According to Article 257(2) k.s.h. an increase in the share capital of a limited liability company may occur on two methods – by issuing new shares or by increasing the nominal value of existing shares. Except these. two methods, there is still one the alternative to using the surplus. This increase in capital is not clear from the provisions of the Commercial Companies Code, but is often used in practice.
There are also no contraindications to issue shares exceeding the nominal value when increasing the share capital of the company. This method produces a surplus, which is called agio.
Issue of new shares
first the method of raising the share capital is linked to the issue of new shares. In the Commercial Companies Code, the concept of participation occurs in different meanings – it may refer to share capital or contributions. Participation in the company may take place before or at the same time as contributions.
The shares in the event of an increase in the share capital of the company are included in a statement stating this fact. Otherwise, the shares are included in the articles of association. In order for a partner to receive shares in the company, he must contribute to their coverage.
The share is part of the share capital, as determined in the amount and expressed in the figure that determines the denomination. The share should not be determined in a fraction. An exception may arise when the partner has acquired or assumed shares in fractional parts for the community.
The share is part of the share capital and the amount corresponding to the value of the contribution. This means the rights and obligations of a partner in relation to the company which arise from the provisions of the Commercial Companies Code.
In the event of an increase in the company's share capital by creating new shares, it is possible to allow the newly created shares of persons third, not related to the company. According to Article 259 k.s.h.
a new partner who has expressed his desire to join the company and to acquire the newly created shares is obliged to submit to the company two statements. In the first of which the person concerned declares that he agrees to the newly created shares.
This statement should also include details of the shares covered, including their value, number. second the statement relates to an expression that the new entity agrees to join the company. Both statements require the application of the form of a notarial act.
Increase in nominal share
second the method of raising the share capital is linked to an increase in the nominal value of the shares. The nominal value of the share shall be determined when the company is established, increased or reduced.
In the case of the creation of the company, the nominal value of the share shall be equal to the amounts paid into share capital. It therefore constitutes a specific part of that capital which is assigned to the shareholder concerned.
The nominal value of the share capital increase shall correspond to the contributions to the company for the increase. On the other hand, the nominal value of the share must be distinguished from the actual, real and market value.
Where an increase in share capital is applied by increasing the nominal value of existing shares, the resources to cover the increased share capital shall be raised from the shareholders already present in the company. Such a reservation may also appear in a limited liability company agreement.
It is usually the practice of the shareholders to exercise the right of priority in taking shares in proportion to the shares already held. As has already been presented, any exclusion of the right of priority should be included in the company agreement or resolution together with the consent of the person concerned.
The notified partners shall have a period of time to decide whether or not to exercise the right of priority. This period is fixed under Article 258(1) k.s.h. and is one one month from the date on which the Board was called at the same time sent to all the partners.
Use of surplus
Connectable two the methods given for increasing the share capital of the company. Although this latter additional way is not clear from the provisions of the Commercial Companies Code, it is encountered in practice. Total application two methods, i.e. increasing the nominal value of existing shares and creating new ones.
There are also no contraindications to issue shares exceeding the nominal value when increasing the share capital of the company. This method produces a surplus, which is called agio. This may also occur when the limited liability company’s share capital is increased by cash contributions.
The obligation to pay surplus to a company is the same as the obligation to pay first contributions by shareholders during the establishment of the company. Namely, the surplus must be transferred to the limited liability company's assets until the change in the amount of the company's capital is entered in the National Court Register.
Agio, in its full amount, is transferred to the reserve rather than the share capital.