You wired tens of thousands of euros from London, New York or Dubai to keep your French company alive, and your French accountant recorded the transfer as a shareholder current account, in French a compte courant d’associé. Now you want that money to strengthen the company permanently instead of sitting on the balance sheet as a debt the company owes you: the bank hesitates to lend while your advance outweighs the equity, a blocked account cannot be touched, or chasing repayment from abroad feels like the wrong fight. French law offers a clean exit from this situation, and it is not repayment. It is conversion: turning your repayable shareholder advance into shares through a capital increase paid by offsetting your claim, in French an augmentation de capital par compensation de créance. Done correctly, the debt disappears, the equity grows, and your past funding becomes a larger stake in the business. Done carelessly, the operation is void, the auditor refuses to certify, or a co-shareholder challenges the new shareholding. This article explains, for a non-French reader running a French SAS (société par actions simplifiée, the simplified joint-stock company most foreign founders choose) or SARL (société à responsabilité limitée, the limited-liability company), why your advance starts life as a repayable loan, when converting it into shares beats asking for the cash back, and the exact procedure to convert it from abroad without leaving France. Where French terms appear, their meaning is given in plain English.

I. Your shareholder advance starts as a repayable loan, not as permanent capital

Before converting anything, you must understand what you built when you wired the money, because the conversion procedure feeds on the legal nature of your claim. French law treats a shareholder who leaves money at the company’s disposal as a creditor of the company: the official government business portal describes the current account as a loan that gives the lending shareholder the status of corporate creditor, with its interest rate, duration and repayment terms set in the articles of association (statuts) or in a written current-account agreement (convention de compte courant). That creditor status is your raw material. Only a genuine, documented claim can later be offset against new shares, and the sections below check that your advance qualifies. If you are still organising the foundations of the company, read first our guide to setting up your French company as a foreign founder, with its bank account, Kbis identity certificate, VAT number and first hire, because the paperwork done on day one decides whether your advance survives every later control.

A. Did your money transfer create a valid shareholder claim

The first question is whether you were entitled to lend at all, and for a foreign founder the answer is normally yes through two different doors. As an individual shareholder or officer, you may advance funds regardless of how many shares you hold and regardless of where you live: the government guidance lists individual shareholders without any minimum holding, alongside the company’s officers such as the gérant (manager) of a SARL or the président (president) of a SAS. A transfer from your foreign personal account to the French company’s account works, provided the transfer reference identifies it as a shareholder advance (avance en compte courant) and not as additional capital, and provided you keep the SWIFT confirmation and both bank statements. The second door is your foreign parent company, if you run the French business through a group. French banking-monopoly law reserves lending to licensed banks but expressly carves out intra-group cash movements: article L. 511-7 of the Code monétaire et financier (the French Monetary and Financial Code) provides that the prohibitions are no obstacle to a company carrying out « Procéder à des opérations de trésorerie avec des sociétés ayant avec elle, directement ou indirectement, des liens de capital conférant à l’une des entreprises liées un pouvoir de contrôle effectif sur les autres », which in plain English means treasury operations with companies linked by capital ties giving one of them effective control over the others. A foreign holding company controlling the French SAS funds it through this door, and the control link should be recited in the treasury agreement so the exception is visibly relied upon.

The second question is whether the advance was documented as a loan, because an undocumented wire invites reclassification. French practice calls for a written convention de compte courant signed between the company and the lender, stating the amount or ceiling, the interest rate or its absence, the repayment terms, and what happens to the balance if the shares are sold. Electronic signature of a PDF exchanged by email is standard practice for founders living abroad. Next comes the related-party procedure, since a shareholder loan is a convention réglementée, a regulated agreement with an insider that must be disclosed to the other shareholders. In a SAS, article L. 227-10 of the Code de commerce (the French Commercial Code) requires that « Le commissaire aux comptes ou, s’il n’en a pas été désigné, le président de la société présente aux associés un rapport sur les conventions intervenues directement ou par personne interposée entre la société et son président, l’un de ses dirigeants, l’un de ses actionnaires disposant d’une fraction des droits de vote supérieure à 10 % », and that « Les associés statuent sur ce rapport. », meaning the auditor or the president reports the loan and the shareholders vote on it. In a SARL, article L. 223-19 provides that « Le gérant ou l’associé intéressé ne peut prendre part au vote et ses parts ne sont pas prises en compte pour le calcul du quorum et de la majorité. », so the interested lender does not vote and their shares are ignored for quorum and majority. An unapproved agreement still produces its effects, but the interested party then bears the prejudicial consequences alone, which is why a founder who is both lender and president should keep the signed agreement and the minuted vote in one file.

