- September 28, 2018
- Posted by: Editorial
- Category: Glossary
French business cash contributions
When creating a company in France, one of the first things you need to do is build up your “social capital”. To do this, the associates need to make contributions to the capital of your company. There are 3 different types of contributions:
Contributions in cash
Here, the associate directly gives money to the company. This money can take the form of a bank transfer, a donation, a loan… These types of contributions allow associates to get shares, which translate to voting rights.
As such, these contributions are the main way for a company to fund its expenses without having to borrow money.
Contributions in kind
Here, it’s not money, but assets that the associates donate to the company. These assets can be anything, from a building to a piece of software.
For the most part, these contributions grant the same type of right as contributions in cash. However, there is a difference in that they don’t always have a clear value. As such, it’s sometimes necessary to have an auditor determine the value of these contributions.
Contributions in industry
In theory, this refers to the associate providing his work and services to the company. In practice though, these contributions are rarely used.
Indeed, these contributions don’t actually count towards the capital of the company, and even though the associate is given shares, these are only temporary. Not only can these shares not be transferred to someone else in any way, but they also disappear if the associate doesn’t follow through with his promises.