Share capital is a foundational element when forming a company. It comes in various forms and grants rights like shares or ownership stakes. Discover what constitutes share capital and how to set it based on your company's legal structure—everything you need to know.
Share capital, often simply called capital, is the initial financing provided at company formation. It serves as a guarantee for creditors and ensures fair distribution of rights among partners.
Share capital encompasses all resources contributed in cash or in kind, transferred irrevocably to the company either at inception or during a capital increase.
In return for their contributions, partners receive corporate rights, such as shares or ownership stakes.
As a reminder:
Share capital must appear on all company commercial documents.
A company's share capital can consist of:
Cash contributions are the most common, involving direct monetary input by shareholders or partners. In exchange, they receive shares or stakes proportional to their investment, entitling them to profits and voting influence. Note: Contributions to a partner's current account are loans, not capital—they must be repaid and do not grant securities.
In-kind contributions from partners or shareholders include tangible assets like premises, machinery, or equipment, and intangible assets like goodwill or patents. These require valuation by a contributions auditor, and sometimes a notary's involvement.
Industry contributions involve providing expertise or skills essential to the company. These do not grant shares and are prohibited for public limited companies (SA).
Minimum share capital varies by legal form. Except for public limited companies (SA), there's no legal minimum—partners decide the amount. This applies to:
For public limited companies (SA), at least two shareholders are required if unlisted (seven if listed), with a minimum share capital of €37,000. Half must be paid at formation, the rest within five years.
Share capital can be fixed or variable.
Several factors influence share capital determination. For bank loans, a substantial initial capital reassures lenders.
Project needs vary: some require heavy investment in raw materials or machinery, others in R&D. Companies reliant on suppliers or resellers need solid capital to cover bills and build trust.
A larger share capital absorbs debts during difficulties or liquidation (after creditors are paid), enhancing creditor confidence.
