How to increase the share capital in a limited liability company?
Increasing the share capital is a popular form of financing the company. The selection of procedure and manner of making the increase, as well as the formalities connected with it, are not always clear enough for the partners.
Basically, the regulations provide for two types of increase – by changing the articles of partnership and – without changing the articles of partnership.
Increase by changing the articles of partnership
When the articles of partnership do not say anything about increasing the share capital, the only option is to adopt a resolution amending the articles of partnership. Such a resolution should be adopted in the form of a notarial deed. When making changes to the articles of partnership, you can consider introducing other provisions to the contract. You can consider allowing shareholders making capital increases without changing the articles of partnership to avoid costly visits to the notary in the future.
The form of a notarial deed is also necessary when the share structure would change. That is, e.g., one partner does not want to increase the number of shares held or he intends to cover only part of them. It is irrelevant in this case whether the articles of partnership provide for the possibility of increasing the capital without having to change its content or not.
For the effective increase in the company’s share capital, it is also necessary for each partner to take up the increase (i.e. newly created shares or increased values). In the event of a change in the articles of partnership, the partners submit declarations of taking up the increase also in the form of a notarial deed.
The company that was founded via the electronic system (the so-called S24) is an exception to the above rule – in this case, both the resolution of the shareholders amending the articles of partnership, as well as declarations of taking up shares may be signed via S24.
When increasing the capital by changing the contract, you should also remember to attach the consolidated text of the articles of partnership, taking into account the changes made, to the application for the change of data in the National Court Register.
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Increase under the existing provisions of the articles of partnership (simplified)
This mode is restricted to entities which have introduced the possibility of increasing its share capital without changing the contract to the content of the articles of partnership. Such a resolution should specify the maximum date for adopting the resolution and the amount of increases made in this mode of increases. It should be emphasized that under one provision of the articles of partnership, this mode can be used repeatedly. Exceeding any of the boundaries set out in the articles of partnership will result in the refusal to enter the increase into the NCR. Although in the event that the amount of the planned financing of the company exceeds a certain threshold, there are ways to introduce all these funds into the company. Unless the articles of partnership state otherwise, the adoption of a resolution on the increase will require an absolute majority of votes cast for the resolution. The resolution is adopted in writing.
The share capital may be enlarged by increasing the value of shares or by increasing their number. Due to the fact that the shares in the company must be of equal value, the increase in the nominal value applies to all shares in the company and is even. On the other hand, the number of newly created shares can be unlimited, but it will be important for choosing the mode of increasing. Thus, a simplified increase is only possible if the new shares are proportionally allocated to the existing shareholders. And in the event of a disproportionate number of new shares or a disproportionate distribution of shares among shareholders, a resolution amending the articles of partnership is required.
The method of making the increase under simplified increase – by increasing the nominal value or creating new shares – will also have a significant impact on the form of the shareholders’ declaration of inclusion. In the event of an increase in the nominal value of shares, a notarial deed is required. However, if it is increased by creating proportional shares, ordinary written form is sufficient.
Increase from company funds (paper)
The last mode of increasing the share capital is to increase its value from the company’s resources (supplementary or reserve capital). In this case, the resolution requires the form of a notarial deed (because this is a change treated as a change in the content of the articles of partnership). While partners do not have to submit any declarations about taking up shares.
Documents for the NCR
The share capital increase is effective provided that this change is entered in the NCR. Therefore, the KRS-Z3 application should be submitted to the NCR. The appropriate number of KRS-ZE forms should be attached to the application (depending on the number of partners holding more than 10% of shares). The originals of the following documents should be attached to the following forms:
– a resolution about increasing the share capital (in the form of a notarial deed or written – depending on the mode of increase),
– consolidated text of the articles of partnership, if the increase constitutes a change of contract,
– shareholders’ declaration of taking up shares (in the form of a notarial deed or written – depending on the mode of increase), unless the increase is made from the company’s funds,
– list of partners,
– a declaration of all members of the management board that contributions to the increased capital were made, unless the increase is made from company funds.
The court fee for an application to change data is PLN 250 (PLN 200 in the S24 system). In turn, the fee for an application for publication of an advertisement in the Court and Commercial Gazette (MSiG) is PLN 100. The deadline for submitting an application for a change is 6 months from the date of adopting the resolution by partners. Otherwise, the registration court will refuse to make an entry.
It should also be kept in mind that in the event of an increase in the share capital, the company must regulate the tax on civil law transactions in the amount of 0.5% of the value of the increase.
Legal status as of September 2019
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