Changing the authorized capital size

Changing the authorized capital size

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Changing the authorized capital size

Changing the authorized capital size is an important corporate procedure that reflects a company’s flexibility and adaptability to changes in its financial and strategic planning. This process determines the company’s ability to adequately respond to new requirements and opportunities arising in the modern business environment. In this context, changing the authorized capital size becomes a strategic tool for achieving financial flexibility and optimizing business processes.

About authorized aapital

Authorized capital is a fixed amount of money that defines a company’s financial framework, ensuring stability and readiness to assume financial obligations. It sets the limits of shareholders’ liability and guarantees the company’s financial stability.

About amending the articles of association

Amending the articles of association is a process during which owners or founders of the company make changes to its fundamental founding documents. This procedure may include changes in the authorized capital size, business purposes, governance bodies, and other provisions that regulate the organization’s functioning. Amending the articles of association allows adapting the company’s structure and strategy to changing conditions and business needs.

Procedure for amending the authorized capital of a company: legal aspects

The procedure for amending the authorized capital of a company includes several key legal aspects:

  • Development of a resolution to change the authorized capital size that complies with legal requirements and founding documents.
  • Conducting general meetings of members (for limited liability companies) or shareholders (for joint-stock companies) to approve the resolution on changing the capital.
  • Determining the new size of the authorized capital and the quantity of new shares.
  • Valuation of contributions by shareholders participating in the capital increase.
  • Preparation and submission of the necessary documents to the relevant company registration authority to formalize the changes to the articles of association.
  • Waiting for and obtaining the registration certificate from the registration authority confirming the changes to the articles.
  • Notifying all relevant parties and the public about the changes in the articles and taking all necessary actions for their consideration.

Importance of changing the authorized capital size for business development

Changing the authorized capital size is crucial for business development, as it allows the company to adjust its financial structure to changing conditions and strategic needs. Increasing the authorized capital can provide additional resources for investments and expansion, while decreasing it can optimize the company’s financial scope. This process creates flexibility in financial planning, contributing to more effective management and achieving strategic goals.

Procedure for increasing the Authorized Capital: steps and requirements

The procedure for increasing the authorized capital includes the following steps and requirements:

  • Preparing a resolution to increase the authorized capital.
  • Organizing general meetings of shareholders to approve the capital increase (if required by the articles of association).
  • Determining the new size of the authorized capital and the quantity of new shares.
  • Assessing the property contributions of shareholders participating in the capital increase.
  • Preparing all necessary documents, such as resolutions, meeting minutes, new articles of association if necessary.
  • Submitting the documents to the relevant registration authority to formalize the capital increase.
  • Waiting for and obtaining the registration certificate confirming the capital increase.
  • Informing shareholders and the public about the capital increase and taking necessary actions for their awareness.

Methods of contributing additional authorized capital

Contributing additional authorized capital can be done through various methods, depending on the specific situation and company’s conditions. Some of the main methods include:

  • Issuing and selling new shares to existing or new shareholders.
  • Converting debt instruments, such as bonds, into new shares.
  • Contributing new assets or property as authorized capital.
  • Utilizing the reserve fund to increase the authorized capital.
  • Allocating a portion of the company’s profit to the authorized capital.
  • Attracting new cash contributions in exchange for the issuance of new shares.
  • Using financial instruments, such as loans or other forms of debt capital, that can be converted into authorized capital.

Dextra Law is ready to provide legal support for changing the authorized capital size of your company. Make changes to your authorized capital with the assistance of our qualified professionals.

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