Capital increase is a very common term among entrepreneurs and investors. Next, we explain in detail what it is, the forms that exist and what are the basic steps to carry it out.
What is a capital increase?
Capital increase, as its name suggests, is the increase in the share capital of a company. It consists of a financial operation to increase a company's own resources.
The reasons for needing a capital increase can be:
- Make new investments
- Need funding to grow and have significant debt. Through a capital increase, the amount of debt could be reduced and be in a better position to apply for financing.
- Being able to pay dividends through shares
What forms of capital increase are there?
To increase resources, companies have three different ways:
- Issue new shares in the company. Investors who want to purchase a share must pay an issuance premium.
- Increase the nominal value of existing shares The partners who are already part of the company provide the new capital.
- Through the Reserve charge or benefits not distributed by the company. Shareholders don't have to provide capital, but they do receive new shares.
What are the types of capital increases?
Depending on their nature, there are several types of capital increases:
- Dinerarias. Shareholders pay cash to the company.
- Not monetary. Shareholders increase the company's capital by providing assets. It's common in limited companies.
- For credit compensation. The company's debt is liquidated with the delivery of equity shares. A report has to be submitted.
- Charged from benefits or reservations.
Depending on the money provided, we found an increase in capital:
- At par. New shares are issued at their nominal value, that is, at the initial price of the share when the company was created.
- About the pair or with an emission premium. Investors participating in the capital increase will have to contribute an additional amount to the initial price of the share called the issue premium.
- Liberated. The investor does not need to pay any amount, since the extension will be carried out with the company's reserve charge.
What are the steps to do a capital increase?
The process for expanding a company's capital must follow a series of formalities.
First, you have to modify the company statutes. The approval of the General Meeting of Shareholders or the Board of Directors is required if the company is a public limited company. As the company's stock numbers change, the value of the shares and how the shares are divided, it has to be reflected in the new statutes.
In the development of the capital increase, the shareholder meeting must decree the new value of the shares and whether the former shareholders will have a preferential right. Any decision made must be documented in the reports.
To finalize the process and incorporate the extension into the statutes, the documents must be brought before a notary so that they appear as a public deed.
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