Where to Deposit the Funds for a Share Capital Increase in France: Bank or Notary?

When carrying out a cash share capital increase in France, the amounts paid by the subscribers must, where required by French law, be deposited with an authorised depositary.

The funds may notably be deposited with a bank or a French notary.

In both cases, the purpose of the deposit is to evidence the actual payment of the subscription funds and allow the issuance of the depositary’s certificate required to proceed with the share capital increase.

The choice between a bank and a notary will generally depend on the characteristics of the transaction, the identity of the subscribers and the procedures applied by each depositary. Using a French notary can be particularly relevant where the company’s bank does not provide this service or where the transaction involves foreign shareholders or investors.

Can Share Capital Increase Funds Be Deposited with a Bank?

Yes.

A bank can receive the subscription funds for a share capital increase and issue the corresponding certificate.

In practice, a French company will often approach its existing bank first.

However, not all banks necessarily provide this service under the same conditions.

Depending on their internal procedures, some banks may only handle share capital deposits for existing customers or may restrict the types of transactions they are prepared to process.

Transactions involving foreign shareholders, foreign companies or international transfers may also be subject to additional review.

Can Share Capital Increase Funds Be Deposited with a French Notary?

Yes.

A French notary can also act as depositary of the funds for a share capital increase where the applicable legal conditions are satisfied.

The company first submits the documentation relating to the share capital increase together with the required information concerning the subscribers.

After the file has been reviewed and accepted, the notary provides the payment instructions required for the subscribers to transfer their funds.

Once the funds have been received and the necessary checks completed, the notary can issue the depositary’s certificate.

Using a notary is therefore a normal way of carrying out the transaction. It is not a procedure reserved solely for companies whose bank has refused to handle their share capital increase.

Bank or French Notary: What Is the Difference?

Both a bank and a French notary may act as depositary where the applicable requirements are satisfied.

The main differences are therefore practical.

A bank applies its own internal procedures, which may depend on factors such as the company’s existing banking relationship, the nature of the transaction and the profile of the subscribers.

A French notary carries out an independent review of the transaction and the persons participating in the share capital increase.

This may include verifying the consistency of the corporate documentation, identifying the subscribers and, where required, identifying the ultimate beneficial owners and reviewing the source of the funds.

The appropriate depositary therefore depends on the circumstances of the transaction rather than on the assumption that one solution will always be simpler than the other.

Why Use a French Notary to Deposit the Funds?

Using a French notary may be particularly suitable where the company wants the deposit of funds to be handled by a legal professional familiar with French corporate transactions.

It may also be relevant where:

• the company’s existing bank does not provide a capital deposit service;
• the company does not wish to open a new bank account solely for the transaction;
• several subscribers are participating in the share capital increase;
• a new investor is joining the company;
• one or more subscribers are based outside France;
• a foreign company is participating in the transaction;
• or the subscription funds are being transferred from abroad.

These circumstances do not remove the need for the required compliance checks.

The French notary must receive sufficient information and supporting documentation to review and accept the transaction before the funds are deposited.

Do You Need to Be an Existing Customer of the Bank?

That depends on the bank.

Some banks may only accept share capital deposits from existing customers or as part of an established banking relationship.

Others may apply specific onboarding or compliance procedures before accepting the transaction.

This can be an important consideration for a company carrying out a one-off transaction that does not otherwise require a change to its banking arrangements.

Depositing the funds with a French notary may provide an alternative, subject to prior review and acceptance of the file.

Can a French Notary Receive Funds from a Foreign Investor?

Yes, subject to review and acceptance of the transaction.

A share capital increase of a French company may involve a foreign investor, whether an individual or a legal entity.

The notary must be able to identify the subscriber and understand the structure of the investment.

Where the subscriber is a foreign company, the required documentation may include information concerning:

• its legal existence and registration;
• its articles of association or equivalent constitutional documents;
• its legal representative and the representative’s authority;
• its ownership structure;
• and its ultimate beneficial owners.

Supporting documentation concerning the source of the investment funds may also be required.

Can the Funds Be Transferred from a Foreign Bank Account?

Yes, a transfer from a foreign bank account may be possible.

Depositing the funds with a French notary does not, in itself, mean that the subscriber must hold a French bank account.

However, the transaction should be reviewed before the funds are transferred.

Once the file has been accepted, payment instructions can be provided to the subscriber.

The originating bank account should allow the payment to be clearly linked to the relevant subscriber and investment.

Any foreign exchange controls or other restrictions applicable in the country from which the funds are transferred must also be taken into account.

What Documents Are Required to Deposit the Funds with a French Notary?

The exact documentation will depend on the company, the structure of the share capital increase and the subscribers involved.

The file will generally include:

• the company’s current articles of association;
• recent evidence of its registration;
• the corporate decisions or draft decisions relating to the share capital increase;
• the subscription documentation;
• information concerning the company’s legal representative;
• identification documents for the subscribers;
• and, where a subscriber is a legal entity, documentation concerning its ownership structure and ultimate beneficial owners.

Depending on the circumstances, supporting documentation relating to the source of the funds may also be required.

Reviewing these documents before any transfer is made helps avoid situations where funds are transferred before the transaction can be accepted by the depositary.

When Is the Depositary’s Certificate Issued?

The depositary’s certificate can be issued after the subscription funds have actually been received and the required checks have been completed.

The processing time therefore depends primarily on the completeness of the file and actual receipt of the subscribers’ transfers.

Once the certificate has been issued, the company can proceed with the remaining formalities required to complete the share capital increase.

After the transaction has been definitively completed and the required supporting documents have been provided, the deposited funds can be released to the company.

Deposit Your Share Capital Increase Funds with a French Notary

Chassaint & Cerclé Notaires, a French notary office based in Paris, assists companies with the deposit of funds for cash share capital increases and the issuance of the depositary’s certificate.

The documentation can be submitted remotely so that the transaction can be reviewed before any funds are transferred.

The office also handles transactions with an international dimension, including those involving foreign shareholders, foreign investors, foreign companies and subscription funds transferred from abroad.

After the file has been approved, payment instructions are provided to the subscribers. The depositary’s certificate can then be issued after receipt of the funds and completion of the required checks.

For further information about the procedure, required documentation and submission of your file, please visit our dedicated share capital increase page, click here.