Unit 6 Flashcards
Who has the competence to approve amendments to the by-laws?
Usually the General Meeting
EXCEPTION:
Transfering of registered office within national territory
What is the procedure required for by-laws modification?
1- Drafting a written report (managing body), with the justification of the proposal modification
2- Convene members for a general meeting (clearly expressing the points to be modified and the right to information)
3- Quorum attendance reinforced
4- Approval according to the legal majority system
5- Minutes of the agreement of the meeting
6- Granting a public deed with certificate from the managing body
What are the protections measures for the members?
-Express consent of the affected member when the modification implies new obligations for the member
-Right of separation of the member: in substantial modification of the corporate purpose
[if someone decides to separate himself from the company then it’s the company that pays the member leaving the value of the shared owned by such member
What are the modalities used for capital increase?
- Issuing new shares/stakes
-Raising the nominal value of the already existing shares/stakes
-According to the kind of contribution:
-Monetary contributions
-Non-Monetary Contributions (independent report for SA)
-Compensation of credits
-Charged to Reserves
State and Describe the different types of contributions for Capital increase
MONETARY CONTRIBUTIONS:
+Cash –> +Capital –> +Equity
more immediate liquidity and better long-term ratio
NON MONETARY CONTRIBUTIONS:
+Assets (in net terms)–> + Capital –> + Equity
[in net terms: if contributing with a business both assets and liabilities have to be taken into account)
does not necessarily affect immediate liquidity but usually improves the long-term solvency ratio
COMPENSATION FOR CREDITS
-indebtness –> + Capital –> +Equity
less debt, less creditors, improving long term solvency
CHARGED TO RESERVES
-Available reserves –> + Capital –> =Equity
Reduces the future availability of the members on accumulated reserves converting them in to unavailable capital
=> strenghten the external image of long term solvency. but NO CHANGE IN EQUITY.
Describe the process of Increasing Capital with premium issue shares:
=> shares are issued for a value greater than par (nominal)
-Required to disburse an amount greater than the par value -Intends to compensate the excess value of the shares or stakes above the par value
Describe and Define the Pre-emptive right (SA) or Preference Right (SRL)
CAN BE USED ONLY IN MONETARY CONTRIBUTIONS
Existing members have the right to acquire the new shares proportionally to the par-value of the ones theuy own
it is also possible to exclude the pre-emptive right (or preference) for the interest of the company
What are the modalities for a Capital Reduction?
-Decrease in nominal value of shares/stakes
-The rescue of shares/stakes
What are the motivations For a capital reduction?
1- Return of contributions to the members (NOT DIVIDENDS)
2- Constitution of increase of reserves
3- Restauration of equity balance due to loss
(effective correspondence between capital and equity)
Describe the different types of capital reduction
- -Assets (money, ppe…) –> - Capital –> -Equity
reduces solvency, restoring the members of their contributions - +reserves –> -Capital –> =Equity
Greater availability of resources for members - -Accumulated Losses –> -Capital –> =Equity
this procedure is:
Voluntary when:
it is useful to avoid misleading investors since losses reduce the value of the equity and the solvency of the company.
By doing this you restore the relationship K<=E
Mandatory when:
Mandatory for SA when E< (2/3)K after 1 year
What is the right of opposition of credits?
Creditors can oppose to a capital decrease when
-they are creditors with unsecure credits (only in SA)
- When value of equity decreases as a result of the reduction.
