Can a French notary issue a certificate for a share capital increase by debt set-off?
French company law expressly allows a French notary to issue the certificate recording that new shares have been paid up by setting off a liquid and due claim against the company. This certificate takes the place of the depositary’s certificate for the amount concerned. It does not record the receipt of funds.
The legal basis
Article L. 225-146 of the French Commercial Code distinguishes the certificate issued upon deposit of funds from the certificate recording a debt set-off. The latter may be issued by a notary or by the statutory auditor under the conditions laid down by law. The rules for sociétés anonymes also apply to a French SAS, subject to its specific provisions.
A French notary may be instructed to issue the certificate where the company has no standing statutory auditor. The treatment of the account statement must still be assessed in the circumstances of the case.
What a French notary checks before issuing the certificate
The certificate concerns specified shares and subscriptions. A notary must identify the subscriber, issue price and claim against the issuing company, and establish that the corresponding obligations have been discharged.
A balance in the accounts alone does not necessarily prove that the claim is due or held by the subscriber. The underlying agreements, resolutions, subscription forms, account statement and relevant accounting entries must be examined.
Documents to provide to a French notary
The articles and resolutions establish the authority and terms of the issue. Subscription forms identify the shares and proposed payment method. The account statement and supporting contracts establish the claim’s origin, amount and payment terms. A notary may request additional explanations from the company or its accountant.
A file prepared by the company’s advisers can enable a focused assignment. A notary must nevertheless verify the material on which the certificate will be based.
The other stages of the transaction
The certificate is one element of a capital increase. Corporate decisions, subscriptions, recording of completion, amendments to the articles and relevant filings must also be addressed. The parties should specify responsibility for each step before the certificate is requested.
The documents required for an initial review are described in our article on preparing a file for a French notary.
Discuss your capital increase with a French notary
Send the available corporate and accounting documents to the office for an initial review of the transaction and the scope of the requested notarial work.
Professionals & partners
A French notary working with lawyers and accountants
Lawyers and accountants who have prepared the resolutions and evidence of the claim may request an assignment limited to the certificate. The office identifies the documents it needs before undertaking that role.
