How does the formation of a company with a contribution in kind work?

In the case of a non-cash contribution, the capital to be contributed is not in the form of cash but through the contribution of items, receivables or other assets. The depositor receives shares or ordinary shares in return. If the value of the assets contributed exceeds the capital to be paid up, the excess amount can be credited to the contributing shareholder/partner as a claim.

The articles of association must specify the object, its valuation and the name of the contributor and the shares or ordinary shares to which he/she is entitled. The founders must also confirm in writing that all contributions in kind are mentioned in the articles of association and confirm the appropriateness of their valuation.

In order to ensure that the capital is only partially or even fictitiously paid up through the contribution of worthless or overvalued assets, a formation audit by a licensed auditor is required. Only if a company with assets and liabilities is taken over that is obliged to have an ordinary audit must the formation audit be carried out by a licensed audit expert.

Requirements for the contribution in kind

In order for an asset to be contributed as a contribution in kind, it must have a market value and be eligible for capitalization in accordance with the principles of proper accounting. Accordingly, all transferable, balance sheet assets can be considered as an economic substitute for a cash contribution. In cases of doubt, the value of the asset from the company's point of view must be taken into account. Finally, the substance of the contribution must be realizable so that the creditors' liability claim is secured.

In summary, the following requirements can be identified for a contribution in kind:

• Valuability or capitalization: Only assets that have a certain value and can be listed as assets in the balance sheet can be considered.
  
• It must be possible for the company to acquire rights (transferability): In order for the company to acquire a contribution in kind, it must be possible to transfer the corresponding object to the company's assets when the company is founded or the capital is increased. Consequently, there must be no legal obstacles to the transfer (e.g. a contractual prohibition of assignment).
  
• Availability (or unconditional right of entry, e.g. in the land register): The company must be able to dispose of the asset in question immediately and unconditionally once it has been entered in the commercial register.
  
• Realizability: The company must be able to transfer the asset to third parties. This is particularly important when the company is dissolved. The transferred asset must be realizable in order to serve as a liability substrate for the company's creditors. Realizability presupposes the existence of at least a limited market. In addition, the transfer of the asset must be legally permissible and legally valid.
  

Suitable assets in kind are, for example

• Movable property
  
• Land (especially real estate / condominiums)
  
• Easements
  
• Shares, ordinary shares in a limited liability company
  
• Business with assets and liabilities
  
• Patents, trademarks, copyrights (e.g. software)
  

Not eligible for contribution are, for example

• Future claims (e.g. life insurance policy)
  
• Highly personal rights (e.g. residential rights)
  
• Objects of low value (e.g. office supplies)
  
• Components of a property
  
• Participation rights in a general partnership
  
• “Specialist knowledge”/knowledge/skills of a founder
  

Stampa declaration

To be on the safe side, commercial register offices and auditors require the founders to confirm in the “Stampa declaration” that no tangible assets other than those mentioned in the articles of association are being contributed. In order to prevent the capital from being only partially or even fictitiously paid up through the contribution of worthless or overvalued assets, a foundation audit by a licensed auditor is required. Our lawyers and trustees will be happy to carry out your incorporation. As a licensed auditor, we can also audit your contribution in kind. Request a quote online or arrange a consultation.