When a partner or a shareholder has a current account in his name in a company, he can, under certain conditions, participate in a increase in equity for integrate your associate current account. This legal operation is known ascapital increase by compensation with a current account. Foundation-company-ricard informs you about the conditions for carrying out this operation, the steps to follow as well as the formalities to be completed.

incorporate current account associated with company capital

When a shareholder or a partner has a current account in his name in a company, he can, under certain conditions, take part in a capital increase in order to include his associate current account. This legal operation is qualified ascapital increase by compensation with a current account. Foundation-company-ricard informs you of the conditions of execution of the operation, the procedures to follow as well as the steps to take.

incorporate current account associated with company capital

Requirements to increase the capital by current account of a shareholder or partner

General instructions on clearing partners' current accounts

A partner or an investor can participate in a capital increase by compensation with its current account, provided that the general meeting has not expressly excluded this capital release method and did not impose monetary payments. In addition, the initial capital must be fully paid up.

This capital increase procedure is similar to that for cash capital increases. Only the release conditions are different.

With regard to the partner's debt (partner current account), she must be some that is to say :

  • Liquide : it must be an amount of money specific,
  • Due : the debt of the company must to be due the day on which the subscriber must release his shares.

Otherwise, the partner's current account cannot be compensated in capital. It could simply be considered as a contribution in kind.

Characteristics of the associate current account clearing of an SA, SAS or SASU

When the capital is increased by clearing a partner's current account in a anonimous society (SA), a joint stock company (SAS) or a one-person simplified joint-stock company (SASU), the debts of the company must have been the subject of a statement of account on the date of subscription of the shares by the board of directors or the management board (SA) or by the chairman (SAS, SASU) certified accurate by the auditor; la Growth Hormone release actions must be confirmed by certificate the auditor or a notary who replaces depositary certificate (this certificate makes it possible to check the corresponding accounting entries and to note the effective release of the new shares by compensation with a liquid and payable debt on the company).

Please note: : the two certificates can be drawn up on the same document.

Characteristics of the associate current account clearing of a SARL and an EURL

As for thecapital increase by incorporation of the partner's current account in a limited liability company (SARL) or a Single member limited liability company (EURL), it is recommended that the manager establish:

  • un statement of account (which may possibly be certified exact by the SARL's chartered accountant – please note, this formality is not compulsory but recommended);
  • a certificate attesting to the release by compensation.

In addition, the deed or the minutes recording the capital increase must mention that the release by compensation takes place with certain, liquid and payable debts.

In SARLs and EURLs, the capital increase carried out by offsetting with receivables in the partner's current account does not require the appointment of an auditor. However, if an auditor is already present in the company (in the case of exceeding thresholds), he must carry out checks and verifications concerning this operation: verify the existence of the current credit account of the partner and examine his liquidity and its enforceability.

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  • Advertising of the capital increase, according to the form and deadlines provided for by law:
    • Opinion of the shareholders for the SA which do not proceed by public offering of shares and the SAS;
    • Publication and availability of an information document and the Balo notice for SAs offering securities to the public.
  • Subscription of new shares ;
  • Release of new shares;
  • Final realization et registration in the trade and companies register.
  • Procedures to follow for capital incorporation by partner current account

    The steps to be followed for a capital increase by compensation with a partner's current account are the same as for a standard capital increase.

    For public limited companies (SA) and simplified joint-stock companies (SAS)

    Advance publicity

    In the case of SA which do not offer securities in public offering as well as SAS, opinion must be sent by registered letter with acknowledgment of receipt to all shareholders at least 14 days before the closing date of the subscription.

    Lagrasse is the perfect setting for SA making a public offering of securities, they must publish a information document, called "prospectus", which must be made available to all interested parties. If the shares are not all registered or if they are admitted to trading on a regulated market, a notice must be sent to shareholders. An advertisement must be published in the Balo, unless the prospectus contains all the information contained therein and is made public within the same period (14 days).

