What formalities must be met in the framework of the SCI share capital increase?

Article created by legal experts. The editors did not participate in its production.

What is share capital in a real estate company (SCI)?

The share capital of a real estate company (SCI) is made up of the partners’ deposits at the time of the creation of the SCI. In exchange for these contributions, shareholders receive shares that give them social rights, such as the right to vote, the right to information or the ability to receive dividends. The share capital represents all the assets available to SCI at the beginning of its activity and is an indicator of its financial health.

Share capital can be fixed or variable:

  • Fixed share capital means that the amount is specifically defined in the SCI bylaws and any subsequent increase or decrease includes procedures. Fixed capital is generally chosen in a SCI family company. Unlike a professional SCI for a real estate development project, an SCI does not require an increase in share capital for its normal operations. On the other hand, in the case of contributions by one or more partners to the SCI, an increase in the share capital will be appropriate.
  • Variable share capital enables easier changes in the amount of capital without the need for changes to the law. This can be advantageous when partners want to facilitate the entry or exit of investors, as there are no costly procedures for adjusting share capital. The option of variable share capital can be useful if the partners know that the partners can make regular contributions.

The share capital of a real estate company (SCI) is mainly used to determine the financial health of the company, to appease the banks in obtaining real estate loans, and to facilitate the financial management of the SCI based on the choice of fixed or variable capital.

Finally, like a trading company such as SAS or SARL, an SCI has no minimum capital requirement: 1 euro is enough. The partners can therefore decide on the amount of the share capital according to their needs and goals. The flexibility of share capital is one of the key characteristics of an SCI, which makes it an ideal legal structure for the management and holding of real estate.

Why increase the share capital of a real estate company (SCI)?

The share capital of a real estate company (SCI) is like a “common pot” formed by the financial contributions of the partners during the creation of the SCI.

Let’s imagine that you have formed an SCI with other investors to purchase a building. The initial share capital is what you all put into this “pot” at the beginning. If you wish to attract new investors or finance other real estate projects, you can increase the share capital by adding money from your personal contributions or by allowing new partners to join the SCI by contributing money.

An increase in the share capital of a real estate company (SCI) therefore allows additional funds to be invested in the SCI. These funds can come from existing partners who decide to provide more capital or from new investors who want to join SCI. These additional financial resources offer more room for maneuver for real estate investments, renovation projects or the acquisition of new properties.

Finally, by allowing new partners to enter the SCI through fund contributions, it can be beneficial in recruiting specific investors or real estate experts while sharing risk and responsibility among the larger group.

What steps are required to increase the share capital of a real estate company (SCI)?

Step 1: Gather partners at an Extraordinary General Meeting (EGM)

In order to increase the share capital, it is necessary to initiate an amendment procedure, SCI shareholders must vote for the adoption of the resolution on the proposal to increase the share capital. It therefore begins with the convening of an extraordinary general meeting (EGM), at which the shareholders vote to amend the articles of association of SCI.

This meeting is convened by the company executive and the majority conditions are set out in the articles of association. The result of the vote is then recorded in the report.

Step 2: Deposit funds or register with the Tax Administration (SIE)

This step varies depending on the nature of the capital increase contribution:

  • Contribution in cash : If the capital increase comes from cash, the funds must be deposited either in the SCI bank account or at a notary or at the Caisse des Dépôts et Consignations. This deposit must be made within 8 days of the decision of the Extraordinary General Meeting (EGM). The depository certificate is provided by the depository organization. This document will be useful for formalities in the Electronic Single Window for Business Formalities.
  • Substantive contribution : If the capital increase includes a contribution in kind, the SCI manager must register the minutes of the general meeting with the relevant tax and commercial department within one month. A deposit confirmation will also be provided for formalities.

Step 3: Publishing the notice in the Legal Notice Journal

To inform third parties about the operation, the capital change notice must be published in the Journal of Legal Announcements of the SCI headquarters department. The digital publication certificate will be downloaded among the supporting documents required as attachments at one point of contact.

Step 4: Submit the change file to the website of the single point of contact

After completing the previous steps, the last stage is the entry of changes in the registers (commercial and commercial register RCS and national commercial register RNE). At the single point of contact, the file is completely electronic and the Cerfa M2 form (change of legal entity) is no longer in question.

In order to register a change in the share capital of SCI, the legal representative (manager or person authorized to act for this formality) must upload the following documents to the platform of one point of contact:

  • A copy certified by the administrator of the updated articles of association.
  • A copy of the minutes (PV) from the extraordinary general meeting (MVH), which approved the increase in the registered capital of SI, certified by a legal representative.
  • Certificate showing that the notice of change has been published in the Journal d’Annonces Légales (JAL).
  • Confirmation of the deposit of funds, if the share capital increase concerns a cash deposit, or a registration certificate provided by the Tax and Commercial Service for a deposit in kind.
  • Contribution Commissioner’s report if the capital increase includes contribution in kind.
  • Payment of processing fees.

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