Increasing The Share Capital When Purchasing A Ready-Made Company

In January 2020, we were contacted by a Client intending to buy a ready-made company. However, the Client was not satisfied with the amount of the share capital, which at that time amounted to UAH 1,000. The Client wanted to increase it to one million.

Since we offer ready-made companies with different licenses, we also make changes that the Clients consider necessary for further activities.

Today we will elaborate on such issues as increasing the share capital of the company:

  • Can you increase the share capital while making changes in members?
  • What is the period for making contributions to the share capital?
  • What is the minimum period for the information about the new share capital to be “highlighted” in the Unified State Register?

Related article: How To Cost-Effectively Register The Company-Related Changes In The Unified State Register?

Peculiarities of the procedure for increasing share capital

Making changes in members and increasing share capital are different registration procedures. This can be explained by the fact that the purchase and sale of shares shall be formalized by the relevant agreement, after which an Act of Acceptance and Transfer of the Shares is made.

Ironically, according to the current legislation, the Act can be submitted to the state registrar even without the agreement. The share capital of the company shall be increased by the decision of the company’s members made at the general meeting. Thus, you can’t make changes in members and increase the share capital at the same time.

Related article: Withdrawal From The Members of A Problem Company

In order to answer the following two questions, let’s consider the procedure for increasing share capital by additional contributions.

This procedure is as follows:

  • At the general meeting, the members shall make the decision on the intention to increase the share capital, the amount of the increase, as well as decide on members that should make the contribution to the share capital and the period of making contribution. According to the legislation, this period should not exceed one year from the date of the decision. At the same time, the law does not establish a minimum period for the members to make contributions. Therefore, nothing prevents members from making a decision that additional contributions should be made no later than three days after the decision is made;
  • The actual additional contributions;
  • No later than one month following the termination of the period established for making additional contributions, the general meeting must be held again to approve the results of the contributions and the new shares of the members. This means that the general meeting may meet the day after the above deadline. This is especially true if the company has only one member and no procedure for notifying other members of the planned meeting shall be followed.

Thus, the contribution shall be made within the period stipulated in the decision on the intention to increase the share capital. If the decision provides for a period of three days from the date of the decision, the contribution shall be made within these three days.

Related article: Increasing Share Capital By Real Estate Object

How to quickly increase share capital when buying a company? This procedure takes from a few days to up to a week after all the changes related to the registration of the company for new owners are made.

Please note that it is the last minutes (or the decision of the sole participant) that shall be submitted to the registrar for registration of the share capital increase. Therefore, it shall be drawn up on the special blank of notarial documents, and the signatures shall be certified by a notary.

Please note! Despite the fact that the first minutes (about the intention to increase the share capital) is not submitted to the registrar, it should also be drawn up on the special blank of notarial documents and the signature should be notarized. If the company has more than one members, this may protect against misunderstandings and temptations to alter the minutes retroactively.

If you want to speed up the process of the acquired company registration and make all changes to the share capital easily and safely, don’t hesitate to call us.

Publication date: 26/02/2020

About author

Name: Marina Losenko

Position: Associate

Education: National Aviation University

Knowledge of languages: Russian, Ukrainian

Email: [email protected]

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