Your French subsidiary is running out of cash. The Paris team writes that suppliers are pressing, the overdraft is exhausted, and the latest balance sheet shows equity melting away. You sit in London, New York, Dubai or Singapore, and you need to send money quickly. Before you wire anything, two questions decide everything: does French law already impose a formal rescue procedure on your company, and should your money travel as a shareholder loan or as a formal capital increase? The wrong choice leaves your injection repayable on demand at the worst moment, or leaves the company exposed to a court-ordered dissolution even after you have paid. This guide explains, for a foreign parent company or founder, how to diagnose the situation under French company law, how to choose between a current-account loan and a capital increase, and how to vote, fund and register the increase from abroad until the commercial court registry issues a new Kbis, the official company identity certificate that proves your subsidiary is back on solid ground.
French bureaucracy uses acronyms everywhere, so here are the ones that matter in this article. The Kbis is the official registration certificate of a French company, issued by the greffe, the registry office of the local commercial court. The RCS is the Trade and Companies Register where the company is listed. The Guichet unique is the single online filing portal run by the INPI, the French intellectual property and companies office, through which almost all company filings now pass. The BODACC is the official gazette where company registrations and modifications are published. An EGM is an extraordinary general meeting, in French an assemblée générale extraordinaire, the shareholder vote that alone can change the articles of association. Pre-emptive subscription rights, in French the droit préférentiel de souscription, give existing shareholders priority when new shares are issued.
I. Your French subsidiary is losing money: what French law requires before you send cash
A. Equity below half the share capital: the four-month decision and the two-year rebuild procedure
Start with the balance sheet, not with the bank transfer. French law draws a hard line at half the share capital. The test compares capitaux propres, the shareholders equity shown in the approved accounts, with half of the capital social, the nominal share capital stated in the articles. When losses push equity below that half, a special statutory procedure starts automatically, whether the company is a SARL, the limited liability company with parts sociales, or a SAS or SA, companies with shares. This is the single most overlooked trap for foreign parents, because the procedure runs on strict deadlines and ends, if ignored, with any interested party entitled to ask a court to dissolve the company.
For a SARL, Article L223-42 of the Commercial Code provides: “Si, du fait de pertes constatées dans les documents comptables, les capitaux propres de la société deviennent inférieurs à la moitié du capital social”, which means that where losses recorded in the accounting documents bring equity below half the share capital, the shareholders must decide, within four months after approval of the accounts showing the loss, whether to dissolve the company early. If dissolution is rejected by the majority required to amend the articles, the company must, no later than the end of the second financial year following the year in which the loss was recorded, rebuild its equity to at least half the share capital or reduce its capital by the amount needed to bring equity back to at least half. The shareholder resolution must be published as provided by decree. If the manager or the statutory auditor fails to trigger a decision, or if the shareholders cannot validly deliberate, any interested party may petition the court for dissolution.
For companies with shares, including the SAS that most foreign founders use, Article L225-248 of the Commercial Code sets the same architecture: “Si, du fait de pertes constatées dans les documents comptables, les capitaux propres de la société deviennent inférieurs à la moitié du capital social”, and it requires the board to convene the extraordinary general meeting within four months after approval of the accounts showing the loss, to decide on early dissolution. Failing dissolution, the same two-year rebuild-or-reduce obligation applies, with publication of the resolution. The SAS follows these SA rules to the extent compatible with its own regime, because Article L227-1 of the Commercial Code makes SA rules applicable to the SAS except for the provisions it expressly excludes, with the powers of the board exercised by the president of the SAS or the managers designated in the articles.
In practice, a foreign parent should run four checks as soon as the draft accounts arrive. First, compute the ratio: divide equity by the nominal capital, and confirm whether it sits below one half. Second, verify the date the accounts were or will be approved, because the four-month clock starts at approval, not at year-end. Third, check whether the auditor, if the subsidiary has a commissaire aux comptes, the statutory auditor, has flagged the situation, since the auditor is one of the officers bound to trigger the decision. Fourth, diary the outer deadline: the end of the second financial year after the loss year is the last moment to show rebuilt equity or a completed capital reduction. A cash injection structured as a capital increase is the standard way to rebuild, which is why this diagnosis comes before any discussion of loans.
Two mistakes are frequent among foreign owners. The first is approving loss-making accounts late or informally, believing the clock has not started. Approval can be organised from abroad, by video meeting or written consultation where the articles allow it, but it must be a valid corporate decision, recorded and filed, because every later step, the dissolution vote, the publication, the rebuild, hangs from that date. The second mistake is recapitalising quietly through a shareholder loan and assuming the procedure is cured. A loan does not rebuild capitaux propres in the sense of these articles: it sits on the liability side of the balance sheet, while only equity, capital, premiums, reserves and retained results count. The company can hold millions in shareholder loans and still show equity below half, still exposed to a dissolution petition. That distinction drives the choice examined next.
