What is a capital link?
A capital link is a relationship between a shareholder (or partner) and the company in which he or she holds part of the capital.
Company capital
The share capital corresponds to the contributions made by the associates or shareholders at the company's creation, or at the time of successive increases. At the company's inception, each partner makes a contribution in cash or in kind. In return, they receive shares in the company. The capital is one of the main features of the company's articles of association. Each change in capital entails a revision of the articles of association. The bylaws must specify the amount of capital and the number of shares that divide it up.
What's the difference between a partner and a shareholder?
In both cases, the shareholders are the owners of the capital. The difference lies in the company's legal form.
Shareholders: joint-stock companies (Sociétés Anonymes, Sociétés par Actions Simplifiées, Société en Commandite par Actions). Shareholders hold shares.
Partners: Limited Liability Partnerships, Limited Partnerships, General Partnerships, Civil Partnerships. Partners hold shares in the company.
How to identify a company's capital links?
The articles of incorporation always contain information relating to the original contributions: identity of contributors, type of contribution, amounts and number of shares received in return. Subsequently, if the company modifies its capital, the increase or decrease is detailed in the minutes of the general meeting, but the bylaws no longer mention the breakdown of the new amount of capital. Only the number and type of shares are shown. If the shareholders are legal entities, their annual financial statements may contain a list of subsidiaries and shareholdings in other companies, enabling you to cross-check information.
What is the difference between a subsidiary and a participating interest? A subsidiary is defined as a company with a shareholding of over 50%, and a participating interest as a company with a shareholding of less than 50%.
What's the difference between a direct and an indirect link?
A direct relationship is one that links a company directly to its shareholder.
The indirect link refers to the shareholder of the shareholder.
If we consider that the direct shareholder is the "mother", then the indirect shareholder is the "grandmother" or "great-grandmother", depending on the level we go back to. By linking all subsidiaries and sub-subsidiaries to the "ultimate mother" (or Group Head), we obtain a global vision of the group.
What's the point of knowing about capital links?
The first interest in knowing the capital links is to know who decides in the company. Each shareholder, depending on the number and type of shares he owns, is allocated voting rights, giving him powers when collective decisions are made. Knowledge of share ownership and voting rights also makes it possible to determine the beneficial owners. A global view of a group also makes it possible to assess its weight in the economy, to classify its constituent entities into "major accounts" and to gain a better understanding of commercial risk.
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Ellisphere's solution visualizes data on a company's subsidiaries and shareholders, as well as information on group membership.
