SPA Increase Shares PDF

Reduction of the share capital: → material, when a company's assets are decreased at the same time → nominal reduction (reduction for losses), when there are no simultaneous decreases in the company's assets Material (or paid) share capital increase implies: -new financial resources, new contribut...

Reduction of the share capital: → material, when a company's assets are decreased at the same time → nominal reduction (reduction for losses), when there are no simultaneous decreases in the company's assets Material (or paid) share capital increase implies: -new financial resources, new contributions -issuance of new shares, with the condition that previous contributions have to be fully paid-up -if the bylaws permit it the capital share can be increased in one or more occasions, the so called delegated capital share increase (art. 2443 c.c.). -the term for the subscription of the new shares is of maximum 5 years -if the share capital increase is not fully subscribed then the share capital increase shall be non- divisible, meaning that any partial subscription shall not be binding for the company Directive (EU) 2017/1132 Article 68-Decision by the general meeting on the increase of capital 1. Any increase in capital shall be decided upon by the general meeting and published in business register. 2. Nevertheless, the statutes or instrument of incorporation or the general meeting, may authorize an increase in the subscribed capital up to a maximum amount which they shall fix with due regard for any maximum amount provided for by law. Directive (EU) 2017/1132 Article 69-Paying up shares issued for consideration Shares issued for consideration, in the course of an increase in subscribed capital, shall be paid up to at least 25% of their nominal value, for an issue premium, it shall be paid in full. Directive (EU) 2017/1132 Article 70 - Shares issued for consideration other than in cash 1. Where shares are issued for consideration other than in cash in the course of an increase in the subscribed capital, the consideration shall be transferred in full within a period of five years from the decision to increase the subscribed capital. The right of pre-emption (art. 2441 с.с.) → it's the shareholders right to be favored over third parties when subscribing a share capital increase against payment, following which new shares shall be issued. → this right is attributed to shareholders in proportion to the number of shares they hold → term for the exercise is 15 days to exercise their right → shares' which pre-emption rights have not been exercised have a preferential right on the unadopted shares → circumstances in which the right of pre-emption can be excluded are: cases in which the shares → have to be issued with a premium → indirect exercise of the pre-emption rights → Recording in the Business register Directive (EU) 2017/1132 Article 72 - Increase in capital by consideration in cash 1. Whenever the capital is increased by consideration in cash, the shares shall be offered on a pre-emptive basis to shareholders in proportion to the capital represented by their shares. 2. Any offer of subscription on a pre-emptive basis and the period within which this right shall be exercised shall be published in the national gazette 3. The right of pre-emption may not be restricted or withdrawn by the statutes or instrument of incorporation. This may, however, be done by decision of the general meeting. The administrative or management body shall be required to present to such a meeting a written report indicating the reasons for restriction or withdrawal of the right of pre-emption, and justifying the proposed issue price. The general meeting shall act in accordance with the rules for a quorum and a majority laid down in Article 83. 4. The laws of a Member State may provide that the statutes, the instrument of incorporation or the general meeting, acting in accordance with the rules for a quorum, may give the power to restrict or withdraw the right of pre-emption to the company body which is empowered to decide on an increase in subscribed capital within the limit of the authorized capital. Directive (EU) 2017/1132 Article 84 - Derogation from certain requirements We have the exclusion of pre-emptive right in case the new shares are offered to the company's employees Nominal (or free) share capital increase (art. 2442 с.с.) Made by allocating amounts that are already part of the company's assets to the share capital amount, more specifically these amounts are taken from reserves and the available funds recorded in the financial statement Reduction of the share capital Material share capital reduction (art. 2445 c.c.) → there needs to be a notice of call for the shareholders meeting indicating the reasons and procedures for the reduction → the resolution must be recorded in the company's register → creditors can oppose the resolution if it harms their position there are two ways of execution: 1. by freeing shareholders from their obligation to make unpaid contributions, or 2. reducing the number of shares by buying own shares to be canceled on the market Directive (EU) 2017/1132 Article 73 - Decision by the general meeting on reduction in the subscribed capital Any reduction in the subscribed capital, except under a court order, shall be subject at least to a decision of the general meeting acting in accordance with the rules for a quorum and a majority. Directive (EU) 2017/1132 Article 75 - Safeguards for creditors in case of reduction in the subscribed capital In any event member state shall ensure that the creditors are authorised to apply to the appropriate administrative or judicial authority for adequate safeguards provided that they can credibly demonstrate that due to the reduction in the subscribed capital the satisfaction of their claims is at stake and that no adequate safeguards have been obtained from the company Nominal share capital reduction (due to losses) The company is not obliged to reduce the share capital until the relative loss