It is the notarial document through which the partners of a company increase their contribution to it, injecting additional amounts of goods or money to the company, so that it has a greater capacity to finance its business projects.
This is a merely informative and non-binding estimate. This estimate is calculated based on two criteria: 1) our knowledge of the Notarial Tariff and 2) our daily experience in the preparation of this type of notarial document. (Royal Decree 1426/1989, November 17, 1989). and 2) our daily experience in the preparation of this type of notarial document. However, any variation (upward or downward) will be duly justified at the time of issuing the final invoice for the notarial service rendered.
As already explained when analyzing the articles of incorporation of capital companies, these are legal instruments that our legal system has designed to promote and facilitate economic and commercial activities that create wealth and employment for the community, all this through the execution of a contract by which two or more persons undertake to pool money, goods or industry, with the intention of sharing the profits among themselves, thus creating entities with their own legal personality and with assets separate from those of their partners with which to finance their social activity and with which they can respond to the debts and social liabilities that they may incur.
Capital companies, as indicated above, require capital, contributed by their partners, with which to cover and finance the assets necessary for the development of the productive or commercial activity that they offer to the market. As a result of this reality, it seems obvious then that the capital needs of commercial companies may vary throughout their life cycle, so that if, for example, a company begins to be successful in its business activity, it is very likely to require higher levels of capital with which to finance its expansion and growth, in order to ensure the necessary financial stability of the company to ensure its strength and viability in the long term.
It is therefore to this reality that the legal system has responded by creating and regulating the figure of the increase of capital stock, with which, by means of its different modalities and particularities that will be described below, it is intended to facilitate that the mercantile companies can reinforce and increase their capital stock, with which to finance and cover these investment needs that the company may have over time. Said regulation, particularities and requirements can be found mainly in articles 295 to 316 of the Capital Companies Law and articles 165 to 173 of the Mercantile Registry Regulations.
Pursuant to Article 295 of the Capital Companies Law, the capital increase may be carried out in two main ways, which are as follows:
Thus, for the reader to understand, the limited liability company may increase its capital by increasing the number of shares or participations into which its capital stock is divided, or by increasing the value of each of the shares or participations into which its capital stock is divided.
<ejemplo>A modo de ejemplo, la clásica sociedad de responsabilidad limitada que disponga de un capital de 3.000 € dividido en 3.000 participaciones sociales de valor nominal 1 €, que deseen doblar su capital social, podrá incrementarlo:<ejemplo>
Likewise, those interested in this type of operation should be aware that the capital increase, in the two forms described above, may be charged to new cash or non-cash contributions to the corporate assets, including the contribution of credits against the company, or charged to profits or reserves already shown in the last approved balance sheet.
Thus, the shareholders of the corporation, when agreeing to increase its capital, may contribute monetary sums expressed in euros (Article 61 of the Capital Companies Act) or, as the case may be, personal property, real estate or credit rights, which must be adequately described and valued in euros (Articles 63 et seq. of the Capital Companies Act).
In any case, the interested party must also bear in mind that the capital increase will not only imply a disbursement of money or property owned by the interested party in favor of the company, since, as stated above, the capital increase may be charged to the company's profits or reserves appearing in its balance sheet.
The agreement to increase the capital stock is the pact agreed between the partners of the commercial company in which the agreement between them necessary to increase the capital stock of the company is materialized.
With respect to its characteristics and legal requirements, in accordance with Article 296 of the Capital Companies Law, it must meet the following requirements:
Generally speaking, the capital increase must be agreed by the general meeting, with the requirements established for the amendment of the bylaws, for which it will be necessary to refer to the provisions of Article 288 of the Capital Companies Act, which requires:
In view of the generic case, the legislator has also established that, when the increase is to be made by increasing the par value of the holdings or shares, the consent of all the shareholders is required, except in the case that it is made entirely out of profits or reserves that already appear in the last approved balance sheet.
It should also be taken into account that, in the case of corporations, the value of each of the shares of the company, once the capital stock has been increased, must be paid up by at least one quarter.
As it seems evident, the increase of capital stock is an act that is properly exclusive and proper to the partners of the company, owners of the same and responsible for adopting the resolution that will precipitate it. However, the legislator has reserved a certain role in this type of operation for the directors of the company in the case of corporations, since in accordance with Article 297 of the Capital Companies Act, the general meeting, subject to the requirements established for the amendment of the articles of association, may delegate to the directors:
Likewise, in these cases, by virtue of the delegation, the directors shall be empowered to redraft the article of the corporate bylaws relating to the capital stock, once the increase has been agreed and executed.
