A novice's manual for task Capital subsidizing
The regulation of payments by members to the company: financing, atypical contributions
It is a widespread practice among shareholders of joint-stock companies, especially with a limited personal basis, to make cash payments, often in the absence of particular formalities and precise reasons, aimed at providing the company with suitable means to allow it to carry out its trading activity. business. Such disbursements of money can be made by the shareholders with the intention of financing the company - or of permanently strengthening the capital and financial structure of the company, without proceeding with an increase in the share capital. In the first case, the obligation to repay, with or without interest, arises on the part of the company; in the second case, these are "atypical" contributions , which increase the company's net assets without causing a change in the nominal share capital; they give rise to credits payable only upon dissolution of the company and within the limits of any liquidation assets. It can be complex to legally qualify the payments made by members, or to establish when they constitute a loan or when, instead, a contribution of actual risk capital. According to jurisprudence, the correct qualification of the disbursement of sums by the member must be carried out through an investigation into the real intention of the parties in the specific case, not limited to the sole use of the terms used for the annotations in the accounting records.
THE REGULATION OF PAYMENTS BY MEMBERS TO THE COMPANY: FINANCING, ATYPICAL CONTRIBUTIONS
INDEX
1. MEMBERS' CONTRIBUTIONS TO THE COMPANY
2. PAYMENTS BY MEMBERS IN THE NATURE OF FINANCING
3. FINANCING OF SHAREHOLDERS IN JOINT STOCK COMPANIES BETWEEN COMPANIES OF THE SAME GROUP
4. PAYMENTS BY MEMBERS IN THE NATURE OF CONTRIBUTIONS OF ASSETS
4.1 NON-REPAYABLE PAYMENTS
4.2 CAPITAL PAYMENTS
4.3 PAYMENTS FOR CAPITAL INCREASES (AND FUTURE INCREASES).
5. THE LEGAL QUALIFICATION OF MEMBERS' PAYMENTS TO THE COMPANY
1. Members' contributions to the company
It is a widespread practice among shareholders of joint-stock companies, especially those with a limited personal base, to make capital allocations in cash , often in the absence of particular formalities and precise reasons, aimed at providing the company with suitable means to allow it to carry out its business. business activities.
Since these sums of money are paid to the company in different ways compared to typical share capital increase procedures, they are often called " outside capital payments ".
Generally speaking, out-of-capital payments can be based on two purposes:
an intent to finance - therefore a loan - of one or more partners in the interest of the company in which they participate;
an intent to permanently, i.e. definitively, strengthen the capital and financial structure of the company , without proceeding with an increase in the share capital .
In the first case , the amounts are paid by the members as a loan , with the company having the obligation to repay them, with or without interest.
In the second case, however, these are "atypical" contributions , which increase the company's net assets without causing a change in the nominal share capital . They give rise to credits payable only upon dissolution of the company and within the limits of any liquidation assets ; the shareholder's right to their repayment is in fact subordinated to the right of the company's creditors .
These latter payments - permitted by our system but not regulated by the legislator, if not partially for tax purposes - are in turn divided into:
non-repayable payments ;
capital contributions ;
capital increase payments ;
payments into account for future capital increases .
2. Payments by members in the nature of financing
Members can pay amounts to the investee company as financing . Loans are sums of money that shareholders have the right to have repaid , and therefore constitute a debt of the company .
Shareholder financing is a means that allows you to increase the financial resources of a company without resorting to conventional capital increase techniques. In this case, the shareholder's aim is to invest his available money to increase the economic capabilities of the company, without affecting the share capital.
The notion of "financing" must be understood in an extensive sense, including all operations aimed at making sums of money available by the shareholder, in direct or indirect signature: the mortgage, but it is therefore the only possible hypothesis, a shareholder may well be able to carry out financing in the form of advances and credit lines, payment extensions, sureties, contributions not attributable to capital, as well as discounting, factoring and pro-recourse purchases of the company's receivables from third parties.
It is not relevant, for the purposes of qualifying the members' disbursements as loans, that there is an interest agreement , as these loans can be either interest-bearing (at the rate that the parties have agreed to apply) or non-interest-bearing , provided that in this case the unfruitfulness is clearly expressed by the will of the parties. In the absence of a different written agreement, a presumption of interest at the legal rate applies for payments (in the nature of financing) , pursuant to art. 1815, paragraph 1, cc and art. 46 tuirs
Nor are the names of used by the members at the time of the payment (such as: "members advance account", "members financing account", "members interest-free financing account", or on the concept of contribution: "capital account payments ", " payments towards future increase account capital ”, etc.). What is relevant in order to qualify the members' payment is the substantial purpose of the operation and its methods , to be analyzed and interpreted on a case-by-case basis.
The loans constitute debts for the company and as such must be recorded in the liabilities of the balance sheet, while for the lending partners they represent credits of the same amount.
Financing from members does not require a meeting resolution, and can be carried out regardless of the shareholding fee. It is preferable that the loan is provided following the signing of a written agreement, or a loan contract , containing the amount of the sum to be paid and the deadline for repayment.
The financing agreement between the shareholder and the company can also take place at the ordinary meeting. In this case, the assembly determines the methods and times of payment and repayment of the sums with a resolution that is binding only for the members who have given their consent.
