Do you want to increase the registered capital? You have some new shareholders who would like to contribute money to the fund of your company? Do you want to receive the bank funding? Or maybe you need an operating license? Please contact us if you have any questions regarding the increase of the registered capital!
The amount of the registered capital represents the funds of the shareholders at stake.
Shareholders can pay out the profit as dividends; however, the registered capital – only by reducing its amount. If the company has long-term liabilities, the registered capital can only be reduced with the consent of all the creditors. If the company has uncovered losses, the registered capital shall not be reduced at all.
The law also stipulates that the company’s equity may not be less than half of the registered capital, which may occur in the case when the company has losses. In such a way, the law aims at protecting the rights of creditors.
Therefore, the higher the amount of registered capital, the more creditors of the company are protected, and the shareholders bear more risks.
The registered capital is increased in the following cases:
- In order to ensure compliance with the company’s financial obligations.
- In order to attract additional funds for business development.
- In order to improve the company’s financial performance.
- When increasing the registered capital, the ratio between the equity and debts improves, as well as the implementation of the short-term liabilities.
- The increase of the registered capital is often made in order to receive bank financing.
- The increase of the registered capital may be made in order to obtain a license for a certain activity, when the licensing conditions establish minimum requirements for the authorized capital.
- If the shareholders lend to the company when financing the business and the company fails to repay the debt, then the company can increase the registered capital, and the shareholders may waive the debt instead of the contributions. The same procedure can be applied to other creditors of the company, who may thus become the shareholders of the company.