As has already been indicated along these lines, there are different types of capital stock increase, each of which will present a series of legal particularities that will be explained below so that those interested may take them into account:
1) Capital increase with additional paid-in capital:
First of all, it is necessary to take into account that in accordance with Article 298 of the Capital Companies Law, the creation of shares and the issuance of shares with a premium, which can be defined as a premium paid by the shareholder above the par value of the new shares, i.e., an excess of value contributed by the shareholder to the company, beyond the par value of the new shares or participations received as consideration, will be lawful in capital increases.
In the event that the capital increase is issued with a premium, the interested parties must also be aware that the premium must be paid in full at the time of assumption of the new shares or subscription of the new shares.
2) Increase in capital stock with a charge to cash contributions:
Secondly, interested shareholders should bear in mind that, in the specific case of corporations, in any capital increase whose countervalue consists of new cash contributions to the corporate assets, it will be a prerequisite (except for insurance companies) that the previously issued shares be fully paid up.
However, the increase may be carried out if there is an amount pending disbursement that does not exceed three percent of the capital stock (Article 299 of the Capital Companies Act).
3) Increase charged to non-cash contributions:
In the event that the capital increase is to be made by means of non-monetary contributions, i.e. by means of movable or immovable property (e.g. machinery, stock, an industrial building, etc.), the interested parties must take into account the requirements established in Article 300 of the Capital Companies Act, which establishes that in these cases, it will be necessary that at the time of the call of the meeting, the capital increase is made available to the shareholders.), the interested parties must take into account the requirements established in Article 300 of the Capital Companies Act, which establishes that in these cases, a report from the administrators describing the planned contributions in detail must be made available to the shareholders at the time the meeting is called, The report must describe in detail the contributions planned, their valuation, the persons who are to make them, the number and value of the shares to be created or issued, the amount of the increase in capital stock and the guarantees adopted for the effectiveness of the increase according to the nature of the assets in which the contribution consists.
In addition, the notice convening the general meeting shall state the right of all shareholders to examine this report at the registered office and to request the delivery or mailing of the document free of charge.
4) Capital stock increase by offsetting credits:
As indicated above, the capital increase can be carried out by offsetting credits that the subscriber has against the company, i.e., those cases in which the shareholder has a creditor position against the company and this is cancelled or offset by the delivery of new shares or equity interests (or by increasing the value of those already owned) through the legal mechanism of offsetting.
The particularities of this type of capital increase are defined in Article 301 of the Capital Companies Law, which establishes that:
In the case of limited liability companies, the receivables must be fully liquid and due, while in the case of corporations, at least twenty-five percent of the receivables to be offset must be liquid, due and payable, and the maturity of the remaining receivables may not exceed five years.
Likewise, at the time of the call of the general meeting, a report of the administrative body on the nature and characteristics of the credits to be offset, the identity of the contributors, the number of shares to be created or issued and the amount of the increase shall be made available to the shareholders at the registered office, expressly stating the concordance of the data relating to the credits in the company's accounts.
As a special feature, in the specific case of the corporation, at the time of the call of the general meeting, a certificate from the auditor of the company's accounts will also be made available to the shareholders at the registered office, certifying that, once the company's accounts have been verified, the data provided by the administrators on the credits to be offset are accurate, bearing in mind that in the event that the company does not have an auditor, the certificate must be issued by an auditor appointed by the Commercial Registry at the request of the administrators. For further details on the appointment procedure, please refer to Articles 350 and following of the Mercantile Registry Regulations.
In addition, it is necessary to bear in mind that the notice of the general meeting must state the right of all shareholders to examine at the registered office the directors' report and, in the case of corporations, the auditor's certification, as well as to request the delivery or shipment of such documents free of charge.
Finally, the legislator requires that the directors' report and, in the case of corporations, the auditor's certification be included in the public deed documenting the execution of the increase.
5) Capital increase by conversion of debentures:
Another of the options available to shareholders of capital companies to increase their capital is to do so by converting the company's debentures into capital, i.e. converting a long-term liability such as debentures into a non-callable liability that will be included in the company's equity.
In these cases, in accordance with Article 302 of the Capital Companies Law, the regulations set forth in the bond issue agreement shall apply, which refers us to Articles 401 and following of the aforementioned law, which provide for the possibility of creating bonds convertible into shares, under the following most noteworthy conditions:
6) Capital increase charged to reserves:
Finally, it is possible for the company to increase its capital stock with a charge to reserves generated in previous years, which are included in its balance sheet and have not been distributed to its shareholders in the form of dividends or allocated to other accounting items.
In these cases, in accordance with Article 303 of the Capital Companies Act, available reserves, reserves for additional paid-in capital or share issue premiums and the legal reserve may be used for this purpose in their entirety, if the company is a limited liability company, or in the portion exceeding ten percent of the increased capital, if the company is a public limited company.
