The authorized capital of the company is increased by a decision of the general meeting of shareholders. The authorized capital of the company is increased by issuing new shares or by increasing the nominal value of the issued shares. The company may increase the authorized capital only when its authorized capital is fully paid. The document confirming the decision to increase the authorized capital must be submitted to the Register of Legal Entities within 10 days of the decision. The shareholders of the company may acquire shares issued by the company with a pre-emptive right in proportion to the nominal value of the shares. The authorized capital is considered increased only after the amended Articles of Association of the company are registered in the Register of Legal Entities. The Articles of Association of the company must be submitted to the Register of Legal Entities within 6 months from the date of the general meeting of shareholders that adopted the decision to increase the authorized capital.
The authorized capital of the company is increased by additional contributions of shareholders and other persons only by issuing new shares.
Methods of increasing the authorized capital:
- By additional contributions (increasing the authorized capital is possible only by issuing new shares);
- From the company’s funds (increasing the authorized capital is possible by issuing new shares or by increasing the nominal value of issued shares):
- Retained earnings;
- Share premium;
- Reserves (exception – acquisition of own shares and mandatory reserves)
Increasing the authorized capital is a change in the financial structure of a legal entity in order to increase its financial capacity.