How to Release the Funds After a Share Capital Increase in France

After a cash share capital increase in France, the funds deposited with the depositary are not immediately available to the company.

They can be released once the share capital increase has been definitively completed and the depositary has received the supporting documents required to establish completion of the transaction.

Where the funds have been deposited with a French notary, the company must therefore provide the documents required for the release of the funds, together with the bank details of the account to which the funds are to be transferred.

After reviewing these documents, the notary can release the funds and transfer them to the company’s bank account.

The release of funds follows the deposit and certification stage. See first how to obtain a depositary’s certificate for a share capital increase in France.

Why Are the Funds Initially Blocked?

In a cash share capital increase, the amounts paid by the subscribers are allocated to a specific corporate transaction.

The depositary receives the subscription funds and, once the applicable conditions have been satisfied, issues the depositary’s certificate.

This certificate allows the company to proceed with the remaining steps required to definitively complete the share capital increase.

Until the transaction has been completed, the deposited funds are not freely available to the company.

The deposit mechanism provides evidence that the amounts corresponding to the subscriptions have actually been paid.

When Can the Funds Be Released?

The funds can be released after the definitive completion of the share capital increase.

The company must therefore have completed the relevant corporate steps in accordance with the resolutions adopted by its shareholders and the rules applicable to its legal form.

It then provides the depositary with the documents establishing that the share capital increase has been definitively completed.

The French notary reviews the documents required for the release before transferring the deposited funds to the company.

What Documents Are Required to Release the Funds?

The documents required will depend on the company’s legal form and the structure of the share capital increase.

They will generally include documentation establishing that the transaction has been definitively completed, together with the company’s bank details.

At Chassaint & Cerclé Notaires, the company will notably be asked to provide:

• the request for release of the deposited funds;
• the corporate resolution recording the definitive completion of the share capital increase, in the required form;
• any additional supporting documents required for the review of the release;
• and the bank details of an account held in the company’s name.

Additional documentation may be requested depending on the circumstances of the transaction.

Can the Funds Be Released to a Shareholder’s Bank Account?

As a general rule, the funds deposited in connection with the share capital increase are intended for the company whose share capital has been increased.

The funds are therefore normally released to a bank account held in the company’s name.

The bank details provided to the notary must clearly identify the company as the account holder.

This helps ensure traceability of the funds from their initial payment by the subscribers through to their final availability to the company.

Do You Have to Wait for an Updated Kbis Extract?

The definitive completion of the share capital increase should be distinguished from the subsequent registration and publication formalities.

The release of the deposited funds is based on evidence that the share capital increase has been definitively completed.

It should therefore not automatically be assumed that the funds can only be released once an updated Kbis extract has been issued.

The depositary must nevertheless receive sufficient documentation to establish that the conditions for releasing the funds have been satisfied.

How Long Does It Take to Release the Funds?

The processing time will primarily depend on whether the company provides a complete set of documents.

Once the documents establishing the definitive completion of the share capital increase and the company’s bank details have been submitted, the depositary can carry out the necessary checks and arrange the transfer.

Missing documents or inconsistencies between the corporate documentation and the completed transaction may result in requests for additional information.

It is therefore advisable to prepare the documents required for the release of the funds as soon as the share capital increase has been definitively completed.

What Happens if the Share Capital Increase Is Not Completed?

The situation is different if the proposed share capital increase is abandoned or cannot ultimately be completed.

The deposited funds cannot simply be transferred to the company as though the transaction had been completed.

The conditions governing repayment must then be considered in light of the circumstances of the transaction and the applicable rules.

The depositary must have sufficient information to determine the conditions under which the deposited amounts may be returned.

The notary should therefore be contacted before requesting repayment where the proposed share capital increase has been abandoned or has failed.

What if the Share Capital Increase Involves Foreign Investors?

The involvement of foreign shareholders or investors does not, in itself, change the principle governing the release of the funds.

Subscribers may have transferred their subscription funds from bank accounts located outside France.

Once the share capital increase has been definitively completed, however, the deposited funds are intended to become available to the French company whose share capital has been increased.

The funds can therefore be transferred to the company’s bank account once the required supporting documents have been provided and reviewed.

Release Funds Deposited with a French Notary

Chassaint & Cerclé Notaires, a French notary office based in Paris, assists companies from the initial deposit of their share capital increase funds through to their release following definitive completion of the transaction.

After the depositary’s certificate has been issued and the share capital increase has been definitively completed, the company provides the office with the supporting documents required for the release together with its bank details.

Once the required documents have been reviewed, the deposited funds can be transferred to the company’s bank account.

The procedure can generally be handled remotely, including where the share capital increase involves foreign shareholders or international investors.

For further information about depositing and releasing funds for a share capital increase in France, please visit our dedicated share capital increase page, click here.