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The share capital often becomes insufficient for the company to pursue its purposes; an insufficiency which can be overcome through the mechanism of shareholder loans.

The shareholder loan agreement is a loan in cash or other fungible thing given by the member to the company, which becomes bound to return it.

The loan must be permanent in nature, with a reimbursement period of greater than one year.

The contract need not be written. Its validity does not actually depend on any special requirements.

The execution of shareholder loan agreements does not need to be provided for in the articles of association and is not subject to prior resolution of the members. Unless the articles of association provide otherwise, no member is required to make a shareholder loan, which is optional, and based on an agreement between the company and the member who makes the loan.

Reimbursement must be made in the contracted period, or according to a term defined by a law court.

Any real guarantees provided for repayment are null and void.

Members holding outstanding shareholders’ loans cannot file for bankruptcy, based on such loans.

 

In the event of bankruptcy or winding-up:

  • The debts of the members to the company cannot be set off against the debts of the company arising from shareholders loans;
  • Shareholder loans can only be repaid after the company´s debts with third parties have been entirely settled.

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