Contribution administrator

What it means

The contributions administrator is the person the founders appoint to receive and manage paid-in contributions to a company between its founding and its coming into existence, that is its entry in the Commercial Register. The administrator is named in the articles of association or deed of incorporation.

The administrator is usually one of the founders, the future director, or the bank into whose account the contributions are paid. They issue a written declaration that the contributions have been paid to the required extent, and this declaration is attached to the application for registration.

The administrator is responsible for handling the contributions lawfully and passing them to the company once it exists, and may not use them for any other purpose. In-kind contributions, such as assets or receivables, are paid by handing the asset to the administrator or in another way prescribed by law.

How it works in practice

When setting up a company, we agree with clients who will be the contributions administrator and how the contribution will be paid. It is simplest when the future director acts as administrator and the money is paid into an account that becomes the company’s business account once it exists.

For small single-shareholder s.r.o.s the practice is straightforward: the shareholder is also the director and the administrator, pays in the contribution and signs the declaration. Even so, there must be proof of payment, such as a bank statement or cash receipt.

Once the company exists, the administrator hands over the contributions, and share capital and the cash in the bank or till are recorded in the accounts. If incorporation costs were paid from the contributions in the meantime, they must be backed by documents so it is clear where the money went.

What to watch out for

The administrator’s declaration must be true. An administrator who confirms payment of a contribution that was not actually paid is liable to creditors for the damage and in serious cases may commit a criminal offence. An unpaid contribution tends to surface later, for example in an audit or bankruptcy.

A common mistake is withdrawing the paid-in money and using it privately before the company comes into existence. This defeats the purpose of the contribution, and the company’s books then show a receivable from the shareholder that must be resolved.