The third question is the direction of the balance, and here the rule is absolute: your account must show the company owing you money, never the reverse. In a SARL, article L. 223-21 states that « A peine de nullité du contrat, il est interdit aux gérants ou associés autres que les personnes morales de contracter, sous quelque forme que ce soit, des emprunts auprès de la société, de se faire consentir par elle un découvert, en compte courant ou autrement, ainsi que de faire cautionner ou avaliser par elle leurs engagements envers les tiers. », meaning any loan by the company to its individual managers or shareholders, any overdraft on their account, and any guarantee of their personal debts is void. The same ban reaches the SAS through article L. 227-12, which provides that « Les interdictions prévues à l’article L. 225-43 s’appliquent, dans les conditions déterminées par cet article, au président et aux dirigeants de la société. » Only a credit balance in your favour can be converted into shares; a debit balance is void and must be repaid to the company first. Finally, the borrowing company must file its yearly declaration of loan agreements (déclaration des contrats de prêts, administrative form Cerfa no. 10142) by the results-return deadline, a formality your accountant handles with the liasse fiscale (the annual tax return bundle) but one you should confirm in writing from abroad.

B. Why asking for the cash back is not always the right move

French courts state the repayment rule in the shareholder’s favour. In a decision of 12 February 2025, appeal no. 23-17.483, the Commercial Chamber of the Cour de cassation (the French supreme court for civil and commercial matters) approved the statement 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 », which in plain English means that unless otherwise agreed, any shareholder may demand repayment of their current-account balance at any time, for whatever reason, because the advance is an open-ended loan. The government portal confirms that the company cannot refuse repayment even on grounds of financial difficulty and cannot cap repayment at what its cash position allows; if it truly cannot pay at once, it must ask a judge for time, since article 1343-5 of the Code civil (the French Civil Code) provides that « Le juge peut, compte tenu de la situation du débiteur et en considération des besoins du créancier, reporter ou échelonner, dans la limite de deux années, le paiement des sommes dues. », meaning the court may defer or spread payment over up to two years. The right exists, but exercising it can damage exactly what you built: draining the company’s cash to repay yourself weakens its balance sheet, alarms its bank, and can push a fragile company toward the collective insolvency proceedings (sauvegarde, redressement judiciaire, liquidation judiciaire) recorded at the BODACC (the official bulletin of civil and commercial announcements), where your claim would then queue behind preferential creditors.

Three common situations make repayment the wrong answer even though it is legally available. First, the bank financing the company often requires your advance to be blocked (blocage) as security for its own loan: blocking, decided by unanimous shareholder vote or in a blocking agreement (convention de blocage), suspends your right to demand repayment for the life of the facility, and while blocked the money cannot come home at all. Second, the company’s equity may have shrunk below healthy ratios, with your current account dwarfing the share capital; any serious lender, incoming investor or public tender file reads that structure as fragility, and converting the debt into equity is the standard repair. Third, you may simply prefer ownership to cash: founders who funded the early months often conclude that increasing their stake, rather than withdrawing the funds, matches their long-term position, especially where co-shareholders contributed less cash. In each case the legal destination is the same operation, the capital increase by offsetting your claim, which Section II details. One related trap to clear now: if you sell your shares while the account is still open, the sale price and the account balance are two independent obligations, as the supreme court confirmed in the same 2025 decision, so state expressly in the sale agreement who repays the account and when, or convert the balance into shares before the sale so the buyer acquires a clean company.

