Understanding share capital contribution

This article explores in detail the different facets of this fundamental practice in business creation and growth.

Apr 11, 2024

In the business world, understanding how share capital works is essential for entrepreneurs and investors alike. This article explores in detail the different facets of this fundamental practice in business creation and growth.

Before diving into these details , if you are planning to create your own company, Micco stands as an all-in-one financial platform tailored for business creators, facilitating a comprehensive array of services. These include streamlined procedures for company registration, professional bank account establishment, capital deposit management, and more.

Micco's commitment to empowering business creators extends to:

  • Effortless company registration processes
  • Seamless professional bank account setup
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Table of Contents
  1. What is Share Capital Contribution?
  2. Different Types of Share Capital Contribution
  3. Share Capital Contribution vs. Shareholder Account Loans: What's the Difference?
  4. Share Capital Contribution and Tax Deductions: How It Works
  5. Accounting Treatment of Company Share Capital Contribution

1. What is Share Capital Contribution?

When partners establish or join a company by contributing to its share capital, they must make a share capital contribution. This can be in the form of cash or assets. The contribution of share capital enables the company to form its social capital, which determines the distribution of power among partners or shareholders.

Defining Share Capital Contribution:

A partner's share capital contribution represents their investment, i.e., what they contribute to the company's operation. In principle, these contributions cannot be withdrawn, so partners may risk losing them. It can be:

  • Cash contribution (a sum of money);
  • Asset contribution (an asset).

Minimum Share Capital:

According to French law, the minimum share capital required at the time of company formation depends on its legal form. It is:

  • €1 for Limited Liability Companies (SARL), Sole Proprietorship with Limited Liability (EURL), Simplified Joint Stock Company (SAS), and Sole Proprietorship Simplified Joint Stock Company (SASU);
  • €37,000 for Joint Stock Companies (SA).

2. Different Types of Share Capital Contribution

(1) Cash Share Capital Contribution


Cash contribution refers to the investment made with cash during initial share capital formation or increase.

Procedure for Cash Contribution:

Cash must be deposited before the articles of association are signed when the company is established. It must be deposited in:

  • Notary office;
  • Bank account opened in the company's name;
  • Professional account held by financial partners like Micco.

Unfreezing of Capital:

Partners do not need to unfreeze all the capital at the time of company establishment. They can unfreeze it partially, with proportions being:

  • 20% for SARL and EURL;
  • 50% for SAS, SASU, and SA.

(2) Asset Share Capital Contribution


When partners make an asset share capital contribution, they transfer ownership of movable or immovable property to the company instead of cash.

Types of Asset Contribution:

The transferred assets can be tangible assets (vehicles, furniture, computer equipment, etc.), intangible assets (business funds, customer base, trademarks, etc.), or real estate.

Valuation of Assets:

The value of each transferred asset must be assessed in advance by an assessor. An assessor must write a report, which will be attached to the company's articles of association.

(3) Professional Share Capital Contribution


Partners can also make a professional share capital contribution by providing intangible services (such as their expertise, network, or knowledge).

Features of Professional Contribution:

Unlike cash and asset contributions, professional contributions are not included in the calculation of social capital. However, contributors still receive shares. Therefore, they can gain voting rights and dividend rights.

3. Share Capital Contribution vs. Shareholder Account Loans: What's the Difference?

When partners decide to make cash share capital contributions, they have two options: share capital contribution or shareholder account loans.

Shareholder Account Loans

  • Shareholder account loans refer to loans provided by partners or shareholders to the company to improve its cash flow. The funds invested do not participate in the formation of social capital and can be withdrawn at any time.
  • Characteristics of Shareholder Account Loans: These funds will receive a fixed interest rate, unaffected by the company's profits. Therefore, even if the company is not profitable, partners will receive returns.

Share Capital Contribution

As for share capital contribution, it enables partners to acquire shares and have the right to potential appreciation when the company is acquired. This is advantageous for the company because it does not need to repay the invested funds in case of problems.

4. Share Capital Contribution and Tax Deductions: How It Works

When partners make cash share capital contributions in non-listed small and medium-sized enterprises, they are entitled to a 18% income tax deduction equal to the amount invested. However, this benefit is subject to conditions.

Applicable Conditions

Payments made between March 12, 2023, and December 31 of the same year will receive a 25% tax deduction. Only companies that meet the following conditions and are less than 7 years old are eligible for this benefit:

  • They need to pay corporate tax;
  • They must employ at least 2 employees;
  • Their registered address is in a European Economic Area country or European Union member state.

5. Accounting Treatment of Company Share Capital Contribution

The accounting treatment of investments made by partners involves only cash or asset investments. Professional contributions do not need to be recorded in accounting.

Accounting Treatment of Cash Contribution

To record cash contributions, the procedure depends on whether the capital unfreezing is complete or partial.

Accounting Treatment of Asset Contribution

When partners make asset contributions, one of the assets must be recorded in a fixed asset account, and it must be entered into the partner's investment account.

To make a cash share capital contribution, you first need to open a professional account, which is essential for your company. Professional accounts provided by Micco offer many advantages, such as quick account opening, multiple payment methods, a clear fee structure, and an easy-to-use application.

Are you setting up an SAS, SASU, SARL, or EURL? Micco allows you to open a professional account quickly and deposit your capital entirely online to expedite your company's establishment.

As a financial services company, Micco provides comparable services and solutions tailored to the needs of modern businesses. With a user-friendly platform, competitive pricing, and a commitment to customer satisfaction, Micco is another viable option worth exploring.

Whether you're a freelancer, startup, or established enterprise, Micco offers the tools and support needed to streamline financial operations and drive business growth. Check out Micco today to discover how it can complement your business banking needs.

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