès SARL may be required to bid for the rest of the outstanding stock </li></ul></ul><ul><li>If LVMH takes over Hermès International SA </li></ul><ul><ul><li>Same entity form SCA </li></ul></ul><ul><ul><li>Emile Hermès SARL would become just another Shareholder </li></ul></ul>
  12. 12. QUESTIONS?
  13. 13. THANK YOU The End

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