The share capital of a company corresponds to the total amount of the contributions of goods and money that the partners or shareholders bring to the company when it is created, in return for social rights (shares or shares depending on the legal form of the company).
The share capital is divided into several shares with equal nominal values, corresponding to the number of partners. It must appear on all official company documents including invoices.
Whether for a SARL or an SA or any other type of legal form, the share capital is essential when the company is created and can vary according to its growth.
Forms of social capital contributions
There are three main types of social capital contributions. These are the contribution in cash, the contribution in industry and finally, the contribution in kind.
1. Cash contributions
Contributions in cash are contributions made in money. Attention, it is not a question of bringing sums in a completely free way. The money must be deposited in a bank account in the name of the company and which will then be used to finance the activity of the company.
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2. Contributions in industry
Contributions in industry refer to contributions in the form of work carried out by a partner (specific knowledge or know-how). This is a type of contribution that will not be added to the constitution of the company's share capital. Indeed, the contribution in industry gives the right to the contributor to benefit from shares or shares in exchange for the work carried out.
The value of the contribution in industry is determined by evaluating the amount that the company would have had to spend to obtain the same work as that carried out by the contributor.
3. Contributions in kind
Contributions in kind correspond to the provision of a good other than a sum of money.
They can take very different forms: Material contributions, customer contributions, or even in the form of patents or trademarks.
These contributions form the share capital of the company through an assessment to determine the value of each contribution in kind.
Indeed, the contribution in kind requires a prior assessment which will then give rise to an equivalence in number of shares or in number of shares depending on the legal form of the company.
The intervention of a commissioner of contributions to assess the value of the property contributed is imperative.
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The usefulness of social capital
Social capital has many uses. The money or goods made available will enable the company to carry out its activity and obtain external financing. Here is what the social capital of a company is used for:
1. Distribute decision-making power
The share capital is effectively used to distribute the voting rights among the partners. It is the main utility of the capital of a company.
Indeed, the capital of a company includes a certain quantity of corporate securities (Shares or shares), having a determined value. In principle, a security gives its bearer one vote at ordinary or extraordinary general meetings. The partner who contributes the most generally has decision-making power. In the event of a dividend distribution, he will also receive a larger sum.
2. Reassure partners
The share capital is the security of the creditors. This means that the partners do not expose their personal assets in the event of the company's bankruptcy. Only the capital of the company allows creditors to recover part of their rights and therefore to be paid.
Social capital therefore makes it possible, to a certain extent, to reassure a company's partners (mainly customers and suppliers). The higher the capital, the more guarantees they will have and therefore the more they will be psychologically ready to work with a company.
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3. Finance the operation of the activity
Share capital is one of the main means of long-term financing for a company.
The funds provided by the partner(s) make it possible to finance the launch of the activity. Thanks to the available cash, the company can invest in the production tools it needs (machines, materials, etc.). It can also carry out advertising/marketing campaigns, create a website or simply buy stocks.
With regard to contributions in kind, they allow the partners to make available to the company assets that they own personally. The company then becomes the owner of the assets that it will use in the operation of its business.
4. Obtain a bank loan
Credit institutions pay particular attention to the need for financing, but also to the personal contribution made. Without contribution, they do not finance any project.
The social capital is not the only indicator studied by the bank but it remains a very important element in terms of financing which will influence its decision.
Capital increase in Morocco
The increase in share capital is a major step in the life of the company which brings it new life and greater credibility with its partners.
The capital increase is a financing tool used in many cases. In particular, it is possible to increase the capital in order to deal with debts accumulated in the past. Finally, the contribution helps to honor new investments, either through direct use of the funds, or through a loan granted by a bank.
There are several solutions to increase the share capital of a company:
Capital increase by incorporation of reserves: In this case, it is the company itself which incorporates the undistributed profits into its share capital.
Capital increase in cash: This involves the issue of new securities or the increase in the nominal value of existing securities. This increase takes place via the contribution of new liquidity.
Capital increase by contributions in kind: This is an increase by the contribution of goods, which are not sums of money.
The capital increase is a strategic operation that cannot be improvised. Its objective may be to increase financial solidity, credibility in the eyes of partners, or financing capacity. So it is worth choosing the right form of augmentation
The capital increase does not take place in the same way in all companies, in particular depending on its legal status.
NB: In Morocco, the amount of share capital may be subject to minimums or maximums depending on the legal form of the company.
Tip:
The capital increase is a strategic decision that requires the intervention of a professional. So, it is better to seek the help of an accounting firm. With his precise look at the finances of your company and the management/life aspects of the company, he will be able to accompany you and explain to you more about the procedure and the legal formalities related to this operation.
Be accompanied and advised.
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