Shareholders' equity
Corporate financing

Shareholders' equity corresponds to the initial capital contributed by shareholders plus the following items :

• retained earnings (reserves and retained earnings), but also reduced by losses incurred ;

• investment grants ;

• provisions that do not correspond to a real risk; the creation of such "regulated" provisions is sometimes authorized on a tax-free basis;

• issue premiums recognized when shares are issued in excess of their par value ;

• merger premiums recognized on asset contributions at a higher value than the par value of the shares created on this occasion.

The non-distribution of a portion of profits increases the company's equity. Self-financing is calculated by adding the depreciation charge to the undistributed portion of earnings. This reflects the gradual loss in value of fixed...