exceeds one third of its total. A mandatory reduction is then implied if: 1. the decrease is of more than 1/3 of the share capital that does not affect the legal minimum capital 2. the decrease is of more than 1/3 of the share capital affecting the legal minimum capital Directive (EU) 2017/1132 Article 76 - Derogation from safeguards for creditors in case of reduction in the subscribed capital In case of decrease of more than 1/3 of the share capital affecting the legal minimum capital (art. 2447 c.c.) → calling of the shareholders' meeting → shareholders meeting passes a resolution to: -reduce the share capital while increasing it to an amount that respects the legal minimum, or -the shareholders meeting passes a resolution to transform the company in another legal form, with lower level of legally required capital, such as SRL (from SPA) → if neither of the two decisions above are made the company shall be dissolved, due to capital dropping below legal minimum Directive (EU) 2017/1132 Article 77-Reduction in the subscribed capital and the minimum capital The subscribed capital may not be reduced to an amount less than the minimum capital laid down in accordance with Article 45. However, Member States may permit such a reduction if they also provide that the decision to reduce the subscribed capital may take effect only when the subscribed capital is increased to an amount at least equal to the prescribed minimum. The amendments to the share capital Increase of the share capital: → material increase (or paid increase) → nominal increase (or free increase) Reduction of the share capital: → material reduction → nominal reduction (reduction for losses) → cases other than losses where reduction is mandatory Increase of the share capital Material (or paid) share capital increase → new financial resources = new contributions → issuance of new shares → conditions: previous contributions have to be fully paid-up; there must be no losses that would require a compulsory reduction → competence → the delegated increase (art. 2443 c.c.) → term for the subscription of the new shares → non-divisible and divisible increase → rules for new contributions Directive (EU) 2017/1132 Article 68 - Decision by the general meeting on the increase of capital 1. Any increase in capital shall be decided upon by the general meeting. Both that decision and the increase in the subscribed capital shall be published in the manner laid down by the laws of each Member State, in accordance with Article 16. (in Italy: through the Business register) 2. Nevertheless, the statutes or instrument of incorporation or the general meeting, the decision of which is to be published in accordance with the rules referred to in paragraph 1, may authorise an increase in the subscribed capital up to a maximum amount which they shall fix with due regard for any maximum amount provided for by law. Where appropriate, the increase in the subscribed capital shall be decided on within the limits of the amount fixed by the company body empowered to do so. The power of such body in this respect shall be for a maximum period of five years and may be renewed one or more times by the general meeting, each time for a period not exceeding five years. Directive (EU) 2017/1132 Article 69 - Paying up shares issued for consideration Shares issued for consideration, in the course of an increase in subscribed capital, shall be paid up to at least 25 % of their nominal value or, in the absence of a nominal value, of their accountable par. Where provision is made for an issue premium, it shall be paid in full. Directive (EU) 2017/1132 Article 70 - Shares issued for consideration other than in cash 1. Where shares are issued for consideration other than in cash in the course of an increase in the subscribed capital, the consideration shall be transferred in full within a period of five years from the decision to increase the subscribed capital. 2. The consideration referred to in paragraph 1 shall be the subject of a report drawn up before the increase in capital is made by one or more experts who are independent of the company and appointed or approved by an administrative or judicial authority. Such experts may be natural persons as well as legal persons and companies and firms under the laws of each Member State. The right of pre-emption (art. 2441 c.c.) → persons entitled to exercise the pre-emption right → ratio legis → term for the exercise → shares on which pre-emption rights have not been exercised (preferencial right on the inopted shares) → circumstances in which the right of pre-emption can be excluded (cases in which the shares have to be issued with a premium) → indirect exercise of the pre-emption rights → Recording in the Business register Directive (EU) 2017/1132 Article 72 - Increase in capital by consideration in cash 1. Whenever the capital is increased by consideration in cash, the shares shall be offered on a pre-emptive basis to shareholders in proportion to the capital represented by their shares. […] 3. Any offer of subscription on a pre-emptive basis and the period within which this right shall be exercised shall be published in the national gazette appointed in accordance with Article 16. However, the laws of a Member State need not provide for such publication where all of a company's shares are registered. In such case, all the company's shareholders shall be informed in writing. The right of pre-emption shall be exercised within a period which shall not be less than 14 days from the date of publication of the offer or from the date of dispatch of the letters to the shareholders. 4. The right of pre-emption may not be restricted or withdrawn by the statutes or instrument of incorporation. This may, however, be done by decision of the general meeting. The administrative or management body shall be required to present to such a meeting a written report indicating the reasons for restriction or withdrawal of the right of pre-emption, and justifying the proposed issue price. The general meeting shall act in accordance with the rules for a quorum and a majority laid down in Article 83. Its decision shall be published in the manner laid down by the laws of each Member State, in accordance with Article 16. 