The associates of SARL have the possibility of making three different types of contribution: contributions in cash, contributions in kind and contributions in industry. However, only contributions in goods (cash or in kind) are taken into account for the share capital. No minimum share capital is required to form a SARL, although it must be represented by a share when there is only one partner (EURL), and at least two shares for a SARL.
Here is a detailed information sheet on the three types of possible contributions in LLCs.
The case of contributions made through joint assets was covered in our article on the conditions for becoming a partner of a SARL.
The associates of SARL have the possibility of making three categories of contributions: contributions in cash, contributions in kind and contributions in industry. Only contributions of goods (cash or in kind) contribute to the formation of social capital. No minimum share capital is required to form an LLC. It must be at least represented by one share if the company has only one partner (EURL), and at least two shares for a SARL.
Here is a detailed information sheet concerning the three types of possible contributions in LLCs.
The case of contributions made through joint assets was covered in our article on the conditions for becoming a partner of a SARL.
The associates of SARL have the possibility of making three types of contributions: contributions in cash, contributions in kind and contributions in industry. Only contributions of goods (cash or in kind) are recorded in the share capital. No minimum share capital is required to form an LLC. But it must be represented by at least one share when there is only one partner (EURL), and at least two shares for a SARL.
Here is a detailed information sheet on the three types of possible contributions in LLCs.
The case of contributions made through common property was discussed in our article on the conditions for becoming a partner of a SARL.
Regulation of cash contributions in LLCs
The cash contributions are financial contributions made by members of a Limited Liability Company (SARL) to the formation of its social capital. In exchange for these contributions, the partners receive shares in proportion to the amount of their contribution.
According to the law, the partners must pay at least one-fifth of the total amount of contributions in cash at the time of the constitution of the SARL, the balance can be released during the following 5 years. For this, the funds must be deposited within 8 days in a blocked bank account opened in the name of the company, at the deposit and consignment fund or with a notary. The release of funds is subject to proof of registration of the company in the trade and companies register.
In the event that the company is not incorporated within 6 months, the partners may seek legal restitution for the contributions they have made.
Advantages of cash contributions for contributors
Contributions in cash allow the partners of SARL to defer the payment of part of the subscribed capital, up to 5 years after the registration of the company. In addition, they can benefit from two tax reduction schemes, namely the income tax reduction (IR) and the wealth tax reduction (ISF).
However, there are some disadvantages: the company will not be able to benefit from the reduced corporate tax rate, the balance of the payments can be claimed, financing requests will be more difficult to obtain and the remuneration of the partners' current accounts will not will not be deductible.
Contributions of assets to the SARL
Partners can also proceed to contributions of assets to the LLC. In exchange for the goods contributed to the company, the partners will receive shares.
Footnotes : the share capital of the SARL can be constituted solely by contributions of assets.
Formalism relating to contributions of assets in SARL
All contributions in kind made must be mentioned in the statutes of the LLC, with the description and valuation of each property, the identity of the partners concerned by these contributions and the number of shares which have been allocated in exchange.
In certain cases, an intervention of the contributions auditor is required:
- when the value of an asset contribution is greater than 30 euros,
- or when the value of all the contributions of assets is greater than half of the total amount of the contributions made within the framework of the incorporation of the company.
In other cases, the partners may decide not to call on a contribution auditor. However, they will be liable for 5 years for the value they have assigned to the asset contributions made.
The contributions auditor is appointed by the president of the commercial court. He must be chosen from among the auditors or from among the experts registered on one of the lists drawn up by the courts. The partners also have the option, unanimously, of personally appointing a contribution auditor.
Making an in-kind contribution to a SARL
For the in-kind contribution to be valid, two conditions must be cumulative:
- the transfer of ownership between the partner and the company must be carried out,
- and the goods must actually be made available to the company.
All in-kind contributions must be released upon registration of the company, not later. The company will become the owner of the assets contributed in kind upon registration in the trade and companies register.
It should be noted that all the risks related to the assets subject to in-kind contributions are transferred to the company at the same time as the transfer of ownership.
The obligations of the partner who makes a contribution in kind
The partner who makes a contribution in kind is required to guarantee the company on the following points:
- against latent defects: if necessary, the other partners may take action against the partner to denounce the contribution in kind and request compensation if the normal use of the property provided is impossible;
- against eviction: nothing should prevent the company from peacefully disposing of the ownership of assets which have been the subject of a contribution in kind.
Contributions in industry in a SARL
The contributions in industry can be made in an LLC and they include:
- are not part of the share capital,
- must be mentioned in the statutes,
- and are assessed by an auditor according to the time period defined in the articles of association.
This corresponds to a contribution, for a natural person, in the form of know-how or knowledge specific to the company throughout the duration of the mandate. The contributor may not exercise a competing activity with that of the SARL.
The articles of association must also define the conditions of remuneration and the voting rights of contributors.
The shares linked to a contribution in industry are inalienable for their entire lifespan, because they are linked to the value of the contributor's contribution.