II. Turning your shareholder advance into shares by offsetting your claim

Conversion means the company issues you new shares and you pay for them not with fresh cash but by cancelling what the company owes you. Lawyers call this liberation by compensation (libération par compensation), and company law treats it as a cash subscription like any other: article L. 225-128 of the Commercial Code provides that new capital securities « sont libérés soit par apport en numéraire y compris par compensation avec des créances liquides et exigibles sur la société, soit par apport en nature, soit par incorporation de réserves, bénéfices ou primes d’émission », which in plain English means they are paid up either in cash, including by offsetting claims that are liquidated and due against the company, or by contributions in kind, or by capitalising reserves, profits or premiums. Three words carry the whole operation: the claim must be liquide (fixed in amount), exigible (currently due, meaning repayable on your demand), and yours against the company. Your on-demand shareholder advance is the textbook example, which is why the conversion route fits foreign founders so well. The government business portal confirms the mechanism for both company forms, stating that the subscription amount may be paid either by a money transfer or by offsetting a claim the shareholder holds against the company, and it adds the threshold condition examined below: before any cash capital increase, the existing share capital must already be fully paid up (capital entièrement libéré).

A. When converting your advance into shares beats taking the cash

Conversion wins whenever the company’s problem is structure rather than liquidity. If the balance sheet shows high shareholder debt and thin equity, the bank’s credit committee reads risk; after conversion, the same money sits in equity, the debt disappears, and borrowing capacity returns. If your advance is blocked as security for a bank loan, conversion ends the blockage cleanly, provided the lending bank agrees to release the blocking agreement in exchange for the stronger equity, a negotiation to run before any shareholder vote rather than after. If the company has lost part of its equity and the shareholders want to rebuild it without wiring fresh funds from abroad, converting existing advances is faster and cheaper than a cash round trip through two banking systems. And if relations with a co-shareholder are settled by rebalancing stakes, issuing yourself the new shares for your converted claim adjusts the percentages with a clear price, the nominal value plus any issue premium (prime d’émission), instead of reopening old arguments about who funded what.

The tax side usually favours conversion over a strained repayment followed by a fresh cash subscription. As long as the advance bears interest, the company deducts it only within the legal ceiling: article 39, 1-3° of the Code général des impôts (the French General Tax Code) allows deduction of interest paid to shareholders « dans la limite de ceux calculés à un taux égal à la moyenne annuelle des taux effectifs moyens pratiqués par les établissements de crédit et les sociétés de financement pour des prêts à taux variable aux entreprises, d’une durée initiale supérieure à deux ans. Cette déduction est subordonnée à la condition que le capital ait été entièrement libéré. », meaning capped at the banks’ average variable business-loan rate and only if the capital is fully paid, with the tax administration publishing the exact reference rate for each closing date in its binding BOFiP doctrine (Bulletin officiel des finances publiques). Interest above the ceiling is a non-deductible expense tested account by account. Conversion stops the meter: once the claim becomes shares, no further interest accrues, no ceiling computation is needed, and no withholding question arises on the lender’s side, because no interest is paid. For a related-company lender, the parallel ceiling of article 212, I applies, limiting deductible interest to the article 39 rate or the provable independent-lender rate, since interest on sums left at the enterprise’s disposal by an associated enterprise is deductible « Dans la limite de ceux calculés d’après le taux prévu au premier alinéa du 3° du 1 du même article 39 ou, s’ils sont supérieurs, d’après le taux que cette entreprise emprunteuse aurait pu obtenir d’établissements ou d’organismes financiers indépendants dans des conditions analogues ». None of this machinery follows the money into equity: the new shares simply join your holding at their subscription price, which becomes your acquisition cost for any future sale.

Conversion is not always available, and the exclusions should be checked before spending on paperwork. If your advance is currently blocked under a convention de blocage, it is arguably not due (exigible) while the block runs, so the bank’s written release must come first. If the company’s existing capital was never fully paid up, the increase cannot proceed until the unpaid balance is called and paid: the portal states this as a hard precondition for both SARL and SAS, and the company’s accountant certifies it. If your claim’s amount is disputed, for instance because part of the transfers were booked as something else or because interest calculations diverge, fix the statement of account (arrêté de compte) and have both sides sign it before starting, because the certifying auditor will refuse an uncertain figure. And if the articles contain approval clauses (clauses d’agrément) or the increase would dilute a protected co-shareholder, address their position in advance: article L. 225-132 gives shareholders a preferential subscription right (droit préférentiel de souscription) in proportion to their holding, providing that « Les actionnaires ont, proportionnellement au montant de leurs actions, un droit de préférence à la souscription des actions de numéraire émises pour réaliser une augmentation de capital. », although shareholders may individually waive it. In a founder-owned SAS the articles usually organise these rights freely, so read the statuts first and collect the waivers with the convocation papers.

