How to increase the capital of your company?

How to increase the capital of your company?

Increase company capital

Why increase the capital of your company? Well, there are two reasons: either for the financial strengthening of your company or for avoiding debt. Since your starting capital is rarely high, you can, once your business has started, need to increase it, to reassure your investors or your banker for example. Two options are available for you to increase your capital: sell new shares to partners (old or new) or add to your share capital the share of profits set aside.

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What are the conditions for the capital increase?

Who can make that decision? As surprising as it may seem, in addition to the partners in your company, third parties can participate in this operation! Compared to the underwriters, pay attention to three things:

How to increase the capital of your company?

1.Take back your articles of association, they may mention if certain partners have a preferential subscription right, if they can subscribe in priority to the new shares.

2.If you decide to collect new partners, your decision must be validated by the general meeting, in accordance with the conditions stipulated in the articles of association.

3.If the buyer purchases new shares through his or her common property with his / her spouse, the latter can claim the status of partner for half of the subscribed units. The buyer must, therefore, inform his spouse and his associates of the nature of the funds contributed. A spouse who is not interested in the title of a partner may waive this right in writing.

Attention: the partner’s status for the spouse is also valid for the PACS for the undivided property.

How should the increase decision be made?

When you decide to increase the capital of your company you amend the statutes, and must, therefore, take this decision in Extraordinary General Assembly. On the other hand, the decision-making procedures differ according to your statutes, and the nature of the increase.

How to increase the capital of his company?

How to increase the capital of your company?

You have three choices :

1.Cash contribution :

This solution is preferred when the buyer wants to manage a company without dismissing the partners already present. Conversely, it can buy back all the shares to refinance a company that seems under capitalized.

2.Contribution in kind :

The company is financed by the contribution of assets (goodwill, customers, premises, etc.)

3.By incorporating the reserves or current accounts of partners :

That is, by making a transfer from the account serving as a reserve to the account serving as capital.

Formalities:

How to increase the capital of your company?

If you wish to change the capital of your company, you have the obligation to publish a legal advertisement.

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