The different types of capital contributions: cash, in-kind, industrial, etc.

Are you in the process of setting up your company and wondering how to build up your capital?

Thecapital contribution is an essential element in the creation of your company, and isrequired in order to obtain a certificate of deposit, which will enable you to validate the filing of your articles of association with the Centre de Formalités des Entreprises.

So, while in many cases associates choose to build up their capital in cash, there are other types of contribution.

Entrepreneurs, what kind of capital contributions should you make to your company?

Definition

Stocks, shares, holdings...

The term "contribution" is used when a company's capital is created or increased. Although contributions can be of different kinds, they correspond to assets (e.g. money, goodwill, real estate, etc.) that associates make available to the company.

The contributions made by the various associates of the company enable them to obtain shares representing a portion of the company's capital.

Together, these contributions represent the total amount of the deposit and thus form the company's capital.

Different types of contribution: cash, industrial, in-kind

While the majority of business founders set up their company in cash, there are different types of capital contributions, which fall into three main categories:

• Cash contribution
• Contribution in kind
• Contribution in kind

Cash contribution

They are characterized by any cash contribution. In this case, the sums contributed must be deposited in a bank account in the name of the company when the articles of association are filed.

This sum of money will then be released when the company's Kbis is presented. In some cases, it may be possible to pay up only part of the capital.

Contribution in kind

These contributions are characterized by the provision of a partner's technical knowledge, labor or services .

Under no circumstances can these contributions contribute to the company's share capital, but they do entitle the holder to shares in the company, giving him or her the right to share in profits or to vote at shareholders' meetings.

Contribution in kind

These are all non-cash contributions that can be valued in monetary terms and sold. Examples include goodwill, computers, cars, receivables, etc.

It is important to note that for each contribution in kind, a valuation of the asset must be written into the articles of association. This valuation must be carried out by a contribution auditor, who will draw up a report appended to the articles of association.

The contributions auditor

The contribution auditor is particularly useful when it comes to assessing the price of assets contributed in kind. What's more, the fact that the contribution auditor is an external, independent expert helps to preserve equality between all the company's partners.

A professional in figures

This is a professional accountant who must be chosen from the list of statutory auditors or legal experts. He or she is responsible for assessing the value of the assets contributed to the company. The valuation will then be filed in the form of a report with the Registre du Commerce et des Sociétés, which will be appended to the articles of association when the company is incorporated.

Note that if the partners do not agree with the valuation made by the commissaire aux apports when the company is incorporated, they must be prepared to be jointly and severally liable to third parties for the value attributed to the said contributions for a period of 5 years.

Conclusion

As you can see, company contributions can be of various types, and may or may not constitute the company's share capital.

The importance of capital contributions to a company is well established, as capital formation is a compulsory step when filing articles of association in order to obtain a Kbis certificate.

Obtain shares in the company

These contributions also enable associates to receive shares in the company, depending on their legal status.

If the contribution in kind cannot be considered for the constitution of the share capital, it nevertheless gives the right to shares and voting rights.

Only cash and in-kind contributions can be used to define the amount of share capital and obtain a certificate of deposit, essential for validating the company's articles of association.

It is important to note that for contributions in kind, you will need to ensure that the assets are valued by a "commissaires aux apports", who are professional accountants.