French company’s social capital explained
“Social capital” is the French equivalent of “equity”. Basically, it refers to all the money a company got thanks to the money or assets the associates contributed the company. In exchange for these contributions, they receive shares or stocks.
How much social capital should my French company possess?
In the large majority of cases, there’s no legal restriction on how much social capital your company should have. The only types of companies who need a minimum amount of social capital to set up are SAs, for them, it needs to be more than 37 000 €. (If you don’t know what an SA is, check out our article about company types in France).
However, banks will probably not take you seriously, and thus refuse to open a bank account for you unless the social capital of your company is at least superior to 1000€ or 5000€ oftentimes.
Furthermore, if your activity requires a high volume of investment or a lot of cash, then it’s probably a good idea to try to have a relatively high volume of social capital as well.
How can I build up my social capital?
As mentioned earlier, your social capital can be made of two types of contributions: contributions in cash and contributions in kind.
As their name implies, “contributions in cash” refers to money that investors directly give to the company, while “contributions in kind” refers to assets that an investor or associate might donate to the company.
Though, investors get shares in both cases.
