Increase of share capital

Share capital – concept / Increase of share capital / Legal increase of share capital / How we can help you

Share capital – concept

The share capital consists of all the assets brought into a company by its shareholders, either at the time of its establishment or subsequently, for the purpose of carrying out its business.

Share capital can be composed of a series of fixed assets – land, buildings or movable assets – cars, production equipment, money, receivables, etc.

Within each type of company, the law requires the formation of a minimum working share capital (e.g. in the case of limited liability companies, at the time of establishment, the minimum share capital is 200 lei, in the case of joint-stock companies, at the time of establishment, the minimum share capital is 25,000 Euro in lei equivalent).

For more details on how to set up a company, please visit the section Setting up a company.

The share capital is obtained through the subscription (offering) and payment (transfer of rights) of the contributions of the associates/shareholders (e.g. deposit of a sum of money in the company’s account, transfer of ownership of a building, assignment of a claim, etc.).

In exchange for the contributions the associates/shareholders receive shares/shares in the company.

The nature and amount of a company’s share capital are set out in the company’s articles of association.

For more information on how a company’s share capital is formed, please visit the section Disposal of shares/shares.

The share capital of a company should not be confused with the company’s assets.

Share capital is a valuable expression of the assets that have been contributed to the company.

Assets are all the rights that can be valued in money and belong to the company.

If an asset is part of a company’s share capital, it is also part of its assets. On the other hand, there are a number of assets that are part of the company’s assets (e.g. they are owned by the company) and are not part of the company’s share capital.

Increase of share capital

In the course of a company’s existence there may be a need to increase the share capital for various reasons (e.g. capitalisation of the company, raising funds by methods other than borrowing from the company, co-opting new partners/shareholders, etc.).

An increase in the share capital implies an amendment to the company’s articles of association, which is why it requires the approval of the general meeting of shareholders.

There are two ways to increase share capital:

• or issuing new shares/shares;
• either the increase in the nominal value of the shares.

In both variants, the increase involves new contributions from existing members/shareholders or from third parties who thus become members/shareholders.

In many cases, the increase in share capital is linked to the existence of a pre-emptive right of existing members/shareholders so that they can keep their share of the benefits offered by the company (e.g. voting rights, right to receive dividends, etc.).

Increase of share capital by operation of law

In Romania there are a number of companies where the share capital of companies is increased by right, by virtue of the law.

This is the case of joint-stock companies (either closed or listed on the stock exchange), which are the legal successors of former socialist state enterprises that were transformed into companies after the 1990s and then privatised.

In the case of these companies, whenever the relevant ministries issue certificates attesting to the private ownership of land in the companies’ use, the share capital is automatically increased by the value of the land that becomes part of the company’s assets and subsequently part of the share capital.

As regards the actual method of increasing share capital, the procedure for issuing new shares and the exercise of pre-emptive rights, there is no consensus in practice: (i) some companies consider that the increase in share capital is carried out through the common law procedure, which implies compliance with the requirements of the articles of association and general laws, (ii) while other companies consider that the increase is carried out directly by virtue of the law, with shareholders having no say.

How we can help you

Our team of lawyers together with specialists in the relevant fields (e.g. valuation experts, accountants, financial auditors) can provide you with legal advice on the operations required to increase the share capital of the company, familiarising you with a number of aspects:

• which is the legal regime of each contribution to the share capital;
• what are the legal and/or tax consequences of increasing the share capital;
• what are the concrete modalities and procedures by which the share capital can be increased;
• the acts and procedures leading to the actual increase in share capital;
• the ways in which the pre-emptive rights of existing members/shareholders can be exercised.

Additional information on the share capital increase