What Is the Share Capital of a Company?
Share capital is the money that guarantees the protection of the partners of a limited company. Share capital establishes the maximum responsibility that can be attributed to a company when it incurs debts or problems with justice.
It is the company, not its members, the one liable to pay for these problems, to the maximum of the share capital. This, therefore, protects the business partners.
As of February 1st, , 2023, companies are no longer required to have a minimum share capital of 2500 Euros, and now the minimum is 1 euro cent/founder or shareholder. This allows the founders/shareholders to tailor the capital financing needs of their company and not be restricted by the state's predetermined rules.
⚠️ But keep in mind these essential points:
The company's net assets must still exceed half of the share capital. Therefore, reducing the share capital also reduces the net asset requirements.
The owners' liability in case of bankruptcy is still limited to 2,500 Euros for the costs related to bankruptcy proceedings, even if the company's share capital is less than 2,500 Euros. Suppose the share capital is below 2,500 Euros. In that case, the owners must respond with their personal finances for the company.
If the share capital has not been paid, the company will not be able to distribute dividends, and it will be the partners who respond with their money since it is assumed that the company does not yet have that share capital to distribute dividends.
To pay the share capital, the shareholders make a payment to the company's account from their personal accounts and update the company registry so that this change is recorded.
It is the company, not its members, the one liable to pay for these problems, to the maximum of the share capital. This, therefore, protects the business partners.
As of February 1st, , 2023, companies are no longer required to have a minimum share capital of 2500 Euros, and now the minimum is 1 euro cent/founder or shareholder. This allows the founders/shareholders to tailor the capital financing needs of their company and not be restricted by the state's predetermined rules.
⚠️ But keep in mind these essential points:
The company's net assets must still exceed half of the share capital. Therefore, reducing the share capital also reduces the net asset requirements.
The owners' liability in case of bankruptcy is still limited to 2,500 Euros for the costs related to bankruptcy proceedings, even if the company's share capital is less than 2,500 Euros. Suppose the share capital is below 2,500 Euros. In that case, the owners must respond with their personal finances for the company.
If the share capital has not been paid, the company will not be able to distribute dividends, and it will be the partners who respond with their money since it is assumed that the company does not yet have that share capital to distribute dividends.
To pay the share capital, the shareholders make a payment to the company's account from their personal accounts and update the company registry so that this change is recorded.
Updated on: 06/02/2023
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