Share capital and subscription of shares
Your company's share capital is the nest egg of your limited liability company. It allows your company to make the initial investments and to cover other costs. Share capital consists of the total sum of the shares’ subscription price. Mark the shares either in cash or as other assets before you send your company’s Memorandum of Association to the Trade Register.
To put it simply, share capital is the total sum of money paid for your company's shares by the shareholders. You can use it for the initial investments in your business, such as the acquisition of machinery.
Share capital is not necessary in a private limited liability company, however. This means that the shareholders do not have to pay anything for the company’s shares. If the company is a public limited liability company, the minimum amount of share capital is EUR 80 000.
Share capital usually consists of the sum of numerous shares of equal value. It is easier to handle many shares of smaller value than one of a great value, for example, if a shareholder wishes to sell their share. However, your company does not need to have more than one share.
The bigger the portion of your company's shares you own, the more voting power you generally have in your company, and the larger your share of the profits will be.
If your company reduces or increases its share capital, report the changes to the Trade Register. Make a notification also if your company's own capital is negative.
Please note that you will not be able to use share capital for paying a salary for yourself.
To put it simply, the subscription of shares means the purchasing of shares at the time of their issuance.
At the start-up phase, your limited liability company issues shares, which entitle their owners to dividends and the right to vote at the General Meeting. The shareholders’ rights will start only after the shares have been entered into the Trade Register.
When you sign your company’s Memorandum of Association, you will purchase the number of shares marked in the Memorandum. All shareholders shall deposit the price of their subscribed shares into the company’s account, that is, their share of the share capital. In the case of a private limited liability company, however, share capital is not necessary so the share price may be zero euros and no transfers of money are required.
In your company's accounts, the share price is usually marked in the share capital. If the nominal share value is not determined in the Articles of Association, you can still credit the full subscription price to the reserve for invested non-restricted equity. It is easier to withdraw money from the reserve than from the share capital.
You do not have to pay the price of your company’s shares in money. You can also pay for it by contribution in kind, that is, with other assets financially valuable to your company. The Memorandum of Association must specify that contribution in kind can be used.
You can use valuable machinery or equipment, a real estate or a vehicle as a contribution in kind. Note that you cannot, however, use your own work input as a contribution in kind.
The Memorandum of Association of your limited liability company must include a detailed explanation specifying what is used as contribution in kind. The contract must also explain how the financial value of the asset has been determined.
Give your in-kind contribution to your company already before sending the start-up notification to the Trade Register. Attach the bookkeeper’s statement regarding the in-kind contribution and an account of the transfer of property, for example the bill of sale, to the notification.