Increase of the capital (authorized fund)
An increase in the authorized capital of a business entity may be made by decision of the founder or the general meeting of participants. The reasons for increasing the authorized capital may be the need to introduce a new participant, provide financial assistance to the company, transfer property, etc. However, the legislation does not provide for the obligation to economically substantiate the decision to increase the authorized capital.
DECISION TO INCREASE THE AUTHORIZED FUND
The decision to increase the authorized capital is taken by the founder of the organization (if he is alone) or by the general meeting of the founders, about which the corresponding minutes of the meeting are drawn up. The decision must be made by a qualified majority of votes – more than 2/3 of the number of participants.
There are also a number of situations when the size of the authorized capital of a company must be changed regardless of the will of the participants – in accordance with the requirements of the legislation (as a rule, an increase in the authorized capital is a condition for carrying out a certain type of activity).
INCREASE IN THE AUTHORIZED FUND OF LLC
The decision to increase the authorized capital is taken by the general meeting of participants.
Ways to increase the authorized capital:
at the expense of society;
making additional contributions by participants: all, several or one;
third party contribution.
INCREASE IN THE AUTHORIZED FUND OF CJSC
An increase in the authorized capital of a CJSC can be carried out in 2 ways:
Issue of additional shares.
Additional shares can be issued using funds of the company, shareholders’ funds, or with the involvement of other investments. In this case, the par value of additional shares is equal to the par value of the existing shares.
Increase in the par value of shares.
The par value of shares can be increased at the expense of the company or shareholders’ funds.
INCREASE IN THE AUTHORIZED FUND OF A UNITARY ENTERPRISE
The increase in the authorized capital of the UP can be made after the complete formation of the previously established authorized capital. The decision to increase is made by the founder.
INCREASE IN THE AUTHORIZED FUND OF JSC
Similarly, with CJSC in OJSC, the decision to increase the authorized capital is made by the general meeting.
The increase is carried out due to:
issue of additional shares;
increasing the par value of shares.
At the same time, shares cannot be issued in order to cover losses of the company resulting from its activities.
PROCEDURE FOR INCREASING THE AUTHORIZED FUND
The increase in the authorized capital of the company is carried out in the following order:
Verification of the need to obtain the consent of the antimonopoly authority.
It is necessary first of all to pay attention to whether the financial performance of the organization or other criteria fall under the regulation of the antimonopoly authority.
Initiation of the issue of increasing the authorized capital.
This can be either an initiative of a member of the company or a statement of a third party’s intention to contribute.
Consideration of an application for contribution.
The authorized body of the company considers the application of a third party about the possibility of making a contribution.
Appointment and conduct of the general meeting.
During the general meeting, a vote is taken on the issue of increasing the authorized capital. The voting result is considered positive if a qualified majority of the participants voted for it.
Execution of the decision.
At this stage, a direct increase in the authorized capital is made: the deposit of funds, the transfer of property.
State registration of amendments to the charter.
INCREASE IN THE AUTHORIZED FUND DUE TO IN-CASH DEPOSIT
The authorized capital can be increased by a non-monetary contribution, but its value must be estimated in monetary terms.
Evaluation can be done in two ways:
This method without fail requires an independent examination of the reliability of the assessment.
Conducting an independent assessment.
It does not require additional expertise, and therefore is the preferred method.
CHANGES IN THE CHARTER IN CONNECTION WITH AN INCREASE IN THE AUTHORIZED FUND
The issue of amending the charter is resolved by holding a general meeting of participants. This issue can be resolved both simultaneously with the holding of a general meeting on the issue of increasing the authorized capital, and by a hotel meeting after the decision to increase is made.
The decision is considered adopted if more than 2/3 of the number of participants voted for it.
Changes to the charter are subject to state registration.
If the authorized capital was increased at the expense of a third party, then the period for registering changes to the charter is 2 months.
The deadline for registering changes to the charter, with the composition of participants unchanged, is not limited by law.
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