Over the years you have kept your French company alive with your own money. A wire from London here, an advance from New York there, a few thousand euros from Singapore to cover payroll while waiting for a customer to pay. Your French accountant recorded each transfer on your compte courant d’associé (shareholder current account, the ledger on which an owner’s advances to the company are booked as a loan the company owes its owner). Today that ledger shows a large balance in your favour, the company needs stronger equity to borrow or to reassure a supplier, and you live abroad. Instead of wiring yet more cash, French law lets you convert what the company already owes you into shares: an increase of capital by offsetting claims, known as augmentation de capital par compensation de créances.
This route is faster and cheaper than a fresh cash injection — no international transfer, no exchange loss, no frozen deposit — but it is also the most controlled. Because no new money enters the company, the law demands independent proof that your loan is real, fixed in amount and already repayable, and it exposes the operation to attacks from minority partners and creditors who suspect a backdated or fictitious advance. A foreign owner who signs everything from abroad must therefore prepare the paper trail before the vote, obtain the right certificate from the auditor or the notary, and file a complete dossier on the single window. This guide explains the full sequence: which loans qualify, how the offset is voted and certified, how it is registered at the greffe (the clerk’s office of the commercial court that keeps the company register), and how to defend it if it is challenged. French acronyms are explained throughout, and every decisive rule is tied to the official text on Légifrance or to a published decision of the Cour de cassation (France’s supreme court for civil, commercial and criminal matters). For the general cash-increase route — wiring new money, preferential rights and filing — see our companion guide on how a foreign shareholder increases capital, defends pre-emption rights and files from abroad, and for running the company day to day our pillar on setting up a company in France as a foreign founder: bank account, Kbis, VAT and first hire.
I. Turning your shareholder loan into shares: which advances qualify and how the offset is voted
A. Which foreign-owner advances can be converted: liquid, due and documented claims
Not every euro you ever sent to the company can be turned into capital. French law allows the release of new shares by offsetting only claims that are liquides et exigibles — liquid, meaning fixed in amount, and due, meaning already repayable on the day of the offset. A documented loan of 80,000 euros, repayable at any time because the advance agreement says so or because no term was ever fixed, qualifies. A conditional promise to lend, an undated cash movement, or an advance locked in a multi-year block (blocage) that has not expired does not. The distinction matters most for foreign owners, whose advances often arrive as informal wires with bare bank references: a transfer labelled “support” from a personal account in Dubai, with no agreement and no board minute, will be refused for offsetting until it is reconstituted as a proper loan.
Reconstituting means assembling four layers of proof before any vote. First, the advance agreement: a signed document between you and the company stating the amount, the date, the interest rate and the repayment terms — repayable on demand is the standard formula that keeps the claim due. Second, the transfer trail: bank statements showing each credit from your personal foreign account to the company’s French account, with matching dates and amounts. Third, the company books: the compte courant ledger, the annual accounts and the auditor’s worksheets must show the same balance, year after year, with interest entries consistent with the agreed rate. Fourth, corporate approval: minutes in which the board or the manager acknowledged each significant advance. When these four layers agree to the euro, the auditor certifies in days; when they diverge — a ledger balance nobody can reconcile, interest never booked, advances mixed with personal expenses — certification stalls for weeks while two years of statements are rebuilt. Foreign owners should order this audit of their own ledger before announcing the operation, not after the meeting has voted a deadline the paperwork cannot meet.
Two preliminary verifications condition the whole project. The first concerns the existing capital. In a SARL (société à responsabilité limitée, the closed limited-liability company), Article L223-7 of the Commercial Code provides that cash shares must be paid up to at least one fifth on subscription, and adds the sentence every foreign owner of a SARL should memorise: “Toutefois, 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.” In plain English: if the current capital was never fully paid up, any new cash-equivalent subscription — including an offset — is void. Ask your French accountant for a certificate that the capital is fully paid (libéré) before voting; if it is not, pay the balance first. The second verification concerns the other owners. Offsetting your loan issues new shares to you alone, which dilutes everyone else. In a SAS (société par actions simplifiée, the flexible joint-stock company most foreign founders choose) or any joint-stock form, Article L225-132 of the Commercial Code provides that “Les actions comportent un droit préférentiel de souscription aux augmentations de capital.” Every existing shareholder has a proportionate first right to the new shares. That right can be removed for the operation under Article L225-135 of the Commercial Code, which allows the meeting to “supprimer le droit préférentiel de souscription pour la totalité de l’augmentation de capital ou pour une ou plusieurs tranches de cette augmentation,” but only on a management report and, where auditors exist, an auditors’ report, through one of the protected procedures. In a SARL, the articles’ priority clauses and the agrément (the approval vote for newcomers) play the same protective role. Notify every holder individually, keep every receipt, and record any waiver in writing: a minority partner who learns after the fact that your loan became half the capital is the classic claimant for annulment.
