What is the contribution in kind?
What are the conditions for carrying out a contribution in kind transaction?
What is the role and mission of the contributions auditor?
What are the consequences of a contribution in kind?
What is the contribution in kind?
When it comes to setting up a business, the partners or shareholders are required to build up start-up capital.
The constitution can be made from the contributions of several types:
- The contribution to industry: it's about know-how and knowledge
- The cash contribution: it's about the amount of money
- Contribution in kind: it concerns tangible or intangible property
Contribution in kind refers to any type of contribution of goods other than cash. Contributions in kind relate to all assets for which there is a transfer of ownership and which are subject to an assessment to determine their value.
An in-kind contribution can refer to tangible material goods such as a car or building, or even intangible goods such as patents or trademarks.
The estimate of the contributions subject to certification by a chartered accountant, who in this context is appointed as a contribution auditor.
What are the conditions for carrying out a contribution in kind operation?
The contribution in kind can be granted by any natural person proving ownership of the property contributed. For there to be a contribution in kind, two conditions must be met:
- Effective transfer of ownership between the contributor and the company
- Effective provision of the property for the benefit of the company benefiting from the contribution in kind.
The contribution in kind can occur when the company is set up or later as part of a capital increase.
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What is the role and mission of the contributions auditor?
For the assessment of contributions, Moroccan law requires the use of a contribution auditor. The contributions auditor acts as an independent professional chosen by the shareholders/partners to determine the value of the contributions in kind which constitute the capital of a company.
The auditor is responsible for the following tasks:
Determine the value of contributions in kind
Ensure the existence and nature of contributions
Check that the partner is the owner of the property he brings
The contributions auditor must be a chartered accountant registered with the Order of Chartered Accountants (OEC). In order to guarantee its independence, it is prohibited to appoint the following persons as auditors:
Founder, contributor in kind or director of the company or its subsidiaries
Spouse, parents or ally.
A person who receives any remuneration from the persons previously mentioned.
Chartered accountant company in which one of the associates represents one of the aforementioned cases.
What are the consequences of a contribution in kind?
The operation of a contribution in kind results in a transfer of ownership between the contributor and the beneficiary company. The contributor receives as remuneration for his contribution shares or shares in the capital of the company.
When subscribing to the capital of a company, contributions in kind must be fully paid up.
In some cases, the contribution may not cover all of the attributes of the property. Therefore, we can distinguish several types of contributions in kind:
Property rights : the contributor transfers full ownership of the property to the company.
Right of use: the company obtains the right to use the property but does not have ownership of it.
Contribution in usufruct: the company does not own the property but benefits from the income it generates.
Be accompanied and advised.
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