5. The laws of a Member State may provide that the statutes, the instrument of incorporation or the general meeting, acting in accordance with the rules for a quorum, a majority and publication set out in paragraph 4 of this Article, may give the power to restrict or withdraw the right of pre-emption to the company body which is empowered to decide on an increase in subscribed capital within the limit of the authorised capital. This power may not be granted for a longer period than the power for which provision is made in Article 68(2). […] 7. The right of pre-emption is not excluded for the purposes of paragraphs 4 and 5 where, in accordance with the decision to increase the subscribed capital, shares are issued to banks or other financial institutions with a view to their being offered to shareholders of the company in accordance with paragraphs 1 and 3. → so-called indirect exercise of the pre-emption rights. Directive (EU) 2017/1132 Article 84 - Derogation from certain requirements 1. Member States may derogate from the first paragraph of Article 48, the first sentence of Article 60(1)(a) and Articles 68, 69 and 72 to the extent that such derogations are necessary for the adoption or application of provisions designed to encourage the participation of employees, or other groups of persons defined by national law, in the capital of undertakings. → Exclusion of pre-emptive right in case the new shares are offered to the company's employees Nominal (or free) share capital increase (art. 2442 c.c.) → assets that can be used for the free share capital increase → methods that can be used for the free share capital increase Reduction of the share capital Material share capital reduction (art. 2445 c.c.) → causes and conditions → ways of execution → the shareholders’ meeting notice of call → recording, execution and creditors’ opposition Directive (EU) 2017/1132 Article 73 - Decision by the general meeting on reduction in the subscribed capital Any reduction in the subscribed capital, except under a court order, shall be subject at least to a decision of the general meeting acting in accordance with the rules for a quorum and a majority laid down in Article 83 without prejudice to Articles 79 and 80. Such decision shall be published in the manner laid down by the laws of each Member State in accordance with Article 16. The notice convening the meeting shall specify at least the purpose of the reduction and the way in which it is to be carried out. Directive (EU) 2017/1132 Article 75 - Safeguards for creditors in case of reduction in the subscribed capital 1. In the event of a reduction in the subscribed capital, at least the creditors whose claims antedate the publication of the decision on the reduction shall at least have the right to obtain security for claims which have not fallen due by the date of that publication. Member States may not set aside such a right unless the creditor has adequate safeguards, or unless such safeguards are not necessary having regard to the assets of the company. Member States shall lay down the conditions for the exercise of the right provided for in the first subparagraph. In any event, Member States shall ensure that the creditors are authorised to apply to the appropriate administrative or judicial authority for adequate safeguards provided that they can credibly demonstrate that due to the reduction in the subscribed capital the satisfaction of their claims is at stake, and that no adequate safeguards have been obtained from the company. 2. The laws of the Member States shall also stipulate at least that the reduction shall be void, or that no payment may be made for the benefit of the shareholders, until the creditors have obtained satisfaction or a court has decided that their application should not be acceded to. 3. This Article shall apply where the reduction in the subscribed capital is brought about by the total or partial waiving of the payment of the balance of the shareholders' contributions. Nominal share capital reduction (due to losses) 1. The optional reduction (decrease of less than 1/3 of the share capital): there are no rule, hence in this event the reduction is optional, but if there are losses profits cannot be distributed... 2. Mandatory reduction: 2.1 Decrease of more than 1/3 of the share capital that does not affect the legal minimum capital 2.2. Decrease of more than 1/3 of the share capital affecting the legal minimum capital 2.1 Decrease of more than 1/3 of the share capital that does not affect the legal minimum (art. 2446 c.c.) → calling of the shareholders’ meeting → up-to-date balance sheet, directors' report and observations of the board of statutory auditors → appropriate measures of the shareholders' meeting → compulsory reduction: within the next financial year the loss has not decreased to less than 1/3 (ordinary shareholders’ meeting) Directive (EU) 2017/1132 Article 76 - Derogation from safeguards for creditors in case of reduction in the subscribed capital 1. Member States need not apply Article 75 (Safeguards for creditors in case of reduction in the subscribed capital) to a reduction in the subscribed capital the purpose of which is to offset losses incurred… 2.2. Decrease of more than 1/3 of the share capital affecting the legal minimum capital (art. 2447 c.c.) → calling of the shareholders’ meeting → measures that must be taken Directive (EU) 2017/1132 Article 77 - Reduction in the subscribed capital and the minimum capital The subscribed capital may not be reduced to an amount less than the minimum capital laid down in accordance with Article 45. However, Member States may permit such a reduction if they also provide that the decision to reduce the subscribed capital may take effect only when the subscribed capital is increased to an amount at least equal to the prescribed minimum.