Interest accrued on your advance follows the principal: once booked and due, it can be offset together with the principal, which is one more reason to keep interest entries regular. Conversely, advances from a person who is not a subscriber cannot be offset in that person’s name — if your spouse or your foreign holding company wired the money, the subscriber of the new shares must be the holder of the claim, or the claim must first be properly assigned to the subscriber with a dated, notified assignment. Wiring from the right account from day one avoids this entire detour.
B. Voting and certifying the offset from abroad: decision, subscription form and auditor certificate
The decision itself belongs to the owners. Article L225-129 of the Commercial Code states the rule in these exact words: “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.” In a SAS, the articles of association decide who votes and how — written consultation, videoconference, or a minute signed by the sole shareholder — because Article L227-1 of the Commercial Code applies public-limited-company rules to a SAS only so far as they are compatible with the special SAS provisions. In a SARL, the shareholders vote under the Code and the articles, remotely if the articles allow it. The resolution must state the amount of the increase, the number and price of the new shares or parts sociales (the units of capital in a SARL), the identity of the subscriber, the claim being offset with its exact amount, the treatment of preferential rights, and the timetable. For a foreign subscriber, add a realistic subscription window: the auditor’s checks and the filing take weeks, and a fifteen-day window that expires while the certificate is pending kills the operation.
The subscriber then signs a subscription form (bulletin de souscription) that expressly states the release is made by offsetting a specified claim, with its amount and origin — not by cash payment. This wording is what replaces the bank transfer. French law requires a neutral third party to certify the offset instead of a depositary certifying funds. Article L225-146 of the Commercial Code first states the general rule — “Les souscriptions et les versements sont constatés par un certificat du dépositaire établi, au moment du dépôt des fonds, sur présentation des bulletins de souscription” — then provides the offset equivalent: releases by offsetting liquid and due claims against the company are certified by the notary or by the company’s statutory auditor — or, where none was appointed, by an auditor specially designated for the purpose. In practice the company’s statutory auditor (commissaire aux comptes), or a notary (notaire), or a court-appointed auditor where the company has none, examines the loan agreement, the transfer trail, the ledger and the accounts, verifies that the claim is certain in amount and already due, and issues the certificate that, in the words of the same article, “tient lieu de certificat du dépositaire” — stands in place of the depositary’s certificate. A foreign owner never meets the certifier empty-handed: send the full loan file — agreement, statements, ledger extracts, prior accounts, corporate approvals — before the appointment, with translations of foreign bank documents where the amounts or the parties need no guessing. The certifier who must chase missing statements for a month is the certifier who finds the inconsistency that blocks the file.
In a SARL, the parallel cash rule in Article L223-32 of the Commercial Code requires cash shares to be paid up by at least one quarter at subscription with the balance within five years, and allows withdrawal of deposited funds by an agent of the company once the depositary’s certificate is established. An offset, being immediate by nature, must cover the subscribed amount in full on the day — the claim backs the whole subscription at once — which is why the exact euro amount of the claim, including whether interest is included, must match the subscription value precisely. A gap of even a few hundred euros between the certified claim and the price of the shares forces an amendment of the resolution and a new certificate. When the loan exceeds the planned increase, the meeting either raises the increase to absorb the full claim or records the surplus as remaining on the current account; when the claim falls short, the subscriber tops up the difference in cash with a matching bank certificate.
