During the creation of a company or an increase in the share capital, the partners provide resources. These resources can take the form a financial contribution, known as cash contribution, or a contribution of goods other than money, referred to as contribution in kind. In compensation, the partners obtain social rights (shares or shares).
Here are the rules and procedures for making these various capital contributions:
- Contributions of money to the share capital of a company
- Contributions of assets other than money to the share capital of a company
To set up a company or increase the share capital, the partners provide means. These means can take the form of a monetary investment, designated cash contribution, or a contribution of goods other than money, called contribution in kind. In exchange, the partners receive social rights (shares or shares).
Here are the rules and procedures for making these various capital contributions:
- Contributions of money to the share capital of a company
- Contributions of assets other than money to the share capital of a company
During the formation of a company or an increase in share capital, the partners offer resources. These resources can take the form a cash contribution, known as cash contribution, or a contribution of goods other than money, called contribution in kind. In return, the partners obtain social rights (shares or shares).
Here are the rules and procedures for making these various capital contributions:
- Contributions of money to the share capital of a company
- Contributions of assets other than money to the share capital of a company
When setting up a business or increasing the share capital, the partners make contributions. These contributions can take the form a monetary addition, designated cash contribution, or a contribution of assets other than cash, called contribution in kind. In return, the partners receive social rights (shares or shares).
Here are the rules and procedures for making these various capital contributions:
- Contributions of money to the share capital of a company
- Contributions of assets other than money to the share capital of a company
Inflow of money into the share capital of a company
The monetary contributions made by the partners of a company correspond to cash contributions. In practice, the company's articles of association summarize the cash contributions of each partner and specify the terms of release. The rules to know about these contributions are explained below.
In addition, you can also consult these files: cash contributions in EURL - cash contributions in SARL - cash contributions in SASU - cash contributions in SAS.
Rules for releasing cash contributions
The legal form of the company receiving the cash contribution determines the regulations to be followed in terms of release. Here is the principle:
- In joint-stock companies and LLCs, contributions in cash are regulated,
- In SNCs, contributions in cash are freely organized by the statutes.
The release of the contribution can be done either by a payment in cash or similar (a transfer or a check for example), or by compensation with a claim on the company.
Release a cash contribution in an LLC
The partners of a SARL are required to immediately pay up a minimum part of their contribution:
- Contribution made on the occasion of the formation of the company : Release of at least one-fifth of the amount of contributions in cash. Release of remaining, on one or more occasions, by decision of the manager and within a period of five years from the registration of the company.
- Contribution made during a capital increase : Release of at least a quarter of the amount of contributions in cash. Release of remaining, in one or more instalments, by decision of the manager and within five years from the day on which the increase in share capital becomes final.
Release a cash contribution in a joint-stock company (SAS, SA, SCA)
The partners or shareholders of a joint-stock company are required to immediately pay up a minimum part of their contribution:
- Contribution made on the occasion of the incorporation of the company : Release of at least half of the amount of contributions in cash. Release of remaining, on one or more occasions, by decision of the manager and within a period of five years from the registration of the company.
- Contribution made during a capital increase : Release of at least a quarter of the amount of contributions in cash. Release of remaining, on one or more occasions, by decision of the manager and within a period of five years from the day on which the increase in share capital became final.
The deposit of funds on behalf of the company
In joint-stock companies and SARLs, the funds corresponding to the paid-up cash contributions must, within eight days of their receipt, be deposited on behalf of the company being formed and by the persons who received them:
- Either in a Bank,
- Either at the Depository and consignments,
- Or either at a notary.
The certificate of the depositary of the funds
The payments made are attested by a certificate established by the depositary (the banker, the notary, etc.) when the funds are deposited. In the event of release by set-off, a certificate must be drawn up by an auditor.
As part of the steps to be taken in relation to the transaction to which the contribution relates (incorporation or capital increase), this certificate must be provided to the registry.
Accounting and tax treatment of cash contributions
In accounting, these contributions are recorded in account 1013 “Capital subscribed, called, paid” as soon as they are released.
From a tax point of view, cash contributions made by natural persons give rise, under certain conditions, to an income tax reduction. For the company, the contribution does not constitute taxable income.
Contribution of assets other than money to the share capital of a company
Share capital contributions that are not cash constitute contributions in kind. The rules to be observed concerning these contributions are detailed below.
You can also consult these documents: contributions in kind in EURL - contributions in kind in SARL - contributions in kind in SASU - contributions in kind in SAS.
Assets other than cash that can be contributed into a corporation
Any movable (tangible or intangible) or immovable property may be contributed to the share capital of a company. However, two conditions are mandatory:
- the possibility of evaluating the property pecuniaryly,
- transferability of ownership or use of the property.
Certain regulations apply in particular to contributions of buildings and goodwill.
Making a contribution in kind to a company
The partners must define the terms and conditions of each contribution in kind in the articles of association or a contribution agreement. For each property, a description and an evaluation must be inserted in the deed of contribution. A contribution auditor is responsible for drawing up a report on the value of the assets contributed to the company.
The contributor must guarantee the company against any eviction and against hidden defects.
The transfer of ownership between the contributor and the company takes place:
- during the incorporation, during the registration of the company,
- in the event of an increase in the share capital, as soon as this becomes effective.
Intervention of a contributions auditor
In principle, it is necessary to use a commissioner of contributions for a contribution in kind. This professional will draw up a report on the valuation of the goods brought.
The contribution auditor is appointed unanimously by the partners, or, in the event of disagreement, upon request presented by the legal representative of the company to the president of the commercial court, who will decide by order.
In a SARL or an SAS, the partners can unanimously dispense with the contribution auditor if:
- no contribution has a value greater than €30,
- and the total value of all contributions in kind does not exceed half of the share capital.
Accounting and tax treatment of contributions in kind
The accounting treatment of contributions in kind is more complex than that of contributions in cash. For more information, please see this post: accounting record of capital contributions.
Unlike contributions in cash, contributions in kind do not entitle the partner to any reduction in income tax. For the company, the contribution is not taxable. In the case of a capital entry, the property can be depreciated.