B. Shareholder loan or capital increase: which cash route fits a foreign parent in a crisis
A foreign parent that wants to rescue its French subsidiary generally chooses between two channels: the avance en compte courant, the shareholder current-account loan, and the augmentation de capital, the formal capital increase. Both move real money into the company, but they produce opposite legal effects on ownership, ranking in an insolvency, speed, cost and reversibility. Understanding the trade-off before wiring funds avoids the classic outcome where the parent pays twice: once to fund the subsidiary, and once to fund the litigation about that funding.
The shareholder loan is fast and flexible. It requires no shareholder meeting to amend the articles, no bank certificate, no legal notice and no registry filing. Money can move within days under a simple loan agreement, often supplemented by a board or shareholder authorisation where the articles or a group policy require one. Intra-group cash support of this kind is expressly carved out of the banking monopoly, since Article L511-7 of the Monetary and Financial Code allows companies to carry out treasury operations with companies with which they have, directly or indirectly, capital links giving one of the linked companies effective control over the others. For a foreign parent controlling its French subsidiary, that exception is the normal legal basis of the current-account advance.
But the loan carries three structural weaknesses that matter precisely in a crisis. First, it is repayable. The Court of Cassation confirmed, in a ruling of 12 February 2025, number D 23-17.483, available at Cour de cassation, commercial chamber, 12 February 2025, No 23-17.483, the reasoning of the court of appeal that “sauf stipulation contraire, tout associé était en droit d’exiger à tout moment et peu important les motifs de sa demande le remboursement du solde de son compte courant, dès lors que l’avance ainsi consentie constituait un prêt à durée indéterminée”, meaning that unless otherwise agreed, any shareholder may demand repayment of the credit balance of the current account at any time, whatever the reason, because the advance is a loan of indefinite duration. Parent and subsidiary can agree otherwise, by fixing a term, a notice period or a subordination clause, yet without such written terms the advance remains callable, including by a liquidator if the subsidiary later fails. Second, the loan does not cure the half-capital procedure described above. Third, interest is only partly deductible: Article 212 of the General Tax Code limits deduction of interest paid to a related company to interest computed at the rate of Article 39 1-3, or at any higher rate the borrowing company could have obtained from independent lenders in similar conditions. A foreign parent that charges its subsidiary an off-market rate will see the excess disallowed, with penalties in a tax audit.
The capital increase is slower and more formal, but it fixes the balance sheet permanently. New shares or parts are issued, the nominal capital rises, the share premium if any feeds equity, and the rebuilt equity counts directly toward the half-capital threshold. A completed increase, duly registered, produces a new Kbis showing the higher capital, which is the document banks, landlords, suppliers and public buyers actually read when they assess whether the subsidiary is solvent again. It also protects against dissolution petitions founded on uncured losses, since the published resolution and the new accounts will show compliance. The price is procedure: a shareholder vote, subscription documents, payment of at least part of the new contributions, a depositary certificate, a legal notice, an online filing and registry review, typically over several weeks.
A frequent temptation must be addressed directly, because foreign sole shareholders raise it in almost every crisis: why not simply dissolve the subsidiary quickly, take the assets and walk away? Where the company is already in insolvency proceedings, that shortcut fails. The Court of Cassation held on 2 October 2024, number J 23-14.912, at Cour de cassation, commercial chamber, 2 October 2024, No 23-14.912, that “La dissolution d’une société, dont toutes les parts sociales sont réunies en une seule main, intervenue au cours de son plan de redressement prévoyant l’inaliénabilité de son fonds de commerce, n’entraîne pas la transmission universelle de son patrimoine à l’associé unique”, meaning that dissolution of a company whose shares are all held by one person, during a court-approved recovery plan that froze the sale of its business assets, does not transfer its estate to the sole shareholder by universal succession. The assets stay governed by the public-order rules of insolvency proceedings. A foreign parent that dissolves instead of rescuing can therefore lose control of the timetable and the assets at once.
The practical decision matrix is straightforward. Choose the shareholder loan, with a written agreement fixing term, interest at an arm’s length rate and any subordination, when the need is short-term working capital, equity is still above half, and speed matters more than balance-sheet repair. Choose the capital increase, alone or combined with a smaller loan, when equity has fallen below half, when a bank, landlord or key customer demands proof of recapitalisation, or when the parent wants its money locked into equity rather than callable debt. Many rescues combine both: an immediate bridge loan to pay wages and urgent suppliers, followed within weeks by a capital increase that converts or repays the bridge and restores the Kbis. Whatever the mix, document the diagnosis first, because the four-month and two-year clocks keep running while the money travels.
