Your social capital is the image of your company, your finances and your reliability vis-à-vis your future partners. Choosing between fixed or variable capital can have an impact on the future of your company, so you must keep every detail in mind.
The share capital can be fixed or variable
At the time of creating your business, regardless of the legal form of your company, you have the choice between fixed or variable capital.
The advantage of choosing one or the other is felt during an operation on the share capital.
- The variable capital can be increased easily and reduced quickly.
- The fixed capital can only be changed at an Extraordinary General Meeting, and therefore requires a modification of the articles of association. Thus, costs must be incurred.
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To make the choice between variable share capital and fixed share capital, you must actually determine your objectives and set a strategy for your company. If you want more freedom of action, you will have to opt for variable share capital. If, on the other hand, you want more stability and security, you will have to choose a fixed share capital.
The choice of fixed share capital
It is recommended to constitute a fixed share capital if you wish to maintain the closed nature of your capital, and therefore of your company. How does the option for fixed share capital allow this? Firstly because it can only be modified at an Extraordinary General Meeting. Then, since any change in fixed capital requires a statutory amendment. And any statutory modification entails costs (registration, publication and registry).
The choice of variable share capital
Choosing a variable share capital for your company means choosing its elasticity. This type of capital allows you to simply vary the amount of your company’s capital. In other words, the operations ofincrease in capital and reduction of capital can occur as easily as the other. In this case, it will be easier to bring partners in or out.
Threshold limits must be respected, but no Extraordinary General Meeting must be convened to carry out such an operation on the capital.
Please note: if you opt for variable capital, a variability clause must be carefully drafted when drafting your company’s articles of association. This clause makes it possible to set the floor price and the ceiling price not to be exceeded.
You are now in control of your choice of share capital. But rest assured, once the type of social capital has been chosen, it will always be possible to opt for the other later. To make this change, an amendment to the articles of association of your company will be essential.
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