Can You Deposit the Funds for a Capital Increase with a French Notary?

When a French company carries out a capital increase in cash, existing shareholders or new investors contribute additional funds to the company in exchange for newly issued shares.

Where French law requires the funds to be deposited before completion of the capital increase, they must be transferred to an authorised depositary.

The funds for a capital increase can be deposited with a French notary.

Using a notary as depositary can be particularly useful when the company’s bank does not provide this service or when the capital increase involves foreign shareholders, international investors or funds transferred from abroad.

What Is the Role of a French Notary in a Capital Increase?

The notary acts as the depositary of the funds contributed by the shareholders or investors participating in the capital increase.

Before accepting the funds, the notary carries out the necessary checks relating to the company, the subscribers and the origin of the funds.

Once the required documents have been reviewed and the funds have been received, the notary can issue the depositary’s certificate (certificat du dépositaire) confirming the subscriptions and payments made in connection with the capital increase.

The company can then proceed with the corporate and registration formalities required to complete the capital increase.

Why Use a French Notary Instead of a Bank?

A company’s bank will often be the first institution approached for a capital increase.

However, not all French banks provide a capital increase deposit service. Some banks may also restrict this service to existing customers or apply their own internal compliance and risk policies.

Difficulties can be more frequent when the transaction has an international dimension, for example where:

• a shareholder lives outside France;
• a new investor is a foreign national;
• the subscriber is a foreign company;
• the investment is transferred from a foreign bank account;
• or several investors located in different countries participate in the transaction.

In such circumstances, depositing the capital increase funds with a French notary may provide an alternative solution, subject to satisfactory review of the transaction and completion of the required regulatory checks.

Can a Foreign Investor Deposit Capital Increase Funds with a French Notary?

Yes, in principle.

Being a foreign national or residing outside France does not, in itself, prevent an investor from participating in the capital increase of a French company.

A foreign company may also subscribe for shares in a French company.

International transactions nevertheless require appropriate identification and compliance checks.

For an individual investor, the notary must be able to verify the investor’s identity.

Where the subscriber is a foreign company, documents may be required to establish:

• the company’s legal existence and registration;
• its registered office;
• the identity and authority of its legal representative;
• its ownership structure;
• and its ultimate beneficial owners (UBOs).

The origin of the funds must also be identifiable and, where necessary, supported by appropriate documentation.

Certain foreign investments in French companies operating in sensitive sectors may also be subject to the French foreign investment control regime.

Can the Funds Be Transferred from a Foreign Bank Account?

The fact that the funds are transferred from outside France does not, by itself, prevent them from being deposited with a French notary.

However, the transfer must be clearly linked to the relevant subscriber and capital increase.

The notary must also be able to perform the required checks regarding the identity of the parties, the transaction and the origin of the funds.

For this reason, foreign investors should submit their documentation for review before making any transfer.

Payment instructions can then be provided once the file has been reviewed and accepted.

Investors should also ensure that the transfer complies with any foreign exchange controls or other regulations applicable in the country from which the funds are being sent.

Does a Foreign Investor Need a French Bank Account?

Not necessarily.

A foreign investor does not, as a general rule, need to open a personal French bank account solely in order to participate in a capital increase of a French company.

Subject to prior review and acceptance of the transaction, the subscription funds may be transferred from a foreign bank account.

It is nevertheless important that the account from which the payment is made is consistent with the identity of the subscriber.

Payments made by unrelated third parties can create additional compliance issues and should not be made without prior approval.

What Documents Are Required?

The exact list of documents depends on the company, the capital increase and the identity of the investors.

The file will generally include documents relating to:

• the French company carrying out the capital increase;
• its articles of association;
• the corporate resolutions or draft resolutions approving the capital increase;
• the subscription documents;
• the identity of individual subscribers;
• the corporate documents of legal entity subscribers;
• the ultimate beneficial owners of corporate subscribers;
• and, where required, supporting documentation concerning the origin of the funds.

Additional documentation may be required depending on the country of residence or incorporation of the investor and the structure of the transaction.

Foreign corporate documents may also need to be accompanied by a translation where necessary.

Can the Procedure Be Completed Remotely?

In many cases, yes.

The documents can be submitted electronically for preliminary review, which means that a foreign investor does not generally need to travel to France solely in order to deposit the funds for the capital increase.

Once the file has been reviewed and accepted, the payment instructions are provided.

The investors then transfer their respective subscription amounts.

After receipt of the funds and completion of the necessary checks, the notary can issue the depositary’s certificate.

Once the capital increase has been legally completed and the required supporting documents have been provided, the funds can be released to the French company.

How Can Our Notary Office Assist with a Capital Increase in France?

Chassaint & Cerclé Notaires, a French notary office based in Paris, handles deposits of funds relating to capital increases of French companies.

Our office can review transactions involving foreign shareholders, foreign companies and international investors, including situations where subscription funds are transferred from outside France.

The file is reviewed before payment instructions are issued, allowing the required documentation to be identified before the international transfer is made.

The procedure can be handled remotely, making it suitable for shareholders and investors who are not based in France.

Deposit the Funds for Your Capital Increase with a French Notary

Chassaint & Cerclé Notaires assists French companies with the deposit of funds for capital increases and the issuance of the corresponding depositary’s certificate following receipt of the funds and approval of the file.

You can submit your capital increase fund deposit request remotely, including where the transaction involves foreign shareholders or international investors.

For further information about the procedure, the documents required and how to submit your request, please visit our dedicated capital increase page, click here.