What is the role of the contribution auditor?
When a partner contributes an asset other than cash to a company, they are making a contribution in kind. Such contributions may include, for example, securities, a business, equipment, real estate, an intangible right, or a sole proprietorship.
The contribution auditor reviews the information provided, evaluates the valuation methods, and determines the value assigned to the assets. The auditor’s report provides the partners and third parties with an independent assessment of the transaction.
Is the designation always required?
The general rule is to appoint a contribution auditor. For certain types of business entities, however, the partners may unanimously decide not to appoint one if the legal conditions for an exemption are met.
The review must be conducted on a case-by-case basis: the legal form, the nature of the transaction, the unit value of the contributions, and their proportion of the capital all influence the analysis.
What documents should you prepare?
- draft articles of incorporation or current articles of incorporation;
- a detailed description of each asset contributed;
- proof of ownership;
- valuation method and assumptions used;
- annual financial statements or financial reports when a business or securities are contributed;
- draft contribution agreement, if any;
- legal and tax considerations that are helpful for understanding the transaction.
How is the mission going?
The commissioner verifies the nature of the mission, its independence, and the availability of the necessary information.
It examines the property, the rights associated with it, the valuation methods, and the risks affecting its value.
Supporting documentation or additional explanations may be requested.
The report presents the audit procedures and the conclusion regarding the value of the contributions.
FAQ
Does a contribution of securities require a contribution auditor?
This constitutes a contribution in kind. The requirement for designation must therefore be evaluated in light of the corporate form and the applicable exemption conditions.
Does the commissioner choose the value instead of the partners?
He appreciates the value proposed and the methods used. His role is not to negotiate the financial terms between the parties, but to reach an independent conclusion.
How much time should I set aside?
The processing time depends on the nature of the asset, the quality of the valuation, and the availability of supporting documents. A simple, complete application can be processed more quickly than a complex contribution of securities or business assets.