B. The conversion procedure step by step without travelling to France

Step one is freezing the claim into a certified statement. The company’s management draws up an account statement (arrêté de compte) showing your exact credit balance, principal plus any accrued but unpaid interest you choose to convert, and the statutory auditor (commissaire aux comptes) certifies it as exact. The regulatory text is short and mandatory: article R. 225-134 of the Commercial Code states that « En cas de libération d’actions par compensation de créances sur la société, ces créances font l’objet d’un arrêté de compte établi par le conseil d’administration ou le directoire et certifié exact par le commissaire aux comptes. », meaning the claims are set out in a statement drawn up by the board and certified exact by the auditor. In a SAS, the president or the decision-making body designated by the articles draws up the statement instead of a board. If the company has no statutory auditor, one must be appointed or designated for the operation, since the greffe (the commercial court clerk’s office that registers companies and issues the Kbis) will reject a compensation file without certification. From abroad, you sign the statement by electronic signature, return it with your transfer proofs, and keep a copy: this single page is the document every later control will ask for first.

Step two is the shareholder decision, taken under the majority rules of your company form and articles. The meeting approves the principle of the increase, its total amount, the number and price of the new shares, the waiver or exercise of preferential subscription rights, and the liberation of your subscription by offsetting your certified claim. In a SARL, statutory amendment majorities apply, with the portal recalling two-thirds of the shares held by present or represented shareholders for companies formed after 4 August 2005; in a SAS, the articles designate the competent body and majority, and unanimity is required only where the articles impose it or where the nominal value of existing shares is increased. Record the decision in signed minutes (procès-verbal), attach the certified statement and your subscription form (bulletin de souscription) mentioning payment by compensation, and have the president or manager sign the amended articles. Where the increase follows the regulated-agreement logic because you sit on both sides of the table, keep the auditor’s special report and the vote in the same bundle: the paper that proves the price was fair protects the operation against later challenges from a co-shareholder or a future insolvency practitioner.

Step three is registration, and here compensation is simpler than a cash increase: no bank deposit and no depositary certificate (certificat du dépositaire) are needed, because the certified statement stands in their place. The file goes through the single online business formalities portal (guichet unique, operated with the INPI, the French intellectual-property and business- formalities institute) to the greffe: minutes of the increase, amended articles, certified claim statement, subscription form, proof of publication of the legal announcement (annonce légale), and the registry forms. The greffe issues the updated Kbis showing the new capital, and the increase is published at the BODACC. Diary three follow-ups from abroad: confirm the Kbis mentions the correct new capital figure, confirm the shareholder register (registre des mouvements de titres) records your new shares with their numbers, and instruct the accountant to close your current account for the converted amount, transfer any unconverted remainder to a fresh sub-account, and stop accruing interest on the converted part from the subscription date. If the operation forms part of rebuilding equity after losses, the same file can carry the accompanying decisions, but keep each decision’s majority and wording distinct so a defect in one does not contaminate the other.

Conclusion

Your shareholder advance began as a lifeline wired from abroad, and French law lets you choose its ending: demand it back at any time as the repayable loan it is, or convert it into shares and make it permanent capital. Conversion by offsetting your claim suits the moment when the company needs strength rather than cash, when a bank requires cleaner equity, when a blocking agreement has frozen repayment, or when you prefer a larger stake to a wire home. The recipe holds in four verified links: a genuine credit claim documented as a loan, a certified statement of its exact amount, a shareholder vote that respects subscription rights and majorities, and a registry file where the auditor’s certification replaces the bank certificate. Assemble those four pieces before anyone signs, check the articles for approval clauses and the bank for any blocking release, and the money you once lent the company becomes the shares that prove you built it.