A shareholder current account records the sums a shareholder leaves at the company's disposal, or owes it. It is a flexible financing tool, faster to set up than a capital increase and repayable in principle on demand, which is why small and mid-sized companies use it heavily.
It is not share capital. The shareholder remains a creditor of the company rather than acquiring additional rights, and the balance can be repaid without any corporate formality. Nor is it an intercompany loan in the strict sense: there is often no maturity, no schedule and, in many cases, no written agreement, which is precisely where the exposure begins.
French rules impose two constraints that are frequently overlooked. Interest paid to a shareholder is deductible only if the share capital is fully paid up, and only up to the annual average rate on variable-rate corporate loans of over two years published each quarter. Interest above that ceiling is added back. Second, a debit balance, meaning the company lends to its shareholder, is prohibited for directors and shareholders in an SARL or SA under the Commercial Code and can constitute misuse of company assets.
In a group context the account is also the practical vehicle of intragroup financing, which brings it into the same reciprocity requirement as any other flow: the balance recorded by the company must mirror the balance recorded by the counterparty, and both must be justified in reciprocal accounts before consolidation.
The recurring difficulty is that these accounts move constantly and are rarely documented movement by movement. Justifying a balance at close means rebuilding a history nobody kept. Closing data reliability starts here, and the intercompany flow reconciliation agent keeps both sides aligned continuously rather than at year end.