Where the advance cannot be made offsettable — disputed amount, unexpired block, missing trail — the fallback is a straight cash top-up or, for an asset, a contribution in kind with an independent valuation: in a SARL, Article L223-9 of the Commercial Code requires valuation on a commissaire aux apports (independent appraiser) report annexed to the articles, and in a SAS Article L225-147 of the Commercial Code imposes appraisers who value contributions “sous leur responsabilité.” Do not dress a doubtful loan as an asset contribution to dodge the liquidity test: the appraiser will ask for the same proof of existence, and a sham requalification compounds the liability.
II. Registering the offset and surviving creditor, partner and greffe challenges
A. Filing the offset increase on the single window: dossier, legal notice and the new Kbis
The vote and the certificate bind the parties; only registration makes the increase enforceable against third parties and visible on the Kbis (the official certificate of existence of a French company). Since January 2023 every amendment passes through the guichet unique operated by the INPI (the Institut national de la propriété industrielle, which runs the single online filing window for all French companies). The file is submitted online by the legal representative — the président of the SAS or the gérant of the SARL — or by a lawyer or accountant holding a mandate. It contains at a minimum: the minutes voting the offset increase, the updated articles (statuts mis à jour) signed and showing the new capital, the subscription form stating release by offset, the auditor’s or notary’s offset certificate, proof of publication of a legal notice (annonce légale) in an authorised journal expressly mentioning release by compensation of claims, and the signatories’ identity documents. The legal notice must state the old and new capital, the registered office and the company number; the mention of offset is what tells creditors how the increase was funded, and omitting it is a classic ground for rejection.
Foreign signatories prepare for the two identity checks that cause most rejections. First, the single-window form requires a valid identity document and, for non-resident managers, proof of address and sometimes a certified translation; a passport expiring next month or an address in a different name bounces the file. Second, powers of attorney signed abroad must be complete: full identification of principal and agent, precise scope covering signature of the updated articles and filing of the offset increase, date, and handwritten or qualified electronic signature. A pasted scan is regularly refused. Where the greffe asks for an apostille or legalisation, have it done before filing: each round trip adds one to three weeks, and the resolution’s timetable keeps running.
Once the greffe validates the file, it updates the Registre du commerce et des sociétés (the Trade and Companies Register, abbreviated RCS), and the amendment is announced in the BODACC (the Bulletin officiel des annonces civiles et commerciales, the official gazette for company registrations, amendments and insolvency notices). The fresh Kbis showing the new capital is then downloadable, and banks, landlords and major customers will demand it before recognising the stronger balance sheet. If the file is rejected, the greffe sends a reasoned refusal citing the missing or inconsistent item — most often a certificate that does not match the subscription amount, articles that still show the old capital, or a legal notice silent on the offset. Correct and refile within the indicated time rather than arguing by email, and keep the rejection, the corrected receipt and the final Kbis together: a bank asked to adjust the company’s rating, or a court asked later whether the offset was completed, will want this chain.
Tax formalities run in parallel and are lighter than foreign owners fear, but they require one question answered before the notary’s clock runs. Acts recording a company’s transformation or capital increase must in principle be registered within one month, while Article 635 of the General Tax Code expressly exempts cash increases and increases by capitalising profits, reserves or provisions. Whether an offset of a shareholder current account follows the exempt cash track in your exact configuration is confirmed with the notary or the accountant at the time of the vote — the answer depends on how the claim and the resolution are characterised — and the confirmation is kept with the file. The point for a foreign owner is to ask before signing, not after a deadline has started running.
B. When the offset is attacked: sham loans, diluted partners and the judge’s control
An offset increase is challenged more often than a cash one, for a simple reason: no fresh money entered, so every sceptic asks whether the loan ever existed. Three challengers appear in practice. The minority partner or the heir who discovers that your old advances became half the capital attacks the dilution: lack of convening notice, breach of preferential subscription rights, or a meeting held abroad without authority in the articles. The defence is procedural regularity — proof that every holder was convened, that rights were respected or lawfully removed with the required reports, and that the vote matches the articles. The creditor of a struggling company attacks the substance: a loan invented or inflated after the fact to absorb losses, backdated agreements, interest conjured to round up the claim. The defence is the four-layer file described above, crowned by the auditor’s certificate: a certifier who verified agreement, transfers, ledger and accounts defeats most sham allegations at birth. The third challenger is the certifier himself, by refusal: an auditor who will not sign because the claim is uncertain or not yet due. That refusal is a protection, not an insult — it tells you the file would not survive a court either. Fix the loan (formalise it, wait for the block to expire, reconcile the ledger) and return, rather than shopping for a lenient signature that a judge will disregard.