    Subscription of new shares

    After that, a subscription phase for new shares can start. It can be done:

    • As irreducible : by the shareholders by virtue of their preferential subscription right. They can also negotiate their DSP or waive it for the benefit of specific beneficiaries.
    • As reducible : if the subscriptions on an irreducible basis do not cover all the subscriptions, the shares may be subscribed, provided that the extraordinary general meeting has expressly provided for this. They may be distributed among subscribers on a reducible basis in proportion to the subscription rights they have and within the limit of their requests.

    When all subscriptions do not cover the capital increase, the board of directors or the management board may choose to limit the amount of the capital increase to the sum of the subscriptions actually received (if they reach at least 75% of the amount of the initial capital increase) or distribute the unsubscribed shares among the persons of its choice.

    Release of new shares

    The new shares resulting from the incorporation of a shareholder's current account must be fully paid up upon subscription.

    Finalization of the capital increase by incorporation of a partner's current account

    THEcapital increase by incorporation of associate current account of SAS or SA is considered completed to the data establishment of the certificate of auditor. It is not necessary to have the finalization of the capital increase recorded by deliberation of the board of directors or the executive board, it suffices to append the certificate to the minutes of the extraordinary general meeting.

    The new shares can be issued as soon as the capital increase is finalized without waiting for the completion of the amending registration formalities in the trade and companies register.

    Summary of formalities

    • Establishment of a report by the board of directors, the management board or the chairman setting out in particular all useful information on the reasons for the capital increase, its maximum amount and the justification of any preferential subscription right;
    • Establishment of a report by the auditor in certain cases (removal of PSR, issue of preferred shares);
    • Holding of an extraordinary general meeting to decide on the capital increase. Note: the EGM can delegate to the board of directors or the management board its competence to decide on the capital increase. It must then set the duration of this (26 months maximum) as well as the overall ceiling of the increase. In all cases, the capital increase must be completed within five years. The meeting may also delegate to the board the powers necessary to set the terms and conditions for issuing securities, record the completion of the resulting capital increases and make the corresponding amendment to the articles of association, provided that it establishes a additional report to the next general meeting.
    • Recording of the act evidencing the achievement of theincrease in capital (minutes of the extraordinary general meeting) and payment of a fixed duty ;
    • Advertising of the capital increase, according to the form and deadlines provided for by law:
      • Opinion of the shareholders for the SA which do not proceed by public offering of shares and the SAS;
      • Publication and provision of an information document and the

        In terms of limited liability companies (SARL) and one-person limited liability companies (EURL), when a partner or a shareholder holds a partner's current account, it is possible to convert it into capital. However, a specific procedure is necessary and includes in particular:

        • the holding of an extraordinary general meeting to rule on the capital increase;
        • submission of the management report setting out the reasons for the capital increase;
        • the approval of the capital increase, the setting of the amount, the approval of the subscribers and the correlative modification of the articles of association;
        • the drafting and publication of a legal announcement in an authorized newspaper covering the location of the registered office;
        • submission of a file to business formality center containing the necessary supporting documents;
        • the payment of costs related to the capital increase;
        • la release by compensation shares and the final completion of the operation.

        Please note: : although the law is extremely flexible in favor of SAS, it still imposes collective decision-making by the partners in the event of a capital increase.

        What is the process for incorporating an equity partner current account?

        Answer: To incorporate a shareholder's current account into the capital, it is necessary to make an adjustment of the share capital. This process requires an amendment to the company's memorandum of association and a vote at the general meeting of shareholders.

        What is an associate current account?

        Answer: A partner current account is a bank account that belongs to a partner of a company. This account can be used to settle the partner's debts as well as to buy shares.

        What are the tax consequences of incorporating a shareholder's current account into the capital?

        Answer: When a partner's current account is incorporated into the capital of the company, the amount incorporated is considered as an adjustment of the share capital and therefore subject to income tax.

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