The material goods provided by the partners or shareholders are called contributions in kind to a business. In certain circumstances, specific standards govern these contributions.
Explanations for in-kind contributions
In-kind contributions can be:
- tangible property: equipment, vehicles, buildings, etc.
- intangible assets: patents, trademarks, customers, goodwill, etc.
- movable titles.
For an asset to be donated in kind, two conditions must be met:
- monetary valuation is possible,
- its ownership or use may be transferred.
Valuation of an in-kind contribution to a company
We will discuss here three essential aspects associated with the valuation of an in-kind contribution: its evaluation, its implementation and the guarantees.
Some contributions are subject to specific rules that we will briefly discuss at the end of the article.
Pre-assessment of in-kind contribution
Before making an in-kind contribution, it is necessary to assess it financially and according to the property, which will be more or less complicated.
This step is of paramount importance because the amount determined contributes to the amount of the share capital and determines the number of shares granted to the contributor.
In some cases, which we will discuss a little later, it will be necessary to appoint a contribution commissioner.
Implementation of the in-kind contribution
A contribution in kind must be paid in full when it is made. There partial release of contributions does not apply to in-kind contributions.
As we have seen previously, the in-kind contribution can be made in three different ways:
- contribution of property : by transferring to the company the ownership of the goods contributed,
- the contribution in enjoyment : by granting the company the right to use the goods contributed. This second solution allows the contributor to recover the property contributed in the event of the dissolution of the company.
- ou contribution in usufruct : by granting the company the usufruct of a good, which can be used and produce fruits.
In return for the goods contributed in kind to the company, the contributor will receive social rights (shares or shares).
Warranties on goods provided
The in-kind contributor is required to guarantee the company against the following risks:
- eviction : the company receiving the contribution in kind must have peaceful possession of it,
- et hidden defects : the contribution in kind can be terminated if a latent defect renders the property unsuitable for the use for which it is intended.
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Provisions relating to contributions in kind
Depending on the type of company, requirements must be met with regard to contributions in kind. Here are the rules applicable to SARL, SAS, SA and SNC.
Contributions in kind in SARL
When a contribution in kind is made to a SARL, a contribution auditor must normally be appointed to draw up a valuation report concerning the property or assets contributed.
Nevertheless, the partners may dispense with the appointment of a contribution auditor if the two criteria below are jointly met:
- no contribution in kind whose value would be greater than 30 euros,
- and the total of contributions in kind no more than half of the share capital.
In the statutes, it is imperative to mention the valuation of each contribution in kind. The contribution auditor's report must be appended to the statutes of the LLC.
If the partners choose a higher value than that proposed by the auditor, they are collectively responsible for this value vis-à-vis third parties for 5 years.
Learn about the requirements for EURLs: contributions in kind in EURL.
Contributions in kind in SAS and SA
When a contribution in kind is made to a SAS or an SA, a contribution auditor must necessarily be appointed to draw up an evaluation report concerning the property or assets contributed.
However, since April 28, 2018, SAS companies can decide unanimously not to use a commissioner of contributions for the same conditions as those imposed on the SARL.
In the SAS and SA articles of association, the identity of the contributors in kind, the assessment of the contribution made by each and the number of shares delivered in return must be mentioned. The contribution auditor's report must be appended to the SAS statutes or SA.
You will find the provisions for SASUs here: contributions in kind in SASU.
Contributions in kind to SNC
The making of one or more contributions in kind in CNS does not necessarily require the appointment of a contribution auditor.
Indeed, the valuation is less important in the case of an SNC because the partners are jointly and severally liable for the social debts.
Specific rules concerning certain contributions in kind
Here are the specific rules relating to contributions in kind of company rights, a patent, a trademark and goodwill.
Contributions in kind of social rights:
When the social rights contributed are shares, the operation must be reported by a notarial deed to the company.
Similarly, the holder of social rights must comply with any rules for the transfer of social rights (particularly the approval clause) when he wishes to contribute them in kind to a company.
Contribution in kind of a patent:
This contribution in kind must be formalized in writing and the INPI must be informed for the patent to be registered in the national patent register.
Contribution in kind of a trademark or trademark license:
As for the contribution of a patent, this contribution in kind must be formalized in writing and the INPI must be informed so that the mark is registered in the national register of marks.
Contribution of a goodwill:
The contribution in kind of a goodwill requires the completion of several procedures.
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