In order for this operation to be carried out, a balance sheet approved by the general meeting must be submitted for a date within the six months immediately prior to the resolution to increase the capital stock, verified by the company's auditor, or by an auditor appointed by the Commercial Registry at the request of the directors, if the company is not obliged to have its accounts verified.
Having considered all the types of capital increase and their particularities, it is now time to analyze, once the decision has been made, how it will be carried out, i.e., which specific shareholders will assume the agreed capital increase.
In this respect, the legislator starts from a principle of preference, establishing a preferential right in favor of the current shareholders of the company, as can be seen in Article 304 of the Capital Companies Law, which establishes that in capital increases with the issue of new shares or new shares, ordinary or preferred, with a charge to cash contributions, each shareholder will have the right to assume a number of shares or to subscribe a number of shares proportional to the par value of those held by the shareholder.
<ejemplo>“Así pues, retomando el ejemplo inicial en el que una sociedad limitada posee un capital social inicial de 3.000 €, formado por 3.000 participaciones sociales de valor nominal de 1 €, si se acuerda aumentar su capital social en 3.000 € mediante la creación de 3.000 nuevas participaciones, si el Sr. Javier García dispone de un 20% del capital inicial (es decir, de 600 participaciones de valor nominal de 1 €), en la ampliación de capital tendrá derecho a suscribir preferentemente un 20% de estas nuevas participaciones sociales, mediante el desembolso de 600 €”.<ejemplo>
However, there shall be no preemptive right when the capital increase is due to the absorption of another company or of all or part of the assets of another company or to the conversion of debentures into shares.
As regards the term for the exercise of this preferential acquisition right, it is necessary to refer to the provisions of Article 305 of the Capital Companies Law, which establishes that in limited liability companies, the preferential right will be exercised within the term established when adopting the resolution for the increase, while in public limited companies, the preferential right will be exercised within the term determined by the directors.
In any case, the period for exercising the right may not be less than one month from the publication of the announcement of the offer to assume the new shares or to subscribe the new shares in the Official Gazette of the Mercantile Registry.
Finally, it should be noted that in limited liability companies and in public limited companies when all the shares are registered, the administrative body may replace the publication of the announcement with a written communication to each of the shareholders and, if applicable, to the beneficial owners registered in the Register of Shareholders or in the Book of registered shares, the period for assumption of the new holdings or new shares being calculated as from the sending of the communication.
Another issue that is undoubtedly of great importance is the transferability of this preferential acquisition right, an issue addressed by the legislator in Article 306 of the Capital Companies Act, which establishes:
In addition to this pre-emptive subscription right, the legislator has also designed a second degree pre-emptive right (Article 307 of the Capital Companies Law), by virtue of which, in limited liability companies, and unless the bylaws provide otherwise, the shares not taken up in the exercise of the pre-emptive right will be offered by the administrative body to the shareholders who have exercised it, for their assumption and payment during a period not exceeding fifteen days from the end of the period established for the pre-emptive assumption.
In the event that there are several partners interested in assuming the shares offered, these will be awarded in proportion to the shares that each one of them already has in the company.
Finally, if the remaining shareholders have not assumed these shares, during the fifteen days following the end of the period indicated above, the administrative body may award the shares not assumed to persons outside the company.
Finally, it is necessary to point out for those interested, the option that exists to exclude the preemptive right (Article 308 of the Capital Companies Act), since in cases where the interest of the company so requires, the general meeting, when deciding on the capital increase, may agree to the total or partial suppression of the preemptive subscription right. For such resolution to be valid, it will be necessary:
As is logical, it can sometimes happen that the capital increase designed ex ante does not come to fruition, partially or completely, because the current shareholders or third parties do not subscribe and pay in the new participations or shares that, if applicable, are created.
For these cases, the legislator has established a series of rules that should govern how to proceed. Thus:
1) Incomplete increases in limited liability companies (Article 310 of the Capital Companies Law):
2) Incomplete capital increases in corporations (Article 311 of the Corporations Law):
Finally, once the capital increase has been agreed and the new shares or stock subscribed, the shareholders who have participated in the capital increase will be obliged to make their contribution from the very moment of subscription, so that they must immediately contribute to the company the monetary amounts or assets to which they have committed themselves in consideration for the shares or stock received or the increase in value of those already held (Article 312 of the Capital Companies Act).
From a formal point of view, the first issue to be taken into account, as could not be otherwise, is the need to adapt the statutory provision relating to the company's capital stock, since, logically, the capital increase agreed and materialized modifies the provisions previously set forth therein.
This is provided for in Article 313 of the Capital Companies Law, which establishes that once the resolution to increase the capital stock has been executed, the directors must redraft the bylaws in order to include the new amount of capital stock, for which purpose they will be deemed to be empowered by the resolution to increase the capital stock.
