Social capital is a kind of contribution that companies must constitute at the time of their creation. It can take several forms and gives access to rights such as shares or shares. What is social capital made up of? How to define it according to the legal form of the company? Here's everything you need to know about it.
Social capital, or more simply capital, is financing that occurs when a business is created. It is also a guarantee for third party creditors as well as for the equitable distribution of rights within a company.
Social capital does not only refer to a sum of money, it includes all resources in cash and in kind. These must be made definitively to the company either at the time of creation or as part of a capital increase.
In exchange for a participation in the share capital, social rights are acquired. It can be shares or shares.
As a reminder:
The share capital appears on all the commercial documents of a company.
The share capital of a company can take different forms, namely:
Contributions in cash are the most frequent since they are contributions in the form of money. Depending on the legal form, they are carried out either by the shareholders or by the partners. The latter receive in return shares or shares which entitle them to a portion of the profits but also an influence proportional to their investment. It should be noted that contributions to a partner's current account do not give the right to securities in return. It corresponds to a loan, the sums paid must therefore be repaid.
Contributions in kind are also made by partners or shareholders. They take the form of so-called tangible assets such as premises, machinery or equipment, or even intangible assets such as goodwill or a patent. The valuation of goods in kind is made by a contribution auditor. Sometimes, these contributions require the intervention of a notary.
Contributions to industry take the form of know-how. In the vast majority of cases, it is a provision of a person with knowledge or skills essential to the company. This contribution does not give right to shares. It is not allowed if the company chooses as legal form the SA or public limited company.
The amount of the minimum share capital depends on the legal form of the company. The rule is very simple:apart from public limited companies (SA), companies do not have a minimum share capital imposed. It is therefore up to the partners to choose the amount they wish to invest. This rule applies equally well to:
The public limited company (SA) works differently. Its creation requires the presence of at least 2 shareholders if the company is not listed on the stock exchange and 7 shareholders if it is listed on the stock exchange. The share capital is at least €37,000. Half of this amount must be paid upon creation and the second half within 5 years of the creation of the company.
As we saw earlier, social capital can take different forms. But there are also different types of social capital. Indeed, it can be fixed or variable.
Several criteria must be taken into consideration to define the share capital of a company. A company wishing to make a bank loan must have a non-negligible starting capital to reassure the lending organizations.
The creation of a company can impose substantial investments which often depend on the nature of the project. Indeed, some companies will need a lot of raw materials and machines to start production, others will have to invest in research and development. Companies that work with many collaborators (suppliers, resellers, etc.) must have substantial social capital to reassure them and above all to pay the various bills.
Having a large share capital is preferable because in case of difficulty, it is used to pay debts. The same applies in the event of compulsory liquidation, the capital is returned after reimbursement of the creditors. The greater the share capital of a company, the more creditors are assured of being paid.
