Subscribed capital receivable

What it means

Subscribed capital receivable represents the part of shareholders' contributions that they have committed to pay in but have not yet paid. It arises when a company is founded and when share capital is increased. In the balance sheet it is shown on a separate line at the top of assets, apart from ordinary receivables.

In a limited liability company, at least 30 % of each cash contribution, and in total at least half of the minimum share capital, must be paid before registration in the commercial register. Shareholders pay the rest within the period set by the articles of association, but no later than five years. Similar rules with a shorter deadline apply to a joint-stock company.

Until the contribution is paid, the shareholder is liable for the company's debts up to the unpaid amount entered in the commercial register. Creditors can therefore turn directly to the shareholder. Paying the contribution in full ends this liability, so it is in the shareholder's interest to have the change registered.

How it works in practice

When founding a company, contributions are paid into a bank account or to a contributions administrator, who confirms payment with a declaration. A receivable from the shareholder and share capital are recorded at the same time. On payment the receivable falls and the money appears in the bank account. For a non-cash contribution the receivable is settled by handing over the asset.

The unpaid part must be tracked and shareholders reminded to pay on time. If a shareholder fails to pay even within an additional period, the general meeting may, under the conditions of the law, exclude them from the company. With several shareholders it is therefore wise to set a clear payment schedule in the articles.

Once the contribution is paid in full, the company files for an amendment in the commercial register, updating the extent of payment. Only then is the shareholder's position fully clear to third parties. Proof of payment, meaning bank statements or the administrator's declaration, should be kept.

What to watch out for

Companies sometimes show an unpaid contribution as cash in the till even though the shareholder never paid it. Such a state is fictitious, distorts equity and liquidity, and in an audit or bankruptcy leads to liability for the director. An unpaid contribution must remain a receivable until the money really arrives.

Be careful with set-off too. A shareholder generally cannot set off the obligation to pay a contribution against its own claim on the company, for example from a loan, unless the law allows it. For capital transactions with shareholders we therefore recommend checking in advance whether the chosen approach is permissible.