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Here is our guide to the dos and don’ts of the payment of share capital in Germany. If you’re unsure about how you can use your share capital, get in touch with us for some expert advice.
If the articles of association do not provide for a contribution in kind, the share capital contribution must be made by making a payment. Usually share capital is wired to the bank account of the company. Theoretically, physical cash could simply be placed in a safe. But notaries normally require proof of payment receipts from a bank, so this isn’t generally a good idea.
The reference attached to the transfer should clearly indicate that it is intended as share capital. Therefore it should contain one of the words: “share”, “share capital”, “capital contribution”, or “liable capital”. However, when there are several shares, the transfer reference should also clarify to which share(s) the capital is attached.
Max founds the “Max & smart idea GmbH” with a minimum share capital of 25,000 € divided into 25,000 shares of 1 € each (when the company is to be formed with a cash contribution). Half of the share capital is to be paid in when the company is founded, i.e. 12,500 €. After the notary appointment, Max opens a bank account named “Max & smart idea GmbH i.G.” (the i.G. stands for “in Gründung” which means “in foundation”). He makes this payment to the bank account with the reference to the amount of 12,500 €: “Share capital – shares 1 – 25,000.” For every share with a nominal value of 1 €, half, i.e. 50 cents, has been paid in. Once the payment has been processed, Max’s company can enter the commercial register.
If the payment is not made from the shareholder’s bank account, the name of the shareholder should also be mentioned in the reference. It’s just a precaution, so that the payment can be clearly allocated. This is particularly important when several shareholders pay in.
The shareholder bears responsibility for the safe-keeping of his proof of payment slip/receipt. So if the company becomes insolvent, the insolvency administrator will usually want to see this as the proof that the payment was made. If it is missing, shareholders might be asked to make the contribution again.