What is the capital increase in joint stock companies? How to increase capital?
The capital increase refers to the increase of the capital of the company which appears on the balance sheet.This can be done for mandatory reasons or for optional reasons.The capital increase is based on the desire of companies to create new capital.As a result of the capital increase the company targets new investments.However, if capital increase is carried out for compulsory reasons, the reasons may be very different.For example, the company’s capital falling below the minimum capital limit specified in the relevant law may be one of the reasons for the compulsory capital increase.Apart from these reasons, the fact that the company wants to make new investments, wants to strengthen its balance sheet and the ability to make new investments by obtaining new loans thanks to the balance sheet strengthening can be considered as the main reasons behind the capital increase.
Capital increase can be done in two ways;
1-)capital increase through capital commitment
2-)Capital increase from internal sources
Today, in our article, we will examine capıtal increase through the capıtal commitment.In another article, we will examine capital increase through internal resources.
1-)Capital Increase in Joint Stock Companies through Capital Commitment
The increase through capital commitment is possible both in companies that have adopted the main capital system and companies that have adopted the registered capital system.
In order to increase capital in this way, the following three conditions must be combined.
1-)the company’s existing shares must be paid in full.(.(However, according to the second article of Article 456 of the Turkish Commercial Code, if non-payment of the amount not considered significant compared to the capital, that positıon does not prevent capital increase.)
2-)All funds that are allowed to be added to capital by legislation should be converted into capital
3-)a quarter of the committed amount must be paid before registration, just as in the establishment of the company.
No doubt it should be stated that this capital increase should be registered.
Each shareholder has the right to receive the shares according to the his/her current share ratio.In the case of justified reasons, the right to preemption may be limited with the affirmative vote of the shareholders representing sixty percent of the capital.
If the establishment of a capital company and the change in its capital is subject to the permission of the relevant ministry, the capital increase shall also be subject to ministry permission.(Customs and trade Ministry)
As it is known, joint stock companies are divided into registered capital system and main capital system.İn these two system have own procedure to take place the increase of the share capital.
Increase of the share capital in the registered capital system
In the registered capital system, the board of directors is allowed to increase the capital up to the boundary that specifies in the artıcle of association.In this system, since the decision of the general assembly is not required for the purchase of shares, it is possible to increase the capital faster.
The initial capital of the non-public joint stock company, which has accepted the registered capital system, must be minimum 100.000 TL.
The board of Directors decides how much capital will be increased within the framework of the given authority .
However, in order for the board of directors to issue privileged shares or to issue more shares than the nominal value of the shares, the board of directors must be authorized in the articles of association.In addition, such a provision should be included in the articles of association in order for the board of directors to limit the priority right.(preemptive right.)
Another point to be mentioned is that cancellation cases may be brought against these decisions of the board of directors.This cancellation case may be filed by the members of the board of directors or by the shareholders.The time to file this case was subject to a period of 1 month from the decision of capital increase.
Increase of the share capital in the main capital system
In the main capital system companies, capital increase is realized with the decision of the General Assembly.And, of course, this is an amendment to the Articles of Association.Therefore, if no more severe decision quorum is specified in the articles of association, as in the other articles of association amendments, a decision is taken by majority of votes at a meeting in which half of the company capital is represented.
In addition, this decision must be approved by the board of directors.The approval decision shall be taken with the majority of the members of the board of directors unless there is a contrary regulation in the articles of association.
As a result, we can say that the Turkish Commercial Code not only gives many rights to shareholders and the board of directors, but also imposes certain obligations. These rights and obligations should be evaluated correctly.
Loss of rights may be unavoidable if rights and obligations are not known and applied correctly.So we advise you to consult a corporate lawyer.
As lawyer in Antalya, we continue to serve in the field of corporate law in our Antalya law firm.