The art. 11 of the Legislative Decree. n. 385/1993 and the CICR resolution of 3 March 1994 established the conditions in which the shareholder must find himself in order to finance the company without this operation being considered as a collection of savings (which is prohibited to subjects other than banks, with some exceptions). These conditions must be:
registration in the members' register for a period of no less than three months ;
being the holder of a share of at least 2% of the share capital approved in the latest approved financial statements;
The partners and directors of the company can always agree to repay the loans made by the partners, totally or partially, with possible simultaneous renewal of the loan itself.
The disbursements originally made as financing can therefore be subsequently converted by the members who have made them into capital contributions or non-refundable contributions , by waiving credits received in favor of the company or offsetting the credits when subtracting capital increases, in order to cover losses and thus avoid the application of articles 2446-2447 of the Civil Code
This may occur, in any case, at the will of the granting partners, resulting in a clear and unequivocal manner, as the company cannot otherwise dispose of it for purposes other than that originally given to them by the granting parties themselves.
It should be highlighted that if the loans are disbursed by the shareholders in a condition of excessive imbalance of indebtedness compared to net worth, or in a financial situation of the company in which it would have been reasonable to expect a contribution , their repayment is subordinated to the satisfaction of others third party creditors .
3. Financing of shareholders in joint stock companies between companies of the same group
The financing of shareholders in joint stock companies is regulated by art. 2497 quinquies of the Civil Code , which regulates financing carried out between companies of the same group .
The law provides that art. applies to loans made in favor of the company by those who carry out management and coordination activities or by other subjects subordinate to them . 2467 cc
The purpose of the rule is to limit the practice of groups of companies to distribute business risk unequally between the group companies that exercise control and coordination and those that suffer it, in a situation of undercapitalization. The rule, in fact, is aimed at guaranteeing a balance between two conflicting interests: the creditor's interest in ensuring that the controlling shareholder does not instrumentally assume the position of financier in order to escape the residual position on the values of the assets, and that of the shareholder to be able to adopt the financial policies of the company that he considers most efficient.
For this reason, the legislator has provided that the loan must be requalified if there are indications that suggest that the use of the same is aimed at evading the regulations on contributions, thus becoming a tool aimed at prosecuting an abuse to the detriment of creditors. .
The discipline of the art. 2467 cc therefore applies to loans made in favor of a company:
by the companies that exercise management and coordination activities on it (i.e. the parent company);
by the companies that are subject to the management and coordination of the same person who carries out this activity on the financed company (so-called sister companies).
However, financing provided to the company by subjects who are subject to its management and coordination activities are excluded from the scope of application of the rule.
The rule ignores the status of shareholder in the financed company, requiring the exercise of management and coordination activities by the financier as the sole condition for its applicability. The rule therefore refers not only to the shareholder of the financed company, but also to its directors, holders of financial instruments and any other person, whether a natural person or an entity or company, even without the status of shareholder, provided that they carry out management and coordination.
Finally, with reference to the qualification of the beneficiaries of the financing, art. 2497-quinquies of the Civil Code, not specifying which type of company the management and coordination activity refers to, also applies if the financed entity is a partnership or a consortium company.
4. Payments by members in the nature of contributions of assets
4.1 Non-repayable payments
The payments made by members to the company, however, can be classified as contributions if they are contributions which, however named (non-repayable contributions, to cover losses or in capital account), and in any case made - through payments of sums of money or waiver of credits - they remain acquired in the company's assets , becoming the company's own resources and therefore ideally belonging to the community of members, even if the disbursement is made only by some of them and not by all or in an amount not proportional to their respective participation shares.
As mentioned, these are "atypical" contributions , as they do not involve the purchase of a share in the share capital - and indeed presuppose that the person making the payment has already acquired the status of shareholder - and therefore increase the net assets of the company without causing a change in the nominal share capital . These payments can therefore be returned to the disbursing members only upon dissolution of the company and within the limits of any liquidation assets ; the member's right to their repayment is in fact subordinated to that of the company's creditors .
The phenomenon is widespread, in particular (but not only) in undercapitalized companies, in which the nominal share capital is inadequate to pursue the corporate purpose. In these cases, and especially in companies with a narrow shareholding base, in order to have a more streamlined corporate structure and to avoid the constraints of the share capital, it is preferable, initially, to determine the latter in a minimum amount: however, this amount is insufficient to carry out the corporate activity, it is necessary for the members to subsequently make payments, which however are not attributed to capital.
The non-repayable payments (such as the capital account payments, which we will deal with in the following paragraph ) are therefore contributions made by the shareholders spontaneously and without obligation of reimbursement by the company, with the aim of giving the company its own means suitable to allow to carry out their business activities, without being attributed to the share capital and, therefore, being exempt from the relevant regulations. They therefore do not give rise to collectible credits, except as a result of the dissolution of the company.
The non-repayable payments are acquired in the company's assets and they give rise to net equity items attributable in an indiscriminate manner to all the members, regardless of whether they were made proportionally by the members or not.
Often, especially in companies with a narrow shareholder base, the shareholders decide to deal with their economic difficulties by paying sums of money in order to eliminate the budget deficit , thus allowing the company to continue operating without having to make changes to the share capital.
The sums disbursed, constituting a real contingent asset for the company, eliminate the operating loss from accounting or prevent its formation, also allowing, in certain conditions, to avoid the application of the complex procedures for reducing the share capital due to losses, pursuant to the articles 2446 and 2447 cc
The execution methods of this operation vary depending on whether the losses have already been ascertained at an accounting level or not.