The courts control linked operations strictly, and one published decision sets the tone for every rescue that rewrites capital. In a case about a so-called coup d’accordéon — a reduction of capital to zero immediately followed by an increase — the Commercial Chamber of the Cour de cassation held, in its judgment of 4 January 2023, appeal no. 21-10.609, published in the Bulletin: “Il résulte de ces textes que la réduction à zéro du capital d’une société par actions n’est licite que si elle est décidée sous la condition suspensive d’une augmentation effective de son capital amenant celui-ci à un montant au moins égal au montant minimum légal ou statutaire.” In English: a reduction of a joint-stock company’s capital to zero is lawful only if decided subject to the condition that an effective increase brings the capital back to at least the legal or statutory minimum. The court quashed the ruling that had treated a shareholder as stripped of that status after a zero reduction while finding that the follow-on increase had never become effective. Foreign owners running a two-step rescue — write the capital down to absorb losses, then convert their current account to recapitalise — should structure both steps in a single documented sequence, make the reduction expressly conditional on the effective offset increase, and complete subscription, certificate and filing without delay. A conditional chain executed cleanly survives; a zero reduction left dangling while the offset stalls invites annulment.
When you are the harmed party — a minority holder diluted by an offset voted without notice, or a subscriber whose claim was taken while the operation was abandoned — French law offers fast remedies. A short-deadline court application (référé) can suspend the effects of the disputed resolutions before the new shares create irreversible facts, ideally within weeks of discovering the meeting, supported by a bailiff’s record of the register and proof of your unanswered request to participate. An action for annulment then targets resolutions taken in breach of subscription rights or of the full-payment rule, which in a SARL voids the operation outright. Conversely, if the offset fails on its own — the claim proves insufficient, the six-month window expires, or the greffe definitively refuses the file — the subscriber is not left empty-handed. In a SARL, Article L223-32 organises the consequence: where the increase is not completed within six months of the first deposit, the refund procedure applies and any subscriber may demand repayment — and your underlying loan, never validly converted, remains a claim against the company. Keep the subscription funds or the claim untouched until the new Kbis arrives: number every step — subscription opening, closing, certificate, legal notice, single-window filing, Kbis — in a dated checklist shared between you, your lawyer and your accountant. For the loan itself — interest, repayment and tax — our guide on shareholder loans to your own French company: interest, repayment and rescue when cash runs short completes this procedure.
Conclusion
Converting your shareholder loan into capital from abroad is neither a bookkeeping trick nor a mountain of paperwork: it is a sequence — eligible claim, regular vote, independent certificate, complete filing — in which each link protects the next. Lend cleanly all year through a documented current account, verify that the existing capital is fully paid, and convene every holder with their rights respected or lawfully removed. Certify the offset with the auditor or the notary on a file where agreement, transfers, ledger and accounts agree to the euro, publish a legal notice that states the offset, and collect the new Kbis before treating the money as capital. Keep every receipt, certificate and notice for years: they are your defence if a partner, an heir or a creditor calls the loan a sham, and your fastest route to a court-ordered suspension if you are the one who was diluted. Done this way, the money you already sent from London, New York or Singapore becomes French share capital that banks recognise, courts respect and future investors can build on.
Need a quick opinion on your case
Turning a shareholder loan into capital from abroad raises one question per step: is your claim liquid and due, who votes and whose rights survive, which certificate proves the offset, and what the greffe will accept. A thirty-minute call with a lawyer who reads your loan ledger and your articles before the meeting saves months of rejected filings and annulled resolutions.
Call +33 6 46 60 58 22 for a telephone consultation within 48 hours with Maître Reda Kohen and the firm’s team, or write via our contact page. We assist foreign founders and groups with shareholder-loan offsets, SAS and SARL capital increases, filings and disputes, in Paris and across Île-de-France.