Definition of contribution in kind
What are the rights granted to the company during a contribution in kind?
What is the counterpart of a contribution in kind for the contributing partner?
In terms of capital, there are mainly two categories of contributions: contributions in cash, which refer to any monetary contribution made to the company's account, or contributions in kind, which refer to all tangible or intangible assets.
With regard to the contribution in kind, there are certain provisions to be taken into account for the latter to be effective.
Definition of contribution in kind
A contribution in kind is any contribution of good other than monetary made by the associates/shareholders of a company during its incorporation or during the increase of its capital. Contributions in kind can therefore cover any type of tangible or intangible property.
The contribution in kind can relate to a material good like a machine, or immaterial like trademarks or patents for example. Each contribution in kind must be assessed by the contributions auditor. The value of each contribution in kind must be mentioned on the statutes.
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What are the rights granted to the company during a contribution in kind?
During the constitution of a company or a capital increase, it is imperative that all contributions in kind be fully paid up. The rights of the company on the assets contributed vary according to the type of contribution:
- The contribution of enjoyment: the company can use the good brought but does not have the title of ownership. In other words, the contributor may dispose of said asset.
- Contribution of ownership: the contributor transfers ownership of the property to the company. This must clearly be the subject of a notification at the level of the statutes.
- The contribution in usufruct: the company is in no way the owner of the asset but has the possibility of using it and receiving the advantages and benefits that it provides.
Contribution in kind operations follow a precise legal procedure which requires the drafting of a contribution agreement as well as the intervention of a contribution auditor to certify the value of the contribution.
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What is the counterpart of a contribution in kind for the contributing partner?
As remuneration for his contribution in kind, the partner/shareholder generally obtains securities in the company (shares/shares). The value of the securities corresponds to the value attributed to the contributions.
It should be noted in this context that the value of contributions in kind does not necessarily correspond to the nominal value of the securities received in return, but rather to their current value (generally market value) according to what has been agreed between partners / shareholders and certified by a contribution auditor.
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