II. How to increase capital and get a new Kbis without flying to France
A. Voting the increase from abroad: EGM, pre-emptive rights and the bank certificate that unlocks registration
Once the parent opts for a capital increase, the operation belongs to the shareholders, not to the manager. Article L225-129 of the Commercial Code states: “L’assemblée générale extraordinaire est seule compétente pour décider, sur le rapport du conseil d’administration ou du directoire, une augmentation de capital immédiate ou à terme”, meaning that only the extraordinary general meeting, acting on the report of the board, may decide an immediate or future capital increase, with delegation possible under the conditions of Article L225-129-2 and completion required within five years. In a SAS, that competence is exercised according to the articles, which must reserve certain decisions to the shareholders collectively under Article L227-9, while in a SARL statutory amendments follow Article L223-30 of the Commercial Code, requiring at least three quarters of the parts for most amendments, or the quorum and two-thirds majority of the modernised regime for companies formed after the 2005 SME Act. A foreign sole shareholder votes alone and records a written decision; a foreign parent holding alongside minority shareholders must convene them properly, allow remote participation where the articles permit it, and count the majority on the exact statutory basis.
Where several shareholders exist, pre-emptive rights shape the vote. Article L225-132 of the Commercial Code provides: “Les actions comportent un droit préférentiel de souscription aux augmentations de capital”, meaning that shares carry a pre-emptive right to subscribe to capital increases in proportion to existing holdings. Shareholders may individually waive that right, and the meeting may vote to cancel it in favour of named persons, but the waiver or cancellation must be express, informed and recorded. A foreign parent that intends to subscribe the whole increase alone needs the other shareholders to waive or the meeting to cancel their rights; otherwise a minority shareholder can later attack the operation. In a SARL, the mechanism differs in form but the caution is identical: record who subscribes what, at which price, with which premium, and attach the subscription forms to the minutes.
Convocation formalities deserve obsessive attention, because French courts punish sloppy meetings with nullity, and nullity destroys the filing built on the vote. The Court of Cassation confirmed on 11 February 2026, numbers F 24-18.524 and G 24-19.883, at Cour de cassation, commercial chamber, 11 February 2026, Nos 24-18.524 and 24-19.883, that “La nullité prévue à l’article L. 227-9, alinéa 4, du code de commerce, dans sa rédaction antérieure à son abrogation par l’ordonnance n° 2025-229 du 12 mars 2025, applicable au litige, qui vise tant la méconnaissance des dispositions de l’alinéa 2 de cet article que celle des dispositions des statuts prises en application de son alinéa 1er, est une nullité absolue”, meaning that breach of the statutory or articles-based rules on shareholder collective decisions in a SAS triggers absolute nullity. Concretely, a foreign parent should verify the notice period and method in the articles, send the board report and draft resolutions in advance, hold the meeting by a means the articles authorise, from physical presence with powers of attorney to video conference or written consultation, and sign minutes that identify attendees, majorities and the exact new capital figure. A power of attorney signed abroad for a representative in Paris is routine, but signatures from foreign directors should be prepared for registry scrutiny, with certified French translations where the underlying parent documents are not in French, a point developed in our guide on registry rejections over foreign documents.
Money must then be paid and certified. For a SARL cash increase, Article L223-32 of the Commercial Code requires: “Ces parts sont obligatoirement libérées, lors de la souscription, d’un quart au moins de leur valeur nominale”, meaning the new parts must be paid up on subscription for at least one quarter of their nominal value, with the balance payable within five years from the day the increase becomes definitive, and withdrawal of the deposited funds possible through a company agent once the depositary certificate is established. If the increase is not completed within six months of the first deposit, the fallback of Article L223-8 applies. For companies with shares, at least half of cash shares is generally required on subscription with the balance callable within five years. One trap is specific to the SARL and catches foreign groups that subscribed successive increases: Article L223-7 of the Commercial Code warns that “le capital social doit être intégralement libéré avant toute souscription de nouvelles parts sociales à libérer en numéraire, à peine de nullité de l’opération”, meaning the existing capital must be fully paid up before any new cash subscription, failing which the operation is void. Check the liberation status of the old capital before voting the new one.
The bank certificate is the hinge of the whole file. The parent wires the subscription amount to a blocked increase account opened with a French bank, or deposits it with a notary, and the depositary issues the certificat du dépositaire listing subscribers and amounts. Foreign wires trigger enhanced checks: the bank will ask for the EGM minutes or draft resolutions, the updated shareholder register, identification of the ultimate beneficial owners, and the origin of funds. Allow two to four weeks for compliance review, keep the SWIFT confirmations, and never mingle the increase funds with operating cash before the certificate is issued. Only after certification can the agent withdraw the funds for the company, and only the certified file can be presented to the registry.
