When setting up a company, it's essential to understand the concept of share capital. The amount and distribution of share capital have a major impact on the start-up and day-to-day running of the company. Here are the main points you need to know about how it works and what it's used for.
What is a company's share capital?
Share capital is the amount injected into the company by shareholders and associates. It may be a sum of money (cash contribution), or a contribution of tangible or intangible assets (contribution in kind). Deposited at the company's inception, the share capital can then be topped up or, conversely, used to cover cash-flow problems. It must appear on official company documents such as invoices and estimates.
What's it for?
A financial cushion
The main purpose of share capital is to support the company's start-up by financing initial investments, which are often substantial. It also guarantees the company's financial health, avoiding the need to draw on equity in the event of losses.
Even if it is possible to set up a company for as little as €1, a minimum start-up capital of a few thousand euros seems essential for the creation of most activities, and to obtain a certificate of capital deposit.
The image of the company's financial health
In the eyes of potential investors, suppliers and partners, a high level of share capital is a sign of a company's sound financial health. For a banker, for example, injecting a substantial sum of money into the company is a sign of your significant commitment and determination.
To give a young company a good image, it must have capital that is consistent with its activity, size and ambitions.
Distribution of powers
In companies with several shareholders, the distribution of share capital determines the allocation of shares, and therefore decision-making power. One share is equivalent to one vote at the Annual General Meeting.
In a SARL with 3 partners, if partner A deposits 40% of the company's capital, he holds 40% of the votes. If B and C each deposit 30% of the capital, they each hold 30% of the votes. Partner A is the majority shareholder.
It is therefore essential to take the time to assess the impact of capital allocation on company management.
What does it consist of?
Cash contributions
A cash contribution is a strictly financial contribution. Associates deposit money in the share capital in exchange for rights to profits proportional to their contribution, and voting rights at general meetings.
Contributions in kind
A company's partners can make an in-kind contribution by providing tangible and intangible assets. Tangible assets include machinery, tools and real estate, while intangible assets include software and patents.
Contributions in kind
A contribution in kind is the contribution of professional knowledge, i.e. know-how or a specific technique. Some companies, such as public limited companies, are not allowed to make industrial contributions.
How to deposit and release a company's share capital?
Once you've chosen your company's legal status and name, you can draw up the articles of association. Next, you need to open a business bank account in the company's name to deposit the share capital. Once the capital has been deposited, the bank, the Caisse des dépôts et de consignation or a notary will issue you with a certificate of capital deposit or deposit of funds, to be sent to the SIE (Service des impôts des entreprises), together with 4 copies of the articles of association.
Once your company's articles of association have been approved by the SIE, you need to proceed with the publication of a legal announcement, which is equivalent to declaring the birth of your company.
You can then register your company with the appropriate CFE. Within a few days, you'll receive a KBis extract that will enable you to release the funds initially deposited.
To save time in the process of setting up your business, you can open your business account withAnytime and have its partners support you in the creation process. After opening your account 100% online, in just a few minutes, your account is ready and you can deposit your capital. You will then receive a certificate of deposit, enabling you to continue with the business creation process.
Is there a minimum share capital?
Depending on the type of company you decide to set up, the minimum amount is either free or taxed. In addition, a certain proportion must be paid up, i.e. actually deposited in the account when the company is set up.
| Type of company | Minimum share capital | Minimum percentage to be paid up on creation |
|---|---|---|
| EURL (Entreprise Unipersonnelle à Responsabilité Limitée) / SARL (Société à Responsabilité Limitée) | 1€ | 20% |
| SASU (Société par Actions Simplifiée Unipersonnelle) / SAS (Société par Actions Simplifiée) | 1€ | 50% |
| SA (Société Anonyme) | 37,000€ without public savings 225,000€ with public savings | 50% |
| SNC (Partnership) | 1€ | In accordance with the terms set by the partners |
If part of the share capital is paid up at inception, the percentage paid up must be stated in the company's articles of association.
Share capital is a key element of your company. As with your legal status or company name, it's important not to make hasty decisions. It's vital to take into account the various requirements and uses of share capital, to ensure that you deposit the right amount.
