Share capital is often treated as a mere incorporation formality. We deposit the minimum, sign the statutes, and move on to operations. This flippancy is a governance error. The capital is the first message addressed to bankers, to suppliers, to foreign partners, and, if applicable, to the judge. A weak message costs dearly.
A legal floor that says nothing about solidity
The Commercial Companies Code (law no. 2000/93 of November 3, 2000) sets entry thresholds. For a joint-stock company, the minimum capital is 5,000 dinars (Article 160), with at least a quarter paid up at incorporation. It rises to 50,000 dinars for a company that raises funds from the public. Practical guides cite 1,000 dinars for an LLC (SARL).
These amounts are entry conditions. No bank reads into them an ability to absorb losses, to sustain an operating cycle, or to support an investment. The manager who stops there confuses compliance with credibility.
Share capital and equity
Capital is a fixed statutory figure. Equity is a moving accounting reality: capital, reserves, retained earnings, result. Losses gnaw at the latter and leave the first intact on paper. This is where the legal risk arises.
Article 388 of the Code organizes this alert. When losses bring equity below half of the capital, an extraordinary general meeting must decide on continuation or dissolution. The meeting that has not pronounced dissolution within the year following the notice of losses is obliged to reduce the capital.
The text does not sanction the weakness of the initial capital, but the erosion that sets in when the capital was too tight from the outset. The practice of listed companies gives it a public image.
What the banker sees