B. Filing on the Guichet unique, legal notice and the updated Kbis: checklist, costs and deadlines from abroad
Registration converts a private shareholder decision into an enforceable company reality. Since 2023, filings pass through the Guichet unique des formalités des entreprises operated by the INPI, which routes the file to the competent greffe for RCS registration, with publication in the BODACC. The official procedure is described step by step on the Service-Public Entreprendre guide to increasing company capital and on the INPI company-modification pages, and the file of a foreign-owned company follows the same track, with extra attention to translations. No flight to France is needed: the filing is electronic, signed with an e-signature, and a Paris-based counsel or formalist can act under a written mandate.
The file for a cash increase typically contains six blocks. First, the corporate block: the EGM minutes or sole-shareholder decision recording the increase, the updated articles showing the new capital and its breakdown, the board or presidential report, and the subscription forms with any waivers of pre-emptive rights. Second, the financial block: the depositary certificate and proof of payment, plus confirmation that prior capital is fully paid where Article L223-7 requires it. Third, the publication block: the attestation of the annonce légale, the legal notice published in a newspaper authorised for the department of the registered office, stating the old and new capital, a step the registry verifies systematically. Fourth, the identity block: valid identification of the signatory, and for documents issued abroad by the foreign parent, such as board resolutions authorising the subscription or powers of attorney, a certified French translation and, where the Hague Convention applies, an apostille. Fifth, the beneficial-owner block: an updated RBE, the register of beneficial owners declaration, where the increase changes control percentages or the capital table used for that declaration. Sixth, the fee block: payment of registry fees and legal-notice costs, which together commonly run to several hundred euros before counsel fees.
Timelines should be planned backwards from the commercial need. The shareholder decision and subscriptions can be completed in one to two weeks where all shareholders cooperate. The bank certificate usually takes two to four weeks including compliance checks on a foreign wire. The legal notice publishes within days of instruction. Registry review on the Guichet unique commonly takes one to three weeks, longer where the greffe issues a rejection asking for a corrected translation, a missing waiver or an updated RBE form. Build in a total of six to ten weeks from decision to new Kbis, and treat the half-capital two-year deadline and any bank covenant deadline as hard stops inside that plan. Where the greffe rejects the filing over a foreign document, do not simply refile the same papers: obtain the apostille or certified translation identified in the rejection and refile a complete file, as explained in our companion guide for foreign founders facing registry rejections and in the pillar guide to setting up a company in France as a foreign founder.
After approval, verify three outputs. The updated Kbis must show the new capital figure and, where changed, the updated managers and registered office. The BODACC notice must reflect the modification. The shareholder register, the cap table and the RBE position must all match the filed articles, because the next auditor, bank or buyer will reconcile them. Keep the full chain for at least the limitation period of corporate claims: convening emails, attendance sheet or written consultation returns, reports, ballots, minutes, subscription forms, SWIFT messages, certificate, legal notice, filing receipt and Kbis. If a minority shareholder, creditor or later buyer challenges the increase, that chain is the defence file, and it is also what proves, in the half-capital procedure, that equity was genuinely rebuilt by the statutory deadline.
Costs and tax complete the picture. Beyond registry and publication fees, budget counsel time for drafting the resolutions, waivers and subscription forms, plus translation and apostille charges for parent documents. On tax, the increase itself generally attracts no proportional duty in modern French law for genuine cash contributions, while issuance premiums feed equity without creating deductible charges, unlike loan interest capped by Article 212. Where the parent had previously advanced a bridge loan, its conversion into capital by set-off, known as libération par compensation, is possible under strict conditions: the claim must be certain, liquid and due, documented by an auditor certificate or equivalent proof the registry accepts, since a contested or conditional claim cannot validly pay for shares. Structure the bridge loan agreement from day one to allow that conversion, with a clear due date and accounting recognition in the subsidiary books.
Conclusion
A French subsidiary running out of cash is not only a treasury problem but a corporate-law timetable. Diagnose first: compare equity with half the share capital, start the four-month dissolution decision at approval of the accounts, and target rebuilt equity by the end of the second following financial year. Fund second: use a documented shareholder loan for urgent working capital, and a formal capital increase for permanent repair, remembering that the loan stays callable and deductible only within statutory limits while the increase alone restores equity and the Kbis. Execute third: vote the increase in a valid EGM with proper convocation and pre-emptive-right handling, pay and certify the funds, then file through the Guichet unique with legal notice, translations and beneficial-owner updates until the greffe issues the new Kbis. Run from abroad with powers of attorney and electronic filing, keep every link of the paper chain, and never shortcut through an informal dissolution where insolvency rules apply. Done in that order, the rescue produces what banks and courts recognise: a recapitalised French company, proven by its registry certificate, rather than an undocumented wire that the next crisis calls back.
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