Capital: practical guides and steps

Capital refers to the resources that partners contribute to their company. It funds the launch and reassures banks and suppliers. This page helps founders and managers size, increase or reward these contributions.

Capital under the companies code

In 2019, the Code of Companies and Associations changed the rules. The SRL no longer has any minimum capital. Instead, it must hold sufficient initial equity. The financial plan exists precisely to show this. The cooperative company also works without capital. By contrast, the SA keeps minimum capital of EUR 61,500.

In other words, the SRL protects its creditors in a different way. Before any distribution, it applies two tests. The net asset test checks solvency. The liquidity test checks whether the company can pay its upcoming debts. You can read the Code on the Belgian Official Gazette website.

To compare legal forms, read our comparison of the SRL and the SA. Then prepare the mandatory financial plan. If the cooperative model appeals to you, discover the cooperative company.

Types of contribution

A partner can contribute several kinds of assets. Each one follows its own rules.

• A cash contribution goes through a blocked bank account.
• A contribution in kind, such as a vehicle or a business, calls for an auditor's report.
• A contribution of skills or work remains possible in an SRL.

Each contribution entitles the partner to shares. However, an overvalued asset distorts the balance between partners. Therefore, set its value with care.

Shares themselves also offer flexibility. In an SRL, the articles can create shares without voting rights or with different rights. This freedom helps, for example, to welcome an investor without losing control. Still, keep the structure simple at the start. Each extra class of shares adds clauses to the articles. You can always refine it later, when new partners join.

Changing the capital over time

Needs change as the business grows. A company can then raise fresh funds. A capital increase relies on new contributions or on incorporating reserves. Conversely, a share buyback can reduce the number of shareholders. Finally, moving from an SRL to an SA means raising the minimum capital. Our article on converting the legal form explains this stage.

Capital and tax: the levers

Equity also unlocks tax benefits. For example, the risk capital deduction lowers the taxable base of some companies. Our article on notional interest explains the mechanism. On the investor side, the tax shelter rewards individuals who buy into a young company.

How much should you plan at the start? No magic figure suits everyone. It all depends on investments, cash needs and planned loans. A costed business plan thus helps set a realistic amount. Above all, thin capital can expose founders to liability if bankruptcy follows quickly.