Cash Contributions in French Company Law: Rules on Release, Deposit, and Withdrawal of Funds

Introduction

In French company law, the concept of apports en numéraire—cash contributions—is one of the fundamental building blocks of corporate capital. Whether forming a SARL (société à responsabilité limitée), a SAS or a SA (société anonyme), or another corporate entity, shareholders must commit financial resources to give substance to the company’s legal personality.

While contributions in kind and contributions in industry also exist, cash contributions occupy a central place due to their liquidity and their ability to provide the company with immediate operational means. However, the law does not leave this process unregulated. On the contrary, the French Code de commerce establishes precise requirements regarding subscription, release (libération), deposit, and withdrawal of these funds.

This article provides a detailed exploration of the legal framework governing cash contributions, enriched with doctrinal explanations, references to case law, and practical insights for entrepreneurs, practitioners, and investors.

 1. The Legal Principle of Subscription of Cash Contributions

The first cornerstone is the principle of full subscription. According to French company law, all shares corresponding to contributions—whether in cash or in kind—must be subscribed in full by the partners.

• Subscription means that shareholders undertake to contribute a defined amount to the capital of the company.
  
• This undertaking is legally binding and creates a debt obligation between the shareholder and the company.
  

This rule ensures that from the outset, the company’s capital reflects genuine commitments from its shareholders. It is not possible to create a company with only partially subscribed shares.

2. The Mechanism of Release of Cash Contributions: Full or Partial

Although subscription is always total, release of contributions may be staggered.

2.1 Minimum Release Requirement

2.1.1 SARL

For SARLs, the law requires that at least 20% (one-fifth) of the cash contributions be paid at the time of incorporation (C. com. art. L. 223-7).

• The remainder (80%) may be deferred.
  
• The maximum delay for payment of the balance is five years from the company’s registration in the registre du commerce et des sociétés (RCS).
  

This mechanism provides flexibility for entrepreneurs who may not immediately have all the necessary liquidity but still wish to start their business.

2.1.2 SAS

When a SAS is incorporated, cash contributions (apports en numéraire) must be paid up at least to the extent of 50% of their nominal value (C. com., art. L. 225-3, made applicable to the SAS by art. L. 227-1). The balance must be liberated within a maximum period of five years from the registration of the company with the Trade and Companies Register (RCS).

The unpaid balance may be called by decision of the president or by any other body designated in the articles of association. The decision specifies the deadline for payment, provided it falls within the five-year maximum period.

Failure to pay the called-up sums may trigger sanctions, such as suspension of voting rights attached to the unpaid shares and, ultimately, forfeiture procedures.

2.1.3 SA

At the time of incorporation, cash contributions (apports en numéraire) in an SA must be liberated to at least half of their nominal value (C. com., art. L. 225-3, para. 1).

The unpaid balance must be paid within a maximum of five years from the date of registration of the company with the Trade and Companies Register (RCS).

The board of directors or the management board, depending on the governance structure chosen, decides on the calls for the unpaid amounts. The decision sets the time frame within the five-year statutory period.

Shareholders must be notified individually of calls for funds. Failure to comply may lead to sanctions, such as:

• automatic accrual of late-payment interest;

• suspension of voting rights attached to the unpaid shares;

• possible forfeiture of the shares after formal notice (déchéance des actions), with reallocation to new subscribers.

2.1.4 SCI

Unlike commercial companies (such as the SA or SAS), the SCI is a civil company governed by the Civil Code (arts. 1832 et seq.). The rules applicable to cash contributions (apports en numéraire) are therefore far more flexible: the law imposes no minimum capital and no statutory requirement for partial liberation at incorporation.

Furthermore, there is no legal requirement to deposit cash contributions with a notary, bank, or the Caisse des Dépôts et Consignations before registration. However, partners may voluntarily opt for such a deposit to demonstrate financial seriousness or to facilitate banking operations.

With respect to SCI, at registration with the Trade and Companies Register (RCS), the registrar does not require proof of deposit of funds—only evidence of the drafting of the articles of association and the agreed capital structure.

2.2 Practical Implications

The requirement of partial release allows:

• early incorporation with limited cash outflow,
  
• progressive mobilization of capital according to the company’s financial needs,
  
• assurance to third parties that at least part of the capital has been effectively paid up.
  

However, this flexibility is balanced by strict rules on deposit and unavailability of the released funds.

3. Deposit of Funds: Procedures and Safeguards

Once released, funds must be deposited within a strict legal framework.

3.1 The 8-Day Rule

According to C. com. art. R. 223-3, funds resulting from the release of cash contributions must be deposited within eight days of their receipt.

This requirement prevents misuse of funds by the founders during the delicate pre-incorporation period.

3.2 Authorized Depositaries

Funds must be deposited for the account of the company in formation, with one of the following:

• a notary,
  
• a bank, or
  
• in theory, the Caisse des dépôts et consignations (CDC).
  

Since June 2021, however, the CDC has refused such deposits in practice, despite the texts of the Commercial Code still mentioning this option.

3.3 Case of Staggered Payments

When contributions are released in instalments, the 8-day deadline applies to each instalment. Careful compliance is necessary to avoid irregularities that could jeopardize incorporation.

4. The Role of the Mandataire During Company Formation and the Use of Cash Contributions

A specific mechanism allows a mandataire (representative), designated in the articles of association, to use part of the funds to act on behalf of the company before its registration.

• The law requires at least 1/5 of the contributions to be released in a SARL, and at least 50% of the contributions to be released in a SAS or SA.
  
