Reviewing a share capital increase by debt set-off requires both corporate documents describing the new share issue and evidence of the claim used to pay for those shares. A structured file enables the notarial office to identify the necessary checks and define its role at an early stage.

Identify the company and subscribers

The file should include the current articles of association, a recent company registration extract, details of the legal representative and the identity of each subscriber. The company’s legal form, whether it has a statutory auditor and the status of its existing share capital should be specified. A corporate subscriber must also provide documents establishing its own existence and authority to act.

A short transaction summary should state the amount of the proposed capital increase, the number and issue price of the new shares, any share premium and the people subscribing for them.

Provide the corporate decisions

The resolutions or drafts, issue terms and subscription forms should identify the new shares, their price and the proposed debt set-off. The articles of association help establish which corporate body has authority and which subscription rules apply. A decision to increase capital does not, on its own, prove that the shares have been subscribed for or paid up.

If part of the issue is paid by transfer of funds, the amounts and methods of payment should be broken down by subscriber. Proof of deposited funds and proof of a debt set-off are separate matters.

Substantiate the claim

Depending on its origin, the claim may be evidenced by a shareholder current account agreement, loan agreement, invoices or another contract. The account statement, details of movements and accounting records should substantiate the balance used in the transaction.

A blocked account, future due date, subordination, dispute or assignment of the claim should be disclosed. The documentation should also establish that the creditor is the person subscribing for the shares. Additional evidence may be requested where the debt has several sources or the documents do not reconcile.

Submit a file prepared by advisers

A company lawyer may provide the draft resolutions and subscription forms; its accountant may supply the account statement and supporting entries. Draft documents can be used for an initial review, while final signed materials will be needed before a certificate is issued.

After reviewing the file, the notarial office can identify missing documents, the scope of its assignment, proposed fees and a practicable timetable. The requirements concerning the claim are discussed in the related article on liquid and due debts.