Share capital

The share capital corresponds to all the contributions made during the creation business by shareholders or members.

In the course of social life, social capital may be subject to increase (either by new contributions or by incorporation of reserves) or by reduction (in the event of losses or resumption of contributions).

Where the amount of equity becomes less than half of the share capital, the business shall implement a specific procedure.

Reserves

Reserves are retained earnings, kept at the disposal of the business and assigned to destinations determined by the general meeting of the shareholders. In particular, the reserves help to strengthen the financial situation of the business.

There are different types of reserves:

• Legal reserve : this is a reserve obligatory provided for by law. It shall consist of a levy of at least 5% realized on the profit of each financial year. This levy ceases to be compulsory when the legal reserve reaches 10% social capital. This reserve cannot be distributed.
• Statutory reserves : these are reserves prescribed by the statutes business. At the general meeting at which the annual accounts are closed, the general body responsible for distributing the profits must put them in reserve. Because of its binding nature, the constitution of such reserves is rarely provided for in the Statute.
• Optional reservations : after allocation to the statutory reserve and, where appropriate, to the statutory reserve, the statutes often grant the ordinary general meeting the right to deduct sums from the profits of the financial year for a specific purpose. These sums may be used for the discharge of losses, the distribution to members by decision of the meeting, the increase of the share capital (by incorporation of reserves) or the redemption of shares or shares.

Carry Forward Again

At the end of the financial year, members have six months to approve business accounts and decide on the allocation of any profits (e.g. dividend distribution or set aside).

Carry-forward allows partners to to defer the allocation of all or part of the profits next fiscal year. In other words, the business may decide to to set aside profits to guard against future losses. Another positive carry-over is a sign of prudent management.

Issuance premiums

The issue premium is akin to a admission fee paid by new members (or shareholders) in connection with a capital increase.

On the day of a capital increase, business is normally better value only when it was created. Therefore, the real value of its securities (their value on the day of the capital increase) is greater than their nominal value (their initial value when the business was created).

It would appear ‘unfair’ for a new partner to be able to enter the capital at that time, by contributing an amount similar to what was contributed at the time of incorporation, when the value of the business has changed.

Thus, the issue premium allows the real value of the business to be taken into account on the day the new securities are issued. She's coming to compensate for this difference to put the new and older associates on an equal footing.

Its amount is calculated from the following formula: (Real value - nominal value) x Number of securities = Issuance premium.

In order to calculate the amount of the issue premium, it is essential that thevaluation of the business.

Investment grant

The investment grant is a financial support for the business by a private or public institution (usually a local authority). It is used to support activity over the long term or to finance investments such as the purchase of equipment or a vehicle (e.g. the ecological bonus).

The investment grant is awarded on a final basis, the business has no obligation to pay it back.

In accounting, the investment grant is included in the accounting result at the same rate as depreciation of the good she financed.

To obtain a grant, the business must complete a grant application dossier with the local authority. The application shall contain the following documents:

• Overview of the company
• Presentation of the investment project
• Investment financing plan
• Forecast balance sheet

State aid and local authorities database

Outturn for the financial year

The result of the financial year shall be consequence of activity business.

It matches the change in equity between the beginning and end of the accounting year. In other words, the accounting income in a year is the business’s turnover (what it has received) less all the expenses associated with its activity (what it has received).

The result of the business year can be expressed in two ways:

• By a profit, the business made money (increased equity)
• By a loss, business lost money (lower equity)

The profit or loss for the financial year shall appear in the profit or loss account.

Regulated provisions

Conventionally, a provision is an accounting statement of probable risk. Its function is to anticipate a future burden on the company, the amount of which is not yet definitively known.

One regulated provision is accounted for, not because it arises from a risk, but because it corresponds to tax provisions.

The various regulated provisions are as follows:

• Provision for price increase : during a increase in raw material prices or goods of more than 10% over one or two successive years, the provision allows the company to reduce its taxable profit to take into account this financial surplus and thus facilitate the financing of stocks.
• Provision relating toderogating depreciation —It enablesdepreciate more the fixed assets in the first few years of use, this encourages companies to invest more.
• Provision for investments : businesses that have established a profit sharing for their employees can provision the part exceeding the legal limit. The provision allows the purchase of a fixed asset within one year of the end of the relevant accounting year.

Regulated provisions are set out in indebted the balance sheet under the heading of equity. They are considered unpaid reserves. This means that when the business restarts provisions, it will increase its profit by a certain amount, which will then be taxable.