• This arrangement enables the mandataire to cover pre-incorporation expenses (e.g., lease deposits, supplier contracts) that cannot wait until registration.
  

However, caution is needed. If registration fails, funds remain unavailable, and commitments made by the mandataire may become problematic.

5. Judicial Injunctions for Non-Release of Funds

What happens if shareholders fail to pay the balance of their contributions within the legal timeframe?

French law provides a solution:

• Any interested party may petition the president of the commercial court to issue an injunction against the manager.
  
• The manager may be ordered, under penalty (astreinte), to proceed with the calls for funds.
  
• Alternatively, the court may appoint a judicial representative to perform this duty (C. civ. art. 1843-3).
  

5.1 Limits of Manager Liability

Case law is clear:

• The manager cannot be personally compelled to release his own contribution (Cass. com., 7 July 2009, n° 08-16433).
  
• The obligation to release contributions remains an obligation of the shareholder toward the company, not a personal liability of the manager in his role.
  

5.2 The Nature of the Company’s Claim

Unreleased contributions are considered a claim of the company against the shareholder. This claim persists even if the shareholder withdraws from the company (Cass. com., 17 January 2019, n° 17-22070).

6. Contributions Paid by Co-Shareholders

An interesting situation arises when one shareholder finances the contribution of another.

The French Cour de cassation has ruled that:

• Any person who subscribes shares and makes the corresponding contribution has the status of shareholder.
  
• It does not matter if the funds were provided by another shareholder (Cass. com., 20 September 2016, n° 14-28107).
  

This reinforces the principle that shareholder status depends on subscription and not on the origin of funds.

7. Authorized Banks and Cross-Border Issues

Not all banks can receive deposits of company funds.

• Only credit institutions authorized by the ACPR (Autorité de contrôle prudentiel et de résolution) may act as depositaries.
  
• This includes French banks and branches of foreign banks established in France.
  
• Foreign nationals, including EU citizens, may not deposit funds in banks outside France.
  

The EEA Exception

A nuance exists for credit institutions based in the European Economic Area (EEA). Under C. mon. et fin. art. L. 511-22, such institutions are deemed authorized in France under certain conditions.

8. The Rule of Unavailability of Funds

A central safeguard is that funds remain blocked until the company is registered.

• Banks that allow premature use of funds risk liability (Cass. com., 19 May 1998, n° 95-19098).
  
• Personal creditors of shareholders cannot seize the funds while they remain blocked.
  

This ensures that the capital is genuinely available to the company once it is incorporated.

9. The CARPA Question: Can Lawyers Handle Deposits of Cash Contributions of a French Company?

Another point of practice is whether funds may be deposited in CARPA accounts (accounts used by lawyers for client funds).

• Twice, the Ministry of Justice has answered positively (Rep. Marini, JO 2 October 1997; Rep. Vallet, JO 6 November 1997).
  
• The reasoning is that CARPA funds are ultimately held in authorized credit institutions, satisfying legal requirements.
  
• Final assessment, however, remains with the courts.
  

Since 2025, the CARPA of Paris refuses to open share capital deposit accounts if the cash contribution is less than 5000€.

10. Mention in the Articles of Association

The articles of association must explicitly record:

• the proportion of contributions released, and
  
• confirmation that funds have been deposited (C. com. art. R. 223-3).
  

Failure to mention this may invalidate the incorporation procedure.

11. Withdrawal of Funds After Registration

Funds are blocked until incorporation. Once the company is registered:

• They may be withdrawn only by a mandataire authorized to represent the company.
  
• Withdrawal requires presentation of the Kbis extract, official proof of registration (C. com. art. R. 223-4).
  

Digitalization of Formalities

Since 1 January 2023, company registration procedures are fully digital. The former paper acknowledgment (récépissé de création d’entreprise) has been replaced by an electronic receipt (Decree 2021-300 of 18 March 2021).

12. Failure of Incorporation: Refund of Funds

What if the company is not incorporated within six months of the first deposit of funds?

• Contributors may request return of their contributions.
  
• Individually, they must obtain authorization from the president of the commercial court.
  
• Collectively, if all contributors agree and designate a representative, they may directly request withdrawal from the depositary.
  

In both cases, if incorporation later proceeds, a new deposit of funds will be required.

FAQs on Cash Contributions in France

Q1: How much of my contribution must I release at incorporation?
At least 20% for an SARL. The rest may be deferred up to five years.

Q2: Where must funds be deposited?
With a notary, a bank, or in theory the Caisse des dépôts (though no longer in practice since 2021).

Q3: Are funds safe during the pre-incorporation stage?
Yes. They remain blocked and unavailable until registration.

Q4: Can a co-shareholder finance my contribution?
Yes. Case law recognizes that shareholder status depends on subscription, not on the origin of funds.

Q5: What happens if the company is not registered?
Funds may be refunded after six months, either individually (with court approval) or collectively (direct request).

Conclusion

The French legal regime of cash contributions (“apports en numéraire“) is a carefully balanced system. It offers flexibility to entrepreneurs through staggered release of funds, but also ensures security and transparency through strict rules on deposit, blocking, and refund mechanisms.

By safeguarding capital, the law strengthens both the credibility of the company and the protection of third parties. From the minimum release rule to the blocking of funds until incorporation, every provision reflects a dual objective: facilitating entrepreneurship while preserving financial trust.

For founders and practitioners, mastering these rules is essential not only to avoid pitfalls but also to optimize incorporation procedures under French law.