For such purpose, they must request the execution of the appropriate public deed, which, pursuant to the provisions of Article 314 of the Capital Companies Act, shall have the purpose of documenting the execution of such capital increase.
The same must state the assets or rights contributed and, in the case of limited liability companies or unlisted corporations, if the increase has been carried out by the creation of new corporate participations or by the issue of new shares, the identity of the persons to whom they have been allotted, the numbering of the units or shares allotted, as well as the declaration of the administrative body that the ownership of the units has been recorded in the register of members or that the ownership of the registered shares has been recorded in the register of registered shares.
Finally, once the corresponding public deed has been granted, it must be registered in the Mercantile Registry, as established in Article 315 of the Capital Companies Law, which states that the resolution to increase the capital stock and its execution must be registered simultaneously in the Mercantile Registry.
However, as an exception to this general rule, the resolution to increase the capital of the corporation may be registered with the Commercial Registry prior to the execution of such resolution when the following two circumstances are present:
Finally, it is necessary to specify that in the event that six months have elapsed since the opening of the period for the exercise of the preemptive right without the documents evidencing the execution of the capital increase having been submitted for registration in the Register, those who have assumed the new shares or the subscribers of the new shares may request the cancellation of the obligation to contribute and demand the restitution of the contributions made, those who have assumed the new shares or the subscribers of the new shares may request the termination of the obligation to contribute and demand the restitution of the contributions made, taking into account that if the failure to present the documents for registration is attributable to the company, they may also demand the legal interest (article 316 of the Capital Companies Act).
I.B.11 of Royal Legislative Decree 1/1993, of September 24, 1993, approving the revised text of the Law on Transfer Tax and Stamp Duty, which establishes that capital increases, among others, are exempt from taxation.
To execute a deed of capital increase, it is only necessary to contact the notary's office (by calling the notary's office telephone number or email address mercantil@jesusbenavides.es) and make an appointment on the day and time most convenient for the grantors.
On the agreed date and time, the grantors must simply go to the notary's office with the necessary documentation (see section on necessary documentation) to sign the corresponding deed, which will be drafted based on the minimum legal content required and the forecasts and needs of the clients in question.
In any case, if the interested parties need assistance in relation to the models of certificates resulting from the adoption of the necessary corporate resolutions for the amendments to the bylaws to be dealt with, they can contact the notary's office for assistance and advice in this regard.
If the interested party so desires, a certified true copy of the deed of capital increase may be delivered to him/her on the same day of the signing, but in such case, he/she will have to go to the Commercial Registry to register it.
Of course, if so desired, it is possible to entrust this management to the notary's office itself, which will telematically send the deed to the Commercial Registry in order to obtain its registration.
Once this has already taken place, the authentic copy of the deed will be delivered to the grantors, which will be much more useful, since from that moment on the document will be able to have all its effects.
Outside our business hours, you can also contact us. The corresponding department will get back to you as soon as possible:
It is enough that the administrator or representative of the company goes to the notary's office with his ID card. In the case of a foreign person, he/she must present to the notary his/her original and valid passport. In addition, the NIE must be presented together with the aforementioned passport.
Normally it will be necessary to provide the certification of the resolution of the general meeting or of the decision of the sole shareholder resulting in the capital increase, its amount and the procedure to carry it out. The notary's office can advise and assist in the preparation or preparation of this type of certificate at no additional cost.
In the event of carrying out a capital increase with new monetary contributions, it will be essential to provide the bank certificate accrediting the disbursement of said monetary contribution (In such case, bear in mind that it will be valid for two months from its issuance until the granting of the deed of increase). In case of carrying out the capital increase by means of non-cash contributions, it will be necessary a report of the administrative body with the valuation of the non-cash contributions or credits to compensate (with detail of the credits that are compensated).
The relevant documentation relating to the company within which the capital increase is intended to be made must be submitted to the notary. For this purpose, the authentic copy of the deed of incorporation of the company must be provided, as well as any subsequent deed modifying the articles of association. However, from the notary's office we can access telematically to the Mercantile Registry where the company is registered in order to verify part of such documentation and corroborate the data that are in force at the moment of granting the deed of capital increase.
Practically every time someone goes to sign at a notary's office in the name and on behalf of a company, it is mandatory to identify at that moment, before the notary, which partners (even if not present) within the company hold more than 25% of the capital stock of the company at that moment. In order to carry out such identification, the Law obliges to exhibit the authentic copy of the corresponding notarial deed called "Acta de titular real". Almost certainly, a new deed of beneficial ownership will have to be signed as a consequence of the capital increase, since usually the percentages of the current partners vary, or it supposes the entry of new partners within the capital of the company with greater or lesser weight.
